Tailored local marketing strategies fuel worldwide unit case volume growth of 7 percent on a reported basis.
  • Comparable unit case volume for the second quarter grew more than 5 percent and the Schweppes brands acquired in 1999 contributed approximately 1-1/2 points of growth.

  • Second quarter earnings per share exceeded consensus expectations by $0.01 because of earlier than anticipated savings from the on-going restructuring process.

  • Management remains comfortable with previously communicated volume and earnings per share expectations for the year 2000 and 2001.

  • The Coca-Cola Company (NYSE: KO) reported today that second-quarter worldwide unit case volume increased 7 percent. Comparable worldwide unit case volume increased more than 5 percent and the Schweppes brands acquired in the third quarter 1999 contributed approximately 1-1/2 points of growth. Second quarter earnings per share, excluding non-recurring items, reached $0.44 as business trends continue to improve and the Company is benefiting from savings from its restructuring process.

    "We are beginning to see the benefits from the large-scale reshaping that we started several months ago," said Douglas N. Daft, chairman and chief executive officer. "We are pleased with our progress as we strive to be the premier consumer relationship organization.

    "The strong talent and leadership of the Coca-Cola system remain focused on ensuring we have the best relationships in place with consumers, customers, employees, bottlers, and communities," said Mr. Daft. "We are confident that this tailored local business approach will lead to strong returns for our share owners well into the future."

    On a reported basis, fully diluted earnings per share were $0.37 for the second quarter. Excluding non-recurring items, diluted earnings per share were $0.44 for the second quarter, which includes $0.01 per share related to earlier than anticipated savings from the on-going restructuring process.

    Volume Results

    Second-quarter worldwide unit case volume increased 7 percent on a reported basis and more than 5 percent on a comparable basis. (References to "comparable" changes in unit case volume are computed based on the exclusion of the Schweppes brands acquired during the third quarter 1999.) Reported worldwide gallon shipments in the second quarter of 2000 increased 4 percent.

    "The solid business trends in the second quarter are the result of strong innovation around brand Coca-Cola and improving global economic conditions," said Jack L. Stahl, president and chief operating officer. "Throughout the world, we are executing marketing initiatives that adapt to fit unique local consumer preferences and market conditions. We are excited about the opportunity to grow our business through imaginative programs around our core brands and through the addition of new beverage offerings to our portfolio."

    Unit case volume in the North America Group increased more than 1 percent in the second quarter. North America gallon shipments of concentrates and syrups declined 2 percent during the second quarter. Sales volumes within the future consumption channels, primarily supermarkets, continue to reflect the impact of higher prices at the retail level. However, this weakness is being offset by a solid contribution from the Company's Fountain operations and by strong performance in the immediate consumption channels.

    "The pricing actions taken in the last year by our bottlers in North America have been a necessary step to improve the overall returns for our customers and bottlers in the future consumption channels," Mr. Stahl said. "As we move into the second half of 2000, we anticipate that our Company, our bottlers and our customers will benefit from improving volume trends at a more profitable level."

    The pop-top promotion, which began delivering prizes of up to $1 million to consumers during the second quarter and will extend through July, is resulting in a positive volume lift for Coca-Cola classic. As new Coca-Cola classic advertising is launched in August, new integrated marketing initiatives surrounding Sprite are rolled out, and a national marketing campaign for Dasani proceeds, the Company anticipates that the volume trends in North America will continue to strengthen.

    The North America Group results include a volume increase of 2 percent by The Minute Maid Company in the quarter, following double digit growth in the prior year. The operation continued to grow its share of sales, benefiting from strong growth in Minute Maid Premium ready-to-drink breakfast brands and continued success of Minute Maid and Hi-C brand products in the proprietary single-serve pouch. In the second half of the year 2000, the Minute Maid Premium line will be extended to include ready-to-drink low acid orange juice and orange juice fortified with vitamins C and E, plus Zinc. The national rollout of Minute Maid Coolers, in the single-serve pouch, will be completed during the second half of 2000.

    In Europe and Eurasia, second-quarter unit case volume increased 13 percent on a reported basis and 11 percent on a comparable basis. Western Europe experienced strong performance during the quarter, with comparable volumes increasing 9 percent in Germany, 7 percent in Spain and 14 percent in CCE Europe territories. Reported volumes for CCE Europe territories grew 23 percent. Reported gallon shipments for Europe and Eurasia increased 5 percent during the second quarter.

    Strong results are being driven by solid marketing initiatives throughout the region, but also reflect the cycling of a challenging period a year earlier. Germany launched a new campaign in June entitled "Try Something New This Summer - Coke at 3 Degrees." The advertising was developed by a local agency and communicates directly to consumer insights regarding a uniquely German feeling of freedom to experiment in the summer. At the same time, the campaign reinforces the fact that brand Coca-Cola is most refreshing when served cold.

