The Coca-Cola CompanyAnnual Report 1981

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The Coca-Cola Company is the world's leading producer and dis-tributor of syrups and concentrates for soft drinks. More than 35 percent ofall soft drinks consumed worldwide in 1981 were Company products, soldthrough about4,000 fountain wholesalers and distributors and about 1,500bottlers in more than 145 countries.

Soft drinks in 1981 generated 80 percent of net sales and 88 percent ofearnings. Sales of Coca-Cola contributed 70 percent of the Company's softdrink unit sales volume, followed by Fanta, Sprite, TAB, Fresca, and otherCompany products. Soft drink sales outside the U.S. now represent 62 per-cent of the Company's total soft drink unit sales.

The Coca-Cola Company Foods Division is the largest citrus processorin the U.S., producing and marketing the Minute Maid brand of chilledandfrozen citrus juices, ades and lemonade crystals, Snow Crop Five Alivefrozen concentrates and juice drinks, Bright & Early frozen concentrate,Hi-C fruit drinks, and Maryland Club and Butter-Nut coffees.

Wine is the fastest-growing part of the Company's domestic beveragebusiness. The Wine Spectrum, the fourth largest U.S. wine producer andmarketer, encompasses The Taylor Wine Company, Inc. (including theGreat Western brand), Sterling Vineyards and The Monterey Vineyard.Other Company subsidiaries produce disposable plastic wrap, bags, cutleryand straws, and bottled water.

The Company employs about 16,700 people in the U.S. and about21,400 overseas, the majority of whom are native to the countries in whichthey work. Common stock of The Coca-Cola Company, exceeding 123 mil-lion shares, is traded on the New York Stock Exchange. There were 77,027stockholders of record as of December 31,1981.

CONTENTS

1 Financial Highlights3 Letter to Stockholders7 Soft Drink Operations

15 Foods and Wine Group24 Directors and Officers29 Financial Information48 Other Information

Front Cover: The Coca-Cola Company launched a new advertisingcampaign "Coke is it!" in the U.S. in early'1982. The theme focuseson tne superior qualities of Coca-Cola and reaffirms the position of lead-ership Coke /las maintained throughout the world.

FINANCIAL HIGHLIGHTS (In millions except per share data)The Coca-Cola Company and Subsidiaries

YEAR ENDED DECEMBER 31,

Net salesOperating incomeIncome from continuing

operations beforeincome taxes

Income from continuingoperations

Net incomeIncome per share from

continuing operationsNet income per shareDividends per shareStockholders' equity at year-endIncome from continuing

operations to net salesIncome from continuing

operations to averagestockholders' equity

1981$5,889.0$ 798.6

$ 807.3

$ 447.1$ 481.8

$ 3.62$ 3.90$ 2.32$2,270.8

7.6%

20.6%

1980$5,620.7$ 741.2

$ 736.7

$ 406.3$ 422.1

$ 3.29$ 3.42$ 2.16$2,074.7

7.2%

20.3%

% Change4.8%7.7%

9.6%

10.0%14.1%

10.0%14,0%7.4%9.5%

$5,889

55,621

54,689

54,095

$3,691

$2,989

Net Sales (Millions)

52,834

$2,483$2,124S 1,854

$3.62Income Per Share From Continuing Operations Dividends Per Share

'72 '73 '74 '75 '76 '77 '78 '79 '80 '81 '72 '73 '74 '75 '76 '77 '78 '79 '80 '81 '72 '73 '74 '75 '76 '77 '78 '79 '80 '81

TO OUR STOCKHOLDERS: Strategy for the '80s Firmly in Place

Earnings goalsbeing achieved

Roberto C. Goizueta (right),Chairman, Board of Direc-tors, and Chief Executive Of-ficer, with DonaldR. Kcough,President and Chief Operat-ing Officer.

The year 1981 was one of exciting change for The Coca-Cola Com-pany Your Company's marketing and financial strength increased atthe same time we made a very successful transition to a new manage-ment team.

The first major accomplishment of new management was thedevelopment of a corporate strategy for achieving the Company's long-term objectives. A copy of that strategy statement was published onMay 5 and shared with each of you. Among those objectives is tocontinue the growth in profits of our highly successful existing mainbusinesses, and those we may choose to enter, at a rate substantially inexcess of inflation, in order to give our shareholders an above averagetotal return on their investment.

The new "Coke is it!" campaign is very much in line with that otherprimary objective of our strategy which states that the unique positionof excellence that the product Coca-Cola has attained in the world willbe protected and enhanced.

The Company's performance in 1981 demonstrates that our strategy istaking hold and that we are well on our way to achieving our goals. Netincome rose 14 percent over the prior year, to $482 million, including a$29 million gain on the sale of the Company's Aqua-Chem, Inc., sub-sidiary. Net income per share increased 14 percent, to $3.90. Incomefrom continuing operations reached $447 million, or $3.62 per share,both increasing 10 percent over 1980 levels. Net sales increased 5 percentover the prior year.

In 1981, the value of the local currencies of many of the countries inwhich we have major operations decreased significantly relative to theU.S. dollar. Therefore, our revenues and operating profits in thesecountries, when translated into U.S. dollars, were much lower thanthey would have been otherwise. Balance sheet translation losses alsohad a negative effect on our full-year profits, but to a lesser degree asfirst-half losses were partially offset by gains in the year's second half.Profit performance in local currencies was excellent for most key opera-tions, in part due to our attention to improving per unit profitability bymonitoring expenses and pricing. This performance gives us tremen-dous confidence in the strength of our business and our new strategy.

The Company's domestic soft drink operations achieved an excellentincrease in profits in 1981. Sales of Company products at retail increasedin excess of 3 percent, well above the industry increase, resulting incontinued market share growth for the products of Coca-Cola USA.

Unit sales of the Company's combined foreign soft drink operationsincreased over 1980 levels, in spite of the depressed worldwideeconomy. Nearly without exception, our major foreign operationsachieved increases in market share in 1981. Foreign earnings also in-creased, led by strong increases from the Company's Latin America andCanada/Pacific operations. The Company's earnings performance inEurope and Africa, while very good in local currency terms, was heldback by the weakness of European currencies.

One of the keys in our strategy is to restructure and strengthen ourbottler system with managements whose principal objective is to buildtheir businesses more aggressively. We made major strides in this effortin 1981.

In September, The Coca-Cola Bottling Company of New York, Inc.,was purchased by a newly formed company owned by outside inves-tors, certain members of existing bottler management, and TheCoca-Cola Company. Other strategic transactions with Coca-Cola bot-tling operations in Detroit, Indianapolis, Baltimore, and Chicago and

New growth programsbeing implemented

Company completes saleof Acjua-Chem, Inc.

Long-termearnings growtha primary objective

Wisconsin greatly strengthened bottler management in those markets.We also are taking an active role in strengthening the bottler system

outside the U.S. For example, in June, the Company established a bot-tling joint venture with the San Miguel Corporation of the Philippineswhich will permit our business to take maximum advantage of theenormous growth potential in this area. In addition, in 1981, we sold ourCompany-owned bottling plants in Greece and created a task forcewhich is reviewing and analyzing all Company-owned bottling andcanning operations around the world. This program is already improv-ing operating efficiencies in many bottling operations.

In further support of our growth objectives, we have installed aworldwide training program which is helping managers make more ef-ficient use of our working capital and is improving our return on assets.In 1981 alone, this action freed up $80 million in working capital for in-vestment in other parts of our business.

A central goal of our corporate strategy is to focus on consumer prod-ucts and services versus industrial markets. In line with this objective,we completed the sale of Aqua-Chem, Inc., in September of 1981. Inearly 1982, we sold Tenco, our private label instant coffee and tea opera-tion. Both moves enabled the Company to apply significant resourcestoward reinvestment in other areas of the business.

On other fronts, we refined our management organizational struc-ture by creation of the Foods and Wine Group, encompassing the FoodsDivision, The Wine Spectrum and Presto Products, Incorporated {in-cluding Winkler/Flexible Products, Inc.). The Foods Division demon-strated excellent profit growth in 1981, and The Wine Spectrum profitsmore than doubled. The Wine Spectrum is now the fourth largest wineproducer in the U.S. and has expanded its production facilities in Gon-zales, California, to support the continuing growth of the TaylorCalifornia Cellars line.

The Company reached another dramatic milestone in April 1981,when we officially opened the first Coca-Cola bottling plant in thePeople's Republic of China in Beijing (Peking) since World War II.

In order to take advantage of our investment opportunities, we planto reduce gradually our dividend pay-out ratio by increasing our di-vidend at a lesser rate than earnings. This policy will enable us to pur-sue aggressively our primary objective of achieving strong long-termearnings growth.

Recognizing the potential of economic revitalization, the Companyannounced in 1981 its plan for special efforts to channel more marketactivities to minority businesses. This plan is in line with a trend ofshifting responsibility for many economic problems from the govern-ment to the private sector.

In the decade ahead, the U.S. soft drink industry faces important is-sues such as artificial sweeteners, regulatory reform, and forced depositlegislation, among others. By diligent work, we are making progress oneach of these issues through cooperation with the National Soft DrinkAssociation (NSDA). For example, continued availability of saccharinin the U.S. has been insured for an additional two years by the Saccha-rin Study and Labeling Act Amendments of 1981. Limited use of thedietetic sweetener aspartame in some products other than soft drinksalso indicates a positive change in the views of regulatory authorities.

In line with our strategy, during 1981, we identified the entertainmentindustry as an area offering significant potential for long-term growththat fits well with our existing businesses. As a result, in January 1982,we reached an agreement in principle for the acquisition of Columbia

Columbia Picturesacquisition offers entryinto expanding market

Dividend increaseapproved for 20thconsecutive year

Pictures Industries, Inc. The terms of this agreement were approved bythe Board on March 3,1982.

We believe that this proposed acquisition represents an opportunityto enter an exciting, expanding market. Columbia is a company with anexcellent management team and fine track record. Historically, it hasplayed a major role in its industry and has become an even more impor-tant factor in recent years. Columbia is primarily engaged in the pro-duction and distribution of programming material to a variety ofmedia. Programming is to the communications and entertainmentbusinesses what syrup is to the beverage business. No matter whattechnology is used, no matter what distribution system is adopted, nomatter how it is packaged, programming remains the key to thebusiness.

