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FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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COMMON STOCK, $.25 PAR VALUE NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
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 BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS
PURSUANT TO ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN,
AND WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE,
IN DEFINITIVE PROXY OR INFORMATION STATEMENTS INCORPORATED BY
REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. [X]
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-
AFFILIATES OF THE REGISTRANT (ASSUMING FOR THESE PURPOSES, BUT
WITHOUT CONCEDING, THAT ALL EXECUTIVE OFFICERS AND DIRECTORS ARE
"AFFILIATES" OF THE REGISTRANT) AS OF FEBRUARY 21, 1997, (BASED
ON THE CLOSING SALE PRICE AS REPORTED ON THE NEW YORK STOCK
EXCHANGE ON SUCH DATE) WAS $132,252,414,334.
THE NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK
AS OF FEBRUARY 28, 1997, WAS 2,479,662,119.
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE COMPANY'S ANNUAL REPORT TO SHARE OWNERS FOR THE
YEAR ENDED DECEMBER 31, 1996, ARE INCORPORATED BY REFERENCE IN
PARTS I, II AND IV.
PORTIONS OF THE COMPANY'S PROXY STATEMENT FOR THE ANNUAL MEETING
OF SHARE OWNERS TO BE HELD ON APRIL 16, 1997, ARE INCORPORATED BY
REFERENCE IN PART III.
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PART I
ITEM 1. BUSINESS
The Coca-Cola Company (the "Company" or the "Registrant") was
incorporated in September 1919 under the laws of the State of
Delaware and succeeded to the business of a Georgia corporation
with the same name that had been organized in 1892. The Company
is the largest manufacturer, distributor and marketer of soft
drink concentrates and syrups in the world. Finished soft drink
products bearing the Company's trademarks, sold in the United
States since 1886, are now sold in nearly 200 countries and
include the leading soft drink products in most of these
countries. The Company also is the world's largest distributor
and marketer of juice and juice-drink products.
The business of the Company is nonalcoholic beverages --
principally soft drinks but also noncarbonated beverages,
including juice and juice-drink products. As used in this
report, the term "soft drinks" refers to nonalcoholic carbonated
beverages containing flavorings and sweeteners, excluding
flavored waters and carbonated or noncarbonated teas, coffees and
sports drinks.
The Company's operating management structure consists of five
geographic groups plus The Minute Maid Company. The geographic
groups are the Africa Group; the Greater Europe Group; the Latin
America Group; the Middle and Far East Group; and the North
America Group. The Minute Maid Company (a division of the
Company previously known as Coca-Cola Foods) produces,
distributes and markets principally juice and juice-drink
products.
Of the Company's consolidated net operating revenues and
operating income for each of the past three years, excluding
corporate operations, the percentage represented by geographic
area (inclusive of The Minute Maid Company) is as follows:
Africa Greater Latin Middle North
Europe America and Far America
East
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Net Operating
Revenues{1}
1996 2% 32% 11% 22% 33%
1995 3% 33% 11% 22% 31%
1994 3% 31% 12% 21% 33%
Operating Income{1}
1996 3% 28% 18% 30% 21%
1995 4% 28% 18% 31% 19%
1994 4% 28% 17% 28% 23%
The Company manufactures and sells soft drink and
noncarbonated beverage concentrates and syrups, including
fountain syrups, some finished beverages, and certain juice and
juice-drink products. Syrups are composed of sweetener, water
and flavoring concentrate. The concentrates and syrups for
bottled and canned beverages are sold by the Company to
authorized bottling and canning operations. The bottlers or
canners of soft drink products either combine the syrup with
carbonated water or combine the concentrate with sweetener, water
and carbonated water to produce finished soft drinks. The
finished soft drinks are packaged in authorized containers
bearing the Company's trademarks -- cans, refillable and non-
refillable glass and plastic bottles -- for sale to retailers or,
in some cases, wholesalers. Fountain syrups are manufactured and
sold by the Company, principally in the United States, to
authorized fountain wholesalers and some fountain retailers.
(Outside the United States, fountain syrups typically are
manufactured by authorized bottlers from concentrates sold to
them by the Company.) Authorized fountain wholesalers (including
certain authorized bottlers) sell fountain syrups to
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{1} See Note 16 to the Consolidated Financial Statements, on page 66
of the Company's Annual Report to Share Owners for the year ended
December 31, 1996, incorporated herein by reference.
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fountain retailers. The fountain retailers use dispensing
equipment to mix the syrup with carbonated or still water and
then sell finished soft drinks or noncarbonated beverages to
consumers in cups and glasses. Finished beverages manufactured
by the Company are sold by it to authorized bottlers or
distributors, who in turn sell these products to retailers or, in
some cases, wholesalers. Both directly and through a network of
brokers, juice and juice-drink products are sold by the Company
to retailers and wholesalers in North America and, to a limited
extent, also distributed outside North America.
The Company's beverage products, including bottled and canned
beverages produced by independent and Company-owned bottling and
canning operations, as well as concentrates and syrups, include
Coca-Cola, Coca-Cola classic, caffeine free Coca-Cola, caffeine
free Coca-Cola classic, diet Coke (sold under the trademark
Coca-Cola light in many countries outside the United States),
caffeine free diet Coke, Cherry Coke, diet Cherry Coke, Fanta
brand soft drinks, Sprite, diet Sprite, Mr. PiBB, Mello Yello,
TAB, Fresca, Barq's root beer and other flavors, Surge, POWERaDE,
Fruitopia, Minute Maid flavors, Saryusaisai, Aquarius, Bonaqa and
other products developed for specific countries, including
Georgia brand ready-to-drink coffees, and numerous other brands.
The Minute Maid Company, with operations primarily in the United
States and Canada, produces, distributes and markets principally
juice and juice-drink products, including Minute Maid brand
products; Five Alive brand refreshment beverages; Bright & Early
brand breakfast beverages; Bacardi brand tropical fruit mixers
(manufactured and marketed under a license from Bacardi & Company
Limited); and Hi-C brand ready-to-serve fruit drinks.
Additionally, Coca-Cola Nestle Refreshments, the Company's joint
venture with Nestle S.A., produces ready-to-drink teas and
coffees in certain countries.
In 1996, concentrates and syrups for beverages bearing the
trademark "Coca-Cola" or including the trademark "Coke" accounted
for approximately 68% of the Company's total gallon shipments of
beverage concentrates and syrups. (Physical units of concentrate
have been converted to their equivalents in gallons of syrup in
all cases in this report where reference is made to "gallons" or
"gallon shipments" of beverage concentrates and syrups.)
In 1996, approximately 30% of the Company's total gallon
shipments of beverage concentrates and syrups were in the United
States. In 1996, the Company's principal markets outside the
United States, based on gallon shipments of beverage concentrates
and syrups, were Mexico, Brazil, Japan and Germany, which
together accounted for approximately 27% of the Company's total
gallon shipments.
In the United States, in 1996 the Company made approximately
64% of its total United States gallon shipments of beverage
concentrates and syrups ("U.S. gallon shipments") to
approximately 114 authorized bottler ownership groups in
approximately 398 licensed territories. Those bottlers prepare
and sell finished beverages bearing the Company's trademarks for
the food store and vending machine distribution channels and for
other distribution channels supplying home and on-premise
consumption. The remaining 36% of 1996 U.S. gallon shipments was
attributable to fountain syrups sold to fountain retailers and to
approximately 816 authorized fountain wholesalers, some of whom
are authorized bottlers. These fountain wholesalers in turn sell
the syrup to restaurants and other fountain retailers. Coca-Cola
Enterprises Inc. and its bottling subsidiaries and divisions
accounted for approximately 43% of the Company's U.S. gallon
shipments in 1996. The Company holds an ownership interest of
approximately 45% in Coca-Cola Enterprises Inc., which is the
world's largest bottler of beverages bearing the Company's
trademarks ("Company Trademark Beverages").
In addition to conducting its own independent advertising and
marketing activities, the Company may choose to provide
promotional and marketing services and/or funds and consultation
to its bottlers and to fountain and bottle/can retailers. Also
on a discretionary basis, the Company may develop and introduce
new products, packages and equipment to assist its bottlers,
fountain syrup wholesalers and fountain beverage retailers.
The profitability of the Company's business outside the United
States is subject to many factors, including governmental trade
regulations and monetary policies, economic and political
conditions in the countries in which such business is conducted
and the risk of changes in currency exchange rates and
regulations.
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BOTTLER'S AGREEMENTS AND DISTRIBUTION AGREEMENTS
Separate contracts ("Bottler's Agreements") between the
Company and each of its bottlers regarding the manufacture and
sale of soft drinks, subject to specified terms and conditions
and minor variations, generally authorize the bottler to prepare
particular designated Company Trademark Beverages, to package the
same in particular authorized containers, and to distribute and
sell the same in (but generally only in) an identified territory.
The bottler is obligated to purchase its entire requirement of
concentrates or syrups for the designated Company Trademark
Beverages from the Company or other authorized suppliers. The
Company typically agrees to refrain from selling or distributing
or from authorizing third parties to sell or distribute the
designated Company Trademark Beverages throughout the identified
territory in the particular authorized containers; however, the
Company typically reserves for itself or its designee the right
(i) to prepare and package such beverages in such containers in
the territory for sale outside the territory and (ii) to prepare,
package, distribute and sell such beverages in the territory in
any other manner or form.
The Bottler's Agreements between the Company and its
authorized bottlers in the United States differ in certain
respects from those in the nearly 200 other countries in which
Company Trademark Beverages are sold. As hereinafter discussed,
the principal differences involve the duration of the agreements;
the inclusion or exclusion of canned beverage production rights;
the inclusion or exclusion of authorizations to manufacture and
distribute fountain syrups; in some cases, the degree of
flexibility on the part of the Company to determine the pricing
of syrups and concentrates; and the extent, if any, of the
Company's obligation to provide marketing support.
OUTSIDE THE UNITED STATES. The Bottler's Agreements between
the Company and its authorized bottlers outside the United States
generally are of stated duration, subject in some cases to
possible extensions or renewals of the term of the contract.
Generally, these contracts are subject to termination by the
Company following the occurrence of certain designated events,
including defined events of default and certain changes in
ownership or control of the bottler.
In certain parts of the world outside the United States, the
Company has not granted canned beverage production rights to the
bottlers. In such instances, the Company or its designee
typically sells canned Company Trademark Beverages to the
bottlers for sale and distribution throughout the designated
territory under can distribution agreements, often on a non-
exclusive basis. A majority of the Bottler's Agreements in force
between the Company and bottlers outside the United States
authorize the bottler to manufacture and distribute fountain
syrups, usually on a non-exclusive basis.
The Company generally has complete flexibility to determine
the price and other terms of sale of concentrates and syrups to
bottlers outside the United States and, although in its
discretion it may determine to do so, the Company typically has
no obligation under such Bottler's Agreements to provide
marketing support to the bottlers.
WITHIN THE UNITED STATES. In the United States, with certain
very limited exceptions, the Company's Bottler's Agreements for
cola-flavored beverages have no stated expiration date and the
contracts for other flavors are of stated duration, subject to
bottler renewal rights. The Bottler's Agreements in the United
States are subject to termination by the Company for
nonperformance or upon the occurrence of certain defined events
of default which may vary from contract to contract. The
hereinafter described "1987 Contract" is terminable by the
Company upon the occurrence of certain events including: (1) the
bottler's insolvency, dissolution, receivership or the like; (2)
any disposition by the bottler or any of its subsidiaries of any
voting securities of any bottler subsidiary without the consent
of the Company; (3) any material breach of any obligation of the
bottler under the 1987 Contract; or (4) except in the case of
certain bottlers, if a person or affiliated group acquires or
obtains any right to acquire beneficial ownership of more than
10% of any class or series of voting securities of the bottler
without authorization by the Company.
Under the terms of the Bottler's Agreements, bottlers in the
United States are authorized to manufacture and distribute
Company Trademark Beverages in bottles and cans, but generally
are not authorized to manufacture fountain syrups. Rather, the
Company manufactures and sells fountain syrups to approximately
816 authorized wholesalers (including certain authorized bottlers)
and some fountain retailers. The wholesalers in turn sell the
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syrups to restaurants and other retailers. The wholesaler
typically acts as such pursuant to a non-exclusive annual letter
of appointment which neither restricts the pricing of fountain
syrups by the Company nor the territory in which the wholesaler
may resell in the United States.
In the United States, the newest form of Bottler's Agreement
for cola-flavored soft drinks (the "1987 Contract") gives the
Company complete flexibility to determine the price and other
terms of sale of soft drink concentrates and syrups for cola-
flavored Company Trademark Beverages ("Coca-Cola Trademark
Beverages") and other Company Trademark Beverages. Bottlers
operating under the 1987 Contract accounted for approximately 76%
of the Company's total United States gallon shipments for bottled
and canned beverages ("U.S. bottle/can gallon shipments") in
1996. Certain other forms of the U.S. Bottler's Agreement,
entered into prior to 1987, provide for soft drink concentrates
or syrups for certain Coca-Cola Trademark Beverages to be priced
pursuant to a stated formula. The oldest such form of contract,
applicable to bottlers accounting for approximately 1% of U.S.
bottle/can gallon shipments in 1996, provides for a fixed price
for Coca-Cola syrup used in bottles and cans, subject to
quarterly adjustments to reflect changes in the quoted price of
sugar. Bottlers accounting for the remaining approximately 23%
of U.S. bottle/can gallon shipments in 1996 have contracts for
certain Coca-Cola Trademark Beverages with pricing formulas
generally providing for a baseline price that may be adjusted
periodically by the Company, up to a maximum indexed ceiling
price, and that is adjusted quarterly based upon changes in
certain sugar or sweetener prices, as applicable.
Standard contracts with bottlers in the United States for the
sale of concentrates and syrups for non-cola-flavored soft drinks
in bottles and cans permit flexible pricing by the Company.
Under the 1987 Contract, the Company has no obligation to
participate with bottlers in expenditures for advertising and
marketing, but may, at its discretion, contribute toward such
expenditures and undertake independent or cooperative advertising
and marketing activities. Some U.S. Bottler's Agreements that
pre-date the 1987 Contract impose certain marketing obligations
on the Company with respect to certain Company Trademark
Beverages.
SIGNIFICANT EQUITY INVESTMENTS AND COMPANY BOTTLING OPERATIONS
The Company has business relationships with three types of
bottlers: independently owned bottlers, bottlers in which the
Company has a noncontrolling ownership interest and bottlers in
which the Company has a controlling ownership interest. Of
these, independently owned bottlers produced and distributed
approximately 40% of the Company's total worldwide unit case
volume in 1996; cost or equity method investee bottlers in which
the Company owns a noncontrolling ownership interest produced and
distributed approximately 45% of such worldwide unit case volume;
and controlled and consolidated bottling and fountain operations
produced and distributed approximately 15% of such worldwide unit
case volume. As used in this report, the term "unit case" means
a unit of measurement equal to 192 U.S. fluid ounces of finished
beverage (24 eight-ounce servings); and "unit case volume" of the
Company, which refers to the number of unit cases sold by
bottlers of Company Trademark Beverages to customers, includes
Company products (excluding products distributed by The Minute
Maid Company) reported as gallon shipments, and certain other key
products owned by such bottlers.
The Company makes equity investments in selected bottling
operations with the intention of maximizing the strength and
efficiency of the Coca-Cola business system's production,
distribution and marketing systems around the world. These
investments often result in increases in unit case volume, net
revenues and profits at the bottler level, which in turn generate
increased gallon shipments for the Company's concentrate
business. When this occurs, both the Company and the bottlers
benefit from long-term growth in volume, cash flows and share-
owner value.
The level of the Company's investment generally depends on the
bottler's capital structure and its available resources at the
time of the investment. In certain situations, it can further
the Company's business interests to acquire a controlling
interest in a bottling operation. Although not the Company's
primary long-term business strategy, owning a controlling
interest may compensate for limited local resources or facilitate
improvements in customer relationships as the bottling operations
are built or restructured. The Company acquired controlling
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interests in certain bottling operations in Italy in 1995 and
1996, as well as in Venezuela in 1995. By providing capital and
marketing expertise to newly acquired bottlers, the Company seeks
to strengthen bottling territories.
In line with its long-term bottling strategy, the Company
periodically considers options for reducing its ownership
interest in a consolidated bottler. One such option is to sell
the Company's interest in a consolidated bottling operation to
one of the Company's noncontrolled equity investee bottlers.
Another option for reducing the Company's ownership interest is
to combine the Company's bottling interests with the bottling
interests of others to form strategic business alliances. In
both of these situations, the Company continues participating in
the previously consolidated bottler's earnings through its
portion of the equity investee's income.
Consistent with its strategy, in 1996 the Company sold its
consolidated bottling and canning operations in France and
Belgium to Coca-Cola Enterprises Inc. Also, during 1996 the
Company sold a 33% interest in four Turkish bottling and
distribution operations to Anadolu Endustri Holding A.S.
("Anadolu") and one of Anadolu's subsidiaries. Two subsidiaries
of the Company, which continue to hold a controlling interest,
entered into a joint venture agreement with Anadolu and its
subsidiary to operate these four entities.
In 1996, a German anchor bottler, Coca-Cola
Erfrischungsgetraenke A.G. ("CCEAG"), was established through the
merger of the Company's previously wholly owned east German
bottler with three other independent bottlers. As a result of
the merger, the Company through a German subsidiary now owns a
45% interest in CCEAG.
Also in 1996, the Company combined its bottling interests in
Venezuela with the Cisneros Group's bottling companies to form a
new joint venture, Embotelladora Coca-Cola y Hit de Venezuela,
S.A. ("ECHV"). A subsidiary of the Company owns a 50% interest
in ECHV.
In cases where the Company's investments in bottlers represent
noncontrolling interests, the Company's intention is to provide
expertise and resources to strengthen those businesses. In
particular, the Company seeks to improve sales and marketing
programs, assist in the development of effective business and
information systems and help establish appropriate capital
structures. In 1996, the Company purchased interests in two
Chilean bottling companies: a 17% interest in Embotelladoras
Polar S.A. and a 6% interest in Embotelladora Andina S.A. which
was further increased to approximately 11% in early 1997. In
addition, in early 1997 the Company sold to Coca-Cola Enterprises
Inc. the Company's unconsolidated 49% interest in Coca-Cola &
Schweppes Beverages Ltd., the leading marketer of beverage
products in Great Britain.
The Company designates certain bottling operations in which it
has a noncontrolling ownership interest as "anchor bottlers" due
to their level of responsibility and performance. Anchor
bottlers, which include Coca-Cola Amatil Limited and Coca-Cola
Enterprises Inc., are strongly committed to their own profitable
growth which, in turn, helps the Company meet its strategic goals
and furthers the interests of its worldwide production,
distribution and marketing systems. Anchor bottlers tend to be
large and geographically diverse with strong financial and
management resources. In 1996, the Company's anchor bottlers
produced and distributed approximately 30% of the Company's total
worldwide unit case volume. Currently, eight companies are
designated as anchor bottlers, providing the Company with strong
partners on every major continent around the world.
The Company has substantial equity positions in approximately
43 unconsolidated bottling, canning and distribution operations
for its products worldwide, including bottlers representing
approximately 51% of the Company's total U.S. unit case volume in
1996. Of these, significant equity method investee bottlers
include those hereinafter described.
COCA-COLA ENTERPRISES INC. ("COCA-COLA ENTERPRISES"). The
Company's ownership interest in Coca-Cola Enterprises is
approximately 45%. Coca-Cola Enterprises is the world's largest
bottler of the Company's beverage products. Net sales of
concentrates and syrups by the Company to Coca-Cola Enterprises
were $1.6 billion in 1996. Coca-Cola Enterprises also purchases
high fructose corn syrup from the Company; however, related
collections from Coca-Cola Enterprises and payments to suppliers
are not included in the Company's consolidated statements of
income. Coca-Cola Enterprises estimates that the territories in
which it markets beverage products to retailers (which include
portions of 41 states, the District of Columbia, the
U.S. Virgin Islands, Great Britain, the
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Netherlands, France and Belgium) contain approximately 55% of
the United States population, 100% of the populations of Great
Britain, the Netherlands and Belgium and 98% of the population
of France.
In 1996, approximately 67% of the unit case volume of
Coca-Cola Enterprises (excluding products in post-mix (fountain)
form) was Coca-Cola Trademark Beverages, approximately 24% of its
unit case volume was other Company Trademark Beverages, and
approximately 9% of its unit case volume was beverage products of
other companies. Coca-Cola Enterprises' net sales of beverage
products were approximately $7.9 billion in 1996.
COCA-COLA AMATIL LIMITED ("COCA-COLA AMATIL"). In 1996,
Coca-Cola Amatil issued approximately 46 million shares of common
stock in exchange for approximately U.S.$522 million. The
issuance reduced the Company's ownership interest in Coca-Cola
Amatil from approximately 39% to approximately 36%. Coca-Cola
Amatil is the largest bottler of the Company's beverage products
in Australia and also has bottling and distribution rights,
through direct ownership or joint ventures, in New Zealand, Fiji,
Austria, Hungary, Papua New Guinea, the Czech and Slovak
Republics, Indonesia, Belarus, Slovenia, Ukraine, Poland,
Switzerland, Romania, Bosnia-Herzegovina and Croatia. Coca-Cola
Amatil estimates that the territories in which it markets
beverage products contain approximately 99% of the population of
Australia, 100% of the populations of New Zealand, Fiji, Austria,
Switzerland, Poland, Hungary, Croatia, the Czech and Slovak
Republics, Belarus, Slovenia and Ukraine, 83% of the population
of Papua New Guinea, 97% of the population of Indonesia, 46% of
the population of Romania and 74% of the population of Bosnia-
Herzegovina. In 1996, Coca-Cola Amatil's net sales of beverage
products were approximately U.S.$2.9 billion.
In 1996, approximately 57% of the unit case volume of
Coca-Cola Amatil was Coca-Cola Trademark Beverages, approximately
36% of its unit case volume was other Company Trademark
Beverages, approximately 5% of its unit case volume was beverage
products of Coca-Cola Amatil and approximately 2% of its unit
case volume was beverage products of other companies.
COCA-COLA FEMSA, S.A. DE C.V. ("COCA-COLA FEMSA"). The
Company owns a 30% economic interest in Coca-Cola FEMSA, a
Mexican holding company with bottling subsidiaries in the Valley
of Mexico, Mexico's southeastern region and Argentina. Coca-Cola
FEMSA estimates that the territories in which it markets beverage
products contain approximately 29% of the population of Mexico
and 29% of the population of Argentina.
In 1996, Coca-Cola FEMSA's net sales of beverage products were
approximately U.S.$944 million. In 1996, approximately 78% of
the unit case volume of Coca-Cola FEMSA was Coca-Cola Trademark
Beverages, approximately 20% of its unit case volume was other
Company Trademark Beverages, and approximately 2% of its unit
case volume was beverage products of other companies.
COCA-COLA BOTTLERS PHILIPPINES, INC. ("CCBPI"). The Company
owns a 30% interest in CCBPI, the only bottler authorized to
manufacture and distribute beverage products of the Company in
the Philippines. In 1996, CCBPI's net sales of beverage products
were approximately U.S.$896 million.
In 1996, approximately 73% of the unit case volume of CCBPI
was Coca-Cola Trademark Beverages, approximately 19% of its unit
case volume was other Company Trademark Beverages, and
approximately 8% of its unit case volume was beverage products of
other companies.
OTHER INTERESTS. Under the terms of the Coca-Cola Nestle
Refreshments ("CCNR") joint venture involving the Company, Nestle
S.A. and certain subsidiaries of Nestle S.A., the Company manages
CCNR's ready-to-drink tea business and Nestle S.A. manages CCNR's
ready-to-drink coffee business. The joint venture is applicable
to ready-to-drink tea and coffee beverages in the United States
and approximately 39 other countries.
During 1996, The Minute Maid Company entered into a joint
venture agreement with Groupe Danone to produce, distribute and
sell premium refrigerated ready-to-serve fruit juice products.
These products will be marketed by the joint venture in selected
countries outside the United States and Canada, with an initial
focus in Europe and Latin America. The Minute Maid Company has a
50% ownership interest in the joint venture.
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OTHER DEVELOPMENTS
During 1996, The Minute Maid Company sold two of its
manufacturing facilities and entered into an agreement with the
purchaser to provide processing and packaging services to the
division.
SEASONALITY
Soft drink and noncarbonated beverage sales are somewhat
seasonal, with the second and third calendar quarters accounting
for the highest sales volumes in the Northern Hemisphere. The
volume of sales in the beverages business may be affected by
weather conditions.
COMPETITION
The Company competes in the nonalcoholic beverages segment of
the commercial beverages industry. That segment is highly
competitive, consisting of numerous firms. These include firms
that compete, like the Company, in multiple geographical areas as
well as firms that are primarily local in operation. Competitive
products include carbonates, packaged water, juices and nectars,
fruit drinks and dilutables (including syrups and powdered
drinks), sports and energy drinks, coffee and tea, still drinks
and other beverages. Nonalcoholic beverages are sold to
consumers in both ready-to-drink and not-ready-to-drink form.
Most of the Company's beverages business currently is in soft
drinks, as that term is defined in this report. The soft drink
business, which is part of the nonalcoholic beverages segment, is
itself highly competitive. The Company is the leading seller of
soft drink concentrates and syrups in the world. Numerous firms,
however, compete in that business. These consist of a range of
firms, from local to international, that compete against the
Company in numerous geographical areas.
In many parts of the world in which the Company does business,
demand for soft drinks is growing at the expense of other
commercial beverages. Competitive factors with respect to the
Company's business include pricing, advertising and sales
promotion programs, product innovation, increased efficiency in
production techniques, the introduction of new packaging, new
vending and dispensing equipment and brand and trademark
development and protection.
RAW MATERIALS
The principal raw material used by the Company's business in
the United States is high fructose corn syrup, a form of sugar,
which is available from numerous domestic sources and is
historically subject to fluctuations in its market price. The
principal raw material used by the Company's business outside the
United States is sucrose. The Company has a specialized
sweetener procurement staff and has not experienced any
difficulties in obtaining its requirements. In the United States
and certain other countries, the Company has authorized the use
of high fructose corn syrup in syrup for Coca-Cola and other
Company Trademark Beverages for use in both fountain syrup and
finished beverages in bottles and cans.
Generally, raw materials utilized by the Company in its
business are readily available from numerous sources. However,
aspartame, which is usually used alone or in combination with
either saccharin or acesulfame potassium in the Company's low-
calorie soft drink products, is currently purchased by the
Company primarily from The NutraSweet Kelco Company, a subsidiary
of Monsanto Company, and from Holland Sweetener. Acesulfame
potassium is currently purchased from Hoechst Aktiengesellschaft.
With regard to juice and juice-drink products, the citrus
industry is subject to the variability of weather conditions, in
particular the possibility of freezes in central Florida, which
may result in higher prices and lower consumer demand for orange
juice throughout the industry. Due to the Company's long-
standing relationship with a supplier of high-quality Brazilian
orange juice concentrate, the supply of juice available that
meets the Company's standards is normally adequate to meet
demand.
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PATENTS, TRADE SECRETS, TRADEMARKS AND COPYRIGHTS
The Company is the owner of numerous patents, copyrights and
trade secrets, as well as substantial know-how and technology
(herein collectively referred to as "technology"), which relate
to its products and the processes for their production, the
packages used for its products, the design and operation of
various processes and equipment used in its business and certain
quality assurance and financial software. Some of the technology
is licensed to suppliers and other parties. The Company's soft
drink and other beverage formulae are among the important trade
secrets of the Company.
The Company owns numerous trademarks which are very important
to its business. Depending upon the jurisdiction, trademarks are
valid as long as they are in use and/or their registrations are
properly maintained and they have not been found to have become
generic. Registrations of trademarks can generally be renewed
indefinitely as long as the trademarks are in use. The majority
of the Company's trademark license agreements are included in the
Company's bottler agreements. The Company has registered and
licenses the right to use its trademarks in conjunction with
certain merchandise other than soft drinks.
GOVERNMENTAL REGULATION
The production, distribution and sale in the United States of
many of the Company's products are subject to the Federal Food,
Drug and Cosmetic Act; the Occupational Safety and Health Act;
the Lanham Act; various environmental statutes; and various other
federal, state and local statutes regulating the production,
transportation, sale, safety, advertising, labeling and
ingredients of such products.
A California law requires that any person who exposes another
to a carcinogen or a reproductive toxicant must provide a warning
to that effect. Because the law does not define quantitative
thresholds below which a warning is not required, virtually all
food manufacturers are confronted with the possibility of having
to provide warnings on their food products due to the presence of
trace amounts of defined substances. Regulations implementing
the law exempt manufacturers from providing the required warning
if it can be demonstrated that the defined substances occur
naturally in the product or are present in municipal water used
to manufacture the product. The Company has assessed the impact
of the law and its implementing regulations on its soft drink
products and other products and has concluded that none of its
products currently requires a warning under the law. The Company
cannot predict whether, or to what extent, food industry efforts
to minimize the law's impact on foods will succeed; nor can the
Company predict what impact, either in terms of direct costs or
diminished sales, imposition of the law will have.
Bottlers of the Company's beverage products presently offer
non-refillable containers in all areas of the United States and
Canada. Many such bottlers also offer refillable containers,
although overall U.S. sales in refillable containers are
relatively limited. Measures have been enacted in various
localities and states which require that a deposit be charged for
certain non-refillable beverage containers. The precise
requirements imposed by these measures vary. Deposit proposals
have been introduced in other states and localities and in
Congress, and the Company anticipates that similar legislation
may be introduced in the future at both the state and the federal
level.
