The Coca‑Cola Company Reports Second Quarter and Year to Date 2011 Results

Global volume and value share gains realized in total nonalcoholic ready- to-drink (NARTD) beverages and across both sparkling and still beverages

• Strong worldwide volume growth of 6% in both the quarter and year-to-date, with growth across all five geographic operating groups. Excluding new cross-licensed brands, primarily Dr Pepper brands, worldwide volume was up 5% in both the quarter and year-to-date. International volume was up 6% in the quarter and year-to-date.

• North America volume was up 4% in the quarter and grew 5% year-to-date. Excluding new cross-licensed brands, North America volume was even in the quarter and grew 1% year-to-date.

• Worldwide volume growth was led by brand Coca‑Cola, up 4% in the quarter and up 3% year-to-date.

• Second quarter reported EPS was $1.20, up 18%, with comparable EPS at $1.17, up 10% and ahead of our long-term growth target. Year-to-date reported EPS was $2.02, up 18%, with comparable EPS also at $2.02, up 9%.

• Second quarter reported net revenue and comparable net revenue were both $12.7 billion, up 47%, reflecting solid growth in concentrate sales, a 6% currency benefit, positive price/mix and the acquisition of Coca‑Cola Enterprises’ (CCE) North American operations in the fourth quarter of 2010. Year-to-date reported net revenue and comparable net revenue were both $23.3 billion, up 44%.

• Second quarter reported operating income was $3.2 billion, up 15%, with comparable operating income of $3.4 billion, up 18%, reflecting strong top-line performance, a 6% currency benefit and the acquisition of CCE’s North American operations, partially offset by increased commodity costs. Year-to-date reported operating income was $5.5 billion, up 10%, with comparable operating income of $5.9 billion, up 14%, including a 4% benefit from currency.

• Coca‑Cola Refreshments (CCR) integration efforts are on plan, with expected 2011 net cost synergies of $140 to $150 million.

• Company-wide productivity initiatives are well on track to slightly exceed the upper end of our original targeted range of $400 to $500 million in annualized savings by year-end 2011, the final year of the four-year program.

ATLANTA – The Coca‑Cola Company reports strong second quarter and year-to-date 2011 operating results, meeting or exceeding our long-term growth targets and gaining volume and value share in total NARTD beverages. Reported worldwide volume grew 6% in both the quarter and year-to-date. Excluding new cross- licensed brands in North America, primarily Dr Pepper brands, worldwide volume grew 5% in the quarter and year-to-date. We achieved broad-based volume growth in the quarter across each of our five geographic operating groups, with growth of 7% in Eurasia and Africa, 7% in Pacific, 6% in Latin America, 5% in Europe and 4% in North America. Excluding new cross-licensed brands, North America volume was even in the quarter and grew 1% year-to-date.

In the quarter and year-to-date, we grew global volume and value share in NARTD beverages, with share gains across most beverage categories. We continued to see growth in sparkling beverages, with worldwide brand Coca‑Cola volume growth of 4% in the quarter driven by a number of global markets, including 24% in China, 17% in Russia, 7% in Mexico, 7% in France, 6% in Germany and 2% in Japan. Worldwide sparkling beverage volume grew 5% in the quarter (4% excluding new cross-licensed brands in North America), with international sparkling beverage volume growing 5%.

Worldwide still beverage volume grew 7% in the quarter, led by growth across the portfolio, including juices and juice drinks, sports drinks, ready-to-drink teas, energy drinks and water brands. Still beverage volume in the quarter grew 10% internationally and 1% in North America. Minute Maid Pulpy continues to expand globally and achieved 35% growth in the quarter. Water grew 10% in the quarter with a focus on innovative and sustainable immediate consumption packaging like our PlantBottleTM in the U.S. and our Eco Crush bottle for the I LOHAS brand in Japan.

Muhtar Kent, Chairman and CEO of The Coca‑Cola Company, said, ―We are pleased with our second quarter performance results. We completed the second quarter of 2011, and the sixth quarter of our 2020 Vision, by delivering results ahead of our long-term growth targets. Importantly, we are delivering these strong results at a time when global macroeconomic conditions are at best mixed. This serves to underscore how, together with our global bottling partners, we are decisively investing in the future and executing our 2020 Vision from a position of real strength.

