Table: Things Go Better with Complex Numbers

How Coca-Cola uses its 38%-owned bottling company, CCE, to improve its financials

-- Coke (KO ) appears to control CCE but doesn't consolidate it, so the capital-intensive

bottler's debt stays off its books

-- Coke sells high-margin cola concentrate, while its captive bottlers sell

the less profitable drink

-- Coke has booked hundred of millions in annual payments to CCE as assets,

not expenses, spreading the profit hit over time

-- After Coke pushed bottlers to overexpand, Coke's return on assets stayed

strong while the bottlers' collapsed

RETURN ON ASSETS 1997 1998 1999 2000 2001 2002E

COKE 21.5% 18.3% 14.7% 17.2% 17.5% 17.8% BOTTLERS 2.8 2.2 1.0 1.0 1.9 2.8 COMBINED 8.8 7.7 5.9 6.3 7.5 8.6

Data: Lehman Brothers Inc., BusinessWeek

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