All of the Company's facilities in the United States are
subject to federal, state and local environmental laws and
regulations. Compliance with these provisions has not had, and
the Company does not expect such compliance to have, any material
adverse effect upon the Company's capital expenditures, net
income or competitive position.
EMPLOYEES
As of December 31, 1996, the Company and its subsidiaries
employed approximately 26,000 persons, down from 32,000 in 1995,
due primarily to divestitures of juice processing plants in
Florida and certain Company-owned bottling operations in Europe
and Latin America. Approximately 9,000 of these employees are
located in the United States. The Company, through its divisions
and subsidiaries, has entered into numerous collective bargaining
agreements, and the Company has no reason to believe it will not
be able to renegotiate any such
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agreements on satisfactory terms. The Company believes that its
relations with its employees are generally satisfactory.
FINANCIAL INFORMATION ON GEOGRAPHIC AREAS
For financial information on operations in geographic areas,
see page 66 of the Annual Report to Share Owners for the year
ended December 31, 1996, which is incorporated herein by
reference.
ITEM 2. PROPERTIES
The Company's worldwide headquarters is located on a 40-acre
office complex in Atlanta, Georgia. The complex includes the
approximately 480,000 square foot headquarters building, the
approximately 731,000 square foot Coca-Cola USA building and, in
addition, an approximately 232,000 square foot office building.
Also located in the complex are several other buildings,
including the technical and engineering facilities, learning
center and the Company's Reception Center. The Company leases
approximately 259,000 square feet of office space at Ten
Peachtree Place, Atlanta, Georgia, owned by a joint venture of
which an indirect subsidiary of the Company is a partner. The
Company and its subsidiaries and divisions have facilities for
administrative operations, manufacturing, processing, packaging,
packing, storage and warehousing throughout the United States.
The Company owns and operates 36 principal beverage
concentrate and/or syrup manufacturing plants throughout the
world. The Company currently owns or holds a majority interest
in 33 operations with 31 principal beverage bottling and canning
plants located outside the United States.
The Minute Maid Company, whose business headquarters is
located in Houston, Texas, occupies its own office building,
which contains approximately 330,000 square feet. The Minute
Maid Company operates nine production facilities throughout the
United States and Canada and utilizes a system of contract
packers to produce and distribute certain products in areas where
The Minute Maid Company does not have its own manufacturing
centers or during periods when it experiences manufacturing
overflow.
The Company directly or through wholly owned subsidiaries owns
or leases additional real estate throughout the world, including
a wholly owned office and retail building at 711 Fifth Avenue in
New York, New York. This real estate is used as office space by
the Company or, in the case of some owned property, leased to
others.
Management believes that the facilities for the production of
its products are suitable and adequate for the business conducted
therein, that they are being appropriately utilized in line with
past experience and that they have sufficient production capacity
for their present intended purposes. The extent of utilization
of such facilities varies based upon the seasonal demand for
product. While it is not possible to measure with any degree of
certainty or uniformity the productive capacity and extent of
utilization of these facilities, management believes that
additional production can be obtained at the existing facilities
by the addition of personnel and capital equipment and, in some
facilities, the addition of shifts of personnel or expansion of
such facilities. The Company continuously reviews its
anticipated requirements for facilities and, on the basis of that
review, may from time to time acquire additional facilities
and/or dispose of existing facilities.
ITEM 3. LEGAL PROCEEDINGS
In May 1993, the Company discovered that its Carolina, Puerto
Rico plant was unintentionally discharging, without a permit,
process wastewater to a stormwater sewer which ultimately
discharged to a surface waterbody. The Company immediately
remedied the unintentional discharge and reported it to
appropriate environmental agencies. The plant was sold in 1994;
however, the Company has agreed to retain any potential legal
liability resulting from the unintentional discharge. The
statutory maximum penalty which could be sought against the
Company is in excess of $100,000.
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.
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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 1994, the
federal Lanham Act suit was tried and resulted in a jury verdict
in favor of The Seven-Up Company on certain of its claims. The
jury awarded The Seven-Up Company a total of $2.53 million in
damages. In December 1994, the federal court entered an order
setting aside that damage award and awarded judgment in favor of
the Company notwithstanding the verdict. The Seven-Up Company
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. On February 14, 1995, the state court granted that
motion and dismissed all of The Seven-Up Company's remaining
claims. The Seven-Up Company appealed that ruling as well.
On July 8, 1996, the U.S. Court of Appeals for the Fifth
Circuit affirmed the federal trial court's decision granting the
Company's motion for judgment in its favor notwithstanding the
jury's verdict for The Seven-Up Company.
On August 28, 1996, the Texas Court of Appeals affirmed the
summary judgment that the trial court had granted in the
Company's favor dismissing all of The Seven-Up Company's state
claims as barred by the doctrine of res judicata. On
September 12, 1996, The Seven-Up Company filed a motion for a
rehearing of this decision, which was denied by the Texas Court
of Appeals on October 23, 1996. On November 22, 1996, The
Seven-Up Company filed an application for writ of error with the
Texas Supreme Court. The Company's papers in opposition to the
granting of the writ of error were filed on December 16, 1996.
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 beverages 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 beverages
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, 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 beverages during the period from
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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 thereafter filed a notice of appeal and also
asked the Court to reconsider its earlier opinion. The latter
request was denied by the Court on October 31, 1995. On
August 12, 1996, the Appellate Division of the New York Supreme
Court affirmed the ruling of the lower court in favor of the
Company and other defendants. Plaintiffs thereafter filed a
motion for leave to appeal to the New York Court of Appeals,
which motion was opposed by the defendants. On November 26,
1996, the New York Court of Appeals denied plaintiffs' motion,
thereby ending this litigation.
On January 30, 1997, the Brazilian Federal Revenue Service
issued Notices of Assessment to Recofarma Industrias do Amazonas
Ltda. ("Recofarma"), an indirect wholly owned subsidiary of the
Company, for the period from January 1, 1992 to February 28,
1994. The assessments allege that Recofarma should have paid a
Brazilian excise tax on intra-company transfers of product
manufactured at its Manaus plant to its warehouse in Rio de
Janeiro. Assessments of tax, interest and penalties total
approximately $530 million as of the assessment date and accrue
interest from such date. The transfer of product from the plant
to the warehouse, which was discontinued in February 1994, was
the subject of a favorable advance ruling issued by the Federal
Revenue Service on September 24, 1990. In the Company's opinion,
the ruling has continuing effect and Recofarma's operations
conformed with the ruling. The Company intends to timely contest
the assessments through the Brazilian Federal Revenue Service
administrative appeals process.
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, will not have a material adverse
effect on the financial condition of the Company and its
subsidiaries taken as a whole.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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ITEM X. EXECUTIVE OFFICERS OF THE COMPANY
The following are the executive officers of the Company:
Roberto C. Goizueta, 65, is Chief Executive Officer and
Chairman of the Board of Directors of the Company. In August
1980, Mr. Goizueta was elected Chief Executive Officer and
Chairman of the Board effective March 1981, at which time he
assumed these positions.
M. Douglas Ivester, 49, is President and Chief Operating
Officer and a Director of the Company. In January 1985, Mr.
Ivester was elected Senior Vice President and Chief Financial
Officer of the Company and served in that capacity until June
1989, when he was appointed President of the European
Community Group of the International Business Sector. He was
appointed President of Coca-Cola USA in August 1990, and was
appointed President of the North America Business Sector in
September 1991. He served in the latter capacity until April
1993 when he was elected Executive Vice President of the
Company and Principal Operating Officer/North America. Mr.
Ivester was elected to his current positions in July 1994.
James E. Chestnut, 46, is Senior Vice President and Chief
Financial Officer of the Company. Mr. Chestnut joined the
Company in 1972 in London. In 1984, he was named Finance
Manager for the Philippine Region in Manila and, in 1987,
Manager of International Treasury Services, Pacific Group, in
Atlanta. He was named Finance Manager for the North Pacific
Division of the International Business Sector in 1989 before
being elected Vice President and Controller of the Company in
1993. He was elected to his present position in July 1994.
Jack L. Stahl, 43, is Senior Vice President of the Company
and President of the North America Group. In March 1985, Mr.
Stahl was named Manager, Planning and Business Development
and was appointed Assistant Vice President in April 1985. He
was elected Vice President and Controller in February 1988
and served in that capacity until he was elected Senior Vice
President and Chief Financial Officer in June 1989. He was
appointed to his present position in July 1994.
E. Neville Isdell, 53, is Senior Vice President of the
Company and President of the Greater Europe Group. Mr.
Isdell became President of the Company's Central European
Division in July 1985 and was elected Senior Vice President
of the Company and appointed President of the Northeast
Europe/Africa Group effective in January 1989. Effective
January 1993 he became President of the Northeast
Europe/Middle East Group of the International Business
Sector. He was appointed to his present position in January
1995.
Douglas N. Daft, 53, is Senior Vice President of the
Company and President of the Middle and Far East Group. In
November 1984, Mr. Daft was appointed President of Coca-Cola
Central Pacific Ltd. In October 1987, he was appointed
Senior Vice President of the Pacific Group of the
International Business Sector. In January 1989, he was named
President of Coca-Cola (Japan) Company, Limited and President
of the North Pacific Division of the International Business
Sector. Effective 1991 he was elected Senior Vice President
of the Company and named President of the Pacific Group of
the International Business Sector. He was appointed to his
current position, effective January 1995.
Carl Ware, 53, is Senior Vice President of the Company and
President of the Africa Group. In 1979, Mr. Ware was
appointed Vice President, Special Markets, Coca-Cola USA. In
March 1982, he was appointed Vice President, Urban Affairs,
of the Company. He was elected Senior Vice President and
Director, Corporate External Affairs in 1986 and became
Deputy Group President of the Northeast Europe/Africa Group
of the International Business Sector in July 1991, a position
he held until he was named to his current position, effective
January 1993.
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Timothy J. Haas, 50, is Senior Vice President of the
Company and President of the Latin America Group. Mr. Haas
was appointed Vice President, Sales, of Coca-Cola Foods in
1983 and Senior Vice President, Sales, of Coca-Cola Foods in
1985. In March 1991, he was appointed President and Chief
Executive Officer of Coca-Cola Foods. In April 1991, he was
elected Vice President of the Company. In 1995, he was named
Executive Vice President of the Latin America Group and
served in that capacity until he was appointed President of
the Latin America Group, effective January 1, 1997. He was
elected Senior Vice President in February 1997.
Ralph H. Cooper, 57, is Senior Vice President of the
Company and President and Chief Executive Officer of The
Minute Maid Company, formerly known as Coca-Cola Foods. Mr.
Cooper was appointed Senior Vice President of the Europe and
Africa Group in July 1984 and was named Senior Vice President
of Coca-Cola International and President of the Northwest
European Division in January 1989. He was elected Senior
Vice President of the Company and President of the European
Community Group of the International Soft Drink Business
Sector in August 1990. In January 1995, he was named
Executive Vice President of Coca-Cola Foods and served in
that capacity until he was appointed President and Chief
Executive Officer in July 1995.
Joseph R. Gladden, Jr., 54, is Senior Vice President and
General Counsel of the Company. In October 1985, Mr. Gladden
was elected Vice President. He was named Deputy General
Counsel in October 1987 and served in that capacity until he
was elected Vice President and General Counsel in April 1990.
He was elected Senior Vice President in April 1991.
Sergio Zyman, 51, is Senior Vice President of the Company
and Chief Marketing Officer. Mr. Zyman first joined the
Company in 1979 and later served as Senior Vice President of
Marketing for Coca-Cola USA until 1986. After a seven year
absence from the Company, during which he acted as consultant
to different companies through Sergio Zyman & Co. and Core
Strategy Group, he returned to assume his current position in
August 1993.
Earl T. Leonard, Jr., 60, is Senior Vice President of the
Company with responsibility for Corporate Affairs. Mr.
Leonard was elected to his current position in April 1983.
Anton Amon, 53, is Senior Vice President of the Company and
Manager of the Company's Product Integrity Division. Dr.
Amon was named Senior Vice President of Coca-Cola USA in
1983. In 1988, he joined Coca-Cola Enterprises as Vice
President, Operations. In September 1989, Dr. Amon returned
to the Company as director, Corporate Quality Assurance. He
was elected Vice President in October 1989. He became
Manager, Product Integrity Division, in January 1992 and was
elected to his current position in July 1992.
George Gourlay, 55, is Senior Vice President of the Company
and Manager of the Technical Operations Division. Mr.
Gourlay was named Manager, Corporate Concentrate Operations
in 1986, named Assistant Vice President in 1988, and was
elected Vice President in 1989. Mr. Gourlay became head of
the Technical Operations Division in January 1992 and was
elected to his current position in July 1992.
All executive officers serve at the pleasure of the Board of
Directors.
There is no family relationship between any of the executive
officers of the Company.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
SHARE-OWNER MATTERS
"Financial Review Incorporating Management's Discussion and
Analysis" on pages 39 through 47, "Selected Financial Data" for
the years 1995 and 1996 on page 48, "Stock Prices" on page 69 and
"Common Stock" and "Dividends," under the heading "Share-Owner
Information" on page 72 of the Company's Annual Report to Share
Owners for the year ended December 31, 1996, are incorporated
herein by reference.
During the fiscal year ended December 31, 1996, no equity
securities of the Registrant were sold by the Registrant which
were not registered under the Securities Act of 1933, as amended.
ITEM 6. SELECTED FINANCIAL DATA
"Selected Financial Data" for the years 1992 through 1996, on
pages 48 and 49 of the Company's Annual Report to Share Owners
for the year ended December 31, 1996, is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
"Financial Review Incorporating Management's Discussion and
Analysis" on pages 39 through 47 of the Company's Annual Report
to Share Owners for the year ended December 31, 1996, is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the
Registrant and its subsidiaries, included in the Company's Annual
Report to Share Owners for the year ended December 31, 1996, are
incorporated herein by reference:
Consolidated Balance Sheets -- December 31, 1996 and 1995.
Consolidated Statements of Income -- Years ended December
31, 1996, 1995 and 1994.
Consolidated Statements of Cash Flows -- Years ended
December 31, 1996, 1995 and 1994.
Consolidated Statements of Share-Owners' Equity -- Years
ended December 31, 1996, 1995 and 1994.
Notes to Consolidated Financial Statements.
Report of Independent Auditors.
"Quarterly Data (Unaudited)" on page 69 of the Company's Annual
Report to Share Owners for the year ended December 31, 1996, is
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
For information on Directors of the Registrant, the subsections
under the heading "Election of Directors" entitled "Board of
Directors" and "Recommendation of the Board of Directors
Concerning the Election of Directors" on pages 2 through 5 of the
Company's Proxy Statement for the Annual Meeting of Share Owners
to be held April 16, 1997, is incorporated herein by reference.
See Item X in Part I hereof for information regarding executive
officers of the Registrant.
ITEM 11. EXECUTIVE COMPENSATION
The subsection under the heading "Election of Directors"
entitled "Committees of the Board of Directors; Meetings and
Compensation of Directors" on pages 8 and 9 and the portion of
the section entitled "Executive Compensation" set forth on pages
10 through 17 of the Company's Proxy Statement for the Annual
Meeting of Share Owners to be held April 16, 1997, are
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The subsections under the heading "Election of Directors"
entitled "Ownership of Equity Securities in the Company" and
"Principal Share Owners" on pages 6 through 8, and the subsection
under the heading "Certain Investee Companies" entitled
"Ownership of Securities in Coca-Cola Enterprises and Coca-Cola
Beverages" on pages 24 and 25 of the Company's Proxy Statement
for the Annual Meeting of Share Owners to be held April 16, 1997,
are incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The subsections under the heading "Election of Directors"
entitled "Committees of the Board of Directors; Meetings and
Compensation of Directors" and "Certain Transactions" on pages 8
through 10, the subsection under the heading "Executive
Compensation" entitled "Compensation Committee Interlocks and
Insider Participation" on page 23 and the subsection under the
heading "Certain Investee Companies" entitled "Certain
Transactions with Investee Companies" on pages 23 and 24 of the
Company's Proxy Statement for the Annual Meeting of Share Owners
to be held April 16, 1997, are incorporated herein by reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON
FORM 8-K
(a) 1. Financial Statements
The following consolidated financial statements of The
Coca-Cola Company and subsidiaries, included in the
Registrant's Annual Report to Share Owners for the year
ended December 31, 1996, are incorporated by reference in
Part II, Item 8:
Consolidated Balance Sheets -- December 31, 1996 and
1995.
Consolidated Statements of Income -- Years ended December
31, 1996, 1995 and 1994.
Consolidated Statements of Cash Flows -- Years ended
December 31, 1996, 1995 and 1994.
Consolidated Statements of Share-Owners' Equity -- Years
ended December 31, 1996, 1995 and 1994.
Notes to Consolidated Financial Statements.
Report of Independent Auditors.
2. The following consolidated financial statement schedule of
The Coca-Cola Company and subsidiaries is included in Item 14(d):
Schedule II -- Valuation and Qualifying Accounts.
All other schedules for which provision is made in the
applicable accounting regulation of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable and, therefore, have
been omitted.
3. Exhibits
EXHIBIT NO.
- -----------
3.1 Certificate of Incorporation of the Registrant, including
Amendment of Certificate of Incorporation, effective May
1, 1996 -- incorporated herein by reference to Exhibit 3
of the Registrant's Form 10-Q Quarterly Report for the
quarter ended March 31, 1996. (With regard to applicable
cross references in this report, the Company's Current,
Quarterly and Annual Reports are filed with the
Securities and Exchange Commission under File No.
1-2217.)
3.2 By-Laws of the Registrant, as amended and restated through
October 17, 1996 -- incorporated herein by reference to
Exhibit 3 of the Registrant's Form 10-Q Quarterly Report
for the quarter ended September 30, 1996.
4.1 The Registrant agrees to furnish to the Securities and
Exchange Commission, upon request, a copy of any
instrument defining the rights of holders of long-term
debt of the Registrant and all of its consolidated
subsidiaries and unconsolidated subsidiaries for which
financial statements are required to be filed with the
Securities and Exchange Commission.
10.1 Long Term Performance Incentive Plan of the Registrant, as
amended November 23, 1988 -- incorporated herein by
reference to Exhibit 10.1 of the Registrant's Form 10-K
Annual Report for the year ended December 31, 1995.*
10.2 The Key Executive Retirement Plan of the Registrant, as
amended -- incorporated herein by reference to Exhibit
10.2 of the Registrant's Form 10-K Annual Report for the
year ended December 31, 1995.*
10.3 Supplemental Disability Plan of the Registrant, as amended
-- incorporated herein by reference to Exhibit 10.3 of
the Registrant's Form 10-K Annual Report for the year
ended December 31, 1991.*
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EXHIBIT NO.
- -----------
10.4 Annual Performance Incentive Plan of the Registrant, as
amended -- incorporated herein by reference to Exhibit
10.4 of the Registrant's Form 10-K Annual Report for the
year ended December 31, 1995.*
10.5 Agreement, dated February 28, 1983, between the Registrant
and Roberto C. Goizueta -- incorporated herein by
reference to Exhibit 10.5 of the Registrant's Form 10-K
Annual Report for the year ended December 31, 1994.*
10.6 Amendment, dated February 10, 1984, to the Agreement dated
February 28, 1983, between the Registrant and Roberto C.
Goizueta -- incorporated herein by reference to Exhibit
10.6 of the Registrant's Form 10-K Annual Report for the
year ended December 31, 1994.*
10.7 1983 Stock Option Plan of the Registrant, as amended --
incorporated herein by reference to Exhibit 10.8 of the
Registrant's Form 10-K Annual Report for the year ended
December 31, 1991.*
10.8.1 1987 Stock Option Plan of the Registrant, as amended
through October 17, 1996.*
10.8.2 Resolutions, dated October 17, 1996, adopted by the
Compensation Committee of the Board of Directors of the
Registrant.*
10.8.3 Resolutions, dated October 17, 1996, adopted by the Stock
Option Subcommittee of the Compensation Committee of the
Board of Directors of the Registrant.*
10.9.1 1991 Stock Option Plan of the Registrant, as amended
through October 17, 1996.*
10.9.2 Resolutions, dated October 17, 1996, adopted by the
Compensation Committee of the Board of Directors of the
Registrant.*
10.9.3 Resolutions, dated October 17, 1996, adopted by the Stock
Option Subcommittee of the Compensation Committee of the
Board of Directors of the Registrant.*
10.10 1983 Restricted Stock Award Plan of the Registrant, as
amended -- incorporated herein by reference to Exhibit
10.11 of the Registrant's Form 10-K Annual Report for the
year ended December 31, 1991.*
10.11.1 1989 Restricted Stock Award Plan of the Registrant, as
amended through October 17, 1996.*
10.11.2 Resolutions, dated October 17, 1996, adopted by the
Restricted Stock Subcommittee of the Compensation
Committee of the Board of Directors of the Registrant.*
10.12 Performance Unit Agreement, dated December 19, 1985,
between the Registrant and Roberto C. Goizueta, as
amended -- incorporated herein by reference to Exhibit
10.12 of the Registrant's Form 10-K Annual Report for the
year ended December 31, 1995.*
10.13 Compensation Deferral & Investment Program, as amended,
including Amendment Number Four dated November 28, 1995 -
- incorporated herein by reference to Exhibit 10.13 of
the Registrant's Form 10-K Annual Report for the year
ended December 31, 1995.*
10.14 Restricted Stock Agreement, dated August 4, 1982, between
the Registrant and Roberto C. Goizueta, as amended --
incorporated herein by reference to Exhibit 10.14 of the
Registrant's Form 10-K Annual Report for the year ended
December 31, 1995.*
10.15 Incentive Unit Agreement, dated November 29, 1988, between
the Registrant and Roberto C. Goizueta, as amended --
incorporated herein by reference to Exhibit 10.15 of the
Registrant's Form 10-K Annual Report for the year ended
December 31, 1995.*
10.16 Special Medical Insurance Plan of the Registrant, as
amended -- incorporated herein by reference to Exhibit
10.16 of the Registrant's Form 10-K Annual Report for the
year ended December 31, 1995.*
10.17.1 Supplemental Benefit Plan of the Registrant, as amended -
- incorporated herein by reference to Exhibit 10.17 of
the Registrant's Form 10-K Annual Report for the year
ended December 31, 1993.*
17
<PAGE>
<PAGE>
EXHIBIT NO.
- -----------
10.17.2 Amendment Number Five to the Supplemental Benefit Plan of
the Registrant.*
10.18 Retirement Plan for the Board of Directors of Registrant,
as amended -- incorporated herein by reference to Exhibit
10.22 of the Registrant's Form 10-K Annual Report for the
year ended December 31, 1991.*
10.19 Deferral Plan for the Board of Directors of Registrant --
incorporated herein by reference to Exhibit 10.23 of the
Registrant's Form 10-K Annual Report for the year ended
December 31, 1992.*
10.20 Deferred Compensation Agreement for Officers or Key
Executives of the Registrant -- incorporated herein by
reference to Exhibit 10.20 of the Registrant's Form 10-K
Annual Report for the year ended December 31, 1993.*
10.21 Long Term Performance Incentive Plan of the Registrant, as
amended February 16, 1994 -- incorporated herein by
reference to Exhibit 10.21 of the Registrant's Form 10-K
Annual Report for the year ended December 31, 1993.*
10.22 Executive Performance Incentive Plan, as amended --
incorporated herein by reference to Exhibit 10.22 of the
Registrant's Form 10-K Annual Report for the year ended
December 31, 1994.*
10.23 Letter Agreement, dated May 3, 1994, between the
Registrant and Sergio S. Zyman -- incorporated herein by
reference to Exhibit 10 of the Registrant's Form 10-Q
Quarterly Report for the quarter ended March 31, 1994.*
10.24 Form of United States Master Bottle Contract, as amended,
between the Company and Coca-Cola Enterprises Inc.
("Coca-Cola Enterprises") or its subsidiaries --
incorporated herein by reference to Exhibit 10.24 of
Coca-Cola Enterprises' Annual Report on Form 10-K for the
fiscal year ended December 30, 1988 (File No. 01-09300).
10.25 Letter Agreement dated March 15, 1989, between the
Registrant and Coca-Cola Enterprises regarding the United
States Master Bottle Contracts, as amended by letter
agreement dated December 18, 1991 -- incorporated herein
by reference to Exhibit 10.23 of Coca-Cola Enterprises'
Annual Report on Form 10-K for the fiscal year ended
December 31, 1991 (File No. 01-09300).
12.1 Computation of Ratios of Earnings to Fixed Charges for the
years ended December 31, 1996, 1995, 1994, 1993 and 1992.
13.1 Portions of the Registrant's 1996 Annual Report to Share
Owners expressly incorporated by reference herein: Pages
39-67, 69, 72 and 73 (definitions of "Dividend Payout
Ratio," "Economic Profit," "Free Cash Flow," "Net Debt
and Net Capital," "Return on Capital," "Return on Common
Equity," "Total Capital" and "Total Market Value of
Common Stock").
21.1 List of subsidiaries of the Registrant as of December 31,
1996.
23.1 Consent of Independent Auditors.
24.1 Powers of Attorney of Officers and Directors signing this
report.
27.1 Financial Data Schedule for the year ended December 31,
1996, submitted to the Securities and Exchange Commission
in electronic format.
99.1 Cautionary Statement Relative to Forward-Looking
Statements.
- -------------------
* Management contracts and compensatory plans and arrangements
required to be filed as exhibits to this form pursuant to Item
14(c) of this report.
18
<PAGE>
<PAGE>
(b) Reports on Form 8-K.
The Registrant did not file any reports on Form 8-K during
the last quarter of the period covered by this report.
(c) Exhibits -- The response to this portion of Item 14 is
submitted as a separate section of this report.
(d) Financial Statement Schedule -- The response to this portion
of Item 14 is submitted as a separate section of this report.
19
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
By: /s/ ROBERTO C. GOIZUETA
------------------------
Roberto C. Goizueta
Chairman, Board of Directors,
Chief Executive Officer
and a Director
Date: March 11, 1997
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the
dates indicated.
/s/ ROBERTO C. GOIZUETA *
- ---------------------------- --------------------------
Roberto C. Goizueta Cathleen P. Black
Chairman, Board of Directors, Director
Chief Executive Officer and
a Director
(Principal Executive Officer)
March 11, 1997 March 11, 1997
/s/ JAMES E. CHESTNUT *
- ---------------------------- --------------------------
James E. Chestnut Warren E. Buffett
Senior Vice President and Chief Director
Financial Officer
(Principal Financial Officer)
March 11, 1997 March 11, 1997
/s/ GARY P. FAYARD *
- ---------------------------- --------------------------
Gary P. Fayard Charles W. Duncan, Jr.
Vice President and Controller Director
(Principal Accounting Officer)
March 11, 1997 March 11, 1997
* *
- ---------------------------- --------------------------
Herbert A. Allen M. Douglas Ivester
Director Director
March 11, 1997 March 11, 1997
* *
- ---------------------------- --------------------------
Ronald W. Allen Susan B. King
Director Director
March 11, 1997 March 11, 1997
20
<PAGE>
<PAGE>
* *
- ---------------------------- --------------------------
Donald F. McHenry James D. Robinson III
Director Director
March 11, 1997 March 11, 1997
* *
- ---------------------------- --------------------------
Sam Nunn Peter V. Ueberroth
Director Director
March 11, 1997 March 11, 1997
* *
- ---------------------------- --------------------------
Paul F. Oreffice James B. Williams
Director Director
March 11, 1997 March 11, 1997
* By: /s/ CAROL C. HAYES
Carol C. Hayes
Attorney-in-fact
March 11, 1997
21
<PAGE>
<PAGE>
ANNUAL REPORT ON FORM 10-K
ITEM 14(d)
FINANCIAL STATEMENT SCHEDULE
YEAR ENDED DECEMBER 31, 1996
THE COCA-COLA COMPANY AND SUBSIDIARIES
<PAGE>
<PAGE>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
THE COCA-COLA COMPANY AND SUBSIDIARIES
Year ended December 31, 1996
(in millions)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- -----------------------------------------------------------------------------------------
Additions
--------------------
(1) (2)
Balance at Charged to Charged Balance
Beginning of Costs and to Other Deductions at End
Description Period Expenses Accounts (Note 1) of Period
- ----------- ------------ ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED IN THE
BALANCE SHEET FROM THE
ASSETS TO WHICH THEY
APPLY
Allowance for losses on:
Trade accounts receivable.. $ 34 $ 9 $ - $ 13 $ 30
Miscellaneous investments
and other assets........... 55 287 - 3 339
Deferred tax assets........ 42 - - 24 18
---- ---- --- --- ----
$ 131 $ 296 $ - $ 40 $ 387
==== ==== === === ====
</TABLE>
- ---------------------------------
Note 1 - The amounts shown in Column D consist of the following:
<TABLE>
<CAPTION>
Trade Miscellaneous Deferred
Accounts Investments Tax
Receivable and Other Assets Assets Total
---------- ---------------- -------- -----
<S> <C> <C> <C> <C>
Charge off of uncollectible accounts... $ 6 $ - $ - $ 6
Foreign exchange adjustments........... 1 - - 1
Other transactions..................... 6 3 24 33
--- --- --- ---
$ 13 $ 3 $ 24 $ 40
=== === === ===
</TABLE>
F-1
<PAGE>
<PAGE>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
THE COCA-COLA COMPANY AND SUBSIDIARIES
Year ended December 31, 1995
(in millions)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- -----------------------------------------------------------------------------------------
Additions
--------------------
(1) (2)
Balance at Charged to Charged Balance
Beginning of Costs and to Other Deductions at End
Description Period Expenses Accounts (Note 1) of Period
- ----------- ------------ ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED IN THE
BALANCE SHEET FROM THE
ASSETS TO WHICH THEY
APPLY
Allowance for losses on:
Trade accounts receivable.. $ 33 $ 15 $ - $ 14 $ 34
Miscellaneous investments and
other assets............... 79 5 - 29 55
Deferred tax assets........ 46 15 - 19 42
---- --- --- --- ----
$ 158 $ 35 $ - $ 62 $ 131
==== === === === ====
</TABLE>
- ---------------------------------
Note 1 - The amounts shown in Column D consist of the following:
<TABLE>
<CAPTION>
Trade Miscellaneous Deferred
Accounts Investments Tax
Receivable and Other Assets Assets Total
---------- ---------------- -------- -----
<S> <C> <C> <C> <C>
Charge off of uncollectible accounts... $ 13 $ 6 $ - $ 19
Foreign exchange adjustments........... (1) - - (1)
Other transactions..................... 2 23 19 44
---- --- --- ----
$ 14 $ 29 $ 19 $ 62
==== === === ===
</TABLE>
F-2
<PAGE>
<PAGE>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
THE COCA-COLA COMPANY AND SUBSIDIARIES
Year ended December 31, 1994
(in millions)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- -----------------------------------------------------------------------------------------
Additions
--------------------
(1) (2)
Balance at Charged to Charged Balance
Beginning of Costs and to Other Deductions at End
Description Period Expenses Accounts (Note 1) of Period
- ----------- ------------ ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED IN THE
BALANCE SHEET FROM THE
ASSETS TO WHICH THEY
APPLY
Allowance for losses on:
Trade accounts receivable.. $ 39 $ 12 $ - $ 18 $ 33
Miscellaneous investments and
other assets............... 71 27 - 19 79
Deferred tax assets........ 75 - - 29 46
---- --- --- --- ----
$ 185 $ 39 $ - $ 66 $ 158
==== === === === ====
</TABLE>
- ---------------------------------
Note 1 - The amounts shown in Column D consist of the following:
<TABLE>
<CAPTION>
Trade Miscellaneous Deferred
Accounts Investments Tax
Receivable and Other Assets Assets Total
---------- ---------------- -------- ------
<S> <C> <C> <C> <C>
Charge off of uncollectible accounts.. $ 15 $ - $ - $ 15
Foreign exchange adjustments.......... (1) - - (1)
Other transactions.................... 4 19 29 52
--- --- --- ---
$ 18 $ 19 $ 29 $ 66
=== === === ===
</TABLE>
F-3
<PAGE>
<PAGE>
EXHIBIT INDEX
DESCRIPTION
EXHIBIT NO.