    Central Europe and Eurasia reported strong growth in the quarter due to marketing initiatives around core brands Coca-Cola and Fanta. Central Europe also introduced flavors under the Lift brand, such as apple, pear and peach. Russia reported strong growth, reflecting the cycling of weak results from last year and the success of targeted marketing activities, such as Russian- specific communication around brand Coca-Cola and Fanta lemon. The Eurasia Region, whose principal market is Turkey, is beginning to show signs of recovery after last year's devastating earthquakes, reporting unit case volume increases of 6 percent on both a reported and comparable basis.

    In the Latin America Group, second-quarter unit case volume increased 8 percent on a reported basis and 6 percent on a comparable basis. Unit case volume on a reported basis grew 12 percent in Brazil, 7 percent in Mexico, 10 percent in Central America and the Caribbean and 3 percent in Argentina. On a comparable basis, unit case volume increased 12 percent in Brazil, 7 percent in Mexico, 3 percent in Central America and the Caribbean, and 1 percent in Argentina. Reported gallon shipments for the Latin America Group increased 12 percent in the second quarter, cycling a decrease of 5 percent in the second quarter of 1999.

    In Latin America, the Company's focus on localized marketing strategies is leading to stronger relationships with consumers. This, along with improving economic stability in many regions, is resulting in improving volume and profitability trends. In countries where challenging economic conditions continue, the Company is delivering value to consumers through broader product offerings, personal size packages, value-added promotions, and attractive pricing.

    In Brazil, marketing activities around brand Coca-Cola and Kuat continue to grow these brands as the Brazilian economy enjoys a steady recovery. In addition, programs have been initiated around Schweppes tonic, club soda and citrus flavors, accelerating the Company's expansion into additional beverage categories. The Company is seeing success around the 250-milliliter package for Fanta in Chile. In Mexico, the integrated "Enjoy!" sensation campaign includes new advertising, new graphics and activation with consumers.

    In the Asia Pacific Group, unit case volume for the second quarter increased 8 percent on a reported and comparable basis. The 3 percent unit case volume gain in Japan during the quarter reflects a renewed focus on brand Coca-Cola and Georgia coffee through fully-integrated theme and promotional activities. Unit case volume in China increased 16 percent in the quarter, benefiting from a strong consumer response to locally developed advertising for brand Coca-Cola and Sprite as well as the re-launch of Fanta.

    Unit case volume on a reported basis grew 18 percent in India and 17 percent on a comparable basis. Marketing activities in India include growing support behind the Coca-Cola "Enjoy!" campaign and the associated internet site, the "Coca-Cola Enjoy! Zone." The launch of a local water brand, Kinley, is expected to benefit the second half of this year. Volume growth in Thailand and Indonesia assisted the strong results for the Group. Volume in the Philippines remains below historical levels due to low consumer confidence in economic conditions and increased competition from local brands.

    Reported gallon shipments for the Asia Pacific Group increased 3 percent in the second quarter.

    In the Africa and Middle East Group, second-quarter unit case volume increased 5 percent on a reported basis and decreased 3 percent on a comparable basis. Unit case volume declined 7 percent in the Northern Africa Division on a reported basis and declined 10 percent on a comparable basis. These results were impacted by the nation-wide strike in Nigeria at the beginning of June, which disrupted the Coca-Cola system's distribution capabilities for a limited time.

    Unit case volume in the Southern Africa Division increased 11 percent on a reported basis and declined 3 percent on a comparable basis as a result of poor weather conditions throughout the region. The Middle East and North Africa Division reported an increase of 9 percent in reported unit case volume and an increase of 2 percent in comparable volume. Reported gallon shipments for the Africa and Middle East Group increased 7 percent in the second quarter.

    Earnings Results

    On a reported basis, fully diluted earnings per share were $0.37 for the second quarter. Excluding non-recurring items, diluted earnings per share were $0.44 for the second quarter, which includes $0.01 per share related to earlier than anticipated savings from the on-going restructuring process.

    The Company still expects restructuring savings for the full year 2000 to be approximately $150 million on a pre-tax basis. Further, the full implementation of the new organizational structure is still expected to generate annual expense reductions of $300 million commencing in 2001.


    Second Quarter Year-to-Date
    Per Share Per Share
    (after tax) (after tax)
    Reported Earnings Per Share $0.37 $0.35
    Non-Recurring Items:
    Organizational Realignment Charges $ 0.05 $ 0.13
    Asset Write-Down --- $ 0.16
    Planned Inventory Reduction $ 0.02 $ 0.12
    On-Going Earnings Per Share $ 0.44 $ 0.76


    Organizational Realignment Charges

    The impact of the Company's organizational realignment on other operating charges for the second quarter was approximately $191 million, or $0.05 per share after tax. The impact of the organizational realignment on the Company's year-to-date earnings was approximately $466 million, or $0.13 per share after tax. The organizational realignment is proceeding as planned. The Company expects the full-year financial impact of the organizational realignment to be approximately $725 million (pre-tax), which will be recorded throughout the year 2000.