In addition, the Columbia film library is one of the most extensive inthe world. The markets for this repository of films are both the rapidlygrowing cable television industry and the expanding home video enter-tainment market. This acquisition, however, will not alter the funda-mental nature of our Company as the premier producer and marketer ofthe highest quality beverage products in the world.

In 1981, the Company recorded a 21 percent return on average stock-holders' equity. The Company's cash and securities position at year-end 1981 was $393 million, compared to $289 million at year-end 1980.The Company's total debt at December 31,1981, was $232 million, com-pared to $228 million at year-end 1980.

At its March 3,1982 meeting, the Directors declared a quarterly divi-dend of 62 cents, equivalent to a full-year dividend in 1982 of $2.48 pershare, a 7 percent increase over the 1981 dividend. This is the 20th con-secutive year the Directors have approved dividend increases.

In other areas of our business, the Board of Directors of TheCoca-Cola Company elected two new members in 1981: Anne CoxChambers and Donald F. McHenry. Mrs. Chambers, chairman ofAtlanta Newspapers, served as U.S. Ambassador to Belgium from 1977to 1981. A former United Nations Ambassador, Mr. McHenry is a Uni-versity Research Professor of Diplomacy and International Affairs atGeorgetown University.

We firmly believe our Board is as strong as any serving a companytoday, and we are grateful to our Directors for their dedicated interestand participation. We also are mindful of the enormous contributionour bottlers and employees have made to our success in 1981, and weespecially appreciate the support of our stockholders and consumers inthis year of transition.

We are confident that, working together, we will continue to take ad-vantage of the growth opportunities our new corporate strategy willpresent to us as we move into the decade of the '80s.

Roberto C. GoizuetaChairman, Board of Directors,and Chief Executive Officer

Donald R. KeoughPresident andChief Operating Officer

KT >

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SOFT DRINK OPERATIONS: Well-Positioned for Future Growth

Coca-Cola USA showsgrowth in profitsand market share

Coke strengthensleadership position

The "Coke is it!" advertisingcampaign reinforces andamplifies the unique positionof excellence that Coca-Colahas attained world-wide. Thecommercials show even/daypeople enjoying life to the ful-lestand Coca-Cola is anatural part of that.

Soft drinks are the backbone of The Coca-Cola Company's sales andprofits, strongly underscoring the Company's commitment to con-sumer products and services.

In 1981, soft drinks comprised 80 percent of net sales and 88 percent ofearnings. Sales revenues from soft drinks rose 4 percent, to $4.68 bil-lion, from $4.52 billion in 1980. Earnings increased 10 percent, to $804million, up from $732 million the previous year.

Countries outside the U.S. and Puerto Rico accounted for about 62percent of soft drink unit sales in 1981, with Coca-Cola, the Company'spremier product, contributing 70 percent of the Company's global unitsoft drink volume.

Altogether in 1981, the Company sold almost 1.3 billion gallons of softdrink syrups and concentrates around the world.

Coca-Cola USA, the Company's flagship Division, completedanother year of building upon its leadership of the U.S. soft drink in-dustry. Company brands, led by Coca-Cola, account for more than 35percent of total U.S. retail sales of soft drinks, a market share nearlyequal to that of its three largest competitors combined.

In 1981, the Division showed excellent growth in profits and marketshare for Coca-Cola. Unit sales of Coca-Cola USA's beverages at retailincreased in excess of 3 percent, more than the industry average, asbottlers of Coca-Cola continued to expand to new outlets, particularlydrugstores and mass merchandising centers. Shipment of soft drinksyrups and concentrates was up more than 4 percent for the year.

Fountain unit sales showed continued growth through some 4,000wholesalers and distributors to more than 200,000 food service outlets.More than 17,000 convenience stores now offer fountain service, andnearly 90 percent serve Company products.

Brand Coca-Cola further strengthened its position as the largest-selling soft drink in all market segments home, fountain and colddrink. Promotions such as "Cash Caps" and consumer cents-offcoupons contributed to this growth. Advertising, including commer-cials for local use featuring comedian Bill Cosby, stressed the originaland unmatched qualities of Coca-Cola.

Also posting impressive gains were Coca-Cola USA's sugar-free bev-erages, including TAB, the largest-selling diet product of any kind inthe world. Consumption of sugar-free soft drinks is expected to growby 10 percent a year during this decade, and the Company's brands arewell poised to participate fully in this growth.

Sprite, the Division's third largest-selling product, continued to growfaster than its competition in the popular lemon-lime category.Ramblin' root beer, in only its second year of test marketing, is alreadythe largest-selling root beer in New York, Portland and Seattle. MelloYello, Mr. PiBB and Hi-C non-carbonated soft drinks are the Division'sother major products.

The Company continued its U.S. leadership in packaging as testingof the half-liter plastic (P.E.T) bottle was expanded to more than 50markets. This light, disposable, single-serving container and the 16-ounce glass non-returnable bottle are gaining food store acceptance asconsumer packaging alternatives. Coca-Cola USA also began testing acost-saving, aluminum 12-ounce can which uses less aluminum for thesame capacity.

Top: Technical innovationssuch as a hand-held computercapable of recording extensivesales data have enabled theFountain Sales Department toincrease efficiency in meetingthe needs of its food servicecustomers.

Right: Have a Coke and a"thankyou" is what consum-ers will get when they pur-chase Coke from the new"Talking Vender," a coin-opera tea vending machinethat talks to customersthrough a computerized voicesynthesizer.

"Coke is it!" highlightsproduct quality

Demand for soft drinkson the increase

A highlight of the year's marketing innovations was the "TalkingVender," a coin-operated vending machine that speaks to customersthrough a computerized voice synthesizer developed exclusively forbottlers of Coca-Cola. Messages include "Hello, I'm a talking Coca-Colavending machine" and "Don't forget your change."

About 100 of the new venders were installed, and several thousandmore are expected to be in operation by the end of 1982. More than 100million people were made aware of the "Talking Vender" throughmedia publicity during the first week of its introduction.

On other fronts, the Company was named the official soft drinksupplier for the 1984 Olympic Winter Games in Sarajevo, Yugoslavia,the 1984 Summer Olympics in Los Angeles, the 1982 World's Fair inKnoxville, Tennessee, and the 1982 World Cup in Spain. The Companyalso announced it will present, with American Express Company, the"American Adventure," a part of the futuristic Epcot Center at WaltDisney World slated to open in October 1982 near Orlando, Florida.

The Company in February 1982 launched a new advertising cam-paign in the U.S. "Coke is it!" aimed at epitomizing the public'spreference for the total refreshment qualities of Coca-Cola.

The "Coke is it!" campaign focuses primarily on the superior qual-ities of Coca-Cola in addition to featuring the lifestyles of its consumers.At the same time, the theme reflects the more assertive stance now ap-parent throughout the Coca-Cola system while mirroring the mood ofAmerica in the 1980s a drive to be the best and demand the best.

As a commitment to the independent bottler franchise system, theCompany continues to assist in the transfer of franchises as oppor-tunities occur. Ownership transfers of franchises representing morethan 36 percent of the U.S. population have brought added experienceto the Company's already strong domestic bottler network.

In addition, bottlers representing approximately 85 percent of theCompany's domestic soft drink volume have signed franchise contractamendments which are contributing to the Division's profitability andproviding greater flexibility in local marketing activities.

Total domestic demand for soft drinks is projected to average slightlyunder a 4 percent annual increase in the 1980s. Research indicates thatalong with an overall increase in U.S. population, Americans of all agesnow consume more soft drinks than they did a decade ago. This patterncontinues until they reach their 60s. One of Coca-Cola USA's key objec-tives is to continue to outperform the industry's growth through ag-gressive marketing.

Top: In japan, a unique vend-ing machine which servesone-liter chilled bottles ofCoca-Cola has demonstratedexcellent sales and is quitepopular in home marketoutlets.

Right: The introduction ofCoca-Cola in cans gave im-petus to unit volume growthin Mexico, the second largestmarket hi the world for Com-pany products.

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New packages, flavorsincrease internationalmomentum

Sales volume up inEurope and Africa

New package and flavor introductions in key countries increasedmomentum in the Company's foreign operations in 1981, and low-calorie soft drinks continued to play an increasing role.

Bottlers in 1981 made substantial investments as part of the Com-pany's goal to strengthen the worldwide bottler network. LatinAmerica, in particular, achieved unprecedented bottler growth duringthe year through new plants and equipment.

In Mexico, the largest market for Company products outside the U.S.,bottlers committed an investment of approximately $100 million to theirbusinesses. Good results from this investment have been seen alreadyas Mexico accomplished an 8 percent full-year unit volume gain. Theintroduction of cans in 1981 further boosted sales in that market.

Cans also were introduced during the year in Colombia, where unitvolume rose by more than 5 percent.

New packaging and flavors contributed to market share growth inthe major markets of Brazil and Argentina, although unit volume wasbelow 1980 levels due primarily to the economic environment. TheCompany introduced cans in Brazil and sugar-free Sprite in Argentina,where it showed excellent growth.

In Chile and Venezuela, the Company introduced TAB to further tapthe potential for low-calorie soft drinks in Latin America.

Latin America averaged an excellent 10 percent annual unit growth inthe 1970s and now represents about 25 percent of the Company'sworldwide unit sales volume. Brazil, in particular, with a median ageunder 18, typifies the very young population among Latin Americanmarkets that provides outstanding growth opportunity for sales ofCompany products.

The Europe and Africa Group achieved favorable soft drink sales vol-ume growth in several regions in 1981 despite a depressed economicenvironment.

In Germany, growth in unit volume outperformed the industry andstrengthened the Company's position as the market leader. The activeGerman market is the third largest in the world for Company products,which enjoy a high degree of brand awareness. The Company con-tinues to hold by far the lead ing share of the fast-growing cola segment.In addition, successful test marketing was completed during the year inpreparation for a major line extension of the Lift brand to enhance theflavor segment of the German soft drink industry.