- -----------
3.1 Certificate of Incorporation of the Registrant,
including Amendment of Certificate of Incorporation,
effective May 1, 1996 -- incorporated herein by
reference to Exhibit 3 of the Registrant's Form 10-Q
Quarterly Report for the quarter ended March 31, 1996.
(With regard to applicable cross references in this
report, the Company's Current, Quarterly and Annual
Reports are filed with the Securities and Exchange
Commission under File No. 1-2217.)
3.2 By-Laws of the Registrant, as amended and restated
through October 17, 1996 -- incorporated herein by
reference to Exhibit 3 of the Registrant's Form 10-Q
Quarterly Report for the quarter ended September 30,
1996.
4.1 The Registrant agrees to furnish to the Securities and
Exchange Commission, upon request, a copy of any
instrument defining the rights of holders of long-term
debt of the Registrant and all of its consolidated
subsidiaries and unconsolidated subsidiaries for which
financial statements are required to be filed with the
Securities and Exchange Commission.
10.1 Long Term Performance Incentive Plan of the Registrant,
as amended November 23, 1988 -- incorporated herein by
reference to Exhibit 10.1 of the Registrant's
Form 10-K Annual Report for the year ended
December 31, 1995.*
10.2 The Key Executive Retirement Plan of the Registrant, as
amended -- incorporated herein by reference to Exhibit
10.2 of the Registrant's Form 10-K Annual Report for
the year ended December 31, 1995.*
10.3 Supplemental Disability Plan of the Registrant, as
amended -- incorporated herein by reference to Exhibit
10.3 of the Registrant's Form 10-K Annual Report for
the year ended December 31, 1991.*
10.4 Annual Performance Incentive Plan of the Registrant, as
amended -- incorporated herein by reference to Exhibit
10.4 of the Registrant's Form 10-K Annual Report for
the year ended December 31, 1995.*
10.5 Agreement, dated February 28, 1983, between the
Registrant and Roberto C. Goizueta -- incorporated
herein by reference to Exhibit 10.5 of the
Registrant's Form 10-K Annual Report for the year
ended December 31, 1994.*
10.6 Amendment, dated February 10, 1984, to the Agreement
dated February 28, 1983, between the Registrant and
Roberto C. Goizueta -- incorporated herein by
reference to Exhibit 10.6 of the Registrant's
Form 10-K Annual Report for the year ended December
31, 1994.*
<PAGE>
<PAGE>
EXHIBIT NO.
- -----------
10.7 1983 Stock Option Plan of the Registrant, as amended --
incorporated herein by reference to Exhibit 10.8 of
the Registrant's Form 10-K Annual Report for the year
ended December 31, 1991.*
10.8.1 1987 Stock Option Plan of the Registrant, as amended
through October 17, 1996.*
10.8.2 Resolutions, dated October 17, 1996, adopted by the
Compensation Committee of the Board of Directors of
the Registrant.*
10.8.3 Resolutions, dated October 17, 1996, adopted by the
Stock Option Subcommittee of the Compensation
Committee of the Board of Directors of the
Registrant.*
10.9.1 1991 Stock Option Plan of the Registrant, as amended
through October 17, 1996.*
10.9.2 Resolutions, dated October 17, 1996, adopted by the
Compensation Committee of the Board of Directors of
the Registrant.*
10.9.3 Resolutions, dated October 17, 1996, adopted by the
Stock Option Subcommittee of the Compensation
Committee of the Board of Directors of the
Registrant.*
10.10 1983 Restricted Stock Award Plan of the Registrant, as
amended -- incorporated herein by reference to Exhibit
10.11 of the Registrant's Form 10-K Annual Report for
the year ended December 31, 1991.*
10.11.1 1989 Restricted Stock Award Plan of the Registrant, as
amended through October 17, 1996.*
10.11.2 Resolutions, dated October 17, 1996, adopted by the
Restricted Stock Subcommittee of the Compensation
Committee of the Board of Directors of the
Registrant.*
10.12 Performance Unit Agreement, dated December 19, 1985,
between the Registrant and Roberto C. Goizueta, as
amended -- incorporated herein by reference to Exhibit
10.12 of the Registrant's Form 10-K Annual Report for
10.13 Compensation Deferral & Investment Program, as amended,
including Amendment Number Four dated November 28,
1995 -- incorporated herein by reference to Exhibit
10.13 of the Registrant's Form 10-K Annual Report for
the year ended December 31, 1995.*
10.14 Restricted Stock Agreement, dated August 4, 1982,
between the Registrant and Roberto C. Goizueta, as
amended -- incorporated herein by reference to Exhibit
10.14 of the Registrant's Form 10-K Annual Report for
the year ended December 31, 1995.*
<PAGE>
<PAGE>
EXHIBIT NO.
- -----------
10.15 Incentive Unit Agreement, dated November 29, 1988,
between the Registrant and Roberto C. Goizueta, as
amended -- incorporated herein by reference to Exhibit
10.15 of the Registrant's Form 10-K Annual Report for
the year ended December 31, 1995.*
10.16 Special Medical Insurance Plan of the Registrant, as
amended -- incorporated herein by reference to Exhibit
10.16 of the Registrant's Form 10-K Annual Report for
the year ended December 31, 1995.*
10.17.1 Supplemental Benefit Plan of the Registrant, as
amended -- incorporated herein by reference to Exhibit
10.17 of the Registrant's Form 10-K Annual Report for
the year ended December 31, 1993.*
10.17.2 Amendment Number Five to the Supplemental Benefit Plan
of the Registrant.*
10.18 Retirement Plan for the Board of Directors of
Registrant, as amended -- incorporated herein by
reference to Exhibit 10.22 of the Registrant's
Form 10-K Annual Report for the year ended December
31, 1991.*
10.19 Deferral Plan for the Board of Directors of Registrant
-- incorporated herein by reference to Exhibit 10.23
of the Registrant's Form 10-K Annual Report for the
year ended December 31, 1992.*
10.20 Deferred Compensation Agreement for Officers or Key
Executives of the Registrant -- incorporated herein by
reference to Exhibit 10.20 of the Registrant's
Form 10-K Annual Report for the year ended December
31, 1993.*
10.21 Long Term Performance Incentive Plan of the Registrant,
as amended February 16, 1994 -- incorporated herein by
reference to Exhibit 10.21 of the Registrant's
Form 10-K Annual Report for the year ended December
31, 1993.*
10.22 Executive Performance Incentive Plan, as amended --
incorporated herein by reference to Exhibit 10.22 of
the Registrant's Form 10-K Annual Report for the year
ended December 31, 1994.*
10.23 Letter Agreement, dated May 3, 1994, between the
Registrant and Sergio S. Zyman -- incorporated herein
by reference to Exhibit 10 of the Registrant's Form
10-Q Quarterly Report for the quarter ended March 31,
1994.*
10.24 Form of United States Master Bottle Contract, as
amended, between the Company and Coca-Cola Enterprises
Inc. ("Coca-Cola Enterprises") or its subsidiaries --
incorporated herein by reference to Exhibit 10.24 of
Coca-Cola Enterprises' Annual Report on Form 10-K for
the fiscal year ended December 30, 1988 (File No.
01-09300).
<PAGE>
<PAGE>
EXHIBIT NO.
- -----------
10.25 Letter Agreement dated March 15, 1989, between the
Registrant and Coca-Cola Enterprises regarding the
United States Master Bottle Contracts, as amended by
letter agreement dated December 18, 1991 --
incorporated herein by reference to Exhibit 10.23 of
Coca-Cola Enterprises' Annual Report on Form 10-K for
the fiscal year ended December 31, 1991 (File No.
01-09300).
12.1 Computation of Ratios of Earnings to Fixed Charges for
the years ended December 31, 1996, 1995, 1994, 1993
and 1992.
13.1 Portions of the Registrant's 1996 Annual Report to
Share Owners expressly incorporated by reference
herein: Pages 39-67, 69, 72 and 73 (definitions of
"Dividend Payout Ratio," "Economic Profit," "Free Cash
Flow," "Net Debt and Net Capital," "Return on Capital,"
"Return on Common Equity," "Total Capital" and "Total
Market Value of Common Stock").
21.1 List of subsidiaries of the Registrant as of December
31, 1996.
23.1 Consent of Independent Auditors.
24.1 Powers of Attorney of Officers and Directors signing
this report.
27.1 Financial Data Schedule for the year ended December 31,
1996, submitted to the Securities and Exchange
Commission in electronic format.
99.1 Cautionary Statement Relative to Forward-Looking
Statements.
- -------------------
* Management contracts and compensatory plans and arrangements
required to be filed as exhibits to this form pursuant to Item
14(c) of this report.
EXHIBIT 10.8.1
THE COCA-COLA COMPANY
1987 STOCK OPTION PLAN
as amended through October 17, 1996
SECTION 1. PURPOSE
The purpose of the 1987 Stock Option Plan of The Coca-Cola
Company (the "Plan") is to advance the interest of
The Coca-Cola Company (the "Company") and its Affiliates
(as defined in Section 4 hereof) by encouraging and
enabling the acquisition of a financial interest in the
Company by officers and other key employees. In addition,
the Plan is intended to aid the Company and its Affiliates
in attracting and retaining key employees, to stimulate the
efforts of such employees and to strengthen their desire to
remain in the employ of the Company and its Affiliates.
The Company may grant stock options which constitute
"incentive stock options" ("ISOs") within the meaning of
Section 422A of the Internal Revenue Code of 1954, as
amended (the "Code"), or stock options which do not
constitute ISOs ("NSOs") (ISOs and NSOs being hereinafter
collectively referred to as "Options"). The Company may
also grant cash amounts ("Cash Awards") in connection with
certain NSOs and may grant certain officers of the Company
stock appreciation rights ("Rights") for use in connection
with Options or with other stock options granted by the
Company.
SECTION 2. ADMINISTRATION
The Plan shall be administered by a committee (the
"Committee") appointed by the Board of Directors of the
Company (the "Board") or in accordance with Section 7,
Article III of the By-Laws of the Company (as amended
through October 17, 1996) from among its members. Unless
and until its members are not qualified to serve on the
Committee pursuant to the provisions of the Plan, the
Compensation Committee of the Board shall function as the
Committee. Eligibility requirements for members of the
Committee shall comply with Rule 16b-3 promulgated pursuant
to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any successor rule or regulation. No
person, other than members of the Committee, shall have any
discretion concerning decisions regarding the Plan. Members
of the Committee shall be members of the Board who are not
eligible to participate under the Plan and who have not been
eligible to participate in the Plan for at least one (1)
year prior to the time at which they become members of the
Committee. The Committee shall determine the key employees
of the Company and its Affiliates (including officers,
whether or not they are directors) to whom, and the time or
times at which, Options, Cash Awards and Rights will be
granted, the number of shares to be subject to each Option,
the duration of each Option or Right, the time or times
within which the Option or Right may be exercised, the
cancellation of the Option, Cash Award or Right (with the
consent of the holder thereof) and the other conditions of
the grant of the Option, Cash Award or Right. The
provisions and conditions of the grants of Options, Cash
Awards and Rights need not be the same with respect to each
optionee or with respect to each Option, each Cash Award or
each Right.
The Committee may, subject to the provisions of the Plan,
establish such rules and regulations as it deems necessary
or advisable for the proper administration of the Plan, and
may make determinations and may take such other action in
connection with or in relation to the Plan as it deems
necessary or advisable. Each determination or other action
made or taken pursuant to the Plan, including interpretation
of the Plan and the specific conditions and provisions of
the Options, Cash Awards and Rights granted hereunder by the
Committee shall be final and conclusive for all purposes and
upon all persons including, but without limitation, the
Company, its Affiliates, the Committee, the Board, officers
and the affected employees of the Company and/or its
Affiliates and their respective successors in interest.
<PAGE>
<PAGE>
SECTION 3. STOCK
The stock to be issued, transferred and/or sold under the
Plan shall be shares of Common Stock, $.25 par value, of the
Company (the "Stock"). The Stock shall be made available
from authorized and unissued Common Stock of the Company or
from the Company's treasury shares. Pursuant to Section 13
of the Plan, no additional Options or Rights may be granted
under the Plan after April 15, 1992. The number of shares
subject to existing Options or Rights granted prior to such
date are subject to adjustment in accordance with Section 12
hereof. Stock subject to any unexercised portion of an
Option or Right which expires or is cancelled, surrendered
or terminated for any reason may again be subject to Options
and/or Rights granted under the Plan. Upon surrender of an
Option or a stock option granted under any other plan
heretofore or hereafter adopted by the Company and the
exercise of a Right, the number of shares of Stock subject
to the surrendered Option or stock option shall be charged
against the maximum number of shares of Stock issuable or
transferable under the Plan or the stock option plan
pursuant to which the surrendered Option or stock option was
granted, and such number of shares of Stock shall not be
issuable or transferable under such Plan or plan in the
future. The surrender of any stock option issued other than
pursuant to a stock option plan pursuant to the exercise of
a Right shall not result in a charge against the maximum
number of shares issuable or transferable under the Plan or
any other stock option plan.
SECTION 4. ELIGIBILITY
Options, Cash Awards and Rights may be granted to employees
of the Company and its Affiliates. The term "Affiliates"
shall mean any corporation or other business organization in
which the Company owns, directly or indirectly, 25 percent
or more of the voting stock or capital at the time of the
granting of such Option or Right; provided, however, that no
ISO may be granted to any employee of an Affiliate which is
not a corporation or to any employee of an Affiliate which
is not at least 50 percent owned, directly or indirectly, by
the Company. No employee shall be granted the right to
acquire pursuant to Options granted under the Plan more than
5 percent of the aggregate number of shares of Stock
issuable under the Plan.
SECTION 5. AWARDS OF OPTIONS
Except as otherwise specifically provided herein, Options
granted pursuant to the Plan shall be subject to the
following terms and conditions:
(a) OPTION PRICE. The option price shall be 100 percent of
the fair market value of the Stock on the date of grant.
The fair market value of a share of Stock shall be the
average of the high and low market prices at which a share
of Stock shall have been sold on the date of grant, or on
the next preceding trading day if such date was not a
trading date, as reported on the New York Stock Exchange
Composite Transactions listing.
(b) PAYMENT. The option price shall be paid in full at the
time of exercise. No shares shall be issued or transferred
until full payment has been received therefor. Payment may
be in cash or, with the prior approval of and upon
conditions established by the Committee, by delivery of
shares of Stock owned by the optionee. Cash payment for the
shares purchased under and NSO may be offset by the amount
of any Cash Award approved by the Committee. If payment is
made by the delivery of shares of Stock, the value of the
shares delivered shall be computed on the basis of the
average of the high and low market prices at which a share
of Stock shall have been sold on the date the optionee
elects to deliver shares of Stock upon exercise of an
Option, or on the next preceding trading day if such date
was not a trading day, as reported on the New York Stock
Exchange Composite Transactions listing.
(c) DURATION OF OPTIONS. The duration of Options shall be
determined by the Committee, but in no event shall the
duration of an Option exceed ten (10) years from the date of
its grant.
2
<PAGE>
<PAGE>
(d) OTHER TERMS AND CONDITIONS. Options may contain such
other provisions, not inconsistent with the provisions of
the Plan, as the Committee shall determine appropriate from
time to time; provided, however, that, except in the event
of a "Change in Control", death or disability of the
optionee or "Retirement", as defined in Section 10, no
Option shall be exercisable in whole or in part for a period
of twelve (12) months from the date on which the Option is
granted, and subject to the provisions of Section 10 hereof,
thereafter the ratio of the number of shares for which any
such Option is exercisable through any given date may not
exceed the ratio of the number of months (a fraction thereof
counting as a full month) between the date on which the
Option is granted and such given date to a period of thirty-
six (36) months (or such lesser period as determined by the
Committee in its discretion). The grant of an Option and/or
Right to any employee shall not affect in any way the right
of the Company and any Affiliate to terminate the employment
of the holder thereof.
(e) ISOS. The Committee, with respect to each grant of an
Option to an optionee, shall determine whether such Option
shall be an ISO, and, upon determining that an Option shall
be an ISO, shall designate it as such in the written
instrument evidencing such Option. If the written
instrument evidencing an Option does not contain a
designation that it is an ISO, it shall not be an ISO.
The aggregate fair market value (determined in each instance
on the date on which an ISO is granted) of the Stock with
respect to which ISOs are first exercisable by any optionee
in any calendar year shall not exceed $100,000 for such
optionee. If any subsidiary or Affiliate of the Company
shall adopt a stock option plan under which options
constituting incentive stock options (as defined in Section
422A(b) of the Code) may be granted, the fair market value
of the Stock on which any such incentive stock options are
granted and the times at which such incentive stock options
will first become exercisable shall be taken into account in
determining the maximum amount of ISOs which may be granted
to the optionee in any calendar year.
SECTION 6. AWARDS OF RIGHTS
The Committee may, at any time and in its discretion, grant
to any officer of the Company who is awarded or who holds
an outstanding Option or any other outstanding stock option
granted by the Company the right to surrender such Option
(to the extent any Option or such other stock option is
otherwise exercisable) and to receive from the Company an
amount equal to the excess, if any, of the fair market value
of the Stock with respect to which such Option is
surrendered on the date of such surrender over the option
price of the Option or other stock option surrendered. No
ISO may be surrendered in connection with the exercise of a
Right unless the fair market value of the Stock subject to
the ISO is greater than the option price for such Stock.
Payment by the Company of the amount receivable upon any
exercise of a Right may be made by the delivery of Stock or
cash or any combination of Stock and cash, as determined in
the sole discretion of the Committee from time to time. No
fractional shares shall be used. The Committee may provide
for the elimination of fractional shares of Stock without
adjustment or for the payment of the value of such
fractional shares in cash. Shares of Stock of the Company
delivered to the optionee upon the exercise of a Right and
the surrender of the Option or stock option shall be valued
at the fair market value of a share of Stock on the date the
right is exercised and the Option or stock option is
surrendered. The Committee may limit the period or periods
during which the Rights may be exercised and may provide
such other terms and conditions (which need not be the same
with respect to each optionee) under which a Right may be
granted and/or exercised. A Right may be exercised only as
long as the related Option or stock option is exercisable;
provided, however, that no Right may be exercised and cash
paid in partial or complete satisfaction thereof during the
first six (6) months exercised following the date of grant
of the Right and related Option. In no event may a Right be
exercised more than ten (10) years after the date of the
grant of the Right and the related Option or stock option.
The fair market value of a share of Stock shall be the
average of the high and low market prices at which a share
of Stock shall have been sold on the date the Option or the
stock option is surrendered or on the next preceding trading
day, if such date is not a trading day, as reported on the
New York Stock Exchange Composite Transactions listing.
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SECTION 7. CASH AWARDS
The Committee may, at any time and in its discretion, grant
to any employee who is granted an NSO the right to receive,
at such times and in such amounts as determined by the
Committee in its discretion, a cash amount ("Cash Award")
which is intended to reimburse the employee for all or a
portion of the Federal, state and local income taxes imposed
upon such employee as a consequence of the exercise of an
NSO and the receipt of a Cash Award.
SECTION 8. REPLACEMENT AND EXTENSION OF THE TERMS OF
OPTIONS, CASH AWARDS AND RELATED RIGHTS
The Committee from time to time may permit an optionee under
Plan or any other stock option plan heretofore or hereafter
adopted by the Company to surrender for cancellation any
unexercised outstanding stock option and related Right
and receive from the Company in exchange an Option for such
number of shares of Stock as may be designated by the
Committee. Such optionees also may be granted related Rights
or Cash Awards as provided in Sections 6 and 7. In addition,
the Committee may extend the duration of any NSO and/or Right
for a period not to exceed one (1) year, subject to the
provisions of paragraph 5(c), without changing the option
price and on such other terms and conditions as the Committee
may deem advisable.
SECTION 9. NONTRANSFERABILITY OF OPTION AND RIGHT
No Option or Right granted pursuant to the Plan shall be
transferable otherwise than by will or by the laws of
descent and distribution. During the lifetime of an
optionee, the Option and Right shall be exercisable only by
the optionee personally or by the optionee's legal
representative.
SECTION 10. EFFECT OF TERMINATION OF EMPLOYMENT, DEATH,
RETIREMENT OR A CHANGE IN CONTROL
(a) If an optionee's employment with the Company and/or its
Affiliates shall be terminated for any reason, except death,
disability or Retirement, as hereinafter defined, to the
extent the Option was exercisable by the optionee at the
date of such termination of employment, the optionee shall
be entitled to exercise the Option for the period of six (6)
months from the date of such termination of employment
unless the Option, by its terms, expires prior thereto,
except as provided in paragraph (b) of this Section 10.
(b) If an optionee shall die or become disabled while an
employee of the Company or any Affiliate or within six (6)
months from the date of termination of employment with the
Company or any Affiliate but prior to the expiration of the
Option, the executor or administrator of the optionee's
estate or a transferee of the Option pursuant to Section 9
or the disabled employee shall have the right to exercise
the Option, and the right to exercise the Option shall
terminate upon the earliest of (i) the expiration of twelve
(12) months from the date of such termination of employment,
(ii) the expiration of twelve (12) months from the date of
the optionee's death or disability, or (iii) as otherwise
provided by the terms of the Option. As used in the Plan,
the term "disabled" shall have the meaning set forth in the
Company's Long Term Disability Income Plan.
(c) If an optionee's employment with the Company and/or its
Affiliates shall be terminated by reason of death,
disability or Retirement, all Options held by the optionee
shall become exercisable. Death or disability of the
optionee occurring after termination of employment with the
Company and/or its Affiliates shall not cause any Options to
become exercisable. The optionee shall be entitled to
exercise exercisable Option or Options for the period of six
(6) months from the date of Retirement or, in the case of
such death or disability, in accordance with the terms of
Section 10(b) hereof, unless any such Option, by its terms,
expires prior thereto. "Retirement", as used herein, shall
mean an employee's termination of employment on a date which
is on or after the earliest date on which such employee
would be eligible for an immediately payable benefit
pursuant to (i) for those employees eligible for
participation in the Company's Supplemental Retirement Plan,
the terms of that Plan and (ii) for all other employees, the
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terms of the Employees Retirement Plan (the "ERP") assuming
such employee were eligible to participate in the ERP.
(d) All Options held by an optionee shall become
exercisable upon the occurrence of a Change in Control. A
"Change in Control" shall mean a change in control of a
nature that would be required to be reported in response to
item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Exchange Act as in effect on November 15, 1988,
provided that such a change in control shall be deemed to
have occurred at such time as (i) any "person" (as that term
is used in Sections 13(d) and 14(d)(2) of the Exchange Act),
is or becomes the "beneficial owner" (as defined in Rule 13d-
3 under the Exchange Act) directly or indirectly, of
securities representing 20% or more of the combined voting
power for election of directors of the then outstanding
securities of the Company or any successor of the Company;
(ii) during any period of two consecutive years or less,
individuals who at the beginning of such period constituted
the Board of Directors of the Company cease, for any reason,
to constitute at least a majority of the Board of Directors,
unless the election or nomination for election of each new
director was approved by a vote of at least two-thirds of
the directors then still in office who were directors at the
beginning of the period; (iii) the shareholders of the
Company approve any merger or consolidation as a result of
which the Stock shall be changed, converted or exchanged
(other than a merger with a wholly-owned subsidiary of the
Company) or any liquidation of the Company or any sale or
other disposition of 50% or more of the assets or earning
power of the Company; or (iv) the shareholders of the
Company approve any merger or consolidation to which the
Company is a party as a result of which the persons who were
shareholders of the Company immediately prior to the
effective date of the merger or consolidation shall have
beneficial ownership of less than 50% of the combined voting
power for election of directors of the surviving corporation
following the effective date of such merger or
consolidation; provided, however, that no Change in Control
shall be deemed to have occurred if, prior to such time as a
Change in Control would otherwise be deemed to have
occurred, the Board of Directors determines otherwise.
(e) Whether military or other government eleemosynary
service or other leave of absence will constitute
termination of employment shall be determined in each case
by the Committee in its sole discretion.
SECTION 11. RIGHTS AS A SHAREHOLDER
An optionee or a transferee of an optionee pursuant to
Section 9 shall have no right as a stockholder with respect
to any Stock covered by an Option or receivable upon the
exercise of an Option or Right until the optionee or
transferee shall have become the holder of record of such
Stock, and no adjustments shall be made for dividends in
cash or other property or other distributions or rights in
respect to such Stock for which the record date is prior to
the date on which the optionee or transferee shall have in
fact become the holder of record of the share of Stock
acquired pursuant to the Option or Right.
SECTION 12. ADJUSTMENT IN THE NUMBER OF SHARES AND IN
OPTION PRICE
In the event there is any change in the shares of Stock
through the declaration of stock dividends, or stock splits
or through recapitalization or merger or consolidation or
combination of shares or otherwise, the Committee or the
Board shall make such adjustment, if any, as it may deem
appropriate in the number of shares of Stock available for
Options and Rights as well as the number of shares of Stock
subject to any outstanding Option or Right and the option
price thereof. Any such adjustment may provide for the
elimination of any fractional shares which might otherwise
become subject to any Option or Right without payment
therefor.
SECTION 13. AMENDMENTS, MODIFICATIONS AND TERMINATION OF
THE PLAN
The Board or the Committee may terminate the Plan, in whole
or in part, may suspend the Plan, in whole or in part, from
time to time and may amend the Plan from time to time,
including the adoption of amendments deemed necessary or
desirable to qualify the Options, Cash Awards and/or Rights
under the laws of various countries (including tax laws) and
under rules and regulations promulgated by the Securities and
Exchange Commission with respect to employees who are subject
to the provisions of
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Section 16 of the Exchange Act, or to correct any defect or
supply an omission or reconcile any inconsistency in the Plan
or in any Option or Right granted thereunder, without the
approval of the stockholders of the Company; provided, however,
that no action shall be taken without the approval of the
stockholders of the Company to increase the number of shares
of Stock on which Options and Rights may be granted, or change
the manner of determining the option price or change the manner
of determining the amount payable upon exercise of a Right, or
increase the maximum duration of an Option, or change the
class of employees eligible to participate, or withdraw
administration from the Committee, or permit any person
while a member of the Committee to be eligible to receive or
hold an Option or Right granted under the Plan.
No amendment or termination or modification of the Plan
shall in any manner affect any Option, Cash Award or Right
theretofore granted without the consent of the optionee,
except that the Committee may amend or modify the Plan in a
manner that does affect Options, Cash Awards or Rights
theretofore granted upon a finding by the Committee that
such amendment or modification is in the best interest of
holders of outstanding Options, Cash Awards or Rights
affected thereby. The Plan shall terminate five (5) years
after the date of approval of the Plan by stockholders of
the Company unless earlier terminated by the Board or by the
Committee.
SECTION 14. GOVERNING LAW
The Plan and all determinations made and actions taken
pursuant thereto shall be governed by the laws of the State
of Georgia and construed in accordance therewith.
