FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission File No. 1-2217
The Coca-Cola Company
(Exact name of Registrant as specified in its Charter)
Delaware 58-0628465
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Coca-Cola Plaza 30313
Atlanta, Georgia (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code (404) 676-2121
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the Registrant's
classes of Common Stock as of the latest practicable date.
Class of Common Stock Outstanding at October 31, 1995
--------------------- -------------------------------
$.25 Par Value 1,254,362,421 Shares
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THE COCA-COLA COMPANY AND SUBSIDIARIES
INDEX
Part I. Financial Information
Item 1. Financial Statements (Unaudited) Page Number
Condensed Consolidated Balance Sheets
September 30, 1995 and December 31, 1994 3
Condensed Consolidated Statements of Income
Three and nine months ended September 30,
1995 and 1994 5
Condensed Consolidated Statements of Cash Flows
Nine months ended September 30, 1995 and 1994 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Part II. Other Information
Item 1. Legal Proceedings 15
Item 6. Exhibits and Reports on Form 8-K 17
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Part I. Financial Information
Item 1. Financial Statements (Unaudited)
THE COCA-COLA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions except share data)
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
----------- -----------
<S> <C> <C>
CURRENT
Cash and cash equivalents $ 1,773 $ 1,386
Marketable securities 152 145
----------- -----------
1,925 1,531
Trade accounts receivable, less
allowances of $35 at September 30
and $33 at December 31 1,648 1,470
Finance subsidiary receivables 53 55
Inventories 1,203 1,047
Prepaid expenses and other assets 1,283 1,102
----------- -----------
TOTAL CURRENT ASSETS 6,112 5,205
----------- -----------
INVESTMENTS AND OTHER ASSETS
Equity method investments
Coca-Cola Enterprises Inc. 558 524
Coca-Cola Amatil Limited 683 694
Other, principally bottling companies 1,113 1,114
Cost method investments,
principally bottling companies 221 178
Finance subsidiary receivables 272 255
Marketable securities and other assets 1,246 1,163
----------- -----------
4,093 3,928
----------- -----------
PROPERTY, PLANT AND EQUIPMENT
Land 219 221
Buildings and improvements 1,939 1,814
Machinery and equipment 4,008 3,776
Containers 346 346
----------- -----------
6,512 6,157
Less allowances for depreciation 2,295 2,077
----------- -----------
4,217 4,080
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GOODWILL AND OTHER INTANGIBLE ASSETS 672 660
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$ 15,094 $ 13,873
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</TABLE>
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THE COCA-COLA COMPANY AND SUBSIDIARIES
LIABILITIES AND SHARE-OWNERS' EQUITY
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
----------- -----------
<S> <C> <C>
CURRENT
Accounts payable and accrued expenses $ 3,075 $ 2,564
Loans and notes payable 2,328 1,757
Finance subsidiary notes payable 263 291
Current maturities of long-term debt 547 35
Accrued taxes 1,602 1,530
----------- -----------
TOTAL CURRENT LIABILITIES 7,815 6,177
----------- -----------
LONG-TERM DEBT 880 1,426
----------- -----------
OTHER LIABILITIES 953 855
----------- -----------
DEFERRED INCOME TAXES 179 180
----------- -----------
SHARE-OWNERS' EQUITY
Common stock, $.25 par value -
Authorized: 2,800,000,000 shares
Issued: 1,710,459,889 shares at
September 30; 1,707,627,955 shares
at December 31 428 427
Capital surplus 1,246 1,173
Reinvested earnings 12,507 11,006
Unearned compensation related to
outstanding restricted stock (65) (74)
Foreign currency translation adjustment (425) (272)
Unrealized gain on securities
available-for-sale 66 48
----------- -----------
13,757 12,308
Less treasury stock, at cost
(455,274,364 shares at September 30;
431,694,661 shares at December 31) 8,490 7,073
----------- -----------
5,267 5,235
----------- -----------
$ 15,094 $ 13,873
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<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
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THE COCA-COLA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In millions except per share data)
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
1995 1994 1995 1994
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
NET OPERATING REVENUES $ 4,895 $ 4,461 $ 13,685 $ 12,155
Cost of goods sold 1,949 1,760 5,270 4,669
---------- ---------- ----------- -----------