Italian sales volume surpassed the prior year by more than 15 per-centmore than triple the industry growth rate boosted by the suc-cessful national roll-out of Sprite, local introductions of 1.5-liter and2-liter P.E.T. bottles for Coca-Cola and intensive advertising.

Unit volume in Spain increased moderately in 1981, considered agood performance under the prevailing difficult economics and the dis-appointing results obtained by the soft drink industry as a whole. Theintroduction of the Plasti-Shield bottle and 2-liter P.E.T. to the Spanishmarket underscored the Company's continuing leadership in thisregion.

The Company enhanced its market leadership in 1981 in Belgiumwith an 8 percent unit volume gain, partly due to the introduction ofP.E.T. bottles. In Switzerland, a strong x'olume increase of 8 percent ex-ceeded industry growth.

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Top: Throughout Germany,bottlers have joined togetherto form cost-efficient canningcooperatives. In Bruchsal, acanning plant owned by 15franchisees in southwestGermany can fit! 1,200 cans!minute with Coke and otherCompany products.

Right: A sculptor puts finish-ing touches on The Spirit ofDiscovery, one of the 12 fig-ures that will welcome visitorsto the "American Adventure"pavilion at the Epcot Cen ter, anew futuristic community atWalt Disney World. Scheduledto open in October 1982, theattraction is co-sponsored byThe Coca-Cola Company andAmerican Express Company.

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Joint ventureestablished inthe Philippines

Market share gainsachieved in Japan

Company's growthexceeds market ratein U.S.

Africa represents another growth region, particularly in Nigeria,where substantial sales gains were achieved during the year. Im-plementation of a major bottler expansion program will continue in1982 to meet demand in this market, which remains under-supplied. InSouth Africa, the introduction of the 1.5-liter returnable bottle in Johan-nesburg and Cape Town received very favorable consumer acceptanceduring the year, and the launching of a new Fanta tangerine flavor washighly successful. Sales volume in South Africa increased more than 10percent in 1981.

In the Pacific Region, the Company and the San Miguel Corporationof the Philippines established a joint venture company, Coca-ColaBottlers Philippines, Inc. The Company's investment in the new bot-tling operation underscores belief in the growth of the Philippineeconomy and the market for Company products.

The full-year sales trend for Coca-Cola in the Philippines was posi-tive, benefiting from the successfully completed roll-out of a 12-ouncebottle. Also introduced in 1981 was a new resealable 1-liter package forCoke, the first of its kind in the history of the Philippine soft drinkindustry.

Unit volume gained nearly 10 percent in 1981 in Australia, highlight-ing performance in that market.

In Japan, significant changes in marketing approach and a realign-ment of management helped to offset continuing sluggish economicconditions. For the year, soft drink sales were slightly below 1980 levels,although Company products continued to gain market share. Increasedpromotional activities, coupled with new product and package intro-ductions, are expected to boost unit sales volume in Japan during 1982.

Long-term signs of opportunity in the Far East remained good duringthe year, and the Company opened its first bottling plant and brokeground for a second in the growing new market of the People's Republicof China. The potential of this vast, heavily populated region issubstantial.

In Canada, where recent government restrictions have held back theindustry, approved use of the dietetic sweetener aspartame in softdrinks, along with the re introduction of the 1.5-liter package, began topump new life into that market. Sales volume of Company products in-creased approximately 5 percent, ahead of industry growth.

During the 1970s, the worldwide soft drink industry showed salesvolume growth well in excess of real economic growth. In the U.S., thesoft drink market grew at an annual rate of 4 percent. The Company'sgrowth rate was even greater, increasing its share of the domestic softdrink industry. Foreign unit growth over the last decade averaged 8percent a year for the Company's combined operations, outpacing the 6to 7 percent industry increase. We strongly believe that future growth,while it may be somewhat more cyclical in nature due to a more volatileeconomic environment, will continue strong, enabling the Company tomeet its overall financial objectives.

Management expects that aggressive and innovative marketing,backed by new packaging and solid bottler investment, will enable theCompany to take full advantage of the worldwide opportunities for itssoft drink products in the decade of the 1980s.

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14

FOODS AND WINE GROUP: New Products Strengthen Solid Base

Minute Maid attainsrecord market share

New apple juice gainsgood share in nationaldistribution

Minute Maid frozen concen-trated orange juice again out-sold all other frozen orangejuice concentrates and enjoyeda record market share.

Growth of existing products and excellent consumer acceptance ofnew ones resulted in a very successful year for the Foods Division, thelargest unit in the newly formed Foods and Wine Group. Although bothcitrus and coffee crops were damaged by freezes, 1981 annual salesrevenue reached a record high. Profits also hit an all-time high, show-ing a strong increase over 1980.

Headquartered in Houston, the Foods Division maintains this stronggrowth through aggressive, innovative marketing and consistent highquality beverage brands, which include: Minute Maid chilled and fro-zen concentrated juices, ades and lemonade crystals; Snow Crop FiveAlive chilled and frozen concentrated juice drinks; Bright & Early fro-zen concentrate; Hi-C fruit drinks; and Maryland Club and Butter-Nutcoffees.

The Division operates 11 production facilities throughout the U.S.and utilizes a system of co-packers who produce and distribute prod-ucts in areas where the Division does not have its own manufacturingcenters.

Citrus is the keystone of the phenomenal growth of the Foods Divi-sion. During 1981, however, the citrus industry suffered somewhat dueto a serious freeze in central Florida in mid-January which temporarilydisrupted fruit supply. The resulting price increases within the citrusindustry caused overall unit volume declines in the frozen concentratedorange juice category.

Retail sales of Minute Maid frozen concentrated orange juice indi-cated the product continued to be by far the leader in the frozen orangejuice category as it posted a record market share level. During the pastfive years, Minute Maid orange juice in cartons has achieved an annualgrowth rate of 44 percent, doubling its share of retail sales. Growth con-tinued in 1981 in spite of the January freeze.

The successful introduction of new products has been a significantfactor in the continuing growth of the Foods Division. In 1981, thestrength of the Minute Maid brand name was reflected in the successfulnational introduction of new Minute Maid frozen concentrated applejuice. The frozen apple juice category was one of the fastest-grow ingcategories in supermarkets during the year, with retail sales of over $100million, an increase of 58 percent over 1980. The Division began na-tional distribution of Minute Maid frozen concentrated apple juice inlate spring and obtained more than a 15 percent share during the prod-uct's first six months in the marketplace.

Another new Minute Maid product also showed steady sales in-creases in 1981. New Minute Maid reduced acid orange juice, a uniqueproduct developed for consumers who prefer an orange juice with lessacid, was successfully tested in Houston and Dallas/Ft. Worth, provingits viability in the marketplace. The Foods Division was a pioneer indeveloping the specialized technology for this product, for which theU.S. Food and Drug Administration now has issued a standard ofidentity.

Snow Crop Five Alive, made from five fruit juices, is one of the mostsuccessful new products introduced by the Division during the pastdecade. Initially placed on the market in late 1979, the frozen concen-trated fruit beverage became one of the Division's largest profitgenerators. Its overwhelming success prompted the immediate roll-out

15

Top: Evaporators producingconcentrate for Minute Maidfrozen concentrated orangejuice at the Foods Division'sAuburndale, Florida, plantarc capable of removing250,000 pounds of water fromoranges each hour. The plantcan produce about 45,000cases of product a day.Right; Snaiv Crop Five Alive,an all-day family beveragecombining the flavors of fivefruit juices, has become amajor profit con tribu tor to theFoods Division. It has been innational distribution for onlytwo years.

16

New Tetra Erik packaging of the '80s

Coffee products showunit volume growth

of a second flavor, fruit punch, which completed its first full year of na-tional distribution in 1981. In addition, the original flavor of Five Alivewas developed in a refrigerated, ready-to-serve form and placed in na-tional distribution in April 1981.

To ensure the Division's ability to meet increasing demand for itschilled and frozen products, significant capital funds were expendedduring the year to increase production capacity. With the constructionof a completely new chilled juice plant at Paw Paw, Michigan, and theinstallation of new, high speed equipment at other plant sites, chilledproduction capacity was increased by 80 percent. Frozen packagingcapacity was increased by more than 15 percent with the installation of anew, frozen packaging line at the Auburndale, Florida, plant.

In the fruit drink category, Hi-C maintained its number one position,although the overall fruit drink market continued to decline in 1981. Thenew flavor introduction of Hi-C apple cranberry drink, along with anew marketing strategy initiated at mid-year, strengthened sales trendsof Hi-C ready-to-serve fruit drinks in the last half of the year.

One of the most exciting new market tests launched by the Foods Di-vision in 1981 was Hi-C in the Drink Box, using aseptic packagingknown as Tetra Brik. The Division is among the first U.S. companies tooffer aseptically packaged fruit drinks and expects to boost Hi-C fruitdrink sales in 1982 through this innovation.

Widely used for many years in European countries, the aseptic pack-aging process was approved recently for use in the U.S. by the Food andDrug Administration. The process involves filling a sterilized containerwith separately sterilized product which is then sealed airtight. Asepti-cally packaged products require no refrigeration or preservatives andhave a shelf life of up to six months.

In 1981, Hi-C fruit drink was distributed in a 250 ml Terra Brik packagein two northeastern markets in the three most popular flavors: orange,grape and fruit punch. The convenient package with attached straw hasbeen very popular among children who find it easy to handle and useaway from home.

Both Butter-Nut and Maryland Club roast and ground coffees main-tained their market positions during 1981, as a result of revitalizationprograms initiated in late 1980. During the year, unit volume for bothbrands of coffee showed growth, reflecting the new marketingstrategies and a stronger roast and ground category. Butter-Nut is dis-tributed primarily in the Midwest, and Maryland Club is marketed inthe southwestern U.S.

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Top'.Bountiful apple harvestshave been put to good use inMinute Maid's neic frozenconcentrated apple juice. In-troduced nationally in '1981,the product already enjoys ahealthy share of the market inthis fast-growing category.Right: The Winklerl FlexibleDivision of Presto Products,Incorporated, continues to be aleading supplier of straws andplastic cutlery to the food serv-ice industry, hospitals andother institutional facilities.