    Asset Write-Down

    No asset write-downs relate to the second quarter results. The year-to- date results are impacted by a first-quarter charge of $405 million in other operating charges primarily reflecting a write-down in the carrying value of the Company's Indian bottling operations. The Company does not expect to generate a tax benefit for financial reporting purposes from this asset write- down; therefore, the impact on diluted earnings per share was $0.16 after tax in the first quarter.

    Planned Inventory Reduction

    As previously disclosed, the concentrate inventory reduction by certain bottlers has been completed and the impact of these actions on the Company was a reduction in second-quarter earnings per share of approximately $0.02 after tax. During the first six months of the year 2000, the impact of shipping less concentrate on the Company's diluted earnings per share was approximately $0.12 after tax. Excluding the planned inventory reduction, gallon shipments in the second quarter would have increased by approximately 6 percent over the prior year quarter.

    Income Statement Review

    Reported net operating revenues increased by 5 percent in the second quarter, reflecting improvements in the underlying business, price increases in selected countries and the offsetting impact of the planned inventory reduction by selected bottlers. Operating income was negatively impacted by the inventory reductions and the charge associated with the organizational realignment.

    Equity income in the second quarter increased over the prior year period as bottlers begin to benefit from improving economic conditions. The effective tax rate on operations was 31 percent for the second quarter.

    Because of the utilization of cash in the organizational realignment and the cash impact from the planned reduction in concentrate inventory levels, the Company did not repurchase any of its shares during the first half of the year. However, the Company remains committed to its consistent long-term program of using excess cash to repurchase its shares. Since January 1, 1984, the Company has repurchased 32 percent of its common shares then outstanding, or a cumulative total of over 1 billion shares, at an average cost of approximately $12.46 per share.

    Remainder of the Year and 2001

    Based on the volume trends of the first six months, improving economic conditions and local marketing programs, the Company remains comfortable with the previously established objective of worldwide unit case volume growing in the range of 5 to 6 percent for the full year 2000. The Company's expectations for earnings in the current year and next year remain unchanged.

    This news release contains forward-looking statements including statements concerning long term volume and EPS objectives and should be read in conjunction with cautionary statements contained in Exhibit 99.1 in the Company's most recent Form 10-K.

    THE COCA-COLA COMPANY AND SUBSIDIARIES
    (In Millions, except per share data)

    Second Quarter
    2000 1999 % Change
    NET OPERATING REVENUES $5,621 $5,335 5

    Cost of Goods Sold 1,677 1,592 5

    GROSS PROFIT 3,944 3,743 5

    Selling, Administrative
    and General Expenses 2,468 2,353 5

    Other Operating Charges
    Organizational Realignment 191 --- ---

    OPERATING INCOME 1,285 1,390 (8)

    Interest Income 98 64 53

    Interest Expense 119 78 53

    Equity Income - Net 71 12 ---

    Other Income (Deductions) - Net 7 (22) ---


    INCOME BEFORE INCOME TAXES 1,342 1,366 (2)

    Income Taxes 416 424 (2)

    NET INCOME $926 $942 (2)


    DILUTED NET INCOME PER SHARE* $0.37 $0.38 (3)

    Average Shares
    Outstanding - Diluted* 2,480 2,488 ---

    * For the second quarter, "Basic Net Income Per Share" was $0.37 for 2000
    and $0.38 for 1999 based on "Average Shares Outstanding - Basic" of
    2,475 and 2,468 for 2000 and 1999, respectively.


    THE COCA-COLA COMPANY AND SUBSIDIARIES
    (In Millions, except per share data)

    Six Months Ended June 30
    2000 1999 % Change
    NET OPERATING REVENUES $ 10,012 $9,735 3

    Cost of Goods Sold 3,075 2,895 6

    GROSS PROFIT 6,937 6,840 1

    Selling, Administrative
    and General Expenses 4,541 4,306 5

    Other Operating Charges
    Organizational Realignment 466 --- ---

    Asset Write Down 405 --- ---

    OPERATING INCOME 1,525 2,534 (40)

    Interest Income 165 128 29

    Interest Expense 218 155 41

    Equity Income (Loss) - Net (14) (83) ---

    Other Income (Deductions) - Net (19) 24 ---

    INCOME BEFORE INCOME TAXES 1,439 2,448 (41)

    Income Taxes 571 759 (25)

    NET INCOME $868 $1,689 (49)

    DILUTED NET INCOME PER SHARE* $0.35 $0.68 (49)

    Average Shares
    Outstanding - Diluted* 2,481 2,488 ---

    * For the six months ended June 30, "Basic Net Income Per Share" was
    $0.35 for 2000 and $0.68 for 1999 based on "Average Shares Outstanding
    - Basic" of 2,474 and 2,467 for 2000 and 1999, respectively.