GROSS PROFIT 2,946 2,701 8,415 7,486
Selling, administrative
and general expenses 1,940 1,701 5,272 4,644
---------- ---------- ----------- -----------
OPERATING INCOME 1,006 1,000 3,143 2,842
Interest income 59 45 185 124
Interest expense 66 51 192 144
Equity income 59 44 153 108
Other income
(deductions) - net 36 (5) 40 (30)
Gain on issuance of stock
by Coca-Cola Amatil 74 - 74 -
---------- ---------- ----------- -----------
INCOME BEFORE INCOME
TAXES 1,168 1,033 3,403 2,900
Income taxes 366 325 1,065 913
---------- ---------- ------------ -----------
NET INCOME $ 802 $ 708 $ 2,338 $ 1,987
========== ========== =========== ===========
NET INCOME PER SHARE $ .64 $ .55 $ 1.85 $ 1.54
========== ========== =========== ===========
DIVIDENDS PER SHARE $ .22 $ .195 $ .66 $ .585
========== ========== =========== ===========
AVERAGE SHARES
OUTSTANDING 1,259 1,289 1,266 1,293
========== ========== =========== ===========
<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
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THE COCA-COLA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In millions)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------
1995 1994
----------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 2,338 $ 1,987
Depreciation and amortization 337 291
Deferred income taxes 14 15
Equity income less than (in excess of)
dividends (64) 20
Foreign currency adjustments (22) (20)
Other noncash items (57) 56
Net change in operating assets and
liabilities (245) 40
----------- -----------
Net cash provided by operating activities 2,301 2,389
----------- -----------
INVESTING ACTIVITIES
Additions to finance subsidiary receivables (44) (79)
Collections of finance subsidiary receivables 41 23
Acquisitions and investments,
principally bottling companies (107) (275)
Purchases of securities (151) (146)
Proceeds from disposals of investments
and other assets 505 229
Purchases of property, plant and equipment (708) (569)
Proceeds from disposals of property, plant
and equipment 45 40
Other investing activities (43) (48)
----------- -----------
Net cash used in investing activities (462) (825)
----------- -----------
Net cash provided by operations after
reinvestment 1,839 1,564
----------- -----------
FINANCING ACTIVITIES
Issuances of debt 551 246
Payments of debt (40) (120)
Issuances of stock 62 62
Purchases of stock for treasury (1,417) (543)
Dividends (558) (504)
----------- -----------
Net cash used in financing activities (1,402) (859)
----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (50) 50
----------- -----------
CASH AND CASH EQUIVALENTS
Net increase during the period 387 755
Balance at beginning of period 1,386 998
----------- -----------
Balance at end of period $ 1,773 $ 1,753
=========== ===========
INTEREST PAID $ 201 $ 151
=========== ===========
INCOME TAXES PAID $ 871 $ 747
=========== ===========
<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
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THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do
not include all information and notes required by generally accepted
accounting principles for complete financial statements. However,
except as disclosed herein, there has been no material change in the
information disclosed in the notes to consolidated financial
statements included in the Annual Report on Form 10-K of The Coca-Cola
Company (the Company) for the year ended December 31, 1994. In the
opinion of Management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the nine month period ended September
30, 1995, are not necessarily indicative of the results that may be
expected for the year ending December 31, 1995.
Certain amounts in the prior periods' financial statements have been
reclassified to conform to the current period presentation.
NOTE B - SEASONAL NATURE OF BUSINESS
Unit sales of the Company's soft drink products are generally
greater in the second and third quarters due to seasonal factors.
NOTE C - INVENTORIES
Inventories consist of the following (in millions):
September 30, December 31,
1995 1994
----------- -----------
Raw materials and supplies $ 826 $ 728
Work in process 7 4
Finished goods 370 315
----------- -----------
$ 1,203 $ 1,047
=========== ==========
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE D - SUMMARIZED INCOME STATEMENT DATA OF COCA-COLA ENTERPRISES INC.
At September 30, 1995 and 1994, the Company owned approximately 44
and 43 percent, respectively, of the outstanding common stock of Coca-Cola
Enterprises Inc. (Coca-Cola Enterprises) and, accordingly, accounted for
its related investment therein under the equity method of accounting.