18

Canadian operationsexpanding

The Foods Division takes advantage of another marketing opportu-nity through its Foodservice Department. The Division taps the currentlifestyle trend toward consuming food away from home by providingrestaurants, hotels, colleges, hospitals and other institutions with a var-iety of Foodservice products. Single-serve sizes of fruit juices currentlyare being introduced under the Minute Maid brand to complete a fullline of citrus forms and packages provided by the Foodservice Depart-ment. These additional sizes also allow the Division to expand market-ing efforts to the airline and fast-food industries. Through a worldwidenetwork of brokers, Foods Division products are sold to military com-missaries and exchanges in the U.S. and abroad.

Highlighting foreign operations, the Division's business in Canadahas continued to expand with strengthening of the Minute Maid frozenconcentrated orange juice franchise. During the year, Five Alive was in-troduced successfully into Canadian markets. In addition, exports fromSucos do Brasil, a joint venture between the Foods Division, Brazil andSucocitrico Cutrale S/A, are encouraging. The Foods Division continuesto provide both technical and marketing support to other Company Di-visions and affiliates around the world as branded juice and drinkproducts are introduced.

Belmont Springs Water Co., Inc., a Company subsidiary managed bythe Foods Division, also reported an outstanding year. Located inBelmont, Massachusetts, this company provides bottled water for resi-dential and industrial use.

The history of the Foods Division comprises a record of vigorousgrowth. In 1982, The Coca-Cola Company anticipates that trend to con-tinue in the varied Foods Division operations.

New products showgrowth potential

Plastic Products

In 1981, Presto Products and Winkler/Flexible Products, Inc., werecombined into a single reporting unit, Presto Products, Incorporated,within the newly formed Foods and Wine Group.

Presto Products, Incorporated, headquartered in Appleton, Wiscon-sin, is a leading private label supplier of plastic wraps, bags and otherdisposable plastic film products to retail customers. In addition, Prestosupplies plastic cutlery and straws to food service chains, hospitals andother institutional facilities through the Winkler/Flexible Division.

Unit volume and sales growth for these operations continued strongin 1981, although earnings were lower due to general economic andindustry conditions.

Presto is expected to benefit from several new products introduced inthe past year. In addition, sales increases in moist towelettes and indus-trial pallet stretch wrap, two relatively new product areas for the Com-pany, are expected to maintain substantial growth in 1982.

19

20

New Light winesintroduced

Major expansionnears completion

Premium grapes in UpperMonterey County, California,are being harvested in increas-ing numbers for delivery to theCompany's expanded produc-tion facilities m Gonzates,where work nears completionon a 300,000-plus square footbuilding. The facility wiUsupport the phenomenalgrowth of Taylor CaliforniaCellars.

The Wine Spectrum

Wine is the fastest-growing commercial beverage in America and isexpected to remain so throughout the decade of the '80s.

During 1981, unit sales volume of The Wine Spectrum increased morethan 20 percent, over three times the industry rate. Through substantialcommitments to product quality, aggressive marketing, and newfacilities, The Wine Spectrum has earned recognition as a dynamiccompany in the exciting U.S. wine industry.

Marketing keyed to product endorsement and comparative evalua-tion advertising resulted in excellent performance by our wineries andbrands during the year. These include: Taylor California Cellars pre-mium generics, varietals and Lights; Sterling Vineyards estate-bottledvintage varietals; The Monterey Vineyard vintage varietals, CaliforniaClassics and Special Signature wines; The Taylor Wine Company LakeCountry and other premium table wines, New York State champagnes,sparkling wines, vermouths, and dessert wines; Great Western WineryNew York State champagnes, varietals and Solera dessert wines; andCinzano fine Italian wines.

Taylor California Cellars continued to lead in sales and innovation. In1981, the first lower-calorie wine introduced in the U.S., Taylor Califor-nia Cellars Light Chablis of California, was tested in 12 markets.Targeted for active, diet-conscious Americans, it was backed by heavymedia support based on the theme: "the perfect time for your otherwine. "Favorable initial results led to national introduction in early 1982of Taylor California Cellars Light Chablis, Rhine and Rose.

Also introduced in 1981 were Taylor California Cellars Dry Red andDry White wines for those consumers who prefer the very dry, tra-ditional style of many European wines.

The success of the "Better Wines Judge For Yourself" advertisingcampaign on behalf of Taylor California Cellars generic wines Chab-lis, Rose, Burgundy, and Rhine continued as these wines grew inconsumer awareness and market share. Wine in 18-liter "bag-in-box"packages was introduced to service the market for on-premise housewine. Other packaging innovations included Taylor California CellarsChablis and Burgundy in cans. In addition to providing individualservice, the cans are shatterproof, quick-chilling and lightweight, mak-ing them ideal for airlines. Following a test period, Delta Air Linesbegan serving wine in cans on all its flights in early 1982.

A major expansion of production facilities in California to supportthe rapid growth of Taylor California Cellars will be completed by earlysummer. The ultra-modern, 300,000-plus square foot building includes11 million gallons of stainless steel fermentation and storage tank capac-ity, three bottling lines, a large quality control laboratory, computerfacilities, and associated support systems.

The Taylor Wine Company, Inc., and Great Western Winery main-tained their eminence among New York State wine producers as bothintroduced new wines to keep pace with consumers' evolving winetastes. Released in test markets during the year, Taylor Lake CountrySoft Red, Pink and White wines achieved immediate consumeracceptance. These low-alcohol, slightly carbonated, semi-dry wines are

21

Top: Developed to meet thefast-growing demand forlower-caloric beverages foractive, diet-conscious Ameri-cans, Taylor California CellarsLight Cnablis of Californiabecame the first lower-caloriewine introduced in the U.S.during 1981.

Right: Great Western's newSpecial Selection varietalwines, the winery's first entryin the "Special" category,have received rave reviewsfrom wine critics.

22

Neiv entriesenhance recognition ofNew York State wines

Sterling remainsamong theworld's finest

the first produced in the U.S. to compete directly with Italian Lambrus-cos, the single largest segment of the imported wine market.

Great Western's new line of Special Selection varietal wines receivedexcellent reviews from America's wine writing community during theyear. These TOO percent New York State vintage-dated varietals were thefirst Special Selection wines released in the 121-year history of the win-ery. They include Verdelet, Aurora Blanc, Rose of de Chaunac, and VidalIce Wine. Produced from what is acknowledged to be the greatest vin-tage recorded in the history of New York winemaking, they have con-tributed significantly to the emerging recognition of New York Statewines. Taylor and Great Western remain the largest producers of pre-mium sparkling wine in America as their market share in the dessertwine category continues to grow.

The Monterey Vineyard in Gonzales, California, situated in the pre-mium grape producing area of Upper Monterey County, continues toproduce outstanding varietal wines including Chardonnay, FumeBlanc, Chenin Blanc, and Riesling.

An information and education program, oriented toward knowl-edgeable wine consumers, is under way to increase awareness of thesemoderately priced, premium wines. The Classic California vintagevarietal wines of The Monterey Vineyard also continue to grow in popu-larity with America's wine connoisseurs. The California Classics line,in particular, has strengthened the multi-varietal blend market and isgenerally considered a superb value for outstanding quality.

Sterling Vineyards, located near Calistoga in Napa Valley, California,now markets exclusively estate-bottled, vintage-dated Chardonnay,Sauvignon Blanc, Merlot, and Cabernet Sauvignon. In 1981, itsDiamond Ranch Vineyard, perched along steep terraces dug in thefoothills of the Mayacamas Mountains, began producing top qualitygrapes. Coupling traditional winemaking practices similar to those ofthe great French estates of Burgundy and Bordeaux with moderntechnology, Sterling Vineyards wine is recognized as among the world'sfinest.

The Wine Spectrum's record of achievement is strong and exciting,establishing it as a major force in the industry. In 1981, sound manage-ment principles, forceful marketing and judicious financial planningpoised The Wine Spectrum to further improve upon this outstandinggrowth.

23

BOARD OF DIRECTORS

C.H.CANDLER, JR.Atlanta, Ga.RetiredANNE COX CHAMBERSAtlanta, Ga.Chairman,Atlanta NewspapersTHOMAS H.CHOATENew York, N.Y.RetiredGEORGE S. CRAFTAtlanta, Ga.RetiredCHARLES W. DUNCAN, JR.Houston, TexasInvestments

KB. EISENBERGRoswell, Ga.RetiredROBERTO C. GOIZUETAAtlanta, Ga.Chairman, Board of Directors,

and Chief Executive OfficerThe Coca-Cola CompanyE. GARLANDHERNDONJR., M.D.Atlanta, Ga.Vice President for Health AffairsEmory UniversityLINDSEY HOPKINSMiami, Fla.Honorary Chairman,

Board of Directors,Security Trust Company

JOSEPH W. JONESAtlanta, Ga.Senior Vice President and

Assistant TreasurerThe Coca-Cola CompanyDONALD R.KEOUCHAtlanta, Ga.President and

Chief Operating OfficerThe Coca-Cola CompanyJOHN T. LUPTONChattanooga, Tenn.Chairman, Board of Directors,

and Chief Executive Officer ofGreat Western, Phoenix and

Denver Coca-Cola BottlingCompanies

DONALD F.McHENRYWashington, D.C.University Research

Professor of Diplomacy andInternational Affairs

Georgetown UniversityJAMES D. ROBINSON 111New York, N.Y.Chairman, Board of Directors,

and Chief Executive OfficerAmerican Express Company

JAMES M.S1BLEYAtlanta, Ga.Partner in the law f i rm

of King & SpaldingWILLIAM B.TURNERColumbus, Ga.Vice Chairman, Board of Directors,

and Chief Executive OfficerW.C. Bradley Company andChairman of the Board,W.C. Bradley Enterprises, Inc.JAMES B. WILLIAMSAtlanta, Ga.Vice Chairman, Board of

Directors, and PresidentTrust Company of GeorgiaGEORGE W. WOODRUFFAtlanta, Ga.RetiredR.W. WOODRUFFAtlanta, Ga.Chairman Emeritus,