―Even as consumers around the world continue to feel the impact of a slow economic recovery, they increasingly choose our brands to refresh themselves at a rate of over 1.7 billion servings each and every day. Our strong revenue and profit results, combined with our worldwide share gains and positive price/mix, attest to the strength of our global system. With our 2020 Vision as our roadmap, we continue to sharpen our focus on execution by getting very clear on those priority actions we need to take to deliver in the near term while also preparing for 2020 today.

―During this past quarter, we officially celebrated Coca‑Cola’s 125th anniversary. And while it is wonderfully rewarding to celebrate our past, we remain constructively discontent and resolutely focused on our future. Our proven track record of creating value over time is a testament to this dynamic commercial enterprise and business that has just begun to reach its potential. That is why, as we look ahead to 2020 and beyond, we remain confident in our ability to achieve our long-term targets and to deliver sustainable profitable growth and value for our shareowners.

FINANCIAL REVIEW

Second quarter reported net revenue was up 47%, with comparable net revenue also up 47%. This reflects a 6% increase in concentrate sales, a 6% currency benefit, positive price/mix and the acquisition of CCE’s North American operations, partially offset by the effect of structural changes. Concentrate sales in the quarter were broadly in line with unit case volume. The positive price/mix in the quarter reflects international and Bottling Investments Group price/mix of 2%. In addition, we achieved 1% to 2% positive retail pricing in North America, with additional incremental pricing programs in place for the second half of 2011 that will enable us to deliver 2% to 3% positive retail pricing for the full year in North America. This reflects our fundamental belief in executing pricing within a disciplined commercial framework that considers rate increases in concert with occasion-based package mix levers, balancing overall category health with volume, value and pricing growth. As a result, we grew global NARTD value share for the 16th consecutive quarter, driven by global share growth across sparkling and still beverages.

Reported cost of goods sold was up 69% in the quarter. Comparable cost of goods sold was up 68% in the quarter, driven by a 6% increase in concentrate sales, a 6% currency impact and the acquisition of CCE’s North American operations, partially offset by the impact of structural changes, principally the sale of the Norway and Sweden bottlers. Higher commodity costs, particularly in our finished goods businesses in the Bottling Investments Group and Coca‑Cola Refreshments, continue to impact cost of goods sold as well. Items affecting comparability primarily included gains on commodities hedging.

Reported SG&A expenses increased 54% in the quarter. Comparable SG&A expenses increased 53% in the quarter. This increase reflects a 6% currency impact and was primarily driven by the acquisition of CCE’s North American operations, including the timing of marketing expenses, which will primarily reverse in the fourth quarter, as we conformed the newly acquired North American business to our accounting policies. The increase also reflects our continued investment behind our bottling operations. Structural changes, principally the sale of the Norway and Sweden bottlers, reduced comparable currency neutral SG&A expenses by 5%.

The Company has expanded certain commodity hedging programs as a result of our acquisition of CCE’s North American business. The Company uses derivatives as economic hedges to mitigate such risks as those associated with commodities and currency exposure. As a result of the expansion of our commodity hedging programs, in the fourth quarter of 2010 we began to exclude the impact of the net mark-to-market adjustments related to these economic hedges from our non-GAAP financial information until the period in which the underlying exposure being hedged impacts our consolidated statement of income. This quarter we included $26 million of previously excluded net gains, primarily related to commodities hedging. These gains are reflected in the Reconciliation of GAAP and Non-GAAP Financial Measures schedule.

Second quarter reported operating income increased 15%, with comparable operating income up 18%. Items affecting comparability reduced second quarter operating income by $177 million in 2011 and by $78 million in 2010. In both years these items included restructuring charges and costs related to global productivity initiatives as well as costs related to the CCE transaction. Currency had a 6% benefit on comparable operating income in the quarter partially offsetting the impact of increased commodity costs. Including our hedge positions and the cycling of our prior year rates, we estimate currencies will have a mid single-digit positive benefit on operating income for the full year.

On a year-to-date basis, our share repurchases now stand at $1.1 billion, although some of these repurchases have been offset by other treasury stock activity, primarily related to the exercise of employee stock options. We were not buying shares under our share repurchase program for most of the quarter as we considered strategic alternatives. However, we are planning to purchase at least $2.5 billion in shares under our existing share repurchase program by year end.