Coca-Cola Enterprises meets the definition of a significant equity
investee as defined by Rule 3-09 of Regulation S-X. Summarized income
statement data for Coca-Cola Enterprises is as follows (in millions):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
September 29, September 30, September 29, September 30,
1995 1994 1995 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net operating revenues $ 1,841 $ 1,595 $ 5,130 $ 4,524
Gross profit $ 658 $ 601 $ 1,893 $ 1,744
Net income $ 36 $ 26 $ 85 $ 58
Net income applicable
to common share owners $ 35 $ 25 $ 83 $ 56
</TABLE>
Coca-Cola Enterprises' results for the three months and the nine
months ended September 29, 1995, include the results of the Wichita
Coca-Cola Bottling Company from January 1, 1995. Results for the nine
months ended September 29, 1995, also reflect a $5 million after-tax
gain on the sale of Coca-Cola Enterprises' 50 percent ownership
interest in The Coca-Cola Bottling Company of the Mid South.
In October 1995, Coca-Cola Enterprises announced the signing of a
non-binding letter of intent to acquire the Ouachita Coca-Cola
Bottling Company, Inc. (Ouachita CCBC) for a total transaction value,
purchase price plus acquired debt, of approximately $313 million. The
purchase price will be paid in cash and, at the election of Ouachita
CCBC share owners, Coca-Cola Enterprises' common stock.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE E - SHARE REPURCHASE PROGRAM
Under its share repurchase program, the Company purchased
approximately 9 million shares of its common stock in the third
quarter and approximately 25 million shares for the nine months ended
September 30, 1995.
NOTE F - NONRECURRING ITEMS
In July 1995, Coca-Cola Amatil Limited (Coca-Cola Amatil) completed
a public offering in Australia of approximately 97 million shares of
common stock. In connection with the offering, the Company's
ownership interest in Coca-Cola Amatil was diluted to approximately 40
percent. The transaction resulted in a noncash pretax gain of
approximately $74 million for the Company. Also in the third quarter
of 1995, the Company recorded a provision of $86 million in selling,
administrative and general expenses primarily related to increasing
efficiencies as part of the ongoing process of strengthening its
worldwide system.
NOTE G - SUBSEQUENT EVENT
In October 1995, the Company announced the issuance of $250 million
of 6 percent five-year Eurobonds which is expected to close November
16, 1995. The Eurobonds to be issued will be senior, unsecured,
unsubordinated bonds with a November 2000 maturity.
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
VOLUME
SOFT DRINKS: Worldwide unit case volume increased more than 7
percent and gallon shipments of concentrates and syrups grew 9 percent
in the third quarter of 1995 when compared to the third quarter of
1994. Unit case volume increased 9 percent and gallon shipments grew
10 percent for the first nine months of 1995.
Unit case volume in the Company's North American soft drink
operation increased 8 percent in the third quarter, including an
increase of 8 percent in the United States. Unit case volume in North
America grew 6 percent for the first nine months of 1995, including 6
percent growth in the United States. The continuing strong unit case
volume gains in the United States resulted from increases in the
Company's core brands, as well as sales of new products, such as
POWERaDE, Minute Maid Juices To Go, Fruitopia and Barq's. Continued
focus on programs designed to increase retail customer volume and
profit also contributed to third quarter results. North American
gallon shipments of concentrates and syrups increased 9 percent for
the third quarter and 5 percent for the first nine months of 1995. In
particular, gallon shipments rose 8 percent in the United States for
the third quarter and 5 percent for the first nine months of 1995.
International unit case volume and gallon shipments of concentrates
and syrups grew 7 percent and 9 percent, respectively, in the third
quarter.
In the Latin America Group, unit case volume grew 5 percent in the
third quarter, including gains of 34 percent in Brazil and 19 percent
in Chile. Unit case volume declined 6 percent in Mexico due to
continued economic difficulties there; however, share of soft drink
sales increased. The unit case volume gains in Latin America resulted
from new packaging initiatives and focused brand promotions. Gallon
shipments in the Latin America Group increased 6 percent in the third
quarter of 1995. For the first nine months of the year, unit case
volume has increased 10 percent and gallon shipments have grown 11
percent in the Latin America Group.