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EXHIBIT 10.8.2
COMPENSATION COMMITTEE
Atlanta, Georgia
October 17, 1996
Resolutions amending conditions for the exercise of
stock appreciation rights for cash under the Company's stock
option plans
- -------------------------------------------------------------
WHEREAS, this Committee, as permitted by the 1991 Stock Option
Plan, as amended to and through the date hereof (the "1991
Plan"), may grant stock appreciation rights to certain key
employees of the Company, and stock appreciation rights have been
heretofore granted under the 1991 Plan and the 1987 Stock Option
Plan of the Company, as amended to and through the date hereof
(the "1987 Plan"); and
WHEREAS, the 1991 Plan and the 1987 Plan provide that this
Committee must determine whether the settlements of stock
appreciation rights are to be made for cash or for shares of
stock of The Coca-Cola Company ("Stock") or for any combination
of cash or Stock;
NOW, THEREFORE, BE IT RESOLVED, that all settlements of stock
appreciation rights heretofore and hereafter granted shall be
made solely in Stock with no adjustment for fractional shares
unless this Committee has already provided or hereafter otherwise
provides with respect to the specific stock appreciation rights;
and
FURTHER RESOLVED, that the foregoing shall supersede all prior
resolutions adopted by this Committee regarding the procedure for
exercise of stock appreciation rights for cash under the 1991
Plan and the 1987 Plan, which resolutions shall be of no force
and effect from and after the date hereof; and
FURTHER RESOLVED, that the Secretary of this Committee may
implement such procedures as she may deem necessary or convenient
to carry out the intent of this action of this Committee.
EXHIBIT 10.8.3
STOCK OPTION SUBCOMMITTEE
Atlanta, Georgia
October 17, 1996
Resolutions approving payment upon exercise of stock
options granted under the Stock Option Plans of The Coca-Cola
Company in cash or by delivery of shares of Company stock owned
by the optionee
- ---------------------------------------------------------------
WHEREAS, this Committee, as permitted by the 1991 Stock Option
Plan, as amended to and through the date hereof (the "1991
Plan"), may grant stock options to certain key employees of the
Company, and options have been heretofore granted under the 1991
Plan and the 1987 Stock Option Plan of the Company, as amended to
and through the date hereof (the "1987 Plan"); and
WHEREAS, the 1991 Plan and the 1987 Plan provide that this
Committee may determine whether the exercises of such stock
options shall be made in cash or by the delivery of shares of
stock of The Coca-Cola Company owned by the optionee;
NOW, THEREFORE, BE IT RESOLVED, that until otherwise determined
by this Committee under the 1987 Plan or the 1991 Plan,
respectively, all exercises of stock options heretofore and
hereafter granted from either the 1991 Plan or the 1987 Plan
shall be made in cash or by delivery of shares of stock of The
Coca-Cola Company ("Stock") owned by the optionee, the value of
the shares delivered shall be computed on the basis of the
average of the high and low market prices at which a share of
Stock shall have been sold on the day the optionee elects to
deliver shares of Stock upon exercise of an option, or the next
preceding trading day if such date was not a trading day, as
reported on the New York Stock Exchange Composite Transaction
listing; and
FURTHER RESOLVED, that the Secretary of this Committee may
implement such procedures as she may deem necessary or convenient
to carry out the intent of this action of this Committee.
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STOCK OPTION SUBCOMMITTEE
Atlanta, Georgia
October 17, 1996
Resolutions authorizing withholding for tax liabilities
in connection with exercises of stock options and stock
appreciation rights by delivery of or withholding of shares of
common stock under the Stock Option Plans of the Company
- -----------------------------------------------------------------
RESOLVED, that holders of nonstatutory options and/or stock
appreciation rights for stock granted pursuant to the terms of
the 1991 Stock Option Plan of the Company or the 1987 Stock
Option Plan of the Company may elect to deliver already-owned
shares of Company common stock or to have shares of Company
common stock withheld from the shares which would have been
delivered upon exercise of such option or stock appreciation
right for stock in order to satisfy the Federal, state and local
tax liabilities arising from the transaction, subject to the
right of this Committee to rescind its advance approval and to
disapprove any election;
FURTHER RESOLVED, that permission to so satisfy tax liabilities
shall be subject to the following conditions: (i) optionees or
holders of stock appreciation rights for stock electing to
satisfy tax liabilities as described above must make an
irrevocable election in writing to do so on or before the date as
of which the amount of tax to be withheld is determined, and (ii)
the election is subject to the right of this Committee to rescind
approval as described above; and
FURTHER RESOLVED, that the Secretary of this Committee may
implement such procedures as she may deem necessary or convenient
to carry out the intent of this action of this Committee.
EXHIBIT 10.9.1
THE COCA-COLA COMPANY
1991 STOCK OPTION PLAN
as amended through October 17, 1996
SECTION 1. PURPOSE
The purpose of the 1991 Stock Option Plan of The Coca-Cola
Company (the "Plan") is to advance the interest of The Coca-Cola
Company (the "Company") and its Affiliates (as defined in Section
4 hereof) by encouraging and enabling the acquisition of a
financial interest in the Company by officers and other key
employees of the Company or its Affiliates. In addition, the Plan
is intended to aid the Company and its Affiliates in attracting
and retaining key employees, to stimulate the efforts of such
employees and to strengthen their desire to remain in the employ
of the Company and its Affiliates.
The Company may grant stock options which constitute
"incentive stock options" ("ISOs") within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"),
or stock options which do not constitute ISOs ("NSOs") (ISOs and
NSOs being hereinafter collectively referred to as "Options").
The Company may grant certain officers of the Company stock
appreciation rights ("Rights") for use in connection with Options
or with other stock options granted by the Company.
Section 2. ADMINISTRATION
The Plan shall be administered by a committee (the
"Committee") appointed by the Board of Directors of the Company
(the "Board") or in accordance with Section 7, Article III of the
By-Laws of the Company (as amended through October 17, 1996) from
among its members. Unless and until its members are not qualified
to serve on the Committee pursuant to the provisions of the Plan,
the Compensation Committee of the Board shall function as the
Committee. Eligibility requirements for members of the Committee
shall comply with Rule 16b-3 promulgated pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"), or
any successor rule or regulation. No person, other than members
of the Committee, shall have any discretion concerning decisions
regarding the Plan. The Committee shall determine the key
employees of the Company and its Affiliates (including officers,
whether or not they are directors) to whom, and the time or times
at which, Options and Rights will be granted, the number of shares
to be subject to each Option, the duration of each Option or
Right, the time or times within which the Option or Right may be
exercised, the cancellation of the Option or Right (with the
consent of the holder thereof) and the other conditions of the
grant of the Option or Right at grant or while outstanding
pursuant to the terms of the Plan. The provisions and conditions
of the Options and Rights need not be the same with respect to
each optionee or with respect to each Option or each Right.
The Committee may, subject to the provisions of the Plan,
establish such rules and regulations as it deems necessary or
advisable for the proper administration of the Plan, and may make
determinations and may take such other action in connection with
or in relation to the Plan as it deems necessary or advisable.
Each determination or other action made or taken pursuant to the
Plan, including interpretation of the Plan and the specific
conditions and provisions of the Options and Rights granted
hereunder by the Committee shall be final and conclusive for all
purposes and upon all persons including, but without limitation,
the Company, its Affiliates, the Committee, the Board, officers
and the affected employees of the Company and/or its Affiliates
and their respective successors in interest.
Section 3. STOCK
The stock to be issued, transferred and/or sold under the
Plan shall be shares of Common Stock, $.25 par value, of the
Company (the "Stock"). The Stock shall be made available from
authorized and unissued Common Stock of the Company or from the
Company's treasury shares. The total number of
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shares of Stock that may be issued or transferred under the Plan
pursuant to Options and Rights granted thereunder may not exceed
59,551,338 shares (subject to adjustment as described below).
This number represents the number of shares originally authorized
in the Plan, adjusted for a 2-for-1 stock split which occurred on
May 1, 1992 and subsequently for a 2-for-1 stock split which occurred
on May 1, 1996 in accordance with Section 10, less the number of
shares already issued or subject to outstanding Options or Rights
issued pursuant to the Plan as of October 1, 1996. Such number of
shares shall be subject to adjustment in accordance with Section 10
hereof and this Section 3. Stock subject to any unexercised
portion of an Option or Right which expires or is cancelled,
surrendered or terminated for any reason may again be subject to
Options and/or Rights granted under the Plan. Upon surrender of
an Option or stock option granted under any other plan heretofore
or hereafter adopted by the Company and the exercise of a Right,
the number of shares of Stock subject to the surrendered Option or
stock option shall be charged against the maximum number of shares
of Stock issuable or transferable under the Plan or the stock
option plan pursuant to which the surrendered Option or stock
option was granted, and such number of shares of Stock shall not
be issuable or transferable under such Plan or plan in the future.
The surrender of any stock option issued other than pursuant to a
stock option plan pursuant to the exercise of a Right shall not
result in a charge against the maximum number of shares issuable
or transferable under the Plan or any other stock option plan.
Section 4. ELIGIBILITY
Options and Rights may be granted to employees of the Company
and its Affiliates. The term "Affiliates" shall mean any
corporation or other business organization in which the Company
owns, directly or indirectly, 25% or more of the voting stock or
capital at the time of the granting of such Option or Right;
provided, however, that no ISO may be granted to any employee of
an Affiliate which is not a corporation or to any employee of an
Affiliate which is not at least 50% owned, directly or indirectly,
by the Company. Any ISOs held by an optionee of an Affiliate
which ceases to be 50% owned will become NSOs three (3) months
after the date that the Company's ownership of the Affiliate falls
below 50%. If ownership falls below 25% an optionee will be
considered terminated for purposes of Section 8 on the date that
the Company's ownership of the Affiliate falls below 25%. No
employee shall be granted the right to acquire pursuant to Options
granted under the Plan more than 15% of the aggregate number of
shares of Stock originally authorized under the Plan, as adjusted
pursuant to Section 10 hereof.
Section 5. AWARDS OF OPTIONS
Except as otherwise specifically provided herein, Options
granted pursuant to the Plan shall be subject to the following
terms and conditions:
(a) OPTION PRICE. The option price shall be 100% of the
fair market value of the Stock on the date of grant. The
fair market value of a share of Stock shall be the average of
the high and low market prices at which a share of Stock
shall have been sold on the date of grant, or on the next
preceding trading day if such date was not a trading date, as
reported on the New York Stock Exchange Composite
Transactions listing.
(b) PAYMENT. The option price shall be paid in full at
the time of exercise. No shares shall be issued or
transferred until full payment has been received therefor.
Payment may be in cash or, with the prior approval of and
upon conditions established by the Committee, by delivery of
shares of Stock owned by the optionee. The optionee, if a
U.S. taxpayer, may elect to satisfy Federal, state and local
income tax liabilities due by reason of the exercise by the
withholding or tendering of shares of Stock. If payment or
satisfaction of such tax liabilities is made by the delivery
of shares of Stock, the value of the shares delivered (or
withheld in the case of tax withholding for U.S. taxpayers)
shall be computed on the basis of the average of the high and
low market prices at which a share of Stock shall have been
sold on the date the optionee elects to deliver shares of
Stock upon exercise of an Option, or tenders shares of Stock
or has shares of Stock withheld in the case of tax withholding,
or on the next preceding trading day if such date
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was not a trading day, as reported on the New York Stock
Exchange Composite Transactions listing.
(c) DURATION OF OPTIONS. The duration of Options shall be
determined by the Committee, but in no event shall the
duration of an Option exceed ten (10) years from the date of
its grant.
(d) OTHER TERMS AND CONDITIONS. Options may contain such
other provisions, not inconsistent with the provisions of the
Plan, as the Committee shall determine appropriate from time
to time; provided, however, that, except in the event of a
"Change in Control", death or disability of the optionee or
"Retirement", as defined in Section 8, no Option shall be
exercisable in whole or in part for a period of twelve (12)
months from the date on which the Option is granted, and,
subject to the provisions of Section 8 hereof, thereafter the
ratio of the number of shares for which any such Option is
exercisable through any given date may not exceed the ratio
of the number of months between the date on which the Option
is granted and such given date to a period of thirty-six (36)
months (or such lesser period as may be then or later
determined by the Committee in its discretion). The grant of
an Option and/or Right to any employee shall not affect in
any way the right of the Company and any Affiliate to
terminate the employment of the holder thereof.
(e) ISOS. The Committee, with respect to each grant of an
Option to an optionee, shall determine whether such Option
shall be an ISO, and, upon determining that an Option shall
be an ISO, shall designate it as such in the written
instrument evidencing such Option. If the written instrument
evidencing an Option does not contain a designation that it
is an ISO, it shall not be an ISO.
The aggregate fair market value (determined in each instance
on the date on which an ISO is granted) of the Stock with respect
to which ISOs are first exercisable by any optionee in any
calendar year shall not exceed $100,000 for such optionee. If any
subsidiary or Affiliate of the Company shall adopt a stock option
plan under which options constituting incentive stock options (as
defined in Section 422(b) of the Code) may be granted, the fair
market value of the Stock on which any such incentive stock
options are granted and the times at which such incentive stock
options will first become exercisable shall be taken into account
in determining the maximum amount of ISOs which may be granted to
the optionee in any calendar year.
Section 6. AWARDS OF RIGHTS
The Committee may, at any time and in its discretion, grant
to any officer of the Company who is awarded or who holds an
outstanding Option or any other outstanding stock option granted
by the Company the right to surrender such Option (to the extent
any Option or such other stock option is otherwise exercisable)
and to receive from the Company an amount equal to the excess, if
any, of the fair market value of the Stock with respect to which
such Option is surrendered on the date of such surrender over the
option price of the Option or other stock option surrendered. No
ISO may be surrendered in connection with the exercise of a Right
unless the fair market value of the Stock subject to the ISO is
greater than the option price for such Stock. Payment by the
Company of the amount receivable upon any exercise of a Right may
be made by the delivery of Stock or cash or any combination of
Stock and cash, as determined in the sole discretion of the
Committee from time to time. No fractional shares shall be used.
The Committee may provide for the elimination of fractional shares
of Stock without adjustment or for the payment of the value of
such fractional shares in cash. Shares of Stock of the Company
delivered to the optionee upon the exercise of a Right and the
surrender of the Option or stock option shall be valued at the
fair market value of a share of Stock on the date the right is
exercised and the Option or stock option is surrendered. The
Committee may limit the period or periods during which the Rights
may be exercised and may provide such other terms and conditions
(which need not be the same with respect to each optionee) under
which a Right may be granted and/or exercised. A Right may be
exercised only as long as the related Option or stock option is
exercisable; provided,
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however, that no Right may be exercised and cash paid in partial
or complete satisfaction thereof during the first six (6) months
following the date of grant of the Right and related Option. In
no event may a Right be exercised more than ten (10) years after
the date of the grant of the Right and the related Option or
stock option. The fair market value of a share of Stock shall
be the average of the high and low market prices at which a share
of Stock shall have been sold on the date the Option or the stock
option is surrendered or on the next preceding trading day, if
such date is not a trading day, as reported on the New York Stock
Exchange Composite Transactions listing.
Section 7. NONTRANSFERABILITY OF OPTION AND RIGHT
No Option or Right granted pursuant to the Plan shall be
transferable otherwise than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order
as defined by the Code. During the lifetime of an optionee, the
Option and Right shall be exercisable only by the optionee
personally or by the optionee's legal representative.
Section 8. EFFECT OF TERMINATION OF EMPLOYMENT, DEATH,
RETIREMENT OR A CHANGE IN CONTROL
(a) ACCELERATION. If an optionee's employment with the
Company and/or its Affiliates shall be terminated by reason of
death, disability or Retirement or in the event of a Change in
Control, all Options held by the optionee shall become
exercisable. Death or disability of the optionee occurring after
termination of employment with the Company and/or its Affiliates
shall not cause any Options to become exercisable. As used in the
Plan, the term "disabled" shall have the meaning set forth in the
Company's Long Term Disability Income Plan. "Retirement", as used
herein, shall mean an employee's termination of employment on a
date which is on or after the earliest date on which such employee
would be eligible for an immediately payable benefit pursuant to
(i) for those employees eligible for participation in the
Company's Supplemental Retirement Plan, the terms of that Plan and
(ii) for all other employees, the terms of the Employee Retirement
Plan (the "ERP") assuming such employee were eligible to
participate in the ERP. "Retire" shall mean to enter Retirement.
A "Change in Control" shall mean a change in control of a
nature that would be required to be reported in response to item
(6e) of Schedule 14A of Regulation 14A promulgated under the 1934
Act as in effect on November 15, 1988, provided that such a change
in control shall be deemed to have occurred at such time as (i)
any "person" (as that term is used in Sections 13(d) and 14(d)(2)
of the 1934 Act), is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the 1934 Act) directly or indirectly, of
securities representing 20% or more of the combined voting power
for election of directors of the then outstanding securities of
the Company or any successor of the Company; (ii) during any
period of two (2) consecutive years or less, individuals who at
the beginning of such period constituted the Board of Directors of
the Company cease, for any reason, to constitute at least a
majority of the Board of Directors, unless the election or
nomination for election of each new director was approved by a
vote of at least two- thirds of the directors then still in office
who were directors at the beginning of the period; (iii) the
shareholders of the Company approve any merger or consolidation as
a result of which the Stock shall be changed, converted or
exchanged (other than a merger with a wholly owned subsidiary of
the Company) or any liquidation of the Company or any sale or
other disposition of 50% or more of the assets or earning power of
the Company; or (iv) the shareholders of the Company approve any
merger or consolidation to which the Company is a party as a
result of which the persons who were shareholders of the Company
immediately prior to the effective date of the merger or
consolidation shall have beneficial ownership of less than 50% of
the combined voting power for election of directors of the
surviving corporation following the effective date of such merger
or consolidation; provided, however, that no Change in Control
shall be deemed to have occurred if, prior to such times as a
Change in Control would otherwise be deemed to have occurred, the
Board of Directors determines otherwise.
4
<PAGE>
<PAGE>
(b) EXERCISE PERIOD. If an optionee's employment with the
Company and/or its Affiliates shall be terminated for any reason,
except death, disability or Retirement to the extent the Option
was exercisable by the optionee at the date of such termination of
employment, the optionee shall be entitled to exercise the Option
for the period of six (6) months from the date of such termination
of employment unless the Option by its terms expires prior
thereto, except as otherwise provided herein.
If an optionee shall become disabled while an employee of the
Company or any Affiliate or within six (6) months after the date
of termination of employment with the Company or any Affiliate but
prior to the expiration of the Option, or if an optionee shall
Retire, the retired optionee, the transferee of the Option
pursuant to Section 7 or the disabled employee shall have the
right to exercise the Option, and the right to exercise the Option
shall terminate as provided by the terms of the Option. If an
optionee shall die while an employee of the Company or any
Affiliate or within six (6) months from the date of termination of
employment with the Company or any Affiliate but prior to the
expiration of the Option, the executor or administrator of the
optionee's estate or a transferee of the Option pursuant to
Section 7 shall have the right to exercise the Option, and the
right to exercise the Option shall terminate upon the earliest of
(i) the expiration of twelve (12) months from the date of such
termination of employment, (ii) the expiration of twelve (12)
months from the date of the optionee's death, or (iii) as
otherwise provided by the terms of the Option. The occurrence of
a Change in Control shall have no effect on the duration of the
exercise period.
Whether military or other government or eleemosynary service
or other leave of absence will constitute termination of
employment shall be determined in each case by the Committee in
its sole discretion.
Notwithstanding the foregoing termination provisions, the
Committee may, in its sole discretion, establish different terms
and conditions pertaining to the effect of an Optionee's
termination on the expiration or exercisability of newly granted
options or (with the consent of the affected Optionee) outstanding
options. However, no Option or Right can have a term of more than
ten years.
Section 9. NO RIGHTS AS A SHAREHOLDER
An optionee or a transferee of an optionee pursuant to
Section 7 shall have no right as a shareholder with respect to any
Stock covered by an Option or receivable upon the exercise of an
Option or Right until the optionee or transferee shall have become
the holder of record of such Stock, and no adjustments shall be
made for dividends in cash or other property or other
distributions or rights in respect to such Stock for which the
record date is prior to the date on which the optionee or
transferee shall have in fact become the holder of record of the
share of Stock acquired pursuant to the Option or Right.
Section 10. ADJUSTMENT IN THE NUMBER OF SHARES AND IN OPTION
PRICE
In the event there is any change in the shares of Stock
through the declaration of stock dividends, or stock splits or
through recapitalization or merger or consolidation or combination
of shares or spin-offs or otherwise, the Committee or the Board
shall make such adjustment, if any, as it may deem appropriate in
the number of shares of Stock available for Options and Rights as
well as the number of shares of Stock subject to any outstanding
Option or Right and the option price thereof. Any such adjustment
may provide for the elimination of any fractional shares which
might otherwise become subject to any Option or Right without
payment therefor.
Section 11. AMENDMENTS, MODIFICATIONS AND TERMINATION OF THE
PLAN
The Board or the Committee may terminate the Plan, in whole
or in part, may suspend the Plan, in whole or in part, from time
to time and may amend the Plan from time to time, including the
adoption of amendments deemed necessary or desirable to qualify
the Options and/or Rights under the laws of
5
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<PAGE>
various countries (including tax laws) and under rules and
regulations promulgated by the Securities and Exchange Commission
with respect to employees who are subject to the provisions of
Section 16 of the 1934 Act, or to correct any defect or supply
an omission or reconcile any inconsistency in the Plan or in any
Option or Right granted thereunder, or for any other purpose or
to any effect permitted by applicable laws and regulations,
without the approval of the shareholders of the Company. However,
in no event may additional shares of Stock be allocated to the
Plan or any outstanding option be repriced or replaced without
shareholder approval. Without limiting the foregoing, the Board
of Directors or the Committee may make amendments applicable or
inapplicable only to participants who are subject to Section 16
of the 1934 Act.
No amendment or termination or modification of the Plan shall
in any manner affect any Option or Right theretofore granted
without the consent of the optionee, except that the Committee may
amend or modify the Plan in a manner that does affect Options or
Rights theretofore granted upon a finding by the Committee that
such amendment or modification is in the best interest of holders
of outstanding Options or Rights affected thereby. Grants may be
made until April 19, 2001. The Plan shall terminate when there
are no longer Rights or Options outstanding under the Plan unless
earlier terminated by the Board or by the Committee.
Section 12. GOVERNING LAW
The Plan and all determinations made and actions taken
pursuant thereto shall be governed by the laws of the State of
Georgia and construed in accordance therewith.
6
EXHIBIT 10.9.2
COMPENSATION COMMITTEE
Atlanta, Georgia
October 17, 1996
Resolutions amending conditions for the exercise of stock
appreciation rights for cash under the Company's stock option
plans
- -------------------------------------------------------------
WHEREAS, this Committee, as permitted by the 1991 Stock Option
Plan, as amended to and through the date hereof (the "1991 Plan"),
may grant stock appreciation rights to certain key employees of
the Company, and stock appreciation rights have been heretofore
granted under the 1991 Plan and the 1987 Stock Option Plan of the
Company, as amended to and through the date hereof (the "1987
Plan"); and
WHEREAS, the 1991 Plan and the 1987 Plan provide that this
Committee must determine whether the settlements of stock
appreciation rights are to be made for cash or for shares of stock
of The Coca-Cola Company ("Stock") or for any combination of cash
or Stock;
NOW, THEREFORE, BE IT RESOLVED, that all settlements of stock
appreciation rights heretofore and hereafter granted shall be made
solely in Stock with no adjustment for fractional shares unless
this Committee has already provided or hereafter otherwise
provides with respect to the specific stock appreciation rights;
and
FURTHER RESOLVED, that the foregoing shall supersede all prior
resolutions adopted by this Committee regarding the procedure for
exercise of stock appreciation rights for cash under the 1991 Plan
and the 1987 Plan, which resolutions shall be of no force and
effect from and after the date hereof; and
FURTHER RESOLVED, that the Secretary of this Committee may
implement such procedures as she may deem necessary or convenient
to carry out the intent of this action of this Committee.
EXHIBIT 10.9.3
STOCK OPTION SUBCOMMITTEE
Atlanta, Georgia
October 17, 1996
Resolutions approving payment upon exercise of stock
options granted under the Stock Option Plans of The Coca-Cola
Company in cash or by delivery of shares of Company stock owned by
the optionee
- ------------------------------------------------------------------
WHEREAS, this Committee, as permitted by the 1991 Stock Option
Plan, as amended to and through the date hereof (the "1991 Plan"),
may grant stock options to certain key employees of the Company,
and options have been heretofore granted under the 1991 Plan and
the 1987 Stock Option Plan of the Company, as amended to and
through the date hereof (the "1987 Plan"); and
WHEREAS, the 1991 Plan and the 1987 Plan provide that this
Committee may determine whether the exercises of such stock
options shall be made in cash or by the delivery of shares of
stock of The Coca-Cola Company owned by the optionee;
NOW, THEREFORE, BE IT RESOLVED, that until otherwise determined by
this Committee under the 1987 Plan or the 1991 Plan, respectively,
all exercises of stock options heretofore and hereafter granted
from either the 1991 Plan or the 1987 Plan shall be made in cash
or by delivery of shares of stock of The Coca-Cola Company
("Stock") owned by the optionee, the value of the shares delivered
shall be computed on the basis of the average of the high and low
market prices at which a share of Stock shall have been sold on
the day the optionee elects to deliver shares of Stock upon
exercise of an option, or the next preceding trading day if such
date was not a trading day, as reported on the New York Stock
Exchange Composite Transaction listing; and
FURTHER RESOLVED, that the Secretary of this Committee may
implement such procedures as she may deem necessary or convenient
to carry out the intent of this action of this Committee.
<PAGE>
STOCK OPTION SUBCOMMITTEE
Atlanta, Georgia
October 17, 1996
Resolutions authorizing withholding for tax liabilities
in connection with exercises of stock options and stock
appreciation rights by delivery of or withholding of shares of
common stock under the Stock Option Plans of the Company
- --------------------------------------------------------------
RESOLVED, that holders of nonstatutory options and/or stock
appreciation rights for stock granted pursuant to the terms of the
1991 Stock Option Plan of the Company or the 1987 Stock Option
Plan of the Company may elect to deliver already-owned shares of
Company common stock or to have shares of Company common stock
withheld from the shares which would have been delivered upon
exercise of such option or stock appreciation right for stock in
order to satisfy the Federal, state and local tax liabilities
arising from the transaction, subject to the right of this
Committee to rescind its advance approval and to disapprove any
election;
FURTHER RESOLVED, that permission to so satisfy tax liabilities
shall be subject to the following conditions: (i) optionees or
holders of stock appreciation rights for stock electing to satisfy
tax liabilities as described above must make an irrevocable
election in writing to do so on or before the date as of which the
amount of tax to be withheld is determined, and (ii) the election
is subject to the right of this Committee to rescind approval as
described above; and
FURTHER RESOLVED, that the Secretary of this Committee may
implement such procedures as she may deem necessary or convenient
to carry out the intent of this action of this Committee.
EXHIBIT 10.11.1
THE COCA-COLA COMPANY
1989 RESTRICTED STOCK AWARD PLAN
(As amended through October 17, 1996)
SECTION 1. PURPOSE
The purpose of the 1989 Restricted Stock Award Plan of
The Coca-Cola Company (the "Plan") is to advance the interest of
The Coca-Cola Company (the "Company") and its Affiliates (as
defined in Section 4 hereof), by encouraging and enabling the
acquisition of a financial interest in the Company by officers
and other key employees through grants of restricted shares of
Company Common Stock (the "Awards", or singly, an "Award").
The Plan is intended to aid the Company and its Affiliates in
retaining officers and key employees, to stimulate the efforts
of such employees and to strengthen their desire to remain in
the employ of the Company and its Affiliates. In addition,
the Plan may also aid in attracting officers and key employees
who will become eligible to participate in the Plan after a
reasonable period of employment by the Company or its Affiliates.
SECTION 2. ADMINISTRATION
The Plan shall be administered by a committee (the "Committee")
appointed by the Board of Directors of the Company (the "Board")
or in accordance with Section 7, Article III of the By-Laws of
the Company (as amended through October 17, 1996) from among its
members and shall be comprised of not less than three (3) members
of the Board. Unless and until its members are not qualified to
serve on the Committee pursuant to the provisions of the Plan,
the Compensation Committee shall be members of the Board who are
not eligible to participate in the Plan for at least one year
prior to the time they become members of the Committee.
Eligibility requirements for members of the Committee shall
comply with Rule 16b-3 promulgated pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act") or any
successor rule or regulation. The Committee shall determine the
officers and key employees of the Company and its Affiliates
(including officers, whether or not they are directors) to whom,
and the time or times at which, Awards will be granted, the
number of shares to be awarded, the time or times within which
the Awards may be subject to forfeiture, and all other conditions
of the Award. The provisions of the Awards need not be the same
with respect to each recipient.
The Committee is authorized, subject to the provisions of the
Plan, to establish such rules and regulations as it deems
necessary or advisable for the proper administration of the Plan
and to take such other action in connection with or in relation
to the Plan as it deems necessary or advisable. Each action
made or taken pursuant to the Plan, including interpretation of
the Plan and the Awards granted hereunder by the Committee,
shall be final and conclusive for all purposes and upon all
persons, including, without limitation, the Company and its
Affiliates, the Committee, the Board, the Officers and the
affected employees of the Company and/or its Affiliates and
their respective successors in interest.
SECTION 3. STOCK
The stock to be issued under the Plan pursuant to Awards shall
be shares of Common Stock, $.25 par value, of the Company (the
"Stock"). The Stock shall be made available from treasury or
authorized and unissued shares of Common Stock of the Company.