Finance CommitteeThe Coca-Cola Company

24

CORPORATE OFFICERS

ROHKRTOC.GOIZUETAChairman, Board of Directors,

and Chief Executive OfficerDONALD R.KEOUGHPresident and

Chief Operating Officer

SAMAYOUBSenior Executive Vice President

and Chief Financial OfficerCLAUS M. HALLESenior Executive Vice PresidentExecutive Vice PresidentsA.GARTHHAMBYIRA C. HERBERT

Senior Vice PresidentsH.T. CIRCUITOVID R. DAVISBRIAN G.DYSONRICHARD D. FORDM.A.GIANTURCOJOSEPH W. JONESROBERT A. KELLERR.V WALTEMEYER

Vice PresidentsWILLIAM W. ALLISONEUGENE V. AMOROSOPAUL BARRONH.O. BERKESSELJAMES R BRANDHORSTJ.ALLEN BRENTWILLIAM R. BUEHLERROBERT L. CALLAHAN, JR.LEOE. CONROYPAULL. DILLINGHAMSERGIO DOLFIMURRAY D. FRIEDMANROBERT D. GUYM. DOUGLAS IVESTERW.GLENN KERNELGLORIA E.LEMOSEARL T.LEONARD, JR.DIANNE McKAICS.W. MAGRUDERALEXMALASPINAJONATHAN E. PARKERC.W. PRATTJ. WILLIAM PRUETT, JR.MAURY C. ROEDOUGLAS A. SAARELCOREY R. SMITHHARRY E.TEASLEY, JR.CARL WARE

ROBERTA. KELLERGeneral CounselCOREY R. SMITHTreasurer

M. DOUGLAS IVESTERControllerRICHARD D. FORDSecretary

25

Headed by Roberto C. Goizueta (foreground), the new corporate management team includes (second row, left to right) Donald R. Kcouvh(third row) IraC. Herbert, Robert A. Keller, R.V. Waltemeyer, H.T. Circuit; (back row) Brian G. Dyson, A. Garth Hamby, andClausM

26

OFFICERS-OPERATING UNITS

Coca-Cola USA

BRIAN G.DYSONPresident

Senior Vice PresidentsHERBERT A. ARNOLDLAWRENCE R. COWARTTHOMAS E. DANNEMILLERMARVIN W. GRIFFIN, JR.H. RICHARD HILLER, JR.

Vice PresidentsANTON AMONM.W. BATESJ.A. BLANCHARDCHARLENE C. BREWTONHENRY J.COCKERILLALBERT E.DAVISWALTER H. DUNNR.BRUCE GILBERTJOHNJ.GILLINA. GORDON GRAYCHARLES D. HARTMANNGARY P. HITECHARLES K. HOLMES, JR.HENRY F.McGILLGENE D.RICHARDSONL.NED ROBERTSWILLIAM R. SALTMERROYG. STOUTAUREL E.STUART, JR.RAYMOND R. THOMASCHARLES H. TURNQUISTDONALD J.ULRICH, JR.JACOB H. WALLERJAMES F. WILLIAMSSERGIO S.ZYMAN

PHILIP J. CARSWELL, JR.Secretary and Treasurer

LEO W. GLYNNControIIer

Coca-Cola Ltd.

NEVILLE W. KIRCHMANNChairman of the Board,

President andChief Executive Officer

Vice PresidentsJOHNJ.BRENNANDONALD A. BURWASHJAMES A. DRUMPETER E. LAYCOCKJOHN MAIRW. RONALD PRINGLEDONALD F. SENIORDAVIDA.STEELEJOHNN. VOUDOURIS

DONALD A. BURWASHSecretary and General Counsel

JOHN M A I RTreasurer

Coca-Cola Europe-Africa-Pacific

CLAUS M. HALLEPresident

Europe-AfricaKLAUS PUTTERExecutive Vice President

ALWINJ. BOLLERJ.WAYNE JONESFRIEDRICH J. MEYERJ.M.S.DE VICUNAANTHONY YOUNG

Vice PresidentsA. ERNESTO CAMINORALPH H. COOPERROBERT L. DELVILLEGEORG FLEISCHERERICH A. KREUSCHBERNARD J. LAPORTEGILBERT J. MARAZZINIAREND W. NOLTESHENRY A. REIDEVERWIJN VAN STEEDEN

PacificSenior Vice PresidentsPAULL. DILLINGHAMROBERT PATERSON

Vice PresidentsJOHN HUNTER, JR.PETER L. LEEMIGUEL B.MACIAS

Coca-Cola (Japan) Company,Limited

MASAOMI IWAMURAChairman

JOHN W. GEORG ASPresident and

Chief Executive Officer

Executive Vice PresidentsWELDON H.JOHNSONTADASHI SHIINA

Senior Vice PresidentsT.R.G. GUESTDENNIS T. LEAKEGEORGE B.O'HAVER, JR.NOBORU SATOWESLEY M. THOMPSON

Vice PresidentsTAKASHI TOGAMIAKIRA UYENO

27

OFFICERS-OPERATING UNITS (continued)

Coca-Cola Latin AmericaH.T. CIRCUITPresidentSenior Vice PresidentsSTANLEY J.CLARKJUAN M. DIAZTOMAS ORNSTEIN

Vice PresidentsERICL. ADAMSRAYMOND W. DE LAGRAVEJOSE LUIS GONZALESLIONEL A. HUDSONHEINZ H.HUEBNERROLANDO S. SAFRANAJOHN L. SHURMAN

Foods DivisionB.M. MIDDLEBROOKSChairmanEUGENE V. AMOROSOPresident and

Chief Executive Officer

Senior Vice PresidentsMATT S. MILLERALBERT G.MUNKELTCLINTON E. OWENS

Vice PresidentsW. HAROLD BROADWAYTHOMAS C. CLEVELANDNORMAN W. JENKINS, JR.JAY M. MOWERH. GRADY TILLER, JR.GEORGE W. TRUITT, JR.MAYNARDC. WHEELER, JR.HUGH W. THOMPSON IIITreasurer

STEPHEN J. SMITHControllerJOHN N. TOUCHSTONESecretary and General Counsel

Presto Products, Incorporated

JOHN E. LYNCHChairman of the Board,

President andChief Executive Officer

Executive Vice PresidentsLAWRENCE W. WIRTHPresident, Presto Division

PAUL M. WINKLERPresident, Winkler/FIexible

Division

Senior Vice PresidentsFRANK H. HECKRODTCLARENCE E. WALLACEGARY W. HOWARDControllerCLARENCE E. WALLACESecretary and Treasurer

The Wine SpectrumHARRY E.TEASLEY, JR.PresidentVice PresidentsMICHAEL V. CHEEKWILLIAM E. CULHANETHOMAS H. MULLER, JR.RICHARD G. PETERSONPETERS. SEALEYMARGARET L. STERNMICHAEL P. W. STONE

THOMAS H. MULLER, JR.Treasurer

STEVEN B. GOLDGeneral Counsel

28

FINANCIAL REPORTThe Coca-Cola Company and Subsidiaries

30 Selected Financial Data32 Management's Discussion and Analysis of Results of

Operations and Financial Condition34 Consolidated Statements of Income34 Consolidated Statements of Retained Earnings35 Consolidated Balance Sheets36 Consolidated Statements of Changes in Financial

Position37 Notes to Consolidated Financial Statements41 Report of Independent Accountants42 Report of Management43 Quarterly Data43 Cash Dividends43 Stock Market Information44 Industry Segments45 Operations in Geographic Areas46 Supplemental Information on the Effects of

Changing Prices48 Other Information

29

SELECTED FINANCIAL DATA (a) (In thousands except per share data)The Coca-Cola Company and Subsidiaries

YEAR ENDED DECEMBER 31,Net sales (b)Gross profit (b)Operating income (b)Income from continuing operations

before income taxesIncome taxes (b)Income from continuing operationsNet income

Average shares outstanding (c)Income per share from continuing operations (c)Net income per share (c)Dividends per share (c)At year-end:

Total assetsStockholders' equityCash and securitiesTotal debtLong-term debt

Income from continuing operationsto net sales

Income from continuing operationsto average stockholders' equity

Capital expendituresDepreciation (b)

1981$5,889,0352,581,461

798,586

807,254360,184447,070481,782

123,610$ 3.62

3.902.32

$3,564,7812,270,772

393,081232,440137,278

7.6%

20.6%$ 329,606

136,868

1980$5,620,7492,423,016

741,155

736,727330,409406,318422,108

123,578$ 3.29

3.422.16

$3,405,9582,074,738

289,071228,336133,221

7.2%

20.3%$ 293,071

131,042

1979$4,688,7392,105,529

690,671

713,590318,443395,147420,120

123,549$ 3.20

3.401.96

$2,938,0411,918,704

208,536139,18930,989

8.4%

21.6%$ 381,401

110,288

1978$4,095,3181,842,106

650,269

664,079302,694361,385374,692

123,503$ 2.93

3.031.74

$2,582,8091,739,610

369,31769,14115,231

8.8%

21.8%$ 306,022

91,275

1977$3,691,1961,517,937

580,382

593,976273,028320,948331,163

123,464$ 2.60

2.681.54

$2,254,4901,578,034

417,98257,30415,303

8.7%

21.3%$ 264,368

79,668

1976$2,989,0001,341,239

520,811

538,567251,031287,536294,130

123,418$ 2.33

2.381.325

$2,006,8381,434,555

402,85051,64910,762

9.6%

21.0%$ 190,607

69,563

1975$2,833,6731,165,051

460,389

467,304224,529242,775248,785

123,356$ 1.97

2.021.15

$1,801,0231,302,135

409,19042,48215,777

8.6%

19.5%$ 145,320

66,226

1974$2,483,145

987,718359,465

377,571175,307202,264(d)203,774(d)123,247

$ 1.64(d)1.65(d)1.04

$1,610,4901,189,888

260,10568,59911,862

8.1%

17.6%$ 153,720

58,618

1973$2,123,8971,005,891

404,249

416,605194,763221,842223,747

123,130$ 1.80

1.82.90

$1,461,2491,109,128

308,05424,3618,317

10.4%

21.1%$ 126,874

58,275

1972$1,854,242

890,432370,401

377,925180,580197,345198,406

122,832$ 1.61

1.62.82

$1,290,408990,860241,02934,773

7,123

10.6%

21.0%$ 119,152

54,910

Notes:(a) Includes results for Presto Products, Incorporated and The Taylor Wine Com-

pany, Inc., which were combined with the Company in transactions accountedfor as poolings of interests in 1978 and 1977, respectively.