In the Africa Group, third quarter unit case volume grew 17 percent
and gallon shipments grew 30 percent. Unit case volume has risen 14
percent and gallon shipments have grown 26 percent in the Africa Group
for the first nine months of the year.
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RESULTS OF OPERATIONS (CONTINUED)
Unit case volume in the Middle and Far East Group grew 9 percent in
the third quarter, driven by a 37 percent increase in China, a 32
percent increase in India and a 14 percent increase in the
Philippines. Unit case volume in Japan increased less than 1 percent,
as a difficult economic environment negatively impacted the entire
retail sector in that country. Gallon shipments in the Middle and Far
East Group increased 7 percent in the third quarter. For the first
nine months of the year, unit case volume has grown 11 percent and
gallon shipments have increased 12 percent in the Middle and Far East
Group.
In the Greater Europe Group, third quarter unit case volume
increased 6 percent. Unit case volume grew 18 percent in the East
Central European Division, 27 percent in Great Britain, 5 percent in
France and 3 percent in Germany and Spain. Gallon shipments in the
Greater Europe Group grew 9 percent in the third quarter. For the
first nine months of the year, unit case volume and gallon shipments
in the Greater Europe Group increased 8 and 10 percent, respectively.
FOODS: At Coca-Cola Foods, unit volume declined 1 percent in the
third quarter as the Division continued to adjust the balance between
price promotions and brand marketing investments. For the first nine
months of the year, unit volume declined 2 percent.
NET OPERATING REVENUES AND GROSS MARGIN
Net operating revenues increased 10 percent in the third quarter and
13 percent in the first nine months of 1995, primarily due to
increased soft drink gallon shipments and selective price increases.
On a weighted average basis, the U.S. dollar was approximately 2
percent stronger in the third quarter versus key currencies in the
prior year.
The Company's gross margin decreased slightly to 60.2 percent in the
third quarter of 1995 from 60.5 percent in the third quarter of 1994.
The decrease in gross margin for the third quarter of 1995 was
primarily due to higher packaging costs at consolidated bottlers. The
Company's gross margin was 61.5 and 61.6 percent, respectively, for
the first nine months of 1995 and 1994.
SELLING, ADMINISTRATIVE AND GENERAL EXPENSES
Selling expenses were $1,488 million in the third quarter of 1995,
compared to $1,326 million in the third quarter of 1994. For the
first nine months of the year, selling expenses were $4,110 million,
compared to $3,687 million in the same period in 1994. The increase
was primarily due to higher marketing investments in support of the
Company's volume growth.
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RESULTS OF OPERATIONS (CONTINUED)
Administrative and general expenses were $452 million in the third
quarter of 1995, compared to $375 million in the third quarter of
1994. The increase in the third quarter resulted from a nonrecurring
provision of $86 million, primarily related to increasing efficiencies
as part of the ongoing process of strengthening the worldwide system.
For the first nine months of 1995, administrative and general expenses
were $1,162 million, compared to $957 million in the comparable period
of the prior year. The increase for the first nine months of the year
resulted primarily from an increase in the costs of stock-related
employee benefits and the nonrecurring provision of $86 million
recorded in the third quarter.
OPERATING INCOME AND OPERATING MARGIN
Operating income for the third quarter of 1995 increased to $1,006
million, a 1 percent increase over the third quarter of 1994. For the
first nine months of 1995, operating income increased 11 percent, to
$3,143 million. Excluding the nonrecurring provision, operating
income grew 9 percent in the third quarter and increased 14 percent
for the first nine months. The operating margin for the first nine
months of 1995 decreased to 23.0 percent from 23.4 percent in the
comparable period in 1994.
INTEREST INCOME AND INTEREST EXPENSE
Interest income increased in the third quarter and for the first
nine months of 1995 relative to the comparable periods in 1994, due
primarily to rising interest rates and higher average invested cash
equivalents and marketable securities balances. Interest expense
increased in the third quarter and for the first nine months of 1995
relative to the comparable periods in 1994, due primarily to rising
interest rates and higher average commercial paper borrowings to fund
the accelerated share repurchase program.