The total number of shares of Stock that may be issued pursuant
to Awards under the Plan may not exceed 32,914,000 shares (subject
to adjustment in accordance with Section 8), which number
represents the number of shares originally authorized in the Plan,
adjusted for 2-for-1 stock splits which occurred on May 1,
<PAGE>
<PAGE>
1990, May 1, 1992 and May 1, 1996, less the number of shares
already issued pursuant to the Plan as of October 1, 1996.
Shares of Stock previously granted pursuant to Awards, but which
are forfeited pursuant to Section 5, below, shall be available
for future Awards.
SECTION 4. ELIGIBILITY
Awards may be granted to officers and key employees of the
Company and its Affiliates who have been employed by the Company
or an Affiliate for a reasonable period of time determined by the
Committee. The term "Affiliate" shall mean any corporation or
other business organization in which the Company owns, directly
or indirectly, 25 percent or more of the voting stock or capital
at the time of the granting of such Award. No employee shall
acquire pursuant to Awards granted under the Plan more than
twenty (20) percent of the aggregate number of shares of Stock
issuable pursuant to Awards under the Plan.
SECTION 5. AWARDS
Except as otherwise specifically provided in the grant of an
Award, Awards shall be granted solely for services rendered to
the Company or any Affiliate by the employee prior to the date of
the grant and shall be subject to the following terms and
conditions:
(a) The Stock subject to an Award shall be forfeited to the
Company if the employment of the employee by the Company or
Affiliate terminates for any reason (including, but not limited
to, termination by the Company, with or without cause) other than
death, "Retirement", as hereinafter defined, provided that such
Retirement occurs at least five (5) years from the date of grant
of an Award and also provided that the employee has attained the
age of 62, or disability (within the meaning of Section 22(e)(3)
of the Internal Revenue Code of 1986, as amended), prior to a
"Change in Control" of the Company as hereinafter defined.
"Retirement", as used herein, shall mean an employee's
voluntarily leaving the employ of the Company or an Affiliate on
a date which is on or after the earliest date on which such
employee would be eligible for an immediately payable benefit
pursuant to (i) for those employees eligible for participation in
the Company's Supplemental Retirement Plan, the terms of that
Plan and (ii) for all other employees, the terms of the Employees
Retirement Plan (the "ERP") assuming such employees were eligible
to participate in the ERP.
(b) If at any time the recipient Retires on a date which is
at least five (5) years from the date of grant of an Award and on
or after the date on which the employee has attained the age of
62, dies or becomes disabled, or in the event of a "Change in
Control" of the Company, as hereinafter defined, prior to such
Retirement, death or disability, such recipient shall be entitled
to retain the number of shares subject to the Award. A "Change
in Control" shall mean a change in control of a nature that would
be required to be reported in response to Item 6(e) of Schedule
14A of Regulation 14A promulgated under the Exchange Act as in
effect on November 15, 1988, provided that such a change in
control shall be deemed to have occurred at such time as (i) any
"person" (as that term is used in Sections 13(d) and 14(d)(2) of
the Exchange Act), is or becomes the beneficial owner (as defined
in Rule 13d-3 under the Exchange Act) directly or indirectly, of
securities representing 20% or more of the combined voting power
for election of directors of the then outstanding securities of
the Company or any successor of the Company; (ii) during any
period of two consecutive years or less, individuals who at the
beginning of such period constituted the Board of Directors of
the Company cease, for any reason, to constitute at least a
majority of the Board of Directors, unless the election or
nomination for election of each new director was approved by a
vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period; (iii) the
shareholders of the Company approve any merger or consolidation as a
result of which the Common Stock shall be changed, converted or
exchanged (other than a merger with a wholly-owned subsidiary of
the Company) or any liquidation of the Company or any sale or other
disposition of 50% or more of the assets or earning power of the
2
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<PAGE>
Company; or (iv) the shareholders of the Company approve
any merger or consolidation to which the Company is a party
as a result of which the persons who were shareholders
of the Company immediately prior to the effective date of the
merger or consolidation shall have beneficial ownership of
less than 50% of the combined voting power for election of
directors of the surviving corporation following the effective
date of such merger or consolidation; provided, however, that no
Change in Control shall be deemed to have occurred if, prior to such
time as a Change in Control would otherwise be deemed to have
occurred, the Board of Directors determines otherwise.
(c) Awards may contain such other provisions, not
inconsistent with the provisions of the Plan, as the Committee
shall determine appropriate from time to time.
SECTION 6. NONTRANSFERABILITY OF AWARDS
Shares of Stock subject to Awards shall not be transferable and
shall not be sold, exchanged, transferred, pledged, hypothecated
or otherwise disposed of at any time prior to the first to occur
of Retirement on a date which is at least five (5) years from the
date of grant of an Award and on or after the date on which the
employee has attained the age of 62, death or disability of the
recipient of an Award or a Change in Control.
SECTION 7. RIGHTS AS A STOCKHOLDER
An employee who receives an Award shall have rights as a
stockholder with respect to Stock covered by such Award to
receive dividends in cash or other property or other
distributions or rights in respect to such Stock and to vote such
Stock as the record owner thereof.
SECTION 8. ADJUSTMENT IN THE NUMBER OF SHARES AWARDED
In the event there is any change in the Stock through the
declaration of stock dividends, through stock splits or through
recapitalization or merger or consolidation or combination of
shares or otherwise, the Committee or the Board shall make such
adjustment, if any, as it may deem appropriate in the number of
shares of Stock thereafter available for Awards.
SECTION 9. TAXES
(a) If any employee properly elects, within thirty (30)
days of the date on which an Award is granted, to include in
gross income for federal income tax purposes an amount equal to
the fair market value (on the date of grant of the Award) of the
Stock subject to the Award, such employee shall make arrangements
satisfactory to the Committee to pay to the Company in the year
of such Award, any federal, state or local taxes required to be
withheld with respect to such shares. If such employee shall
fail to make such tax payments as are required, the Company and
its Affiliates shall, to the extent permitted by law, have the
right to deduct from any payment of any kind otherwise due to the
employee any federal, state or local taxes of any kind required
by law to be withheld with respect to the Stock subject to such
Award.
(b) Each employee who does not make the election described
in paragraph (a) of this Section shall, no later than the date as
of which the restrictions referred to in Section 5 and such other
restrictions as may have been imposed as a condition of the
Award, shall lapse, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of any federal,
state or local taxes of any kind required by law to be withheld
with respect to the Stock subject to such Award, and the Company
and its Affiliates shall, to the extent permitted by law, have
the right to deduct from any payment of any kind otherwise due to
the employee any federal, state, or local taxes of any kind
required by law to be withheld with respect to the Stock subject
to such Award.
3
<PAGE>
<PAGE>
SECTION 10. RESTRICTIVE LEGEND AND STOCK POWER
Each certificate evidencing Stock subject to Awards shall bear
an appropriate legend referring to the terms, conditions and
restrictions applicable to such award. Any attempt to dispose of
Stock in contravention of such terms, conditions, and restrictions
shall be ineffective. The Committee may adopt rules which
provide that the certificates evidencing such shares may be
held in custody by a bank or other institution, or that the
Company may itself hold such shares in custody until the
restrictions thereon shall have lapsed and may require, as a
condition of any Award, that the recipient shall have delivered a
stock power endorsed in blank relating to the Stock covered by
such Award.
SECTION 11. AMENDMENTS, MODIFICATIONS AND TERMINATION OF PLAN
The Board or the Committee may terminate the Plan, in whole or
in part, may suspend the Plan, in whole or in part from time to
time, and may amend the Plan from time to time, including the
adoption of amendments deemed necessary or desirable to qualify
the Awards under the laws of various states (including tax laws)
and under rules and regulations promulgated by the Securities and
Exchange Commission with respect to employees who are subject to
the provisions of Section 16 of the Exchange Act, or to correct
any defect or supply an omission or reconcile any inconsistency
in the Plan or in any Award granted thereunder, without the
approval of the stock holders of the Company; provided, however,
that no action shall be taken without the approval of the
stockholders of the Company which may increase the number of
shares of Stock available for Awards or withdraw administration
from the Committee, or permit any person while a member of the
Committee to be eligible to receive an Award. Without limiting
the foregoing, the Board of Directors or the Committee may make
amendments applicable or inapplicable only to participants who
are subject to Section 16 of the Exchange Act. No amendment or
termination or modification of the Plan shall in any manner
affect Awards therefore granted without the consent of the
employee unless the Committee has made a determination that an
amendment or modification is in the best interest of all persons
to whom Awards have theretofore been granted. The Board or the
Committee may modify or remove restrictions contained in Sections
5 and 6 on an Award or the Awards as a whole which have been
previously granted upon a determination that such action is in
the best interest of the Company. The Plan shall terminate when
(a) all Awards authorized under the Plan have been granted and
(b) all shares of Stock subject to Awards under the Plan have
been issued and are no longer subject to forfeiture under the
terms hereof unless earlier terminated by the Board or the
Committee.
SECTION 12. GOVERNING LAW
The Plan and all determinations made and actions taken pursuant
thereto shall be governed by the laws of the State of Georgia and
construed in accordance therewith.
4
EXHIBIT 10.11.2
RESTRICTED STOCK SUBCOMMITTEE
Atlanta, Georgia
October 17, 1996
Resolutions authorizing withholding for tax liabilities
by delivery of or withholding of shares of common stock under the
1989 Restricted Stock Award Plan
- -----------------------------------------------------------------
RESOLVED, that holders of awards pursuant to the terms of the
1989 Restricted Stock Award Plan may elect to deliver already-
owned shares of Company common stock or to have shares of Company
common stock withheld from the shares which would have been
delivered upon the lapse of restrictions upon such awards in
order to satisfy the Federal, state and local tax liabilities
arising from the transactions, subject to the right of this
Committee to rescind its advance approval and to disapprove any
election; and
FURTHER RESOLVED, that permission to so satisfy tax liabilities
shall be subject to the following conditions: (i) recipients of
awards electing to satisfy tax liabilities as described above
must make an irrevocable election in writing to do so on or
before the date as of which the amount of tax to be withheld is
determined, and (ii) the election is subject to the right of this
Committee to rescind approval as described above; and
FURTHER RESOLVED, that the Secretary of this Committee may
implement such procedures as she may deem necessary or convenient
to carry out the intent of this action of this Committee.
EXHIBIT 10.17.2
AMENDMENT NUMBER FIVE
TO THE COCA-COLA COMPANY
SUPPLEMENTAL BENEFIT PLAN
WHEREAS, pursuant to Section 7.5 of The Coca-Cola Company
Supplemental Benefit Plan (the "Plan"), the Supplemental
Benefit Plan Committee (the "Committee") has the authority to
amend the Plan; and
WHEREAS, the Committee wishes to amend the Plan for the
purpose of clarifying the eligibility provisions;
NOW THEREFORE, the Plan hereby is amended as follows:
1.
Effective January 1, 1989, Section 2.9 of the Plan is amended
by adding the following language immediately after the last
word thereof:
"An individual shall be treated as employed by an
Employer under this Plan for any period only if (i)
he or she is actually classified during such period
by the Employer on its payroll, personnel and
benefits system as an employee, and (ii) he or she
is paid for services rendered during such period
through the payroll system, as distinguished from
the accounts payable department of the Employer. No
other individual shall be treated as employed by an
Employer under this Plan for any period, regardless
of his or her status during such period as an
employee under common law or under any statute."
2.
Effective January 1, 1989, Section 4.1 of the Plan is amended
by capitalizing the word "employee" the first time it appears
in said section.
Except as specifically amended hereby, the Plan shall remain
in full force and effect as prior to this Amendment Number
Five.
SUPPLEMENTAL
RETIREMENT PLAN
COMMITTEE
By: /s/ C. Ron Cheeley
Chairman
Date: 2/27/97
ATTEST:
/s/ William J. Wortman
Secretary
EXHIBIT 12.1
<TABLE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(IN MILLIONS EXCEPT RATIOS)
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------
1996 1995 1994 1993 1992
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earnings:
Income from continuing operations
before income taxes and changes
in accounting principles $ 4,596 $ 4,328 $ 3,728 $ 3,185 $ 2,746
Fixed charges 324 318 236 213 207
Less: Capitalized interest, net (7) (9) (5) (16) (10)
Equity income, net of dividends (89) (25) (4) (35) (30)
-----------------------------------------------------------
Adjusted earnings $ 4,824 $ 4,612 $ 3,955 $ 3,347 $ 2,913
===========================================================
Fixed charges:
Gross interest incurred $ 293 $ 281 $ 204 $ 184 $ 181
Interest portion of rent expense 31 37 32 29 26
-----------------------------------------------------------
Total fixed charges $ 324 $ 318 $ 236 $ 213 $ 207
===========================================================
Ratios of earnings to fixed charges 14.9 14.5 16.8 15.7 14.1
===========================================================
The Company is contingently liable for guarantees of indebtedness owed by third parties in the amount
of $274 million, of which $34 million related to independent bottling licensees. Fixed charges for these
contingent liabilities have not been included in the computation 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>
EXHIBIT 13.1
THE COCA-COLA COMPANY AND SUBSIDIARIES
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
We exist for one reason: to maximize share-owner value over time. To
fulfill this mission, The Coca-Cola Company and its subsidiaries (our
Company) have developed a comprehensive business strategy focused on
four key objectives: (1) increasing volume, (2) expanding our share of
beverage sales worldwide, (3) maximizing our long-term cash flows and
(4) improving economic profit and creating economic value added. We
achieve these objectives by strategically investing in the high-return
beverages business and by optimizing our cost of capital through
appropriate financial policies.
INVESTMENTS
With a global business system that operates in nearly 200 countries
and generates superior cash flows, our Company is uniquely positioned
to capitalize on profitable new investment opportunities. Our
criterion for investment is simple: We seek to invest in opportunities
that enhance our existing operations and offer cash returns that
exceed our long-term after-tax weighted-average cost of capital,
estimated to be approximately 11 percent.
Because it consistently generates high returns on capital, our
business is a particularly attractive investment for us. In developing
and emerging markets, where increasing the penetration of our beverage
products is our primary goal, we dedicate the bulk of our investments
to infrastructure enhancements: production facilities, distribution
networks, sales equipment and technology. We make these investments by
acquiring or forming strategic business alliances with local bottlers
and by matching local expertise with our experience and focus. In
highly developed markets, where our primary goal is to make our
products the beverages consumers prefer, we dedicate the bulk of our
expenditures to marketing activities.
Currently, 55 percent of the world's population lives in markets
where the average person consumes fewer than 10 servings of our
beverages per year, offering high-potential growth opportunities for
our Company and our bottlers. In fact, the emerging markets of China,
India, Indonesia and Russia combined represent approximately 44
percent of the world's population, but, on a combined basis, the
average per capita consumption of our products in these markets is
approximately 1 percent of the United States' level. As a result, we
are investing aggressively to ensure our products are pervasive,
preferred and offer the best price relative to value.
Our investment strategy focuses primarily on the four fundamental
drivers of our business: bottling operations, capital expenditures,
marketing activities and people.
BOTTLING OPERATIONS
We continue our well-established strategy of strengthening our
distribution system by investing in, and subsequently reselling,
ownership positions in bottling operations. This strategy provides our
Company with yet another value stream resulting from the gains on the
sale of these investments. The other value streams from which we
benefit are those provided by our core concentrate business and our
consolidated bottling operations, as well as our participation in the
earnings of bottlers in which we remain an equity investor.
We have business relationships with three types of bottlers -
independently owned bottlers, bottlers in which we have a
noncontrolling ownership interest and bottlers in which we have a
controlling ownership interest. Independently owned bottlers are
bottlers in which we have no ownership interest. These bottlers
produced and distributed approximately 40 percent of our 1996
worldwide unit case volume. The other bottlers represent businesses in
which we have invested. In 1996, bottlers in which we own a
noncontrolling ownership interest produced and distributed an
additional 45 percent of our total worldwide unit case volume.
Controlled and consolidated bottling and fountain operations produced
and distributed approximately 15 percent of total worldwide unit case
volume for Company products.
We invest heavily in certain bottling operations to maximize the
strength and efficiency of our production, distribution and marketing
systems around the world. These investments often result in increases
in unit case volume, net revenues and profits at the bottler level,
which in turn generate increased gallon shipments for our concentrate
business. As a result, both our Company and the bottlers benefit from
long-term growth in volume, cash flows and share-owner value.
The level of our investment generally depends on the bottler's
capital structure and its available resources at the time of our
investment. In certain situations, it can be advantageous to acquire a
controlling interest in a bottling operation. Although not our primary
long-term business strategy, owning a controlling interest allows us
to compensate for limited local resources or facilitate improvements
in customer relationships while building or restructuring the bottling
operations. Bottling businesses typically generate lower margins on
revenue than our concentrate business. However, the acquisition and
consolidation of a bottler increases revenues and generally increases
operating profits on a per-gallon basis. We acquired controlling
interests in certain bottling operations in Italy in 1996 and 1995, as
well as in Venezuela in 1995. By providing capital and marketing
expertise to newly acquired bottlers, we intend to strengthen our
bottling territories.
- 39 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
In line with our long-term bottling strategy, we periodically
consider options for reducing our ownership interest in a consolidated
bottler. One such option is to sell our interest in a consolidated
bottling operation to one of our equity investee bottlers. Another
option for reducing our ownership interest is to combine our bottling
interests with the bottling interests of others to form strategic
business alliances. In both of these situations, we continue
participating in the previously consolidated bottler's earnings
through our portion of the equity investee's income.
Consistent with our strategy, we sold our consolidated bottling
and canning operations in France and Belgium to our major bottler
headquartered in the United States, Coca-Cola Enterprises Inc.
(Coca-Cola Enterprises) in 1996.
In 1996, we formed a strategic business alliance in Germany,
Coca-Cola Erfrischungsgetraenke AG (CCEAG), through the merger of our
previously wholly owned east German bottler with three independent
bottlers. This new bottler is expected to build a stronger bottler
structure in Germany, establishing the framework for future profitable
growth and future acquisitions in that region. As a result of the
merger, we now have a 45 percent interest in CCEAG.
Also in 1996, we combined our bottling interests in Venezuela
with the Cisneros Group's bottling companies to form a new joint
venture, Embotelladora Coca-Cola y Hit de Venezuela, S.A. (Coca-Cola y
Hit). Coca-Cola y Hit is the leader in the Venezuelan beverage
business.
During 1995, we sold our controlling interests in certain
bottling operations in Poland, Croatia and Romania to Coca-Cola Amatil
Limited (Coca-Cola Amatil), a bottler headquartered in Australia.
As stated earlier, our investments in a bottler can represent
either a noncontrolling or a controlling interest. Through
noncontrolling investments in bottling companies, we provide expertise
and resources to strengthen those businesses. Specifically, we help
improve sales and marketing programs, assist in the development of
effective business and information systems and help establish
appropriate capital structures. In 1996, we purchased interests in two
Chilean bottling companies: a 17 percent interest in Embotelladoras
Polar S.A. and a 6 percent interest in Embotelladora Andina S.A. Also,
we sold our 49 percent interest in Coca-Cola & Schweppes Beverages
Ltd., a bottler in the United Kingdom, to Coca-Cola Enterprises in
early 1997.
We designate certain bottling operations in which we have a
noncontrolling ownership interest as "anchor bottlers" due to their
level of responsibility and performance. Anchor bottlers, which
include Coca-Cola Amatil and Coca-Cola Enterprises, are strongly
committed to their own profitable growth which, in turn, helps us meet
our strategic goals and furthers the interests of our worldwide
production, distribution and marketing systems. Anchor bottlers tend
to be large and geographically diverse with strong financial and
management resources. In 1996, our anchor bottlers produced and
distributed approximately 30 percent of our total worldwide unit case
volume. Currently, eight companies are designated as anchor bottlers,
giving us strong partners on every major continent around the world.
In 1996, CCEAG was designated an anchor bottler, our first anchor
bottler headquartered in Europe. In 1995, we increased our economic
interest in Panamerican Beverages, Inc. (Panamerican Beverages) from 7
to 13 percent and designated it as an anchor bottler. Panamerican
Beverages owns bottling operations in Mexico, Brazil, Colombia and
Costa Rica. Also in 1995, we contributed assets to a new joint
venture, Coca-Cola Sabco (Proprietary) Limited (Coca-Cola Sabco), also
an anchor bottler, in return for a 16 percent economic interest and
notes receivable. Coca-Cola Sabco continues to strengthen our
distribution system in south and east Africa.
In line with our established investment strategy, our bottling
investments have been profitable over time. For bottling investments
which are accounted for by the equity method, we measure the
profitability of our bottling investments in two ways - equity income
and the excess of the fair values over the carrying values of our
investments. Equity income represents our share of the net earnings of
our investee companies that are accounted for by the equity method,
and it is included in our consolidated income. In 1996, equity income,
primarily from our investments in unconsolidated bottling companies,
reached $211 million, a 25 percent increase from 1995. The following
table illustrates the excess of the calculated fair values, based on
quoted closing prices of publicly traded shares, over our Company's
carrying values for selected equity method investees (in millions):
Fair Carrying
December 31, Value Value Excess
- ----------------------------------------------------------------------
1996
Coca-Cola Enterprises Inc. $ 2,731 $ 547 $ 2,184
Coca-Cola Amatil Limited 2,109 881 1,228
Coca-Cola FEMSA, S.A. de C.V. 411 90 321
Coca-Cola Beverages Ltd. 219 15 204
Coca-Cola Bottling Co. Consolidated 134 85 49
- ----------------------------------------------------------------------
$ 3,986
======================================================================
The excess of the calculated fair values over the carrying values
for our investments illustrates the significant increase in the value
of our investments. Although this excess value for equity method
investees is not reflected in our consolidated results of operations
or financial position, it represents a true economic benefit to us.
- 40 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
CAPITAL EXPENDITURES
Capital expenditures for property, plant and equipment and the
percentage distribution by geographic area for 1996, 1995 and 1994 are
as follows (in millions):
Year Ended December 31, 1996 1995 1994
- ------------------------------------------------------------------
Capital expenditures $ 990 $ 937 $ 878
- ------------------------------------------------------------------
North America 27% 31% 29%
Africa 3% 2% 3%
Greater Europe 38% 41% 37%
Latin America 8% 9% 15%
Middle & Far East 12% 9% 6%
Corporate 12% 8% 10%
==================================================================
In 1996, we launched a strategic business initiative called
"Project Infinity" to integrate business systems across our global
enterprise over the next seven years. Project Infinity will require
significant capital expenditures over the next several years. We
anticipate Project Infinity will enhance our competitiveness as it
will supply immediate, detailed information about the marketplace to
our management, associates and bottlers worldwide, providing better
and faster decision-making capabilities about operations, marketing
and finance.
MARKETING ACTIVITIES
In addition to investments in bottling and distribution
infrastructure, we also make significant expenditures in support of
our trademarks. We define marketing as anything we do to create
consumer demand for our brands. We are intently focused on continually
finding new ways to build value into all of our brands. Marketing
spending aimed at building the value of our brands enhances consumer
awareness and builds consumer preference, which results in volume
growth and increases in per capita consumption of our products and our
share of worldwide beverage sales.
We build consumer awareness and product appeal for our trademarks
using integrated marketing programs. These programs include activities
such as advertising, point-of-sale merchandising and product sampling.
Each of these activities contributes to building consumer awareness
and product preference.
Through our bottling investments and strategic alliances with
other bottlers of our products, we are able to develop and implement
integrated marketing programs on a global basis. In developing a
global strategy for a Company trademark, we perform product and
packaging research, establish brand positioning, develop precise
consumer communications and seek consumer feedback. Examples of recent
successes with our global brand strategies include our Coca-Cola
contour bottle, our Sprite "dimpled" bottle and the Coca-Cola classic
campaign, "For the Fans."
During 1996, our partnership with the Centennial Olympic Games
and our presentation of the Olympic Torch Relay added value to our
brands. During the year, we executed Olympic-themed programs in more
than 135 countries around the world, building brand recognition,
product appeal and consumer awareness for our products. In addition,
we have extended our sponsorship of the Olympic Movement through 2008.
As part of our ongoing efforts to maximize the impact of our
advertising expenditures, we assign specific brands to individual
advertising agencies. This approach enables us to enhance each brand's
global positioning, increase accountability and use the Company's
marketing expenditures more efficiently and effectively.
During 1996, our Company's direct marketing expenses, which
include consumer marketing activities, increased 12 percent to $4.3
billion.
PEOPLE
Our success depends on having people who can identify and act on the
vast opportunities that exist for our business. This means building a
culture among our people in which learning and innovation dominate our
business lives. To support this effort in 1996, we formed the
Coca-Cola Learning Consortium, a group dedicated to working with the
management of our entire system to make learning a core capability.
The Learning Consortium will build the culture, systems and processes
our people need to develop the knowledge and skills to discover and
act upon opportunities better and faster than ever.
FINANCIAL STRATEGIES
We use several strategies to optimize our cost of capital, which is a
key component of our ability to maximize share-owner value.
DEBT FINANCING
We maintain debt levels considered prudent based on our cash flow,
interest coverage and percentage of debt to total capital. We use debt
financing to lower our overall cost of capital, which increases our
return on share-owners' equity.
Our capital structure and financial policies have earned long-
term credit ratings of "AA" from Standard & Poor's and "Aa3" from
Moody's, and the highest credit ratings available for our commercial
paper programs.
Our global presence and strong capital position afford us easy
access to key financial markets around the world, enabling us to raise
funds with a low effective cost. This posture, coupled with the active
management of our mix of short-term and long-term debt, results in a
lower overall cost of borrowing. Our debt management policies, in
conjunction with our share repurchase programs and investment
activity, typically result in current liabilities exceeding current
assets.
- 41 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
In managing our use of debt capital, we consider the following
financial measurements and ratios:
Year Ended December 31, 1996 1995 1994
- ----------------------------------------------------------------
Net debt (in billions) $ 2.8 $ 2.6 $ 1.8
Net debt-to-net capital 31% 32% 26%
Free cash flow to net debt 85% 82% 120%
Interest coverage 17x 16x 19x
Ratio of earnings to
fixed charges 14.9x 14.5x 16.8x
================================================================
Net debt is net of cash, cash equivalents and marketable
securities in excess of operating requirements and net of temporary
bottling investments.
FINANCIAL RISK MANAGEMENT
Most of our foreign currency exposures are managed on a consolidated
basis, which allows us to net certain exposures and, thus, take
advantage of any natural offsets. With approximately 80 percent of our
1996 operating income generated outside the United States, weakness in
one particular currency is often offset by strengths in others. We use
derivative financial instruments to reduce our net exposure to
financial risks.
We use forward exchange contracts to adjust the currency mix of
our recorded assets and liabilities, which further reduce our exposure
to adverse fluctuations in exchange rates. In addition, we enter into
forward exchange and swap contracts and purchase options to hedge both
firmly committed and anticipated transactions, as appropriate, and net
investments in certain international operations.
Our derivative financial instruments are straight-forward
instruments with liquid markets. We use primarily liquid spot,
forward, option and swap contracts. We do not enter into derivative
financial instruments for trading purposes. As a matter of policy, all
of our derivative positions are used to reduce risk by hedging an
underlying economic exposure. This policy mitigates certain risks such
as changes in currency, interest rates and other market factors,
including commodities, on a matched basis. Under this strategy, gains
or losses on hedging transactions are offset by gains or losses on the
underlying exposures being hedged.
SHARE REPURCHASES
Our confidence in the long-term growth potential of our business is
demonstrated by our continued and consistent use of share repurchase
programs. In July 1992, our Board of Directors authorized a plan to
repurchase up to 200 million shares of our Company's common stock
through the year 2000. In 1996, we repurchased 32 million shares under
the July 1992 plan at a total cost of approximately $1.5 billion.
Through 1996, we had repurchased 167 million shares under the July
1992 plan.
On October 17, 1996, our Board of Directors authorized a new
share repurchase program for 206 million additional shares through the
year 2006. Over the next 10 years, this plan, combined with the
remaining shares under the 1992 plan, authorizes the repurchase of
approximately an additional 10 percent of our outstanding shares.
Since the inception of our initial share repurchase program in
1984 through our current program as of December 31, 1996, our Company
has repurchased 998 million shares, representing 30 percent of the
shares outstanding as of January 1, 1984, at an average price per
share of $10.29.
DIVIDEND POLICY
Because of our historically strong earnings growth, our Board of
Directors has increased our cash dividend per common share by an
average annual compound growth rate of 14 percent since December 31,
1986. Our annual common stock dividend was $.50 per share, $.44 per
share and $.39 per share in 1996, 1995 and 1994, respectively. At its
February 1997 meeting, our Board of Directors again increased our
quarterly dividend per share to $.14, equivalent to a full-year
dividend of $.56 in 1997, our 35th consecutive annual increase.
In 1996, our dividend payout ratio was approximately 36 percent
of our net income. To free up additional cash for reinvestment in our
high-return beverages business, our Board of Directors intends to
gradually reduce our dividend payout ratio to 30 percent over time.
STOCK SPLIT
In April 1996, our share owners approved an increase in the authorized
common stock of our Company from 2.8 billion shares to 5.6 billion
shares and a two-for-one stock split. The stated par value of each
share remained at $.25 per share. All share data included in our
Annual Report has been restated for periods prior to the stock split.
PERFORMANCE TOOLS
Economic profit and economic value added provide a framework for
measuring the impact of value-oriented actions. We define economic
profit as income from continuing operations after taxes, excluding
interest, in excess of a computed capital charge for average operating
capital employed. In 1996, we modified the calculation of economic
profit to include both gains and losses on transactions relating to
our bottling investments. As modified, economic profit now includes
all of our identified value streams. Economic value added represents
the growth in economic profit from year to year. To assure that our
management team is clearly focused on the key drivers of our business,
economic value added and economic profit are used in determining
annual incentive awards and long-term incentive awards for most
eligible employees.