{b) Amounts for 1972-1980 have been restated to exclude the results of Aqua-Chem,Inc., and Tenco Division, which were sold in September 1981 and February1982, respectively, and accounted for as discontinued operations.

(c) Adjusted for a two-for-one stock split in 1977.(d) In 1974, the Company adopted the last-in, first-out (LIFO) accounting method

for certain major categories of inventories. This accounting change had the ef-fect of reducing net income in 1974 by $31.2 million ($.25 per share).

S5.B89$5,621

$4,689

54,095

S3 E91

52,989

Net Sales (Millions) Operating Income (Millions) Income Per Share From Continuing Operations Dividends Per Share

52,483

52,124

72 73 74 '75 '76 77 '78 79 '80 '81 72 73 74 '75 76 77 78 79 '80 '81 72 73 74 75 76 77 78 79 '80 '81

30

$2,271Stockholders' Equity at Year-End (Millions) Cash and Securities (Millions)

Total Debt Long-Term Debt

72 73 '74 75 76 77 78 '79 '80 '81 72 73 74 75 76 77 7B 79 '80 '81

I I I I I I I I

I I I I I I I I

I I I I I I I

I I I I I I I I

72 73 74 75 76 77 78 79 '80 '81

31

MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL CONDITIONThe Coca-Cola Company and Subsidiaries

For additional information concerning the Com-pany's operations, cash flow, liquidity and capitalsources, this analysis should be read in conjunc-tion with the Letter to Shareholders and theinformation on pages 34 through 40 of thisAnnual Report. For information relating to theeffects of inflation on the operations of theCompany see pages 46 to 47, "Supplementary In-formation on the Effects of Changing Prices."Additional information concerning operations indifferent industries and different geographicalareas is presented on pages 44 to 45.RESULTS OF CONTINUING OPERATIONS1981 versus 1980

Statements of Income: Net sales increased4.8% from the prior year. Soft drinks, comprising80% of net sales, increased 3.6% worldwide as aresult of increases in unit sales, changes in theproduct mix, and price increases, partially offsetby lower foreign exchange rates. These rates ofincrease are substantially less than in 1980 be-cause of lower sugar prices which reduce net salesand cost of sales in the U.S. and for Company-owned bottling operations outside the U.S.,without a corresponding impact on gross profit.Soft drink uni t sales increased in the U.S.,Canada, Latin America, Europe and Africa anddecreased slightly in Japan and the Pacific areas.Net sales of non-soft drink products increased9.7% versus 1980.

Gross profit increased 6.5% from 1980, due tohigher un i t s a f e s and improved per un i tprofitability.

The 6.0% increase in selling, administrativeand general expenses reflects higher advertisingand promotional expenses for soft drinks, wineand citrus products and the general effect of infla-tion. Expenditures for media advertising were$414 million in 1981 and $395 million in 1980.

Operating income, which increased 7.7% over1980, was adversely affected by the translation offoreign earnings into U.S. dollars at lower rates ofexchange in 1981.

Interest earned in 1981 increased from the prioryear due to higher interest rates and higher aver-age invested balances. Interest expense increasedover the prior year due primarily to the effects ofhigher interest rates in the U.S.

Net other deductions increased $14.2 milliondue mainly to losses on balance sheet revalua-tions caused by lower exchange rates in Europeand Africa.

Profitability Ratios: Income from continuingoperations as a percentage of sales was 7.6% in1981, compared to 7.2% in 1980. The return onequity (income from continuing operations as apercentage of average stockholders' equity) was20.6% in 1981, compared to 20.3% in 1980.

The increase in return on sales was due primar-ily to higher gross margins, lower sugar pricesand programs installed by management to controloperating expenses.

1980 versus 1979Statements of Income: Net sales increased

19.9% from the prior year. Soft drinks, compris-ing 80% of net sales, increased 20.1 % worldwidedue to a 3% increase in unit sales, changes in theproduct and package mix and higher sugarprices; changing sugar prices affect net sales andcost of goods sold in the U.S. and for Company-owned bottling operations outside the U.S.,without a corresponding impact on gross profit.Soft drink unit sales in the U.S. increased by 2%over 1979 levels and would have increased moreexcept for the effects of bottlers and fountainwholesalers building stocks of syrups and con-centrates in December 1979 in anticipation ofJanuary 1980 price increases. Soft drink unit saleswere well ahead of 1979 levels in Canada, LatinAmerica and Europe/Africa, but were below 1979levels in the Pacific Group primarily as a result ofthe economic environment in Japan and the FarEast. Net sales of non-soft drink products in-creased 18.9% versus 1979.

Gross profit increased 15.1% from 1979, due tohigher unit sales and increased gross profit perunit. Gross profit increased at a lesser rate thansales in 1980, mainly because of significantlyhigher sugar prices.

Selling, administrative and general expensesincreased 18.9% in 1980. The increase reflects ex-panded marketing programs, increased expensesassociated with the Company's Atlanta officecomplex and the effects of general inflation.Media advertising expenditures were $395 mil-lion in 1980 compared to $342 million in 1979,reflecting increased advertising of soft drinks,wine and citrus products.

Interest earned in 1980 increased from the prioryear due to higher interest rates, partially offsetby lower average invested balances. The increasein interest expense was due to higher interestrates and increased borrowings.

32

MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL CONDITION (continued)

Profitability Ratios: Income from continuingoperations as a percentage of sales was 7.2% in1980, compared to 8.4% in 1979. The return onequity (income from continuing operations as apercentage of average stockholders' equity) was20.3% in 1980, compared to 21.6% in 1979.

The decline in return on sales was due primar-ily to higher raw material costs, primarily sugarand concentrate ingredients, as well as increasesin marketing expenditures on soft drinks, wineand citrus products.

The decline in return on equity from 1979 to1980 was due primarily to the relatively small in-crease in net income.

RESULTS OF DISCONTINUED OPERATIONSThe Company's subsidiary, Aqua-Chem, Inc.,

was sold in the third quarter of 1981, resulting in anet gain on the sale of approximately $29 millionor 6% of net income. In addition, the Companysold its Tenco Division on February 4, 1982, forapproximately book value. Income from discon-tinued operations accounted for 1.2% of netincome in 1981, compared to 3.7% in 1980 and5.9% in 1979.

FINANCIAL CONDITIONSWorking Capital and Liquidity: Working capi-

tal was $630 million at December 31, 1981, a 12%increase over 1980. Cash and marketable securi-ties were $340 million at December 31,1981, an in-crease of 47%, while current debt was $95 million,unchanged from 1980. The increase in marketablesecurities and the decrease in accounts receivableand inventories are due primarily to the sale ofAqua-Chem, Inc., and management programsinstalled in 1981 to improve control over workingcapital. At December 31, 1980, working capitalwas $561 million, a 33% increase over 1979, due

primarily to the issuance of $100 million in longterm debt. Proceeds from the issuance of the debtwere used to liquidate certain short-term borrow-ings and at year-end were largely invested inmarketable interest bearing certificates.

The Company's major source of working capi-tal is operations. The Company uses bank credit,and to a limited extent commercial paper, to fundprimarily seasonal working capital requirements.

Working capital was used primarily for capitalexpenditures and dividends. Management ex-pects to continue its policy of paying regular cashdividends, although the dividend/earnings ratiowill be gradually reduced to provide more fundsfor reinvestment in the business.

Although governmental restrictions in certainforeign countries could affect the transfer of divi-dends from subsidiaries, the Company does notanticipate that such restrictions will significantlyaffect liquidity. Net assets of subsidiaries affectedby such restrictions are not significant.

Cash provided by continuing operations wasapproximately $680 million in 1981, $540 millionin 1980 and $470 million in 1979.

Capital Resources: Capital expenditures to-taled $330 million in 1981, compared to $293 mil-lion in 1980 and $381 million in 1979. Expendituresconsist primarily of normal replacement and ex-pansion of plant facilities. In 1979, capital expen-ditures also included construction of the Atlantaoff ice complex and purchase of The AtlantaCoca-Cola Bottling Company. Capital expendi-tures are financed primarily by internally gener-ated funds. Addit ional funds from outsidesources are used as necessary.

The Company's long-term debt representedonly 6% of total capital at December 31, 1981 and1980.

33

CONSOLIDATED STATEMENTS OF INCOME (In thousands except per share data)The Coca-Cola Company and Subsidiaries

YEAR ENDED DECEMBER 31, 1981 1980 1979Net salesCost of goods sold

GROSS PROFIT

Selling, administrative and genera] expenses

OPERATING INCOME

Interest incomeInterest expenseOther deductions net

INCOME FROM CONTINUING OPERATIONSBEFORE INCOME TAXES

Income taxes

INCOME FROM CONTINUING OPERATIONSDiscontinued operations:

Income from discontinued operations(net of applicable income taxes of $7,271 in 1981,$11,782 in 1980, and $3,629 in 1979)

Gain on disposal of discontinued operations(net of applicable income taxes of $13,274)NET INCOME

PER SHARE:Continuing operationsDiscontinued operations

Net income

$5,889,035 $5,620,749 $4,688,7393,307,574 3,197,733 2,583,210

2,581,461 2,423,016 2,105,529

1,782,875 1,681,861 1,414,858

798,586

447,070

5,641

29,071

741,155

406,318

690,671

70,63238,34923,615

807,254

360,184

40,09935,1029,425

736,727

330,409

36,30410,6022,783

713,590

318,443

395,147

15,790 24,973

$ 481,782 $ 422,108 $ 420,120

3.62 $ 3.29 $ 3.20.28 .13 .20

$ 3.90 $ 3.42 $ 3.40

CONSOLIDATED STATEMENTS OF RETAINED EAIxNINGS(In thousands except per share data)YEAR ENDED DECEMBER 31, 1981 1980 1979Balance at January 1Net income for the yearDividends paid in cash (per share

1981, $2.32; 1980, $2.16; 1979, $1.96)