EQUITY INCOME
Equity income for the third quarter of 1995 totaled $59 million,
compared to $44 million in the third quarter of 1994. For the first
nine months of 1995, equity income totaled $153 million, compared to
$108 million for the same period in 1994. The increase in the first
nine months of the year was due primarily to improved results from
Coca-Cola Enterprises and Coca-Cola Bottlers Philippines, Inc. and
equity income now being reported from the Company's investment in the
Argentina bottler (previously a wholly-owned consolidated bottling
operation), partially offset by lower operating results from The
Coca-Cola Bottling Company of New York, Inc. and Coca-Cola & Schweppes
Beverages Ltd.
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RESULTS OF OPERATIONS (CONTINUED)
OTHER INCOME (DEDUCTIONS) - NET
Other income (deductions) - net was $36 million for the third
quarter of 1995 compared to $(5) million for the third quarter of
1994. For the first nine months of 1995, other income (deductions) -
net was $40 million, compared to $(30) million in the comparable
period of the prior year. The increase in the third quarter and the
first nine months of 1995 as compared to the same periods in 1994 was
due primarily to the gains on the sales of certain bottling
investments, partially offset by increased foreign currency exchange
losses.
GAIN ON ISSUANCE OF STOCK BY COCA-COLA AMATIL
In July 1995, Coca-Cola Amatil completed a public offering in Australia
of approximately 97 million shares of common stock. In connection with
the offering, the Company's ownership interest in Coca-Cola Amatil was
diluted to approximately 40 percent. The transaction resulted in a
noncash pretax gain of approximately $74 million for the Company.
INCOME TAXES
The Company's effective tax rate during the third quarter and the
first nine months of 1995, relative to the comparable periods of 1994,
decreased to 31.3 percent from 31.5 percent. The Company's effective
tax rate reflects tax benefits derived from significant operations
outside the United States which are taxed at rates lower than the U.S.
statutory rate of 35 percent.
NET INCOME
Net income per share for the third quarter and the first nine months
of 1995 increased at a higher rate than net income due to the
Company's share repurchase program.
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FINANCIAL CONDITION
NET CASH FLOW PROVIDED BY OPERATIONS AFTER REINVESTMENT
In the first nine months of 1995, net cash flow after reinvestment
totaled $1,839 million, an increase of $275 million over the
comparable period in 1994. Net cash provided by operating activities
declined in the first nine months of 1995 as higher net income was
offset by an increased use of cash in operating assets and liabilities
relative to the comparable period in 1994. Net cash used in investing
activities also decreased in the first nine months of 1995, from the
first nine months of 1994, due primarily to increased proceeds from
disposals of investments and other assets and decreased expenditures
on acquisitions and investments. Reinvestment in the form of
property, plant and equipment, the primary use of cash for investing
activities, was $708 million for the first nine months of 1995, an
increase of approximately $139 million over the comparable period in
1994.
FINANCING
Financing activities primarily represent the Company's net borrowing
activities, dividend payments and share repurchases. Net cash used in
financing activities totaled $1,402 million and $859 million for the
first nine months of 1995 and 1994, respectively. Net borrowings were
$511 million in the first nine months of 1995, compared to $126
million in the first nine months of 1994. Net borrowings were used
primarily to finance share repurchases. Cash used for share
repurchases increased to $1,417 million, compared to $543 million in
the comparable period in 1994.
EXCHANGE
International operations are subject to certain opportunities and
risks, including currency fluctuations and governmental actions. The
Company closely monitors its methods of operating in each country and
adopts appropriate strategies responsive to each environment. On a
weighted average basis, the U.S. dollar was approximately 2 percent
stronger during the third quarter of 1995 versus key currencies for
the comparable period of the prior year.
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Part II. Other Information
Item 1. Legal Proceedings
As reported in the Company's Annual Report on Form 10-K for the year
ended December 31, 1994, on February 26, 1992, suit was brought
against the Company in Texas state court by The Seven-Up Company, a
competitor of the Company. An amended complaint was filed by The
Seven-Up Company on February 8, 1994. The suit alleges that the
Company is attempting to dominate the lemon-lime segment of the soft
drink industry by tortious acts designed to induce certain independent
bottlers of the Company's products to terminate existing contractual
relationships with the plaintiff pursuant to which such bottlers
bottle and distribute the plaintiff's lemon-lime soft drink products.
