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October 21, 2000 

ATLANTA (AP) — The Coca-Cola Co., boosted by stronger overseas sales, reported a better-than-expected 36 percent increase in third quarter earnings but warned that a weak euro could put pressure on its earnings next year. Coke said Friday it earned $1.07 billion, or 43 cents per share, for the three months ended Sept. 30. In the same period last year, Coke earned $787 million, or 32 cents per share.

The 43 cents included a one-time charge of 3 cents associated with a reorganization and a one-time gain of 4 cents from the recent merger of Coca-Cola Beverage and Hellenic Bottling Co. Without those one-time items, Coke's earnings were 42 cents per share, which beat the consensus forecast of 41 cents by analysts surveyed by First Call/Thomson Financial.

Caroline Levy, a beverage analyst for UBS Warburg, said the earnings statement was ``not a positive report.'' Coca-Cola's earnings per share would have been 41 cents if the company had not paid a lower-than-expected tax on a bottling transaction, she said.

She also noted that investors were skittish Friday about Coke's vulnerability to the weak euro.

Coke shares were trading at $54.75, down $2.38 per share, on the New York Stock Exchange.

The euro has fallen about 30 percent since its introduction in 1999, hurting the European sales of many U.S. companies. The euro traded Friday at about 84 cents.

``We do have some downside risk related to currency,'' Coke chief financial officer Gary Fayard told analysts in a conference call Friday. ``If the euro stays near these levels, it will put some pressure on our earnings next year.''

Fayard said Coca-Cola was hedged against the falling euro this year but not in 2001.

Revenues for the third quarter were $5.54 billion, up from $5.14 billion for the same period last year.

``From our standpoint, we are very encouraged with the direction of the business,'' said president and chief executive officer Jack Stahl. ``We are making some very positive changes that are really changing the underpinnings of growth.''

For the nine months ended Sept. 30, Coke earned $1.94 billion, or 78 cents per share, on revenues of $15.56 billion. In the same period a year ago, Coke earned $2.48 billion, or $1 per share, on revenues of $14.87 billion.

Worldwide unit case volume, an important measure of financial health in the beverage industry, increased 4 percent in the third quarter, pushed primarily by overseas sales. One unit equals 24 eight-ounce servings.

North American sales have been flat this year because of higher retail prices for Coke products. But Coke showed strong growth in its Asian Pacific group, which increased case volume by 10 percent in the third quarter.

Quarterly sales were led by a 24 percent volume surge in China, which Coke attributed in part to a marketing campaign that used local music celebrities and the Internet to promote Coca-Cola and Sprite brands.

In Europe and Eurasia, case volume increased 5 percent, although volume in Germany was down 5 percent due to adverse weather conditions during the third quarter.

Coke officials said the company remains ``comfortable'' with its objective to increase worldwide case volume by 5 percent this year and with its earnings-per-share expectations for 2000 and 2001.

Levy called Coke's targets ``too aggressive,'' however, and lowered her estimate of Coke's 2001 earnings per share by 5 cents to $1.70.

Analysts at Sanford C. Bernstein and Co. said they remain positive about Coca-Cola as a long-term investment and consider the recent dip of Coke's stock price as a buying opportunity. Bernstein estimates Coke's 2001 earnings per share will be $1.74.

In 1999, Coca-Cola earned 98 cents per share.

On the Net: http://www.cocacola.com