BALANCE AT DECEMBER 31

$1,914,547 $1,759,367 $1,581,406481,782 422,108 420,120

286,787 266,928 242,159

$2,109,542 $1,914,547 $1,759,367

See Notes to Consolidated Financial Statements34

CONSOLIDATED BALANCE SHEETS (In thousands except share data)The Coca-Cola Company and Subsidiaries

DECEMBER 31AssetsCURRENTCashMarketable securities, at cost (approximates market)Trade accounts receivable, less allowances of$8,579 in 1981 and $8,594 in 1980

InventoriesPrepaid expenses

TOTAL CURRENT ASSETS

INVESTMENTS AND OTHER ASSETS

PROPERTY, PLANT AND EQUIPMENTLand and improvementsBuildingsMachinery and equipmentContainers

Less allowances for depreciation

FORMULAE, TRADEMARKS, GOODWILL AND CONTRACT RIGHTS

1981

$ 120,908218,634

483,491750,71962,494

1,636,246

387,418

96,468570,356

1,271,065306,243

2,244,132834,676

1,409,456

131,661$3,564,781

1980

$ 129,685101,401

523,123810,23557,809

1,622,253

302,184

96,567537,235

1,183,438314,349

2,131,589790,749

1,340,840

140,681$3,405,958

Liabilities and Stockholders' Equity

STOCKHOLDERS' EQUITYCommon stock, no par value authorized 140,000,000 shares;

issued 124,024,735 shares in 1981 and 123,989,854 shares in 1980Capital surplusRetained earnings

Less 401,338 shares of stock held in treasury, at cost

1981 1980

CURRENTNotes payableCurrent maturities of long-term debtAccounts payable and accrued expensesAccrued taxes including income taxes

TOTAL CURRENT LIABILITIES

LONG-TERM DEBT

DEFERRED INCOME TAXES

$ 89,6475,515

672,049239,114

1,006,325

137,278

150,406

$ 87,5877,528

733,023233,442

1,061,580

133,221

136,419

62,389 62,372114,194 113,172

2,109,542 1,914,5472,286,125 2,090,091

15,353 15,3532,270,772 2,074,738

$3,564,781 $3,405,958

See Notes to Consolidated Financial Statements35

CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION (In thousands)The Coca-Cola Company and Subsidiaries

YEAR ENDED DECEMBER 31, 1981 1980 1979

SOURCE OF WORKING CAPITALFrom operations:Income from continuing operationsAdd charges not requiring outlay of workingcapital during the year:DepreciationDeferred income taxesOther (principally amortization ofgoodwill and container adjustments)

TOTAL FROM CONTINUING OPERATIONSDiscontinued operations (excludes provisions fordepreciation, amortization and deferredincome taxes of $2,429 in 1981, $4,521 in 1980,and $(2,504) in 1979)

TOTAL FROM OPERATIONSIncrease in long-term debtDisposals of property, plant and equipmentOther

APPLICATION OF WORKING CAPITALCash dividendsAdditions to property, plant and equipmentAcquisitions of purchased companies excludingnet current assets:Property, plant and equipment netOther assets including goodwill, net of other liabilities

Increase in investments and other assetsOther

INCREASE (DECREASE) IN WORKING CAPITAL

INCREASE (DECREASE) IN WORKINGCAPITAL BY COMPONENT

CashMarketable securitiesTrade accounts receivableInventoriesPrepaid expensesNotes payableCurrent maturities of long-term debtAccounts payable and accrued expensesAccrued taxes including income taxesINCREASE (DECREASE) IN WORKING CAPITAL

$447,070 $ 406,318

136,86823,692

61,009668,639

37,141705,780

4,05771,7881,090

782,715

286,787319,792

9,814113

85,13111,830

713,467

131,04231,500

37,932606,792

20,311627,10399,41577,053

854804,425

266,928287,186

5,8857,593

95,2542,348

665,194

395,147

110,28817,629

29,370552,434

22,469574,903

7,23425,0411,133

608,311

242,159329,559

51,84223,45625,223

7,147679,386

$ 69,248 $ 139,231 $ (71,075)

$ (8,777)117,233(39,632)(59,516)4,685(2,060)2,01360,974(5,672)

$ 69,248

$ 22,79959,71688,044140,6215,47016,229(3,144)

(156,161)(34,343)

$ 139,231

$ (49,265)(123,655)96,788131,35313,820(55,573)1,283

(66,830)(18,996)

$ (71,075)

See Notes to Consolidated Financial Statements36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Accounting Policies. The major accountingpolicies and practices followed by the Companyand its subsidiaries are as follows:

The consolidated financial statements includethe accounts of the Company and its majority-owned subsidiaries. All s igni f icant inter-company accounts and transactions are elimi-nated in consolidation.

Inventories are valued at the lower of cost ormarket. The last-in, first-out (LIFO) method ofinventory valuation is used for sugar and othersweeteners used in domestic beverages, for cer-tain major citrus concentrate products, and forsubstantially all inventories of domestic bottlingsubsidiaries, wine products and certain otherdomestic and foreign operations. All other inven-tories are valued on the average or first-in, first-out (FIFO) method. The excess of current costsover LIFO stated values amounted to approxi-mately $76,000,000 and $109,000,000 at December31,1981 and 1980, respectively.

Property, plant and equipment is stated at cost,less allowance for depreciation, except thatforeign subsidiaries carry bottles and shells inservice at amounts (less than cost) which, in gen-eral, correspond with deposit prices obtainedfrom customers. Approximately 87% of deprecia-tion expense was determined by the straight-linemethod for each of the three years in the periodended December 31,1981. A portion of the depre-ciation determined by the straight-line methodfor financial statement purposes is calculated onaccelerated methods for income tax purposes. De-ferred income taxes are provided to recognizetiming differences in reporting depreciation foraccounting and tax purposes. Investment taxcredits are accounted for by the flow-throughmethod.

Formulae, trademarks, goodwill and contractrights are stated on the basis of cost and, if pur-chased subsequent to October 31,1970, are beingamortized, principally on a straight-line basis,over the estimated future periods to be benefited(not exceeding 40 years). Accumulated amortiza-tion amounted to $16,168,000 and $12,189,000 atDecember 31,1981 and 1980, respectively.

At January 1, 1980, the Company begancapitalizing interest cost as part of the cost of ac-quisition or construction of major assets as re-quired by Statement of Financial AccountingStandards No. 34. The Company previously fol-lowed the policy of expensing interest costs as in-

DECEMBER 311981

$259,39192,464

398,864$750,719

1980$214,108113,348482,779

$810,235

curred. Interest capitalized was $7,893,000 in 1981and $5,674,000 in 1980.

The financial statements of foreign operationsare translated to United States dollars in accord-ance with the provisions of Statement of FinancialAccounting Standards No. 8.

2. Inventories. The principal categories of inven-tories shown in the balance sheet are as follows(in thousands):

Finished productsWork in processRaw materials and supplies

3. Short-Term Borrowings and Credit Arrange-ments. Notes payable include amounts payableto banks of $61,122,000 and $87,587,000 at De-cember 31,1981 and 1980, respectively.

Under line of credit arrangements for short-term debt with various financial institutions, theCompany and its subsidiaries may borrow up to$280,170,000. These lines of credit are subject tonormal banking terms and conditions. At De-cember 31,1981, the unused portion of the creditlines was $219,048,000. Some of the financial ar-rangements require compensating balanceswhich are not material.

4. Accounts Payable and Accrued Expenses arecomposed of the f o l l o w i n g amounts ( inthousands):

DECEMBER 311981 1980

Trade accounts payableDeposits on bottles and shellsOther

$565,69767,48938,863

$618,54869,42845,047

$672,049 $733,023

5. Accrued Taxes are composed of the followingamounts (in thousands):

DECEMBER 311981 1980

Income taxesSales, payroll and

miscellaneous taxes

$175,753 $152,590

63,361 80,852$ 239,114 $233,442

37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Long-Term Debt consisted of the followingamounts (in thousands):

9% % notes due June 1,1985Other

Less current portion

DECEMBER 311981 1980

$ 99,898 S 99,86742,895 40,882

142,793 140,7495,515 7,528

$137,278 $133,221

The 9%% notes may not be redeemed beforeJune 1, 1983. After that date the notes may be re-deemed at the option of the Company in whole orin part at 100% of their principal amount, plus ac-crued interest. The notes include various restric-tions, none of which is presently significant to theCompany.

Other long-term debt consists of variousmortgages and notes with maturity dates rangingfrom 1982 to 2010. Interest on a portion of this debtvaries with the changes in the prime rate, and theweighted average interest rate applicable to theremainder is approximately 10.3%.

Maturities of long-term debt for the five yearssucceeding December 31, 1981, are as follows (inthousands):

19821983198419851986

B 5,5155,4905,745

104,1902,266

The Company is contingently liable for guaran-tees of indebtedness by its independent bot-tling companies and others of approximately$39,000,000 at December 31,1981.7. Changes in Capital during 1981,1980 and 1979were as follows (in thousands):

Common Stock Issued

Balance January 1,1979Sale of stock to

employees exercisingstock options

Tax benefit from saleof option sharesby employees

BalanceDecember 31,1979

Sale of stock toemployees exercisingstock options andappreciation rights

Tax benefit from saleof option sharesby employees

BalanceDecembers!, 1980

Sale of stock toemployees exerc is ingstock options andappreciation rights

Tax benefit from saleof option sharesby employees

BalanceDecember 31,1981

CapitalSurplus

123,925 $62,340 $111,217Shares Amount

35 17

123,960

30 15

35 17

904

212

62,357 112,333

711

128

123,990 62,372 113,172

841

181

124,025 $62,389 $114,194

38

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

8. Stock Options. The Company's 1979 stock op-tion plan covering 1,000,000 shares of the Com-pany's common stock provides for the granting ofstock appreciation rights and stock options. Stockoptions and stock appreciation rights under theplan are granted to certain officers and employeesof the Company and its subsidiaries. Stock ap-preciation rights permit the holder, upon surren-dering all or part of his/her related stock option, toreceive cash, common stock, or a combinationthereof, up to 100% of the difference between themarket price and the option price. Shares coveredby such surrendered stock options or portionsthereof are not available for the grant of furtherstock options. Options were held at December 31by officers and employees to purchase shares ofthe Company's common stock under all stock op-tion plans at prices ranging from $22.08 to $67.91per share for 1981, from $19.16 to $67.91 per sharefor 1980, and from $19.16 to $67.91 per share for1979. Option prices on options exercised rangedfrom $22.08 to $34.00 per share in 1981, from $19.16to $24.97 per share in 1980, and from $9.09 to$41.38 per share in 1979. Further information re-lating to options is as follows:

1981 1980 1979Options outstanding

at January 1Options granted

during the yearOptions exercised

during the yearOptions cancelled

during the yearOptions outstanding

at December 31Options exercisable

at December 31Shares available at

December 31 foroptions which maybe granted

1,392,457 1,259,886 1,153,598

244,975 362,350 262,242

(35,651) (29,559) (35,443)

(195,421) (200,220) (120,511)

1,406,360 1,392,457 1,259,886

755,598

278,121

728,067 718,912

400,408 737,758

In 1980, an officer of the Company was grantedoptions for 25,000 shares of the Company's com-mon stock. The options are exercisable at fairmarket value on the date of the grant on a cumula-tive basis at the rate of 20% a year. Upon exercise

of the options, shares will be made available fromtreasury stock. Such options are not a part of anystock option plan.