As amended, the complaint alleges that Coca-Cola/Seven-Up bottlers in
several different territories, including Nacogdoches, Texas; Oklahoma
City, Oklahoma; Fargo, North Dakota; Shreveport, Louisiana; Elkins,
West Virginia; Salem, New Hampshire; Fayetteville, Arkansas; Pine
Bluff, Arkansas and Vicksburg, Mississippi, were illegally induced
into initiating Sprite distribution and discontinuing Seven-Up
distribution. The Company is accused of using several different
purportedly improper tactics to bring about those bottler decisions,
including false and misleading statements by the Company about the
plaintiff's past, present and future business operations, improper
financial advancements and various forms of alleged coercion.
The complaint seeks unspecified money damages for (1) alleged
tortious interference with the plaintiff's contractual relations, (2)
alleged intentional tortious conduct to injure plaintiff, (3) alleged
disparagement of the plaintiff and its business, and (4) alleged false
and injurious statements harmful to plaintiff's interests. The
complaint also seeks an injunction prohibiting future allegedly
tortious conduct by the Company and seeks an award of punitive damages
in the amount of at least $500 million. In 1993, the Company filed a
counterclaim against The Seven-Up Company in the matter alleging that
The Seven-Up Company has tortiously interfered with the Company's
efforts to obtain distribution of its lemon-lime soft drink, Sprite,
through bottlers of Coca-Cola.
On July 22, 1992, The Seven-Up Company filed a related suit in
federal court in Texas alleging that the facts and circumstances
giving rise to the state court suit (described above) also
constitute a violation of the federal Lanham Act which, inter alia,
proscribes false advertisement and disparagement of a competitor's
goods and services. The suit sought injunctive relief, treble
damages and attorneys' fees. In October of 1994, the federal Lanham
Act suit was tried and resulted in a jury verdict in favor of Seven-Up
on certain of its claims. The jury awarded Seven-Up a total of
$2.53 million in damages. In December of 1994, the federal court
entered an order setting aside that damage award and awarded judgment
in favor of the Company notwithstanding the verdict. Seven-Up appealed
that judgment. Shortly after the federal court's ruling, the Company
asked the state court to dismiss all of the plaintiff's remaining
claims in that case based upon the judgment entered in the federal case.
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Item 1. Legal Proceedings (continued)
On February 14, 1995, the state court granted that motion and
dismissed all of Seven-Up's remaining claims. Seven-Up appealed that
ruling as well. The appeals in both cases have been briefed and are
awaiting decisions by the United States Court of Appeals for the Fifth
Circuit and the Court of Appeals for the Fifth District of Texas,
respectively.
As reported in the Company's Annual Report on Form 10-K for the year
ended December 31, 1994, and its Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995, on April 22, 1994, Deborah A. Heller, et
al., individually and as a class representative, filed a class action
lawsuit against the Company and other sellers of diet soft drink
products in the Supreme Court of the State of New York, County of
Kings, which alleged that the plaintiff and other members of the
purported class had been defrauded by the defendants by reason of
their failure to advise consumers that the sweetness level of diet
soft drinks sweetened with aspartame degrades over time. The initial
complaint, which asserted claims based upon common law fraud and
violation of New York state consumer protection statutes, did not
indicate a specific damage amount in its prayer for damages. On July
27, 1994, plaintiffs filed an amended complaint adding several
individually-named plaintiffs and a claim for unjust enrichment. On
September 23, 1994, the Company filed a motion to dismiss plaintiffs'
amended complaint in its entirety. On November 7, 1994, the
plaintiffs filed a motion for summary judgment seeking from the
Company damages of at least $1.187 billion based upon its sales of
such diet soft drinks during the period from April 1988 through
December 1993. The New York law upon which plaintiffs' claims are
based allows the Court, at its discretion, to increase up to three
times any damages it awards.
On April 4, 1995, the Court granted defendants' motion to dismiss
the complaint, ruling that the Federal Food and Drug Administration
has primary jurisdiction over the issue raised by plaintiffs; and that
in any event, plaintiffs had failed to state a cause of action under
any of the various fraud, misrepresentation and/or consumer protection
counts of their complaint. The Court also held that plaintiffs had no
unjust enrichment claim. Plaintiffs' cross motions for class action
certification and partial summary judgment were deemed moot in light
of the Court's other rulings and were not formally ruled upon.