- 42 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
Over the last five years, as we have continued to strengthen our
bottling system, economic profit has increased at an average annual
compound rate of 20 percent. Over the same period, our Company's stock
price has increased at an average annual compound rate of 21 percent.
Over time, increases in our economic profit have correlated closely
with increases in our Company's stock price. For this reason, we
intend to continue focusing on the growth of economic profit.
During 1996, we began implementing a new tool to help us improve
our performance - value-based management (VBM). VBM does not replace
the economic value added concept; rather, it is a tool to manage
economic profit. It requires us to think about creating value - in
everything we do, every day. By focusing on value, we develop better
strategies that help us create more value for our share owners.
VBM is a way of thinking, a process for planning and executing
and a set of tools for understanding what creates value and what
destroys it. It provides a set of fundamental principles that allows
us to manage for increased value. With VBM, we determine how best to
maximize value creation, not just in our business overall, but in
every area of our business. We believe that a clear focus on the
components of economic profit and on the driver of those components -
VBM - is critical to our ability to maximize share-owner value over time.
TOTAL RETURN TO SHARE OWNERS
Share owners of our Company have received an excellent return on their
investment over the past decade. A $100 investment in our Company's
common stock on December 31, 1986, together with reinvested dividends,
was worth approximately $1,337 on December 31, 1996, an average annual
compound return of 30 percent.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OUR BUSINESS
We are the largest manufacturer, distributor and marketer of soft
drink beverage concentrates and syrups in the world. We manufacture
beverage concentrates and syrups and, in certain instances, finished
beverages, which we sell to bottling and canning operations,
authorized fountain wholesalers and some fountain retailers. In
addition, we have substantial ownership interests in numerous bottling
and canning operations. We are also the world's largest distributor
and marketer of juice and juice-drink products.
We own more than 160 brands, including soft drinks and
noncarbonated beverages such as sports drinks, juice drinks, milk
products, water products, teas and coffees.
VOLUME
We measure our sales volume in two ways: (1) gallon shipments of
concentrates and syrups and (2) unit cases of finished product. Gallon
shipments represent our primary business and measure the volume of
concentrates and syrups we sell to our bottling system. Most of our
revenues are based on this measure of "wholesale" activity. We also
measure volume in unit cases, which represent the amount of finished
product our bottling system sells to retail customers. We believe unit
case volume more accurately measures the underlying strength of our
business system because it measures trends at the retail level.
Fountain syrups sold directly to our customers are included in both
measures.
In 1996, our worldwide unit case volume increased 8 percent, on
top of an 8 percent increase in 1995. Our business system sold 13.7
billion unit cases in 1996, an increase of 1 billion unit cases over
1995. Our 1996 results are the product of years of methodically
investing not only in marketing, but also in our worldwide
infrastructure including bottlers, capital, information systems and
people.
OPERATIONS
NET OPERATING REVENUES AND GROSS MARGIN
On a consolidated basis, our net revenues grew 3 percent and our gross
profit grew 7 percent in 1996. The increase in revenues reflects an
increase in gallon shipments and selective price increases offset by a
stronger U.S. dollar and the disposition of our previously
consolidated bottling and canning operations in France, Belgium and
east Germany. Our gross profit margin increased to 64 percent in 1996
from 61 percent in 1995, primarily due to the sale of our east German,
French and Belgian bottling and canning operations, which shifted a
greater proportion of our revenues to our higher margin concentrate
business, and favorable results from changes in our product mix.
Additionally, gross margins improved in 1996 due to favorable price
variances in raw materials, such as packaging, at our consolidated
bottlers.
On a consolidated basis, our net revenues and gross profit each
grew 11 percent in 1995. The increase in revenues reflects gallon
shipment increases, selective price increases and continued expansion
of our bottling and canning operations. Our gross margin declined to
61 percent in 1995 from 62 percent in 1994, primarily due to higher
costs for materials such as sweeteners and packaging.
SELLING, ADMINISTRATIVE AND GENERAL EXPENSES
Selling expenses were $5,891 million in 1996, $5,399 million in 1995
and $4,931 million in 1994. The increases in 1996 and 1995 were
primarily due to higher marketing expenditures in support of our
Company's volume growth.
- 43 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
Administrative and general expenses were $2,002 million in 1996,
$1,653 million in 1995 and $1,445 million in 1994. The increase in
1996 reflects certain nonrecurring provisions. In the third quarter of
1996, we made a series of decisions that resulted in provisions of
approximately $276 million in administrative and general expenses
related to our plans for strengthening our worldwide system. Of this
$276 million, approximately $130 million related to the streamlining
of our operations, primarily in Greater Europe and Latin America. Our
management has taken actions to consolidate certain manufacturing
operations and, as a result, recorded charges to recognize the
impairment of certain manufacturing assets and to recognize the
estimated losses on the disposal of other assets. The remainder of
this $276 million provision related to actions taken by The Minute
Maid Company (formerly known as Coca-Cola Foods). During the third
quarter of 1996, The Minute Maid Company entered into two significant
agreements with independent parties: (i) a strategic supply alliance
with Sucocitrico Cutrale Ltda., the world's largest grower and
processor of oranges, and (ii) a joint venture agreement with Groupe
Danone to produce, distribute and sell premium refrigerated juices
outside of the United States and Canada. With these agreements, we
intend to increase The Minute Maid Company's focus on managing its
brands while seeking arrangements to lower its overall manufacturing
costs. In connection with these actions, we recorded $146 million in
third quarter provisions, comprised primarily of impairment charges to
certain production facilities and reserves for losses on the disposal
of other production facilities.
Also in the third quarter of 1996, we launched a strategic
initiative, Project Infinity, to redesign and enhance our information
systems and communications capabilities. In connection with this
initiative, we recorded an $80 million impairment charge in
administrative and general expenses to recognize Project Infinity's
impact on existing information systems. Also in the third quarter of
1996, we recorded a charge in administrative and general expenses as a
result of our decision to contribute $28.5 million to the corpus of
The Coca-Cola Foundation, a not-for-profit charitable organization.
The increase in administrative and general expenses in 1995 was
due to higher expenses related to employee benefits and a nonrecurring
provision of $86 million to increase efficiencies in the Company's
operations in North America and Europe.
Administrative and general expenses, as a percentage of net
operating revenues, were approximately 11 percent in 1996 and 9
percent in 1995 and 1994.
OPERATING INCOME AND OPERATING MARGIN
On a consolidated basis, our operating income decreased 3 percent in
1996, following an 11 percent increase in 1995. The decrease in 1996
was principally due to the disposition of our French and Belgian
bottling and canning operations and the recording of several
nonrecurring provisions as discussed previously. In addition, to
strengthen our already efficient worldwide bottler system where
possible, we encouraged certain bottlers to reduce their concentrate
inventory levels by curtailing concentrate shipments to their
locations. Reducing concentrate inventory levels freed up cash in the
bottling system, allowing for further investment in sales-generating
equipment and production capacity expansion. This curtailment of
concentrate shipments decreased operating income by an estimated $290
million. Our consolidated operating margin was 21 percent in 1996 and
22 percent in 1995.
MARGIN ANALYSIS
[bar chart]
1996 1995 1994
- -------------------------------------------------------
Net Operating Revenues $18.5 $18.0 $16.2
(in billions)
Gross Margin 64% 61% 62%
Operating Margin 21% 22% 22%
- -------------------------------------------------------
- 44 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
INTEREST INCOME AND INTEREST EXPENSE
In 1996, our interest income decreased 3 percent, due primarily to
lower average short-term investments and lower average interest rates
in Latin America. Interest expense increased 5 percent in 1996, due to
higher average debt balances.
In 1995, our interest income increased 35 percent as a result of
higher average interest rates outside of the United States. Interest
expense increased 37 percent in 1995, reflecting higher commercial
paper balances.
EQUITY INCOME
Equity income increased 25 percent to $211 million in 1996, due
primarily to stronger operating performances by Coca-Cola Enterprises,
Coca-Cola Beverages Ltd. and The Coca-Cola Bottling Company of New
York, Inc.
Equity income increased 26 percent to $169 million in 1995, due
primarily to improved results at Coca-Cola FEMSA, Coca-Cola Nestle
Refreshments, Coca-Cola Bottlers Philippines, Inc. and Coca-Cola
Beverages Ltd.
OTHER INCOME (DEDUCTIONS)-NET
In 1996, other income (deductions)-net increased $1 million, and
includes gains recorded on the sale of our bottling and canning
operations in France and Belgium, as well as gains on other bottling
transactions.
In 1995, other income (deductions)-net increased $111 million,
and includes gains recorded on the sale of bottling operations in
Poland, Croatia and Romania.
GAINS ON ISSUANCES OF STOCK BY EQUITY INVESTEES
In 1996, Coca-Cola Amatil issued approximately 46 million shares in
exchange for approximately $522 million. This issuance reduced our
ownership percentage in Coca-Cola Amatil from approximately 39 percent
to approximately 36 percent and resulted in a noncash pretax gain to
our Company of approximately $130 million.
Also in 1996, Coca-Cola Erfrischungsgetraenke G.m.b.H. (CCEG),
our wholly owned east German bottler, issued new shares to effect a
merger with three independent German bottling operations. The shares
were valued at approximately $925 million, based upon the fair values
of the assets of the three acquired bottling companies. Approximately
24.4 million shares were issued, resulting in a noncash pretax gain of
approximately $283 million to our Company. We own a 45 percent
interest in the resulting anchor bottler Coca-Cola
Erfrischungsgetraenke AG (CCEAG).
In 1996, Coca-Cola FEMSA de Buenos Aires, S.A. issued
approximately 19 million shares to Coca-Cola FEMSA, S.A. de C.V. This
issuance reduced our ownership in Coca-Cola FEMSA de Buenos Aires,
S.A. from 49 percent to approximately 32 percent. We recognized a
noncash pretax gain of approximately $18 million as a result of this
transaction. In a subsequent transaction, our ownership in Coca-Cola
FEMSA de Buenos Aires, S.A. was reduced to 25 percent.
In the third quarter of 1995, Coca-Cola Amatil completed a public
offering in Australia of approximately 97 million shares of common
stock. In connection with the offering, our ownership in Coca-Cola
Amatil was reduced to approximately 40 percent. We recognized a
noncash pretax gain of approximately $74 million as a result of this
transaction.
INCOME TAXES
In the third quarter of 1996, our Company reached an agreement in
principle with the U.S. Internal Revenue Service (IRS), settling
certain U.S.-related income tax matters, including issues in
litigation related to our operations in Puerto Rico, dating back to
1981 and extending through 1995. This settlement resulted in a one-
time reduction of $320 million to our 1996 income tax expense as a
result of a reversal of previously accrued income tax liabilities and
reduced our effective tax rate to 24.0 percent in 1996 from 31.0
percent in 1995 and 31.5 percent in 1994. Excluding the favorable
impact of the settlement with the IRS, our 1996 effective tax rate
would have been 31.0 percent. Our effective tax rate reflects tax
benefits derived from having significant operations outside the United
States, which are taxed at rates lower than the U.S. statutory rate of
35 percent.
INCOME PER SHARE
Accelerated by our Company's share repurchase program, our net income
per share grew 19 percent in 1996 and 1995 and 18 percent in 1994.
LIQUIDITY AND CAPITAL RESOURCES
We believe our ability to generate cash from operations in excess of
our capital reinvestment and dividend requirements is one of our
fundamental financial strengths. We anticipate that our operating
activities in 1997 will continue to provide us with sufficient cash
flows to capitalize on opportunities for business expansion and to
meet all of our financial commitments.
FREE CASH FLOW
Free cash flow is the cash remaining from operations after we have
satisfied our business reinvestment opportunities. We focus on
increasing free cash flow to achieve our primary objective, maximizing
share-owner value over time. We use free cash flow, along with
borrowings, to pay dividends and make share repurchases.
- 45 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
The consolidated statements of our cash flows are summarized as
follows (in millions):
Year Ended December 31, 1996 1995 1994
- ------------------------------------------------------------------
Cash flows provided by
(used in):
Operations $ 3,463 $ 3,328 $ 3,361
Investment activities (1,050) (1,226) (1,215)
- -------------------------------------------------------------------
FREE CASH FLOW 2,413 2,102 2,146
Cash flows provided by
(used in):
Financing
Share repurchases (1,521) (1,796) (1,192)
Other financing activities (581) (482) (600)
Exchange (45) (43) 34
- -------------------------------------------------------------------
Increase (decrease) in cash $ 266 $ (219) $ 388
===================================================================
Cash provided by operations amounted to $3.5 billion, a 4 percent
increase from 1995. This increase reflects the continued growth of our
business and includes the cash effect of significant items recorded in
1996. These items have been previously discussed in Management's
Discussion and Analysis on pages 43 through 45. In 1995, cash provided
by operations amounted to $3.3 billion, a 1 percent decrease from
1994. This 1995 decrease primarily resulted from increases in accounts
receivable and inventories related to the increase in our net
revenues, and an increase in prepaid expenses and other assets.
In 1996, net cash used in investment activities decreased from
1995, primarily due to the increase in proceeds from the disposals of
investments and other assets including the disposition of our bottling
and canning operations in France and Belgium. The increase in proceeds
from disposals was partially offset by significant acquisitions and
investments, including our investment in Coca-Cola y Hit.
As compared to 1994, net cash used in investment activities
increased slightly in 1995, primarily attributable to an increase in
purchases of property, plant and equipment, offset by an increase in
proceeds from disposals of investments and other assets. Specifically,
during 1995, we sold our interests in bottling operations in Poland,
Croatia and Romania.
FINANCING ACTIVITIES
Our financing activities include net borrowings, dividend payments and
share repurchases. Net cash used in financing activities totaled $2.1
billion in 1996, $2.3 billion in 1995 and $1.8 billion in 1994. Cash
used to purchase common stock for treasury was $1.5 billion in 1996
versus $1.8 billion in 1995. The change between 1995 and 1994 was due,
in part, to net borrowings of debt.
Commercial paper is our primary source of short-term financing.
On December 31, 1996, we had $3.2 billion outstanding in commercial
paper borrowings. In addition, we had $1.1 billion in lines of credit
and other short-term credit facilities available, under which $0.2
billion was outstanding. The 1996 and 1995 increases in loans and
notes payable were primarily attributable to additional commercial
paper borrowings resulting from the management of our short-term and
long-term debt mix.
EXCHANGE
Our international operations are subject to certain opportunities and
risks, including currency fluctuations and government actions. We
monitor our operations in each country closely so that we can respond
to changing economic and political environments quickly and
decisively, and take full advantage of changing foreign currencies and
interest rates.
We use approximately 50 functional currencies. In 1996, 1995 and
1994, the weighted-average exchange rates for certain key foreign
currencies strengthened (weakened) against the U.S. dollar as follows:
Year Ended December 31, 1996 1995 1994
- -------------------------------------------------------------------
Key currencies (9)% Even 2%
- -------------------------------------------------------------------
Australian dollar 6% 1% 9%
British pound Even 3% 2%
Canadian dollar Even Even (5)%
French franc (4)% 13% (1)%
German mark (6)% 13% 2%
Japanese yen (15)% 9% 9%
Mexican peso (17)% (46)% (8)%
===================================================================
These percentages do not reflect the impact of fluctuations in
exchange on our operating results, as our foreign currency management
program mitigates a portion of such exchange risks. In addition, due
to our global operations, weaknesses in some currencies are often
offset by strengths in others.
The change in our foreign currency translation adjustment in 1996
was due primarily to the revaluation of net assets located in
countries where the local currency significantly weakened versus the
U.S. dollar. Exchange gains (losses)-net amounted to $3 million in
1996, $(21) million in 1995 and $(25) million in 1994, and were
recorded in other income (deductions)-net. Exchange gains (losses)-net
includes the remeasurement of certain currencies into functional
currencies and the costs of hedging certain transaction and balance
sheet exposures.
Additional information concerning our hedging activities is
presented on pages 59 through 61.
- 46 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
FINANCIAL POSITION
The 1996 decrease in our accounts receivable, inventories, property,
plant and equipment, goodwill, and accounts payable and accrued
expenses is due primarily to the disposition of our previously
consolidated bottling and canning operations in France and Belgium and
the deconsolidation of our previously consolidated east German
bottler. In 1996, our equity method investments increased primarily
due to our investments in CCEAG and Coca-Cola y Hit. The 1996 increase
in cost method investments includes our investment in Embotelladoras
Polar S.A., Embotelladora Andina S.A., Panamerican Beverages and
noncash adjustments increasing our investments to fair value. The
decrease in accrued income taxes is directly attributable to our 1996
settlement with the IRS, whereby $320 million of previously accrued
income tax liabilities was reversed against current year income tax
expense.
The 1995 increase in cost method investments included an
increased investment in Panamerican Beverages. In 1995, goodwill and
other intangible assets increased as a result of our acquisitions
during the year, including Barq's, Inc., and certain fountain syrup
manufacturing operations.
IMPACT OF INFLATION AND CHANGING PRICES
Inflation is a factor that affects the way we operate in many markets
around the world. In general, we are able to increase prices to
counteract the effects of increasing costs and to generate sufficient
cash flows to maintain our productive capability.
OUTLOOK
As a global business that generates the majority of its operating
income outside the United States, our Company is uniquely positioned
to benefit from operating in a variety of currencies, as downturns in
any one region are often offset by upturns in others. Additionally, we
have various operational initiatives available to offset the
unfavorable impact of such events.
While we cannot predict the future, we believe our opportunities
for sustained, profitable growth are considerable, not only in the
developing population centers of the world, but also in our oldest,
most established markets, including the United States. We firmly
believe the strength of our brands, our global presence, our strong
financial condition and the skills of our people give us the
flexibility to capitalize on these growth opportunities as we continue
to pursue our goal of increasing share-owner value.
ADDITIONAL INFORMATION
For additional information about our operations, cash flows, liquidity
and capital resources, please refer to the information on pages 50
through 68 of this report. Additional information concerning our
operations in geographic areas is presented on page 66.
- 47 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Compound
(In millions except per Growth Rates Year Ended December 31,
share data{1}, ratios ----------------- -------------------------------------------------
and growth rates) 5 Years 10 Years 1996 1995 1994{3} 1993{4}
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net operating revenues 9.9% 10.3% $ 18,546 $18,018 $16,181 $13,963
Cost of goods sold 7.7% 6.9% 6,738 6,940 6,168 5,160
- -----------------------------------------------------------------------------------------------
Gross profit 11.3% 12.9% 11,808 11,078 10,013 8,803
Selling, administrative
and general expenses 11.3% 11.6% 7,893 7,052 6,376 5,704
- -----------------------------------------------------------------------------------------------
Operating income 11.1% 15.9% 3,915 4,026 3,637 3,099
Interest income 238 245 181 144
Interest expense 286 272 199 168
Equity income 211 169 134 91
Other income (deductions)-net 87 86 (25) 7
Gains on issuances of stock by
equity investees 431 74 - 12
- -----------------------------------------------------------------------------------------------
Income from continuing
operations before income
taxes and changes in
accounting principles 14.0% 13.5% 4,596 4,328 3,728 3,185
Income taxes 7.6% 8.9% 1,104 1,342 1,174 997
- -----------------------------------------------------------------------------------------------
Income from continuing
operations before
changes in accounting
principles 16.6% 15.5% $ 3,492 $ 2,986 $ 2,554 $ 2,188
===============================================================================================
Net income 16.6% 14.1% $ 3,492 $ 2,986 $ 2,554 $ 2,176
Preferred stock dividends - - - -
- -----------------------------------------------------------------------------------------------
Net income available to
common share owners 16.6% 14.1% $ 3,492 $ 2,986 $ 2,554 $ 2,176
===============================================================================================
Average common shares
outstanding{1} 2,494 2,525 2,580 2,603
PER COMMON SHARE DATA{1}
Income from continuing
operations before
changes in accounting
principles 18.1% 17.9% $ 1.40 $ 1.18 $ .99 $ .84
Net income 18.1% 16.7% 1.40 1.18 .99 .84
Cash dividends 15.8% 14.4% .50 .44 .39 .34
Market price on
December 31 21.3% 27.3% 52.63 37.13 25.75 22.31
TOTAL MARKET VALUE OF
COMMON STOCK{2} 19.6% 24.6% $130,575 $92,983 $65,711 $57,905
BALANCE SHEET DATA
Cash, cash equivalents and
current marketable
securities $ 1,658 $ 1,315 $ 1,531 $ 1,078
Property, plant and
equipment-net 3,550 4,336 4,080 3,729
Depreciation 442 421 382 333
Capital expenditures 990 937 878 800
Total assets 16,161 15,041 13,873 12,021
Long-term debt 1,116 1,141 1,426 1,428
Total debt 4,513 4,064 3,509 3,100
Share-owners' equity 6,156 5,392 5,235 4,584
Total capital{2} 10,669 9,456 8,744 7,684
OTHER KEY FINANCIAL MEASURES{2}
Total debt-to-total capital 42.3% 43.0% 40.1% 40.3%
Net debt-to-net capital 31.4% 32.2% 25.5% 29.0%
Return on common equity 60.5% 56.2% 52.0% 51.7%
Return on capital 36.7% 34.9% 32.7% 31.2%
Dividend payout ratio 35.7% 37.2% 39.4% 40.6%
Economic profit{7} $ 2,718 $ 2,291 $ 1,896 $ 1,549
Free cash flow $ 2,413 $ 2,102 $ 2,146 $ 1,623
===============================================================================================
{1} Adjusted for a two-for-one stock split in 1996.
{2} See Glossary on page 73.
{3} In 1994, we adopted SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities."
{4} In 1993, we adopted SFAS No. 112, "Employers' Accounting for Postemployment Benefits."
{5} In 1992, we adopted SFAS No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions."
</TABLE>
- 48 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
(In millions except per Year Ended December 31,
share data{1}, ratios ----------------------------------------------------------------------------------------
and growth rates) 1992{5,6} 1991{6} 1990{6} 1989{6} 1988 1987 1986
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net operating revenues $13,074 $11,572 $10,236 $ 8,622 $ 8,065 $ 7,658 $ 6,977
Cost of goods sold 5,055 4,649 4,208 3,548 3,429 3,633 3,454
- ---------------------------------------------------------------------------------------------------------------------
Gross profit 8,019 6,923 6,028 5,074 4,636 4,025 3,523
Selling, administrative and
general expenses 5,272 4,614 4,078 3,327 3,033 2,673 2,624
- ---------------------------------------------------------------------------------------------------------------------
Operating income 2,747 2,309 1,950 1,747 1,603 1,352 899
Interest income 164 175 170 205 199 232 154
Interest expense 171 192 231 308 230 297 208
Equity income 65 40 110 75 92 64 45
Other income (deductions)-net (59) 51 15 45 (38) (28) 33
Gains on issuances of stock by
equity investees - - - - - 40 375
- ---------------------------------------------------------------------------------------------------------------------
Income from continuing
operations before income
taxes and changes in
accounting principles 2,746 2,383 2,014 1,764 1,626 1,363 1,298
Income taxes 863 765 632 553 537 496 471
- ---------------------------------------------------------------------------------------------------------------------
Income from continuing
operations before changes
in accounting principles $ 1,883 $ 1,618 $ 1,382 $ 1,211 $ 1,089 $ 867 $ 827
=====================================================================================================================
Net income $ 1,664 $ 1,618 $ 1,382 $ 1,537 $ 1,045 $ 916 $ 934
Preferred stock dividends - 1 18 21 7 - -
- ---------------------------------------------------------------------------------------------------------------------
Net income available to
common share owners $ 1,664 $ 1,617 $ 1,364 $ 1,516{8} $ 1,038 $ 916 $ 934
=====================================================================================================================
Average common shares
outstanding{1} 2,634 2,666 2,674 2,768 2,917 3,019 3,095
PER COMMON SHARE DATA{1}
Income from continuing
operations before changes
in accounting principles $ .72 $ .61 $ .51 $ .43 $ .37 $ .29 $ .27
Net income .63 .61 .51 .55{8} .36 .30 .30
Cash dividends .28 .24 .20 .17 .15 .14 .13
Market price on December 31 20.94 20.06 11.63 9.66 5.58 4.77 4.72
TOTAL MARKET VALUE OF COMMON
STOCK{2} $54,728 $53,325 $31,073 $26,034 $15,834 $14,198 $14,534
BALANCE SHEET DATA
Cash, cash equivalents and
current marketable
securities $ 1,063 $ 1,117 $ 1,492 $ 1,182 $ 1,231 $ 1,489 $ 895
Property, plant and
equipment-net 3,526 2,890 2,386 2,021 1,759 1,602 1,538
Depreciation 310 254 236 181 167 152 151
Capital expenditures 1,083 792 593 462 387 304 346
Total assets 11,052 10,189 9,245 8,249 7,451 8,606 7,675
Long-term debt 1,120 985 536 549 761 909 996
Total debt 3,207 2,288 2,537 1,980 2,124 2,995 1,848
Share-owners' equity 3,888 4,239 3,662 3,299 3,345 3,187 3,479
Total capital{2} 7,095 6,527 6,199 5,279 5,469 6,182 5,327
OTHER KEY FINANCIAL MEASURES{2}
Total debt-to-total capital 45.2% 35.1% 40.9% 37.5% 38.8% 48.4% 34.7%
Net debt-to-net capital 33.1% 24.1% 24.6% 15.6% 21.1% 21.1% 15.4%
Return on common equity 46.4% 41.3% 41.4% 39.4% 34.7% 26.0% 25.7%
Return on capital 29.4% 27.5% 26.8% 26.5% 21.3% 18.3% 20.1%
Dividend payout ratio 44.3% 39.5% 39.2% 31.0%{8} 42.1% 46.0% 43.1%
Economic profit{7} $ 1,300 $ 1,073 $ 920 $ 859 $ 717 $ 530 $ 594
Free cash flow $ 873 $ 960 $ 844 $ 1,664 $ 1,517 $ 1,023 $ 186
=====================================================================================================================
{6} In 1992, we adopted SFAS No. 109, "Accounting for Income Taxes," by restating financial statements beginning
in 1989.
{7} The calculation of economic profit has been modified and amounts prior to 1996 have been restated.
{8} Net income available to common share owners in 1989 included after-tax gains of $604 million ($.22 per
common share) from the sales of our equity interest in Columbia Pictures Entertainment, Inc. and our bottled
water business, and the transition effect of $265 million related to the change in accounting for income taxes.
Excluding these nonrecurring items, our dividend payout ratio in 1989 was 39.9 percent.
</TABLE>
- 49 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31, 1996 1995
- ------------------------------------------------------------------------------------
(In millions except share data)
ASSETS
<S> <C> <C>
CURRENT
Cash and cash equivalents $ 1,433 $ 1,167
Marketable securities 225 148
- ------------------------------------------------------------------------------------
1,658 1,315
Trade accounts receivable, less allowances
of $30 in 1996 and $34 in 1995 1,641 1,695
Inventories 952 1,117
Prepaid expenses and other assets 1,659 1,323
- ------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 5,910 5,450
- ------------------------------------------------------------------------------------
INVESTMENTS AND OTHER ASSETS
Equity method investments
Coca-Cola Enterprises Inc. 547 556
Coca-Cola Amatil Limited 881 682
Other, principally bottling companies 2,004 1,157
Cost method investments, principally
bottling companies 737 319
Marketable securities and other assets 1,779 1,597
- ------------------------------------------------------------------------------------
5,948 4,311
- ------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT
Land 204 233
Buildings and improvements 1,528 1,944
Machinery and equipment 3,649 4,135
Containers 200 345
- ------------------------------------------------------------------------------------
5,581 6,657
Less allowances for depreciation 2,031 2,321
- ------------------------------------------------------------------------------------
3,550 4,336
- ------------------------------------------------------------------------------------
GOODWILL AND OTHER INTANGIBLE ASSETS 753 944
- ------------------------------------------------------------------------------------
$ 16,161 $ 15,041
====================================================================================
</TABLE>
- 50 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31, 1996 1995
- ------------------------------------------------------------------------------------
(In millions except share data)
LIABILITIES AND SHARE-OWNERS' EQUITY
<S> <C> <C>
CURRENT
Accounts payable and accrued expenses $ 2,972 $ 3,103
Loans and notes payable 3,388 2,371
Current maturities of long-term debt 9 552
Accrued income taxes 1,037 1,322
- ------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 7,406 7,348
- ------------------------------------------------------------------------------------
LONG-TERM DEBT 1,116 1,141
- ------------------------------------------------------------------------------------
OTHER LIABILITIES 1,182 966
- ------------------------------------------------------------------------------------
DEFERRED INCOME TAXES 301 194
- ------------------------------------------------------------------------------------
SHARE-OWNERS' EQUITY
Common stock, $.25 par value
Authorized: 5,600,000,000 shares
Issued: 3,432,956,518 shares in 1996;
3,423,678,994 shares in 1995 858 856
Capital surplus 1,058 863
Reinvested earnings 15,127 12,882
Unearned compensation related to outstanding
restricted stock (61) (68)
Foreign currency translation adjustment (662) (424)
Unrealized gain on securities available for sale 156 82
- ------------------------------------------------------------------------------------
16,476 14,191
Less treasury stock, at cost
(951,963,574 shares in 1996;
919,081,326 shares in 1995) 10,320 8,799
- ------------------------------------------------------------------------------------
6,156 5,392
- ------------------------------------------------------------------------------------
$ 16,161 $ 15,041
====================================================================================
See Notes to Consolidated Financial Statements.