9. Pension Plans. The Company and its sub-sidiaries sponsor or contribute to various pensionplans covering substantially all domestic em-ployees and certain employees in foreign coun-tries. Pension expense for continuing operationsde te rmined unde r var ious a c t u a r i a l costmethods, principally the aggregate level costmethod, amounted to approximately $35,000,000in 1981, $32,000,000 in 1980 and $31,000,000 in1979. Changes in the actuarial assumptions forone plan reduced pension expense by approxi-mately $2,600,000 in 1980.

The actuarial present value of accumulatedbenefits, as estimated by consulting actuaries,and net assets available for benefits of Companyand subsidiary-sponsored domestic plans arepresented below (in thousands).

JANUARY 1

Actuarial present value ofaccumulated plan benefits:

VestedNonvested

Net assets available for benefits

1981

$146,88412,669

1980

$152,77213,001

$159,553 $165,773

$193,268 $165,448

The assumed rates of return used in determin-ing the actuarial present value of accumulatedplan benefits were approximately 9% for 1981 and8% for 1980. This change reduced the actuarialpresent value of accumulated plan benefits atJanuary 1,1981, by approximately $19,000,000.

The Company has various foreign pensionplans which are not required to report to certaingovernmental agencies pursuant to the EmployeeRetirement Income Security Act (ERISA) and donot otherwise determine the actuarial value of ac-cumulated plan benefits or net assets available forbenefits as calculated and disclosed above. Forthose plans, the value of the pension funds andbalance sheet accruals exceeded the actuariallycomputed value of vested benefits as of January 1,1981 and 1980, as estimated by consul t ingactuaries.

39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

10. Income Taxes. The components of income be-fore income taxes for continuing and discon-tinued operations consisted of the following (inthousands):

YEAR ENDED DECEMBER 311981

$309,654552,857

$862,511

1980$251,807512,492

$764,299

1979$248,063494,129

$742,192

United StatesForeign

Federal, state and foreign income taxes for con-tinuing and discontinued operations consisted ofthe following amounts (in thousands):

YEAR ENDED DECEMBER 31

1981CurrentDeferred

1980CurrentDeferred

1979CurrentDeferred

State &Federal Local Foreign Total

$86,589 $22,461 $248,292 $357,34215,574 1,646 6,167 23,387

$63,636 $17,438 $228,013 $309,08725,518 2,390 5,196 33,104

$76,965 $13,858 $218,951 $309,77418,541 881 (7,124) 12,298

Total tax expense differed from the amountcomputed by applying the statutory federal in-come tax rate to income before income taxes dueto investment tax credits which had the effect ofreducing the tax provision by approximately$14,000,000, $11,000,000 and $15,000,000 in 1981,1980 and 1979, respectively. Additionally, in 1979income taxes were reduced by approximately$11,000,000 resulting from changes in UnitedKingdom tax legislation.

11. Acquisitions. In 1979, the Company acquiredThe Atlanta Coca-Cola Bottling Company for ap-proximately $65,000,000 in cash. In addition, sev-eral other companies, primarily bottling opera-tions, were acquired in exchange for cash andnotes during 1979 and 1980. These transactionswere accounted for as purchases, and the opera-tions of the acquired companies have been in-cluded in the consolidated statement of incomefrom the dates of purchase. The purchased com-panies had no significant effect on operating re-sults in 1979 or 1980.

12. Discontinued Operations. In September 1981,the Company sold Aqua-Chem, Inc., a wholly-owned subsidiary which produced steamgenerators, industrial boilers and water treat-ment equipment. On February 4,1982, the Com-pany sold its Tenco Division for approximatelybook value. Tenco was an operating unit which

manufactured and distributed private label in-stant coffees and teas.

Net sales of discontinued operations were$240,216,000, $291,846,000 and $272,663,000 in1981,1980 and 1979, respectively. At December 31,1981, assets of $60,967,000 and liabilit ies of$16,308,000 applicable to discontinued operationsare included in the consolidated balance sheet.

13. Foreign Operations. The Company's identifi-able assets and liabilities outside the UnitedStates and Puerto Rico are shown below (inthousands):

DECEMBER 311981 1980

Current assetsProperty, plant and

equipment netOther assets

LiabilitiesNet assets

$ 751,835 $ 773,168

567,179121,903

1,440,917637,015

513,731121,677

1,408,576664,980

$ 803,902 S 743,596

Appropriate United States and foreign incometaxes have been accrued on earnings of sub-sidiary companies which are expected to be re-mitted to the parent company in the near future.Accumulated unremitted earnings of foreignsubsidiaries which are expected to be requiredfor use in the foreign operations amounted to ap-proximately $61,000,000 at December 31,1981, ex-clusive of amounts which if remitted would resultin little or no tax. Exchange adjustments were notmaterial in amount in 1981,1980 or 1979.

14. Industry Segment and Geographic Data. Theindustry segment and geographic data for 1981,1980 and 1979 presented on pages 44 and 45 are anintegral part of these financial statements.

15. Contemplated Acquisition. In January 1982,the Company announced agreements in principlewhereby the Company would acquire ColumbiaPictures Industries, Inc. and The Outlet Companyfor consideration, consisting of cash and shares ofthe Company's common stock, having an aggre-gate value of approximately $900,000,000. Theseacquisitions are subject to execution of definitiveagreements, approvals of the Boards of Directorsand shareholders of the parties and receipt of con-sents and approvals by governmental authoritiesand regulatory agencies. Subsequently, the Com-pany announced that the Outlet transactionwould be considered separately following a re-view of potential contingent liabilities of Outletresulting from a third party bankruptcy.

40

REPORT OF INDEPENDENT ACCOUNTANTSThe Coca-Cola Company and Subsidiaries

Board of Directors and StockholdersThe Coca-Cola CompanyAtlanta, Georgia

We have examined the consolidated balance sheets of The Coca-Cola Company and subsidiaries as ofDecember 31, 1981 and 1980, and the related consolidated statements of income, retained earnings andchanges in financial position for each of the three years in the period ended December 31, 1981. Ourexaminations were made in accordance with generally accepted auditing standards and, accordingly,included such tests of the accounting records and such other auditing procedures as we considerednecessary in the circumstances.

In our opinion, the financial statements referred to above present fairly the consolidated financialposition of The Coca-Cola Company and subsidiaries at December 31,1981 and 1980, and the consolidatedresults of their operations and the changes in their financial position for each of the three years in theperiod ended December 31,1981, in conformity with generally accepted accounting principles applied on aconsistent basis.

- ~ ' ' - -

REPORT OF MANAGEMENTThe Coca-Cola Company and Subsidiaries

Management is responsible for the preparation and integrity of the consolidated financial statementsappearing in this annual report. The financial statements were prepared in conformity with generallyaccepted accounting principles appropriate in the circumstances and, accordingly, include some amountsbased on management's best judgements and estimates. Other financial information in this annual reportis consistent with that in the financial statements.

Management is responsible for maintaining a system of internal accounting controls and proceduresto provide reasonable assurance, at an appropriate cost/benefit relationship, that assets are safeguardedand that transactions are authorized, recorded and reported properly. The internal accounting controlsystem is augmented by a program of internal audits and appropriate reviews by management, writtenpolicies and guidelines, careful selection and training of qualified personnel and a written Code ofBusiness Conduct adopted by the Board of Directors, applicable to all employees of the Company and itssubsidiaries. Management believes that the Company's internal accounting controls provide reasonableassurance that assets are safeguarded against material loss from unauthorized use or disposition and thatthe financial records are reliable for preparing financial statements and other data and maintainingaccountability for assets.

The Audit Committee of the Board of Directors, composed solely of Directors who are not officers ofthe Company, meets with the independent accountants, management and internal auditors periodically todiscuss internal accounting controls, auditing and financial reporting matters. The Committee reviewswith the independent accountants the scope and results of the audit effort. The Committee also meets withthe independent accountants without management present to ensure that the independent accountantshave free access to the Committee.

The independent accountants, Ernst & Whinney, are recommended by the Audit Committee of theBoard of Directors, selected by the Board of Directors and ratified by the shareholders. Ernst & Whinneyare engaged to examine the financial statements of The Coca-Cola Company and subsidiaries and conductsuch tests and related procedures as they deem necessary in conformity with generally accepted auditingstandards. The opinion of the independent accountants, based upon their examination of the consolidatedfinancial statements, is contained in this annual report.

Roberto C. GoizuetaChairman, Board of Directors,and Chief Executive Officer

March 3, 1982

Sam AyoubSenior Executive Vice Presidentand Chief Financial Officer

42

UNAUDITED QUARTERLY DATA (For the years ended December 31,1981 and 1980)The Coca-Cola Company and Subsidiaries

Quarterly Results of Operations(In thousands except per share data)

First quarterSecond quarterThird quarterFourth quarter

NET SALES GROSS PROFIT1981

$1,346,4621,600,2471,529,8101,412,516

$5,889,