Coke Profit Falls From A Year Ago

    April 19, 2005

The Coca-Cola Company reported first quarter earnings per share of $0.42, compared with $0.46 for the prior year first quarter.

First quarter earnings per share include a net reduction of $0.05 per share due to an accrual for taxes of $0.06 per share related to the repatriation of foreign earnings and a charge for accelerated amortization of stock-based compensation of $0.02 per share, offset by favorable tax resolutions of $0.02 per share and a gain on the issuance of stock by an equity investee of $0.01 per share.

Neville Isdell, chairman and chief executive officer, commented, “These results reflect our stated intent to step up our investments in marketing, innovation and organizational capability building while effectively managing our portfolio of countries. We are taking the actions necessary to position the Company for future growth. We have now completed a major review of our operational framework under the umbrella of our new Manifesto for Growth. A solid foundation has been laid from which future growth paths will continue to emerge. Our recently announced operational and geographic alignment will reinvigorate our marketing, stimulate innovation and lead to enhanced execution at a local level. We have also put behind us the investigations by the Securities and Exchange Commission and the Department of Justice. We still have much work ahead of us, but I am very confident that we are doing the right things, making good progress, and that our continued emphasis on execution will bring about long-term benefit.”

Financial Highlights

– Reported first quarter operating income declined 6 percent compared to the prior year first quarter. Operating income in the quarter was negatively impacted by two fewer shipping days, increased investments in marketing and higher stock-based compensation expenses, partially offset by positive currency benefits. The currency benefit to operating income was approximately 5 percent in the quarter, compared to the comparable prior year period.

– Cash from operations for the quarter was $1.4 billion, compared with $1.2 billion in the prior year period, an increase of 18 percent.

– The Company intends to repurchase at least $2 billion of its stock in 2005.

– The underlying effective tax rate on operations for the quarter was 24.0 percent.

– In February, the Company approved its 43rd consecutive annual dividend increase, a 12 percent increase over 2004.

Operational Highlights

Unit case volume increased 3 percent in the first quarter. The growth was led by a 4 percent increase in the International Operations including double-digit unit case volume growth in key emerging markets, such as China, Brazil, Russia and Turkey. Offsetting these results were unit case volume declines in Germany, the Philippines, India and northwest Europe. On a reported basis, unit case volume and gallon sales in the first quarter were even with the prior year first quarter. The reported shipments of unit cases and gallons in the first quarter reflect two fewer shipping days compared to the previous year first quarter.

For the quarter, carbonated soft drink unit case volume grew by 2 percent led by growth in the International Operations of 3 percent. The Company maintained its share position in the carbonated soft drink category in the first quarter compared to the prior year quarter.

Unit case volume for noncarbonated beverages, excluding water, grew by 4 percent for the quarter led by juice and juice drinks growth in North America of 16 percent and growth in the International Operations of teas/coffees and sports drinks of 6 and 18 percent, respectively. In the quarter versus the prior year quarter, the Company gained share in the sports drink category and maintained share in the juice/juice drinks category. Share declined in the ready-to-drink coffee/tea category but is being addressed with new innovation in this important category, particularly in Japan.

Total water unit case volume grew 8 percent, driven by worldwide growth in the Dasani brand of 15 percent along with solid growth in many of the regional brands. For the quarter, share improved in this competitive category.

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