</TABLE>
- 51 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Year Ended December 31, 1996 1995 1994
- ------------------------------------------------------------------------------------
(In millions except per share data)
<S> <C> <C> <C>
NET OPERATING REVENUES $ 18,546 $ 18,018 $ 16,181
Cost of goods sold 6,738 6,940 6,168
- ------------------------------------------------------------------------------------
GROSS PROFIT 11,808 11,078 10,013
Selling, administrative and general expenses 7,893 7,052 6,376
- ------------------------------------------------------------------------------------
OPERATING INCOME 3,915 4,026 3,637
Interest income 238 245 181
Interest expense 286 272 199
Equity income 211 169 134
Other income (deductions)-net 87 86 (25)
Gains on issuances of stock by equity investees 431 74 -
- ------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 4,596 4,328 3,728
Income taxes 1,104 1,342 1,174
- ------------------------------------------------------------------------------------
NET INCOME $ 3,492 $ 2,986 $ 2,554
====================================================================================
NET INCOME PER SHARE $ 1.40 $ 1.18 $ .99
====================================================================================
AVERAGE SHARES OUTSTANDING 2,494 2,525 2,580
====================================================================================
See Notes to Consolidated Financial Statements.
</TABLE>
- 52 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Year Ended December 31, 1996 1995 1994
- ------------------------------------------------------------------------------------
(In millions)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 3,492 $ 2,986 $ 2,554
Depreciation and amortization 479 454 411
Deferred income taxes (145) 157 58
Equity income, net of dividends (89) (25) (4)
Foreign currency adjustments (60) (23) (6)
Gains on issuances of stock by equity investees (431) (74) -
Other noncash items 181 45 41
Net change in operating assets and liabilities 36 (192) 307
- ------------------------------------------------------------------------------------
Net cash provided by operating activities 3,463 3,328 3,361
- ------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Acquisitions and investments, principally
bottling companies (645) (338) (311)
Purchases of investments and other assets (623) (403) (379)
Proceeds from disposals of investments
and other assets 1,302 580 299
Purchases of property, plant and equipment (990) (937) (878)
Proceeds from disposals of property,
plant and equipment 81 44 109
Other investing activities (175) (172) (55)
- ------------------------------------------------------------------------------------
Net cash used in investing activities (1,050) (1,226) (1,215)
- ------------------------------------------------------------------------------------
Net cash provided by operations
after reinvestment 2,413 2,102 2,146
- ------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Issuances of debt 1,122 754 491
Payments of debt (580) (212) (154)
Issuances of stock 124 86 69
Purchases of stock for treasury (1,521) (1,796) (1,192)
Dividends (1,247) (1,110) (1,006)
- ------------------------------------------------------------------------------------
Net cash used in financing activities (2,102) (2,278) (1,792)
- ------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (45) (43) 34
- ------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
Net increase (decrease) during the year 266 (219) 388
Balance at beginning of year 1,167 1,386 998
- ------------------------------------------------------------------------------------
Balance at end of year $ 1,433 $ 1,167 $ 1,386
====================================================================================
See Notes to Consolidated Financial Statements.
</TABLE>
- 53 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHARE-OWNERS' EQUITY
<TABLE>
<CAPTION>
Number of
Common Outstanding Foreign Unrealized
Three Years Ended Shares Common Capital Reinvested Restricted Currency Gain on Treasury
December 31, 1996 Outstanding{1} Stock{1} Surplus{1} Earnings Stock Translation Securities Stock
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(In millions except per share data){1} |
|
BALANCE DECEMBER 31, 1993 2,595 | $852 $ 660 $ 9,458 $(85) $(420) $ -- $ (5,881)
Transition effect of change |
in accounting for certain |
debt and marketable equity |
securities, net |
of deferred taxes -- | -- -- -- -- -- 60 --
Stock issued to employees |
exercising stock options 8 | 2 67 -- -- -- -- --
Tax benefit from employees' |
stock option and |
restricted stock plans -- | -- 17 -- -- -- -- --
Stock issued under |
restricted stock plans, |
less amortization of $13 -- | -- 2 -- 11 -- -- --
Translation adjustments -- | -- -- -- -- 148 -- --
Net change in unrealized |
gain on securities, |
net of deferred taxes -- | -- -- -- -- -- (12) --
Purchases of stock for |
treasury (51){2}| -- -- -- -- -- -- (1,192)
Net income -- | -- -- 2,554 -- -- -- --
Dividends (per share-$.39) -- | -- -- (1,006) -- -- -- --
- -----------------------------------------|--------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1994 2,552 | 854 746 11,006 (74) (272) 48 (7,073)
Stock issued to employees |
exercising stock options 8 | 2 84 -- -- -- -- --
Tax benefit from employees' |
stock option and |
restricted stock plans -- | -- 26 -- -- -- -- --
Stock issued under |
restricted stock plans, |
less amortization of $12 -- | -- 7 -- 6 -- -- --
Translation adjustments -- | -- -- -- -- (152) -- --
Net change in unrealized |
gain on securities, |
net of deferred taxes -- | -- -- -- -- -- 34 --
Purchases of stock for |
treasury (58){2}| -- -- -- -- -- -- (1,796)
Treasury stock issued |
in connection with |
an acquisition 3 | -- -- -- -- -- -- 70
Net income -- | -- -- 2,986 -- -- -- --
Dividends (per share-$.44) -- | -- -- (1,110) -- -- -- --
- -----------------------------------------|--------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1995 2,505 | 856 863 12,882 (68) (424) 82 (8,799)
Stock issued to employees |
exercising stock options 9 | 2 122 -- -- -- -- --
Tax benefit from employees' |
stock option and |
restricted stock plans -- | -- 63 -- -- -- -- --
Stock issued under |
restricted stock plans, |
less amortization of $15 -- | -- 10 -- 7 -- -- --
Translation adjustments -- | -- -- -- -- (238) -- --
Net change in unrealized |
gain on securities, |
net of deferred taxes -- | -- -- -- -- -- 74 --
Purchases of stock for |
treasury (33){2}| -- -- -- -- -- -- (1,521)
Net income -- | -- -- 3,492 -- -- -- --
Dividends (per share-$.50) -- | -- -- (1,247) -- -- -- --
- -----------------------------------------|--------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1996 2,481 | $858 $1,058 $15,127 $(61) $(662) $156 $(10,320)
==========================================================================================================================
{1} Adjusted for a two-for-one stock split in 1996.
{2} Common stock purchased from employees exercising stock options numbered 881 thousand, 561 thousand and 416 thousand
shares for the years ending December 31, 1996, 1995 and 1994, respectively.
See Notes to Consolidated Financial Statements.
</TABLE>
- 54 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
The Coca-Cola Company and subsidiaries (our Company) is predominantly
a manufacturer, marketer and distributor of soft drink and
noncarbonated beverage concentrates and syrups. Operating in nearly
200 countries worldwide, we primarily sell our concentrates and syrups
to bottling and canning operations, fountain wholesalers and fountain
retailers. We have significant markets for our products in all of the
world's geographic regions. We record revenue when title passes to our
customers.
BASIS OF PRESENTATION
Certain amounts in the prior years' financial statements have been
reclassified to conform to the current year presentation.
CONSOLIDATION
Our consolidated financial statements include the accounts of The Coca-
Cola Company and all subsidiaries except where control is temporary or
does not rest with our Company. Our investments in companies in which
we have the ability to exercise significant influence over operating
and financial policies are accounted for by the equity method.
Accordingly, our Company's share of the net earnings of these
companies is included in consolidated net income. Our investments in
other companies are carried at cost or fair value, as appropriate. All
significant intercompany accounts and transactions are eliminated upon
consolidation.
ISSUANCES OF STOCK BY EQUITY INVESTEES
When one of our equity investees sells additional shares to third
parties, our percentage ownership interest in the investee decreases.
In the event the selling price per share is more or less than our
average carrying amount per share, we recognize a noncash gain or loss
on the issuance. This noncash gain or loss, net of any deferred taxes,
is recognized in our net income in the period the change of ownership
interest occurs.
ADVERTISING COSTS
Our Company generally expenses production costs of print, radio and
television advertisements as of the first date the advertisements take
place. Advertising expenses included in selling, administrative and
general expenses were $1,437 million in 1996, $1,292 million in 1995
and $1,114 million in 1994. As of December 31, 1996 and 1995,
advertising costs of approximately $247 million and $299 million,
respectively, were recorded primarily in prepaid expenses and other
assets in our accompanying balance sheets.
NET INCOME PER SHARE
Net income per share is computed by dividing net income by the
weighted-average number of shares outstanding.
On April 17, 1996, our share owners approved an increase in the
authorized common stock of our Company from 2.8 billion to 5.6 billion
shares and a two-for-one stock split. The stated par value of each
share remained at $.25 per share. Our financial statements have been
restated to reflect these changes.
CASH EQUIVALENTS
Marketable securities that are highly liquid and have maturities of
three months or less at the date of purchase are classified as cash
equivalents.
INVENTORIES
Inventories consist primarily of raw materials and supplies and are
valued at the lower of cost or market. In general, cost is determined
on the basis of average cost or first-in, first-out methods.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost and are depreciated
principally by the straight-line method over the estimated useful
lives of the assets.
GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets are stated on the basis of cost
and are amortized, principally on a straight-line basis, over the
estimated future periods to be benefited (not exceeding 40 years).
Goodwill and other intangible assets are periodically reviewed for
impairment based on an assessment of future operations to ensure that
they are appropriately valued. Accumulated amortization was
approximately $86 million and $117 million on December 31, 1996 and
1995, respectively.
USE OF ESTIMATES
In conformity with generally accepted accounting principles, the
preparation of our financial statements requires our management to
make estimates and assumptions that affect the amounts reported in our
financial statements and accompanying notes. Although these estimates
are based on our knowledge of current events and actions we may
undertake in the future, they may ultimately differ from actual
results.
NEW ACCOUNTING STANDARDS
We adopted Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123), in 1996. Under
the provisions of SFAS 123, companies can elect to account for stock-
based compensation plans using a fair-value based method or continue
measuring compensation expense for those plans using the intrinsic
value method prescribed in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations. We have elected to continue using the intrinsic value
method to account for our stock-based compensation plans. SFAS 123
requires companies electing to continue using the intrinsic value
method to make certain pro forma disclosures (see Note 11).
Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" (SFAS 121), was adopted as of January 1, 1996. SFAS
121 standardized the accounting practices for the recognition
- 55 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
and measurement of impairment losses on certain long-lived assets. The
adoption of SFAS 121 was not material to our results of operations or
financial position. However, the provisions of SFAS 121 required
certain charges, historically recorded by our Company in other income
(deductions)-net, to be included in operating income.
2. BOTTLING INVESTMENTS
COCA-COLA ENTERPRISES INC.
Coca-Cola Enterprises is the largest soft drink bottler in the world.
Our Company owns approximately 45 percent of the outstanding common
stock of Coca-Cola Enterprises, and accordingly we account for our
investment by the equity method of accounting. On December 31, 1996,
the excess of our equity in the underlying net assets of Coca-Cola
Enterprises over our investment was approximately $150 million, which
is primarily being amortized on a straight-line basis over 40 years. A
summary of financial information for Coca-Cola Enterprises is as
follows (in millions):
December 31, 1996 1995
- --------------------------------------------------------------------
Current assets $ 1,319 $ 982
Noncurrent assets 9,915 8,082
- --------------------------------------------------------------------
Total assets $ 11,234 $ 9,064
====================================================================
Current liabilities $ 1,390 $ 859
Noncurrent liabilities 8,294 6,770
- --------------------------------------------------------------------
Total liabilities $ 9,684 $ 7,629
====================================================================
Share-owners' equity $ 1,550 $ 1,435
====================================================================
Company equity investment $ 547 $ 556
====================================================================
Year Ended December 31, 1996 1995 1994
- --------------------------------------------------------------------
Net operating revenues $ 7,921 $ 6,773 $ 6,011
Cost of goods sold 4,896 4,267 3,703
- --------------------------------------------------------------------
Gross profit $ 3,025 $ 2,506 $ 2,308
====================================================================
Operating income $ 545 $ 468 $ 440
====================================================================
Cash operating profit{1} $ 1,172 $ 997 $ 901
====================================================================
Net income $ 114 $ 82 $ 69
====================================================================
Net income available to
common share owners $ 106 $ 80 $ 67
====================================================================
Company equity income $ 53 $ 35 $ 30
====================================================================
Our net concentrate/syrup sales to Coca-Cola Enterprises were
$1.6 billion in 1996, $1.3 billion in 1995 and $1.2 billion in 1994.
Coca-Cola Enterprises purchases sweeteners through our Company;
however, related collections from Coca-Cola Enterprises and payments
to suppliers are not included in our consolidated statements of
income. These transactions amounted to $247 million in 1996, $242
million in 1995 and $254 million in 1994. We also provide certain
administrative and other services to Coca-Cola Enterprises under
negotiated fee arrangements.
Our direct support for certain marketing activities of Coca-Cola
Enterprises and participation with them in cooperative advertising and
other marketing programs amounted to approximately $448 million in
1996, $343 million in 1995 and $319 million in 1994. Additionally, in
1996 and 1995, we committed approximately $120 million and $55
million, respectively, to Coca-Cola Enterprises under a Company
program that encourages bottlers to invest in building and supporting
beverage infrastructure.
If valued at the December 31, 1996, quoted closing price of
publicly traded Coca-Cola Enterprises shares, the calculated value of
our investment in Coca-Cola Enterprises would have exceeded its
carrying value by approximately $2.2 billion.
COCA-COLA AMATIL LIMITED
We own approximately 36 percent of Coca-Cola Amatil, an Australian-
based bottler of our products that operates in 17 countries.
Accordingly, we account for our investment in Coca-Cola Amatil by the
equity method. On December 31, 1996, the excess of our investment over
our equity in the underlying net assets of Coca-Cola Amatil was
approximately $137 million, which we are amortizing on a straight-line
basis over 40 years. A summary of financial information for Coca-Cola
Amatil is as follows (in millions):
December 31, 1996 1995
- --------------------------------------------------------------------
Current assets $ 1,847 $ 1,129
Noncurrent assets 2,913 2,310
- --------------------------------------------------------------------
Total assets $ 4,760 $ 3,439
====================================================================
Current liabilities $ 1,247 $ 1,077
Noncurrent liabilities 1,445 881
- --------------------------------------------------------------------
Total liabilities $ 2,692 $ 1,958
====================================================================
Share-owners' equity $ 2,068 $ 1,481
====================================================================
Company equity investment $ 881 $ 682
====================================================================
Year Ended December 31, 1996 1995 1994
- --------------------------------------------------------------------
Net operating revenues $ 2,905 $ 2,193 $ 1,670
Cost of goods sold 1,737 1,311 981
- --------------------------------------------------------------------
Gross profit $ 1,168 $ 882 $ 689
====================================================================
Operating income $ 215 $ 214 $ 156
====================================================================
Cash operating profit{1} $ 384 $ 329 $ 247
====================================================================
Net income $ 80 $ 75 $ 68
====================================================================
Company equity income $ 27 $ 28 $ 28
====================================================================
Our net concentrate sales to Coca-Cola Amatil were approximately
$450 million in 1996, $340 million in 1995 and $270 million in 1994.
We also participate in various marketing, promotional and other
activities with Coca-Cola Amatil.
If valued at the December 31, 1996, quoted closing price of
publicly traded Coca-Cola Amatil shares, the calculated value of our
investment in Coca-Cola Amatil would have exceeded its carrying value
by approximately $1.2 billion.
- 56 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OTHER EQUITY INVESTMENTS
Operating results include our proportionate share of income from our
equity investments since the respective dates of those investments. A
summary of financial information for our equity investments in the
aggregate, other than Coca-Cola Enterprises and Coca-Cola Amatil, is
as follows (in millions):
December 31, 1996 1995
- -----------------------------------------------------------------
Current assets $ 2,792 $ 1,889
Noncurrent assets 8,783 5,006
- -----------------------------------------------------------------
Total assets $ 11,575 $ 6,895
=================================================================
Current liabilities $ 2,758 $ 1,933
Noncurrent liabilities 4,849 2,555
- -----------------------------------------------------------------
Total liabilities $ 7,607 $ 4,488
=================================================================
Share-owners' equity $ 3,968 $ 2,407
=================================================================
Company equity investment $ 2,004 $ 1,157
=================================================================
Year Ended December 31, 1996 1995 1994
- -----------------------------------------------------------------
Net operating revenues $ 11,640 $ 9,370 $ 7,998
Cost of goods sold 8,028 6,335 5,416
- -----------------------------------------------------------------
Gross profit $ 3,612 $ 3,035 $ 2,582
=================================================================
Operating income $ 835 $ 632 $ 633
=================================================================
Cash operating profit{1} $ 1,268 $ 1,079 $ 875
=================================================================
Net income $ 366 $ 280 $ 255
=================================================================
Company equity income $ 131 $ 106 $ 76
=================================================================
Equity investments include certain non-bottling investees.
{1} Cash operating profit is defined as operating income plus
depreciation expense, amortization expense and other noncash
operating expenses.
Net sales to equity investees other than Coca-Cola Enterprises
and Coca-Cola Amatil were $1.5 billion in 1996, $1.2 billion in 1995
and $1.0 billion in 1994. Our Company also participates in various
marketing, promotional and other activities with these investees, the
majority of which are located outside the United States.
In July 1996, we sold our interests in our French and Belgian
bottling and canning operations to Coca-Cola Enterprises in return for
cash consideration of approximately $936 million. Also in 1996, we
contributed cash and our Venezuelan bottling interests to a new joint
venture, Embotelladora Coca-Cola y Hit de Venezuela, S.A., in exchange
for a 50 percent ownership interest. Accordingly, we account for our
investment by the equity method.
During 1995, our finance subsidiary invested $160 million in The
Coca-Cola Bottling Company of New York, Inc. (CCNY), in return for
redeemable preferred stock. As of December 31, 1996, we held a 49
percent voting and economic interest in CCNY. Accordingly, we account
for our investment in CCNY by the equity method.
If valued at the December 31, 1996, quoted closing prices of
shares actively traded on stock markets, the calculated value of our
equity investments in publicly traded bottlers other than Coca-Cola
Enterprises and Coca-Cola Amatil would have exceeded our carrying
value by approximately $574 million.
3. ISSUANCES OF STOCK BY EQUITY INVESTEES
In the third quarter of 1996, our previously wholly owned subsidiary,
Coca-Cola Erfrischungsgetraenke G.m.b.H. (CCEG), issued approximately
24.4 million shares of common stock as part of a merger with three
independent German bottlers of our products. The shares were valued at
approximately $925 million, based upon the fair values of the assets
of the three acquired bottling companies. In connection with CCEG's
issuance of shares, a new corporation was established, Coca-Cola
Erfrischungsgetraenke AG (CCEAG), and our ownership was reduced to 45
percent of the resulting corporation. As a result, we will account for
our related investment by the equity method of accounting,
prospectively from the transaction date. This transaction resulted in
a noncash pretax gain of $283 million to our Company. Our German
subsidiary has provided deferred taxes of approximately $171 million
related to this gain.
Also in the third quarter of 1996, Coca-Cola Amatil issued
approximately 46 million shares in exchange for approximately $522
million. This issuance reduced our Company's ownership percentage in
Coca-Cola Amatil from approximately 39 percent to approximately 36
percent. This transaction resulted in a noncash pretax gain of $130
million to our Company. We have provided deferred taxes of
approximately $47 million on this gain.
In 1996, Coca-Cola FEMSA de Buenos Aires, S.A. issued
approximately 19 million shares to Coca-Cola FEMSA, S.A. de C.V. This
issuance reduced our ownership in Coca-Cola FEMSA de Buenos Aires,
S.A. from 49 percent to approximately 32 percent. We recognized a
noncash pretax gain of approximately $18 million as a result of this
transaction. In a subsequent transaction, our ownership in Coca-Cola
FEMSA de Buenos Aires, S.A. was reduced to 25 percent.
In the third quarter of 1995, Coca-Cola Amatil completed a public
offering in Australia of approximately 97 million shares of common
stock. In connection with the offering, our ownership interest in
Coca-Cola Amatil was diluted to approximately 40 percent. This
transaction resulted in a noncash pretax gain of $74 million. We
provided deferred taxes of approximately $27 million on this gain.
4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following
(in millions):
December 31, 1996 1995
- -------------------------------------------------------------
Accrued marketing $ 510 $ 492
Container deposits 64 130
Accrued compensation 169 198
Sales, payroll and other taxes 174 209
Accounts payable and
other accrued expenses 2,055 2,074
- -------------------------------------------------------------
$ 2,972 $ 3,103
=============================================================
- 57 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. SHORT-TERM BORROWINGS AND CREDIT ARRANGEMENTS
Loans and notes payable consist primarily of commercial paper issued
in the United States. On December 31, 1996, we had $3.2 billion
outstanding in commercial paper borrowings. In addition, we had $1.1
billion in lines of credit and other short-term credit facilities
available, under which $0.2 billion was outstanding. Our weighted-
average interest rates for commercial paper were approximately 5.6 and
5.7 percent on December 31, 1996 and 1995, respectively.
These facilities are subject to normal banking terms and
conditions. Some of the financial arrangements require compensating
balances, none of which are presently significant to our Company.
6. LONG-TERM DEBT
Long-term debt consists of the following (in millions):
December 31, 1996 1995
- ------------------------------------------------------------------
7 3/4% U.S. dollar notes due 1996 $ - $ 250
5 3/4% Japanese yen notes due 1996 - 292
5 3/4% German mark notes due 1998{1} 161 175
7 7/8% U.S. dollar notes due 1998 250 250
6% U.S. dollar notes due 2000 251 252
6 5/8% U.S. dollar notes due 2002 150 149
6% U.S. dollar notes due 2003 150 150
7 3/8% U.S. dollar notes due 2093 116 116
Other, due 1997 to 2013 47 59
- ------------------------------------------------------------------
1,125 1,693
Less current portion 9 552
- ------------------------------------------------------------------
$1,116 $1,141
==================================================================
{1} Portions of these notes have been swapped for liabilities
denominated in other currencies.
After giving effect to interest rate management instruments (see
Note 8), the principal amount of our long-term debt that had fixed and
variable interest rates, respectively, was $261 million and $864
million on December 31, 1996, and $1,017 million and $676 million on
December 31, 1995. The weighted-average interest rate on our Company's
long-term debt was 5.9 and 6.5 percent on December 31, 1996 and 1995,
respectively. Interest paid was approximately $315 million, $275
million and $197 million in 1996, 1995 and 1994, respectively.
Maturities of long-term debt for the five years succeeding
December 31, 1996, are as follows (in millions):
1997 1998 1999 2000 2001
- -------------------------------------------------------
$9 $422 $16 $257 $2
=======================================================
The above notes include various restrictions, none of which is
presently significant to our Company.
7. FINANCIAL INSTRUMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts reflected in our consolidated balance sheets for
cash, cash equivalents, marketable equity securities, investments,
receivables, loans and notes payable and long-term debt approximate
their respective fair values. Fair values are based primarily on
quoted prices for those or similar instruments. A comparison of the
carrying value and fair value of our hedging instruments is included
in Note 8.
CERTAIN DEBT AND MARKETABLE EQUITY SECURITIES
Investments in debt and marketable equity securities, other than
investments accounted for by the equity method, are categorized as
either trading, available-for-sale or held-to-maturity. On December
31, 1996 and 1995, we had no trading securities. Securities
categorized as available-for-sale are stated at fair value, with
unrealized gains and losses, net of deferred income taxes, reported in
share-owners' equity. Debt securities categorized as held-to-maturity
are stated at amortized cost.
On December 31, 1996 and 1995, available-for-sale and held-to-
maturity securities consisted of the following (in millions):
Gross Gross Estimated
Unrealized Unrealized Fair
December 31, Cost Gains Losses Value
- --------------------------------------------------------------------------
1996
Available-for-sale
securities
Equity securities $ 377 $ 259 $ (2) $ 634
Collateralized
mortgage
obligations 145 - (5) 140
Other debt
securities 24 - (1) 23
- -------------------------------------------------------------------------
$ 546 $ 259 $ (8) $ 797
=========================================================================
Held-to-maturity
securities
Bank and
corporate debt $ 1,550 $ - $ (9) $ 1,541
Other debt
securities 58 - - 58
- -------------------------------------------------------------------------
$ 1,608 $ - $ (9) $ 1,599
=========================================================================
- 58 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Gross Gross Estimated
Unrealized Unrealized Fair
December 31, Cost Gains Losses Value
- -------------------------------------------------------------------------
1995
Available-for-sale
securities
Equity securities $ 128 $ 151 $ (2) $ 277
Collateralized
mortgage
obligations 147 - (5) 142
Other debt
securities 26 - - 26
- -------------------------------------------------------------------------
$ 301 $ 151 $ (7) $ 445
=========================================================================
Held-to-maturity
securities
Bank and
corporate debt $ 1,333 $ - $ - $ 1,333
Other debt
securities 40 - - 40
- -------------------------------------------------------------------------
$ 1,373 $ - $ - $ 1,373
=========================================================================
On December 31, 1996 and 1995, these investments were included in the
following captions on our consolidated balance sheets (in millions):
Available-for-Sale Held-to-Maturity
December 31, Securities Securities
- -------------------------------------------------------------------------
1996
Cash and cash equivalents $ - $ 1,208
Current marketable securities 68 157
Cost method investments,
principally bottling companies 584 -
Marketable securities and
other assets 145 243
- -------------------------------------------------------------------------
$ 797 $ 1,608
=========================================================================
1995
Cash and cash equivalents $ - $ 900
Current marketable securities 74 74
Cost method investments,
principally bottling companies 222 -
Marketable securities and
other assets 149 399
- -------------------------------------------------------------------------
$ 445 $ 1,373
=========================================================================
The contractual maturities of these investments as of December
31, 1996, were as follows (in millions):
Available-for-Sale Held-to-Maturity
Securities Securities
- -----------------------------------------------------------------------------
Fair Amortized Fair
Cost Value Cost Value
- -----------------------------------------------------------------------------
1997 $ 21 $ 20 $ 1,365 $ 1,365
1998-2001 3 3 223 214
After 2001 - - 20 20
Collateralized
mortgage obligations 145 140 - -
Equity securities 377 634 - -
- -----------------------------------------------------------------------------
$ 546 $ 797 $ 1,608 $ 1,599
=============================================================================
For the years ended December 31, 1996 and 1995, gross realized
gains and losses on sales of available-for-sale securities were not
material. The cost of securities sold is based on the specific
identification method.
8. HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS
Our Company employs derivative financial instruments primarily to
reduce our exposure to adverse fluctuations in interest rates, foreign
exchange rates, commodity prices and other market risks. These
financial instruments, when entered into, are designated as hedges of
underlying exposures. Because of the high correlation between the
hedging instrument and the underlying exposure being hedged,
fluctuations in the value of the instruments are generally offset by
changes in the value of the underlying exposures. We effectively
monitor the use of these derivative financial instruments through the
use of objective measurement systems, well-defined market and credit
risk limits and timely reports to senior management according to
prescribed guidelines. Virtually all of our derivatives are "over-the-
counter" instruments.
The estimated fair values of derivatives used to hedge or modify
our risks fluctuate over time. These fair value amounts should not be
viewed in isolation, but rather in relation to the fair values of the
underlying hedged transactions and investments, and the overall
reduction in our exposure to adverse fluctuations in interest
rates,foreign exchange rates, commodity prices and other market risks.
The notional amounts of the derivative financial instruments do
not necessarily represent amounts exchanged by the parties and,
therefore, are not a direct measure of our exposure through our use of
derivatives. The amounts exchanged are calculated by reference to the
notional amounts and by other terms of the derivatives, such as
interest rates, exchange rates or other financial indices.
- 59 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We have established strict counterparty credit guidelines and
only enter into transactions with financial institutions of investment
grade or better. Counterparty exposures are monitored daily and any
downgrade in credit rating receives immediate review. If a downgrade
in the credit rating of a counterparty were to occur, we have
provisions requiring collateral in the form of U.S. government
securities for transactions with maturities in excess of three years.
To mitigate pre-settlement risk, minimum credit standards become more
stringent as the duration of the derivative financial instrument
increases. To minimize the concentration of credit risk, we enter into
derivative transactions with a portfolio of financial institutions. As
a result, we consider the risk of counterparty default to be minimal.
INTEREST RATE MANAGEMENT
Our management has implemented a policy to maintain our percentage of
fixed and variable rate debt within certain parameters. We enter into
interest rate swap agreements that maintain the fixed/variable mix
within these defined parameters. These contracts had maturities
ranging from one to seven years on December 31, 1996. Variable rates
are predominantly linked to LIBOR (London Interbank Offered Rate). Any
differences paid or received on interest rate swap agreements are
recognized as adjustments to interest expense over the life of each
swap, thereby adjusting the effective interest rate on the underlying
obligation.
Additionally, our Company enters into interest rate cap
agreements that entitle us to receive from a financial institution the
amount, if any, by which our interest payments on our variable rate
debt exceed pre-specified interest rates through 1997. Premiums paid
for interest rate cap agreements are included in prepaid expenses and
other assets and are amortized to interest expense over the terms of
the respective agreements. Payments received pursuant to the interest
rate cap agreements, if any, are recognized as an adjustment to the
interest expense on the underlying debt instruments.
FOREIGN CURRENCY MANAGEMENT
The purpose of our foreign currency hedging activities is to reduce
the risk that our eventual dollar net cash inflows resulting from
sales outside the United States will be adversely affected by changes
in exchange rates.