Plaintiffs have filed a notice of appeal and have also asked the Court
to reconsider its earlier opinion. Argument on the latter motion was
heard in New York on September 27, 1995, and the matter has been taken
under advisement by the Court.
The Company is involved in various other legal proceedings. The
Company believes that any liability to the Company which may arise as
a result of these proceedings, including the proceedings specifically
discussed above and in the Company's Annual Report on Form 10-K for
the year ended December 31, 1994, will not have a material adverse
effect on the financial condition of the Company and its subsidiaries
taken as a whole.
- 16 -
<PAGE>
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
12 - Computation of Ratios of Earnings to Fixed Charges
27 - Financial Data Schedule for the nine months ended
September 30, 1995, submitted to the Securities and
Exchange Commission in electronic format
(b) Reports on Form 8-K:
No report on Form 8-K has been filed during the quarter for
which this report is filed.
- 17 -
<PAGE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
THE COCA-COLA COMPANY
(REGISTRANT)
Date: November 13, 1995 By: /s/ Gary P. Fayard
-------------------------------------
Gary P. Fayard
Vice President and Controller
(On behalf of the Registrant and
as Principal Accounting Officer)
- 18 -
<PAGE>
<PAGE>
EXHIBIT INDEX
Exhibit Number and Description
12 - Computation of Ratios of Earnings to Fixed Charges
27 - Financial Data Schedule for the nine months ended
September 30, 1995, submitted to the Securities and
Exchange Commission in electronic format
Exhibit 12
THE COCA-COLA COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(In millions except ratios)
<TABLE>
<CAPTION>
Nine Months
Ended Year Ended December 31,
September 30, ---------------------------------------------
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
EARNINGS:
Income before
income taxes and
changes in
accounting
principles $3,403 $3,728 $3,185 $2,746 $2,383 $2,014
Fixed charges 223 236 213 207 222 255
Less:
Capitalized
interest, net (6) (5) (16) (10) (8) (8)
Equity income,
net of dividends (64) (4) (35) (30) (16) (94)
------ ------ ------ ------ ------ ------
Adjusted earnings $3,556 $3,955 $3,347 $2,913 $2,581 $2,167
====== ====== ====== ====== ====== ======
FIXED CHARGES:
Gross interest
incurred $ 198 $ 204 $ 184 $ 181 $ 200 $ 238
Interest portion of
rent expense 25 32 29 26 22 17
------ ------ ------ ------ ------ ------
Total fixed charges $ 223 $ 236 $ 213 $ 207 $ 222 $ 255
====== ====== ====== ====== ====== ======
Ratios of earnings
to fixed charges 15.9 16.8 15.7 14.1 11.6 8.5
====== ====== ====== ====== ====== ======
<FN>
The Company is contingently liable for guarantees of indebtedness of
independent bottling companies and others (approximately $219 million at
September 30, 1995). Fixed charges for these contingent liabilities have
not been included in the computations of the above ratios as the amounts
are immaterial and, in the opinion of Management, it is not probable that
the Company will be required to satisfy the guarantees.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE FINANCIAL STATEMENTS OF THE COCA-COLA COMPANY FOR THE
QUARTER ENDED SEPTEMBER 30, 1995, AS SET FORTH IN ITS FORM 10-Q
FOR SUCH QUARTER, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,773
<SECURITIES> 152
<RECEIVABLES> 1,683
<ALLOWANCES> 35
<INVENTORY> 1,203
<CURRENT-ASSETS> 6,112
<PP&E> 6,512
<DEPRECIATION> 2,295
<TOTAL-ASSETS> 15,094
<CURRENT-LIABILITIES> 7,815
<BONDS> 880
<COMMON> 428
0
0
<OTHER-SE> 4,839
<TOTAL-LIABILITY-AND-EQUITY> 15,094
<SALES> 13,685
<TOTAL-REVENUES> 13,685
<CGS> 5,270
<TOTAL-COSTS> 5,270
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 192
<INCOME-PRETAX> 3,403
<INCOME-TAX> 1,065
<INCOME-CONTINUING> 2,338
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,338
<EPS-PRIMARY> 1.85
<EPS-DILUTED> 0
</TABLE>