Second quarter reported EPS was $1.20, an increase of 18%, with comparable EPS at $1.17, up 10% and ahead of our long-term growth target. Items affecting comparability increased second quarter 2011 reported EPS by $0.03 and decreased second quarter 2010 reported EPS by $0.04. In both years these items included restructuring charges and costs related to global productivity initiatives as well as the CCE transaction. Second quarter 2011 reported EPS also included a one-time non- cash gain of $0.09 on the adjustment to fair value of our investment in Mexican bottler Grupo Continental S.A.B. (Contal). As a result of the merger between Contal and Embotelladoras Arca, S.A.B. de C.V. (Arca), our shares of Contal were converted into shares of the new entity Arca Continental, S.A.B de C.V. (Arca Contal). Accounting standards required that we adjust the carrying value of our investment to fair value, and the non-cash gain can be found on the Reconciliation of GAAP and Non-GAAP Financial Measures schedule. We continue to hold our shares in Arca Contal; however, since our ownership percentage in the combined company has been reduced, we no longer apply the equity method of accounting.

We estimate that the sale of the Company’s stake in Chilean bottler Coca‑Cola Embonor S.A. in first quarter 2011 and the change in accounting resulting from the merger of Arca and Contal in the second quarter will decrease equity income by approximately $0.01 on a full-year basis. Additionally, we continue to anticipate challenges in the remainder of the year in Japan as a result of the natural disasters earlier this year that we estimate will have a dilutive $0.03 to $0.05 impact on full-year comparable EPS. This impact will be primarily observed in the third and fourth quarter.

Cash from operations was $3.6 billion for the first six months of the year as compared to $4.3 billion in the prior year, a decrease of 15%. This difference primarily reflects additional pension funding made in the first quarter as well as the effect of the acquisition of CCE’s North American operations, which historically use a larger proportion of working capital in the first half of the year. After adjusting for the impact of the additional pension contribution in the first quarter, cash from operations would have increased 2%.

Net cash provided by financing activities was $30 million year-to-date, while net cash used in financing activities was $1,875 million in the prior year. This fluctuation primarily represents proceeds from net debt issuances year-to-date, partially offset by share repurchases.

NOTES

• All references to growth rate percentages, share and cycling of growth rates compare the results of the period to those of the prior year comparable period.

• Concentrate sales‖ represents the amount of concentrates, syrups, beverage bases and powders sold by, or used in finished beverages sold by, the Company to its bottling partners or other customers.

• Sparkling beverages‖ means NARTD beverages with carbonation, including energy drinks and carbonated waters and flavored waters.

• Still beverages‖ means nonalcoholic beverages without carbonation, including noncarbonated waters, flavored waters and enhanced waters, juices and juice drinks, teas, coffees and sports drinks.

• All references to volume and volume percentage changes indicate unit case volume. All volume percentage changes are computed based on average daily sales. ―Unit case‖ means a unit of measurement equal to 24 eight-ounce servings of finished beverage. ―Unit case volume‖ means the number of unit cases (or unit case equivalents) of Company beverages directly or indirectly sold by the Company and its bottling partners to customers.

• Year-to-date 2011 financial results were impacted by one fewer selling day, which will be offset by the impact of one additional selling day in fourth quarter 2011 results. Unit case volume results are not impacted by the variance in selling days due to the average daily sales computation referenced above.

• The Company reports its financial results in accordance with accounting principles generally accepted in the United States (―GAAP‖). However, management believes that certain non-GAAP financial measures provide users with additional meaningful financial information that should be considered when assessing our ongoing performance. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP. Our non-GAAP financial information does not represent a comprehensive basis of accounting.

• Our long-term revenue and operating income growth targets are on a comparable currency neutral basis and exclude structural changes. Our long-term volume growth target is on a comparable basis, excluding the effect of structural changes. Our long-term EPS growth target is on a comparable basis.

About The Coca‑Cola Company

The Coca‑Cola Company is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands. Led by Coca‑Cola, the world’s most valuable brand, the Company’s portfolio features 15 billion dollar brands including Diet Coke, Fanta, Sprite, Coca‑Cola Zero, vitaminwater, Powerade, Minute Maid, Simply and Georgia. Globally, we are the No. 1 provider of sparkling beverages, juices and juice drinks and ready-to-drink teas and coffees. Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy the Company’s beverages at a rate of 1.7 billion servings a day. With an enduring commitment to building sustainable communities, our Company is focused on initiatives that reduce our environmental footprint, support active, healthy living, create a safe, inclusive work environment for our associates, and enhance the economic development of the communities where we operate.