We enter into forward exchange contracts and purchase currency
options (principally European currencies and Japanese yen) to hedge
firm sale commitments denominated in foreign currencies. We also
purchase currency options (principally European currencies and
Japanese yen) to hedge certain anticipated sales. Premiums paid and
realized gains and losses, including those on terminated contracts, if
any, are included in prepaid expenses and other assets. These are
recognized in income along with unrealized gains and losses, in the
same period the hedged transactions are realized. Approximately $17
million and $27 million of realized losses on settled contracts
entered into as hedges of firmly committed transactions that have not
yet occurred were deferred on December 31, 1996 and 1995,
respectively. Deferred gains/losses from hedging anticipated
transactions were not material on December 31, 1996 or 1995. In the
unlikely event that the underlying transaction terminates or becomes
improbable, the deferred gains or losses on the associated derivative
will be recorded in our income statement.
Gains and losses on derivative financial instruments that are
designated and effective as hedges of net investments in international
operations are included in share-owners' equity as a foreign currency
translation adjustment.
The following table presents the aggregate notional principal
amounts, carrying values, fair values and maturities of our derivative
financial instruments outstanding on December 31, 1996 and 1995 (in
millions):
Notional
Principal Carrying Fair
December 31, Amounts Values Values Maturity
- --------------------------------------------------------------------------
1996
Interest rate
management
Swap agreements
Assets $ 893 $ 5 $ 13 1997-2003
Liabilities 25 - 1 2002
Interest rate caps
Assets 400 1 - 1997
Foreign currency
management
Forward contracts
Assets 5 1 (2) 1997
Liabilities 2,541 (53) (42) 1997-1998
Swap agreements
Assets 398 18 12 1997-1998
Liabilities 1,086 (12) (114) 1997-2002
Purchased options
Assets 1,873 42 89 1997
Other
Assets 537 67 33 1997
- --------------------------------------------------------------------------
$ 7,758 $ 69 $ (10)
==========================================================================
- 60 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notional
Principal Carrying Fair
December 31, Amounts Values Values Maturity
- -----------------------------------------------------------------------------
1995
Interest rate
management
Swap agreements
Assets $ 705 $ 4 $ 30 1997-2003
Liabilities 62 - (2) 2000-2002
Interest rate caps
Assets 400 2 - 1997
Foreign currency
management
Forward contracts
Assets 1,927 25 36 1996
Liabilities 554 (17) (15) 1996-1997
Swap agreements
Assets 390 17 11 1996-2000
Liabilities 1,686 (46) (262) 1996-2002
Purchased options
Assets 1,823 62 90 1996
Other
Assets 327 7 5 1996
- -----------------------------------------------------------------------------
$ 7,874 $ 54 $ (107)
=============================================================================
Maturities of derivative financial instruments held on December
31, 1996, are as follows (in millions):
1997 1998 1999 2000-2003
- -----------------------------------------------
$ 6,037 $ 622 $ 204 $ 895
===============================================
9. COMMITMENTS AND CONTINGENCIES
On December 31, 1996, we were contingently liable for guarantees of
indebtedness owed by third parties in the amount of $274 million, of
which $34 million related to independent bottling licensees.
The Mitsubishi Bank Limited has provided a yen denominated
guarantee for the equivalent of $269 million in support of a
suspension of enforcement of a tax assessment levied by the Japanese
tax authorities. We have agreed to indemnify Mitsubishi if amounts are
paid pursuant to this guarantee. This matter is being reviewed by the
tax authorities of the United States and Japan under the tax treaty
signed by the two nations to prevent double taxation. Any additional
income tax payable to Japan should be offset by income tax credits in
the United States and would not adversely affect earnings.
Through our finance subsidiary, we have agreed to issue up to $50
million in letters of credit on CCNY's behalf, of which $21 million
was committed on December 31, 1996.
We do not consider it probable that we will be required to
satisfy these guarantees or indemnification agreements. The fair value
of these contingent liabilities is immaterial to our consolidated
financial statements.
We believe our exposure to concentrations of credit risk is
limited, due to the diverse geographic areas covered by our
operations.
Additionally, under certain circumstances, we have committed to
make future investments in bottling companies. However, we do not
consider any of these commitments to be individually significant.
10. NET CHANGE IN OPERATING ASSETS AND LIABILITIES
The changes in operating assets and liabilities, net of effects of
acquisitions and divestitures of businesses and unrealized exchange
gains/losses, are as follows (in millions):
Year Ended December 31, 1996 1995 1994
- ----------------------------------------------------------------------
Increase in trade accounts
receivable $ (230) $ (255) $ (169)
(Increase) decrease in inventories (33) (80) 43
Increase in prepaid expenses
and other assets (65) (160) (95)
Increase in accounts payable
and accrued expenses 361 214 197
Increase (decrease) in
accrued taxes (208) 26 200
Increase in other liabilities 211 63 131
- ----------------------------------------------------------------------
$ 36 $ (192) $ 307
======================================================================
11. RESTRICTED STOCK, STOCK OPTIONS AND OTHER STOCK PLANS
Our Company sponsors restricted stock award plans, stock option plans,
Incentive Unit Agreements and Performance Unit Agreements. Our Company
applies APB Opinion No. 25 and related Interpretations in accounting
for our plans. Accordingly, for our stock option plans, no
compensation cost has been recognized. The compensation cost that has
been charged against income for our restricted stock award plans was
$63 million in 1996 and $45 million in 1995. For our Incentive Unit
Agreements and Performance Unit Agreements, the charge against income
was $90 million in 1996 and $64 million in 1995. Had compensation cost
for the stock option plans been determined based on the fair value at
the grant dates for awards under the plans, consistent with the
alternative method set forth under SFAS 123, our Company's net income
and net income per share would have been reduced.
- 61 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The pro forma amounts are indicated below (in millions, except per
share amounts):
Year Ended December 31, 1996 1995
- ----------------------------------------------------------
Net income
As reported $ 3,492 $ 2,986
Pro forma $ 3,412 $ 2,933
Net income per share
As reported $ 1.40 $ 1.18
Pro forma $ 1.37 $ 1.16
==========================================================
Under the amended 1989 Restricted Stock Award Plan and the
amended 1983 Restricted Stock Award Plan (the Restricted Stock Award
Plans), 40 million and 24 million shares of restricted common stock,
respectively, may be granted to certain officers and key employees of
our Company.
On December 31, 1996, 34 million shares were available for grant
under the Restricted Stock Award Plans. In 1996 and 1995, 210,000 and
190,000 shares of restricted stock were granted at $48.88 and $35.63,
respectively. Participants are entitled to vote and receive dividends
on the shares, and under the 1983 Restricted Stock Award Plan,
participants are reimbursed by our Company for income taxes imposed on
the award, but not for taxes generated by the reimbursement payment.
The shares are subject to certain transfer restrictions and may be
forfeited if a participant leaves our Company for reasons other than
retirement, disability or death, absent a change in control of our
Company.
Under our 1991 Stock Option Plan (the Option Plan), a maximum of
120 million shares of our common stock was approved to be issued or
transferred to certain officers and employees pursuant to stock
options and stock appreciation rights granted under the Option Plan.
The stock appreciation rights permit the holder, upon surrendering all
or part of the related stock option, to receive cash, common stock or
a combination thereof, in an amount up to 100 percent of the
difference between the market price and the option price. Options to
purchase common stock under the Option Plan have been granted to
Company employees at fair market value at the date of grant.
Generally, stock options become exercisable over a three-year vesting
period and expire 10 years from the date of grant.
The fair value of each option grant is estimated on the date of
grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions used for grants in 1996 and 1995,
respectively: dividend yields of 1.0 and 1.3 percent; expected
volatility of 18.3 and 20.1 percent; risk-free interest rates of 6.2
and 5.9 percent; and expected lives of four years for both years. The
weighted-average fair value of options granted was $11.43 and $8.13
for the years ended December 31, 1996 and 1995, respectively.
A summary of stock option activity under all plans is as follows
(shares in millions):
<TABLE>
<CAPTION>
1996 1995 1994
--------------------------- ------------------------- ---------------------------
Weighted-Average Weighted-Average Weighted-Average
Shares Exercise Price Shares Exercise Price Shares Exercise Price
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding on
January 1, 74 $ 20.74 65 $ 15.53 60 $ 12.38
Granted 14 48.86 18 34.88 14 25.35
Exercised (9) 13.72 (8) 10.63 (8) 7.81
Forfeited/Expired (1) 31.62 (1) 24.84 (1) 20.95
- ------------------------------------------------------------------------------------------------------------
Outstanding on
December 31, 78 $ 26.50 74 $ 20.74 65 $ 15.53
============================================================================================================
Exercisable on
December 31, 51 $ 18.69 45 $ 14.22 43 $ 11.31
============================================================================================================
Shares Available
on December 31,
for options that
may be granted 46 59 76
============================================================================================================
</TABLE>
The following table summarizes information about stock options at December 31,
1996 (shares in millions):
<TABLE>
<CAPTION>
Outstanding Stock Options Exercisable Stock Options
----------------------------------------------- -------------------------------
Weighted-Average
Range of Remaining Weighted-Average Weighted-Average
Exercise Prices Shares Contractual Life Exercise Price Shares Exercise Price
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 3.00 to $ 10.00 16 2.2 years $ 6.74 16 $ 6.74
$ 10.01 to $ 20.00 5 4.5 years $ 14.44 5 $ 14.44
$ 20.01 to $ 30.00 28 7.1 years $ 23.60 24 $ 23.16
$ 30.01 to $ 40.00 15 8.8 years $ 35.63 6 $ 35.63
$ 40.01 to $ 50.00 14 9.8 years $ 48.86 - -
==============================================================================================================
$ 3.00 to $ 50.00 78 6.8 years $ 26.50 51 $ 18.69
==============================================================================================================
</TABLE>
- 62 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In 1988, our Company entered into Incentive Unit Agreements
whereby, subject to certain conditions, certain officers were given
the right to receive cash awards based on the market value of 2.4
million shares of our common stock at the measurement dates. Under the
Incentive Unit Agreements, the employee is reimbursed by our Company
for income taxes imposed when the value of the units is paid, but not
for taxes generated by the reimbursement payment. At December 31, 1996
and 1995, approximately 1.6 million units were outstanding.
In 1985, we entered into Performance Unit Agreements, whereby
certain officers were given the right to receive cash awards based on
the difference in the market value of approximately 4.4 million shares
of our common stock at the measurement dates and the base price of
$2.58, the market value as of January 2, 1985. At December 31, 1996
and 1995, approximately 2.9 million units were outstanding.
12. PENSION AND OTHER POSTRETIREMENT BENEFITS
Our Company sponsors and/or contributes to pension plans covering
substantially all U.S. employees and certain employees in
international locations. The benefits are primarily based on years of
service and the employees' compensation for certain periods during the
last years of employment. We generally fund pension costs currently,
subject to regulatory funding limitations. We also sponsor
nonqualified, unfunded defined benefit plans for certain officers and
other employees. In addition, our Company and its subsidiaries have
various pension plans and other forms of postretirement arrangements
outside the United States.
Total pension expense for all benefit plans, including defined
benefit plans, amounted to approximately $85 million in 1996, $81
million in 1995 and $73 million in 1994. Net periodic pension cost for
our defined benefit plans consists of the following (in millions):
Year Ended December 31, 1996 1995 1994
- ----------------------------------------------------------------------
Service cost-benefits earned
during the period $ 48 $ 43 $ 46
Interest cost on projected
benefit obligation 91 89 78
Actual return on plan assets (169) (211) (25)
Net amortization and deferral 103 145 (39)
- ----------------------------------------------------------------------
Net periodic pension cost $ 73 $ 66 $ 60
======================================================================
The funded status of our defined benefit plans is as follows
(in millions):
Assets Exceed Accumulated
Accumulated Benefits
Benefits Exceed Assets
-------------------- ----------------------
December 31, 1996 1995 1996 1995
- ---------------------------------------------------------------------------
Actuarial present value of
benefit obligations
Vested benefit
obligation $ 704 $ 731 $ 343 $ 286
===========================================================================
Accumulated benefit
obligation $ 768 $ 790 $ 384 $ 316
===========================================================================
Projected benefit
obligation $ 890 $ 919 $ 485 $ 394
Plan assets at fair value{1} 1,126 1,044 156 112
- ---------------------------------------------------------------------------
Plan assets in excess of
(less than) projected
benefit obligation 236 125 (329) (282)
Unrecognized net (asset)
liability at transition (39) (44) 36 41
Unrecognized prior service
cost 33 38 16 25
Unrecognized net (gain) loss (191) (84) 104 54
Adjustment required to
recognize minimum liability - - (66) (60)
- ---------------------------------------------------------------------------
Accrued pension asset
(liability) included in the
consolidated balance sheet $ 39 $ 35 $ (239) $ (222)
===========================================================================
{1} Primarily listed stocks, bonds and government securities.
The assumptions used in computing the preceding information are as
follows:
Year Ended December 31, 1996 1995 1994
- -------------------------------------------------------------------
Discount rates 7 1/4% 7% 7 1/2%
Rates of increase in
compensation levels 4 3/4% 4 3/4% 5%
Expected long-term rates of
return on assets 8 1/2% 8 1/2% 8 1/4%
===================================================================
Our Company has plans providing postretirement health care and
life insurance benefits to substantially all U.S. employees and
certain employees in international locations who retire with a minimum
of five years of service. Net periodic cost for our postretirement
health care and life insurance benefits consists of the following (in
millions):
Year Ended December 31, 1996 1995 1994
- -------------------------------------------------------------------
Service cost $ 12 $ 12 $ 12
Interest cost 20 23 21
Other (3) (2) (1)
- -------------------------------------------------------------------
$ 29 $ 33 $ 32
===================================================================
- 63 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In addition, we contribute to a Voluntary Employees' Beneficiary
Association trust that will be used to partially fund health care
benefits for future retirees. Generally, we fund benefits to the
extent contributions are tax-deductible, which under current
legislation is limited. In general, retiree health benefits are paid
as covered expenses are incurred.
The funded status of our postretirement health care and life
insurance plans is as follows (in millions):
December 31, 1996 1995
- ----------------------------------------------------------------------
Accumulated postretirement
benefit obligations:
Retirees $ 114 $ 122
Fully eligible active plan
participants 35 40
Other active plan participants 130 141
- ----------------------------------------------------------------------
Total benefit obligation 279 303
Plan assets at fair value{1} 41 42
- ----------------------------------------------------------------------
Plan assets less than benefit obligation (238) (261)
Unrecognized prior service cost 5 (3)
Unrecognized net gain (57) (9)
- ----------------------------------------------------------------------
Accrued postretirement benefit
liability included in the
consolidated balance sheet $ (290) $ (273)
======================================================================
{1} Consists of corporate bonds, government securities and short-term
investments.
The assumptions used in computing the preceding information are
as follows:
Year Ended December 31, 1996 1995 1994
- -------------------------------------------------------------------
Discount rate 7 3/4% 7 1/4% 8 1/4%
Rates of increase in
compensation levels 5% 4 3/4% 5 1/4%
===================================================================
The rate of increase in the per capita costs of covered health
care benefits is assumed to be 7 3/4 percent in 1997, decreasing
gradually to 5 1/4 percent by the year 2003. Increasing the assumed
health care cost trend rate by one percentage point would increase the
accumulated postretirement benefit obligation as of December 31, 1996,
by approximately $33 million and increase the net periodic post-
retirement benefit cost by approximately $5 million in 1996.
13. INCOME TAXES
Income before income taxes consists of the following (in millions):
Year Ended December 31, 1996 1995 1994
- --------------------------------------------------------------
United States $ 1,168 $ 1,270 $ 1,214
International 3,428 3,058 2,514
- --------------------------------------------------------------
$ 4,596 $ 4,328 $ 3,728
==============================================================
Income tax expense (benefit) consists of the following (in
millions):
Year Ended United State &
December 31, States Local International Total
- ----------------------------------------------------------------------
1996
Current $ 256 $ 79 $ 914 $ 1,249
Deferred (264) (29) 148 (145)
1995
Current $ 204 $ 41 $ 940 $ 1,185
Deferred 80 10 67 157
1994
Current $ 299 $ 38 $ 779 $ 1,116
Deferred 24 5 29 58
======================================================================
We made income tax payments of approximately $1,242 million,
$1,000 million and $785 million in 1996, 1995 and 1994, respectively.
A reconciliation of the statutory U.S. federal rate and effective
rates is as follows:
Year Ended December 31, 1996 1995 1994
- ----------------------------------------------------------------------
Statutory U.S. federal rate 35.0% 35.0% 35.0%
State income taxes-net of
federal benefit 1.0 1.0 1.0
Earnings in jurisdictions taxed
at rates different from the
statutory U.S. federal rate (3.3) (3.9) (4.3)
Equity income (1.7) (1.7) (1.1)
Tax settlement (7.0) - -
Other-net - .6 .9
- ----------------------------------------------------------------------
24.0% 31.0% 31.5%
======================================================================
In 1996, we reached an agreement in principle with the U.S.
Internal Revenue Service (IRS) settling certain U.S.-related income
tax matters. The agreement included issues in litigation involving our
operations in Puerto Rico, dating back to the 1981 tax year and
extending through 1995. This agreement resulted in a one-time
reduction of $320 million to our 1996 income tax expense as a result
of reversing previously accrued contingent income tax liabilities.
Our effective tax rate reflects the favorable U.S. tax treatment
of manufacturing facilities in Puerto Rico that operate under a
negotiated exemption grant that expires December 31, 2009. Changes to
U.S. tax law enacted in 1993 limit the utilization of the favorable
tax treatment of operations in Puerto Rico. Our effective tax rate
also reflects the tax benefit derived from having significant
operations outside the United States that are taxed at rates lower
than the U.S. statutory rate of 35 percent. Our 1996 effective tax
rate would have been 31 percent, excluding the favorable impact of the
settlement with the IRS.
- 64 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Appropriate U.S. and international taxes have been provided for
earnings of subsidiary companies that are expected to be remitted to
the parent company. Exclusive of amounts that would result in little
or no tax if remitted, the cumulative amount of unremitted earnings
from our international subsidiaries that is expected to be
indefinitely reinvested is approximately $542 million on December 31,
1996. The taxes that would be paid upon remittance of these
indefinitely reinvested earnings are approximately $190 million, based
on current tax laws.
The tax effects of temporary differences and carryforwards that
give rise to significant portions of deferred tax assets and
liabilities consist of the following (in millions):
December 31, 1996 1995
- ---------------------------------------------------------
Deferred tax assets:
Benefit plans $ 414 $ 369
Liabilities and reserves 164 178
Net operating loss carryforwards 130 97
Other 88 151
- ---------------------------------------------------------
Gross deferred tax assets 796 795
Valuation allowance (18) (42)
- ---------------------------------------------------------
$ 778 $ 753
=========================================================
Deferred tax liabilities:
Property, plant and equipment $ 200 $ 414
Equity investments 369 170
Intangible assets 74 89
Other 33 205
- ---------------------------------------------------------
$ 676 $ 878
=========================================================
Net deferred tax asset (liability){1} $ 102 $(125)
=========================================================
{1} Deferred tax assets of $403 million and $69 million
have been included in the consolidated balance sheet
caption "marketable securities and other assets" at
December 31, 1996 and 1995, respectively.
On December 31, 1996, we had $261 million of operating loss
carryforwards available to reduce future taxable income of certain
international subsidiaries. Loss carryforwards of $17 million must be
utilized within the next 5 years; $244 million can be utilized over an
indefinite period. A valuation allowance has been provided for a
portion of the deferred tax assets related to these loss
carryforwards.
14. NONRECURRING ITEMS
In the third quarter of 1996, we made a series of decisions that
resulted in provisions of approximately $276 million in selling,
administrative and general expenses related to our plans for
strengthening our worldwide system. Of this $276 million,
approximately $130 million related to the streamlining of our
operations, primarily in Greater Europe and Latin America. Our
management has taken actions to consolidate certain manufacturing
operations and, as a result, recorded charges to recognize the
impairment of certain manufacturing assets and to recognize the
estimated losses on the disposal of other assets. The remainder of
this $276 million provision related to actions taken by The Minute
Maid Company (formerly known as Coca-Cola Foods). During the third
quarter of 1996, The Minute Maid Company entered into two significant
agreements with independent parties: (i) a strategic supply alliance
with Sucocitrico Cutrale Ltda., the world's largest grower and
processor of oranges, and (ii) a joint venture agreement with Groupe
Danone to produce, distribute and sell premium refrigerated juices
outside of the United States and Canada. With these agreements, we
intend to increase The Minute Maid Company's focus on managing its
brands while seeking arrangements to lower its overall manufacturing
costs. In connection with these actions, we recorded $146 million in
third quarter provisions, comprised primarily of impairment charges to
certain production facilities and reserves for losses on the disposal
of other production facilities.
Also in the third quarter of 1996, we launched a strategic
initiative, Project Infinity, to redesign and enhance our information
systems and communications capabilities. In connection with this
initiative, we recorded an $80 million impairment charge in
administrative and general expenses to recognize Project Infinity's
impact on existing information systems.
Based upon management's commitment to certain strategic actions
during the third quarter of 1996, these impairment charges were
recorded to reduce the carrying value of identified assets to fair
value. Fair values were derived using a variety of methodologies,
including cash flow analysis, estimates of sales proceeds and
independent appraisals.
Also in the third quarter of 1996, we recorded a charge in
administrative and general expenses as a result of our decision to
contribute $28.5 million to the corpus of The Coca-Cola Foundation, a
not-for-profit charitable organization.
During 1995, selling, administrative and general expenses
included provisions of $86 million to increase efficiencies in our
operations in North America and Europe.
15. SUBSEQUENT EVENT
In 1996, we executed an agreement to sell our 49 percent interest in
Coca-Cola & Schweppes Beverages Ltd. to Coca-Cola Enterprises. This
transaction closed in early 1997 and resulted in gross proceeds to our
Company of approximately U.S. $1 billion, and an after-tax gain of
approximately $.08 per share.
- 65 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
16. OPERATIONS IN GEOGRAPHIC AREAS
Information about the Company's operations by geographic area is as follows (in millions):
<CAPTION>
North Greater Latin Middle &
America Africa Europe America Far East Corporate Consolidated
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1996
Net operating revenues $6,050 $476 $5,947 $1,991 $4,035 $ 47 $18,546
Operating income 949{2} 118{2} 1,277{2} 815{2} 1,358{2} (602){2} 3,915
Identifiable operating assets 3,814 326 2,896 1,405 1,463 2,088{1} 11,992
Equity income 211 211
Investments (principally bottling companies) 4,169 4,169
Capital expenditures 261 32 379 79 121 118 990
Depreciation and amortization 157 8 176 37 25 76 479
======================================================================================================================
1995
Net operating revenues $5,513 $595 $5,999 $1,920 $3,936 $ 55 $18,018
Operating income 856{3} 205 1,256{3} 798 1,394 (483) 4,026
Identifiable operating assets 3,478 348 4,301 1,294 1,445 1,461{1} 12,327
Equity income 169 169
Investments (principally bottling companies) 2,714 2,714
Capital expenditures 286 19 383 87 85 77 937
Depreciation and amortization 148 8 180 31 21 66 454
======================================================================================================================
1994
Net operating revenues $5,327 $522 $5,029 $1,928 $3,333 $ 42 $16,181
Operating income 915 174 1,129 710 1,150 (441) 3,637
Identifiable operating assets 3,085 356 3,959 1,164 1,343 1,456{1} 11,363
Equity income 134 134
Investments (principally bottling companies) 2,510 2,510
Capital expenditures 253 27 330 129 50 89 878
Depreciation and amortization 130 6 160 36 19 60 411
======================================================================================================================
Intercompany transfers between geographic areas are not material.
North America includes only the United States and Canada.
Prior year amounts have been reclassified to conform to the current year presentation.
{1} Corporate identifiable operating assets are composed principally of marketable securities, finance subsidiary
receivables and fixed assets.
{2} Operating income for North America, Africa, Greater Europe, Latin America and the Middle & Far East was reduced
by $153 million, $7 million, $66 million, $32 million and $18 million, respectively, for provisions related to
management's strategic plans to strengthen our worldwide system. Corporate operating income was reduced by $80
million for Project Infinity's impairment impact to existing systems and by $28.5 million for our decision to
contribute to the corpus of The Coca-Cola Foundation.
{3} Operating income for North America and Greater Europe was reduced by $61 million and $25 million, respectively,
for provisions to increase efficiencies.
</TABLE>
<TABLE>
<CAPTION>
Compound Average Growth Rates North Greater Latin Middle &
Ending 1996 America Africa Europe America Far East Consolidated
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net operating revenues
5 years 6% 18% 10% 13% 14% 10%
10 years 6% 11% 15% 14% 11% 10%
=======================================================================================================================
Operating income
5 years 9% 2% 8% 15% 13% 11%
10 years 12% 19% 15% 19% 15% 16%
=======================================================================================================================
</TABLE>
- 66 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
NET OPERATING REVENUES BY GEOGRAPHIC AREA{1}
[bar chart]
Year Ended December 31, 1996 1995 1994
- ---------------------------------------------------------------
Middle & Far East 22% 22% 21%
Latin America 11% 11% 12%
Greater Europe 32% 33% 31%
Africa 2% 3% 3%
North America 33% 31% 33%
OPERATING INCOME BY GEOGRAPHIC AREA{1}
[bar chart]
Year Ended December 31, 1996 1995 1994
- ---------------------------------------------------------------
Middle & Far East 30% 31% 28%
Latin America 18% 18% 17%
Greater Europe 28% 28% 28%
Africa 3% 4% 4%
North America 21% 19% 23%
{1} Charts and percentages are calculated exclusive of corporate
operations.
REPORT OF INDEPENDENT AUDITORS
BOARD OF DIRECTORS AND SHARE OWNERS
THE COCA-COLA COMPANY
We have audited the accompanying consolidated balance sheets of The
Coca-Cola Company and subsidiaries as of December 31, 1996 and 1995,
and the related consolidated statements of income, share-owners'
equity, and cash flows for each of the three years in the period ended
December 31, 1996. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of The Coca-Cola Company and subsidiaries at December 31,
1996 and 1995, and the consolidated results of their operations and
their cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
Atlanta, Georgia
January 24, 1997
- 67 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
<TABLE>
QUARTERLY DATA (UNAUDITED)
(In millions except per share data)
<CAPTION>
First Second Third Fourth Full
Year Ended December 31, Quarter Quarter Quarter Quarter Year
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996
Net operating revenues $4,194 $5,253 $4,656 $4,443 $18,546
Gross profit 2,664 3,347 2,842 2,955 11,808
Net income 713 1,050 967 762 3,492
Net income per share .28 .42 .39 .31 1.40
===========================================================================
1995
Net operating revenues $3,854 $4,936 $4,895 $4,333 $18,018
Gross profit 2,409 3,060 2,946 2,663 11,078
Net income 638 898 802 648 2,986
Net income per share .25 .35 .32 .26 1.18
===========================================================================
</TABLE>
The third quarter of 1996 includes a noncash gain from a tax
settlement with the IRS for $320 million ($.13 per share after income
taxes), an impairment charge to recognize Project Infinity's impact on
existing information systems of $80 million ($.02 per share after
income taxes), a charge for our decision to contribute $28.5 million
($.01 per share after income taxes) to the corpus of The Coca-Cola
Foundation, a not-for-profit charitable organization and provisions
related to management's strategic plans to strengthen our worldwide
system of $276 million ($.07 per share after income taxes). In
addition, the third quarter of 1996 includes noncash gains on the
issuance of stock by Coca-Cola Amatil of $130 million ($.03 per share
after income taxes) and CCEAG of $283 million ($.04 per share after
income taxes).
The third quarter of 1995 includes provisions to increase efficiencies
of $86 million ($.02 per share after income taxes) and a noncash gain
recognized on the issuance of stock by Coca-Cola Amatil of $74 million
($.02 per share after income taxes).
STOCK PRICES
Below are the New York Stock Exchange high, low and closing prices of
The Coca-Cola Company's stock for each quarter of 1996 and 1995,
adjusted for the 1996 two-for-one stock split.
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996
High $ 42.69 $ 49.50 $ 53.88 $ 54.25
Low 36.06 39.13 44.25 46.88
Close 41.38 49.00 50.88 52.63
============================================================================
1995
High $ 29.69 $ 33.00 $ 35.31 $ 40.19
Low 24.38 28.06 31.31 34.19
Close 28.19 31.88 34.50 37.13
============================================================================
</TABLE>
- 69 -
<PAGE>
<PAGE>
SHARE-OWNER INFORMATION
CORPORATE OFFICES
The Coca-Cola Company
One Coca-Cola Plaza
Atlanta, Georgia 30313
COMMON STOCK
Ticker symbol: KO
The Coca-Cola Company is one of 30 companies in the Dow Jones
Industrial Average.
Share owners of record at year end: 311,983
Shares outstanding at year end: 2.48 billion
STOCK EXCHANGES
INSIDE THE UNITED STATES:
Common stock listed and traded: New York Stock Exchange, the principal
market for our common stock.
Common stock traded: Boston, Cincinnati, Chicago, Pacific and
Philadelphia stock exchanges.
OUTSIDE THE UNITED STATES:
Common stock listed and traded: The German exchange in Frankfurt and
the Swiss exchange in Switzerland.
DIVIDENDS
At its February 1997 meeting, our Board increased our quarterly
dividend to 14 cents per share, equivalent to an annual dividend of 56
cents per share. The Company has increased dividends each of the last
35 years.
The Coca-Cola Company normally pays dividends four times a year,
usually on April 1, July 1, October 1 and December 15. The Company has
paid 303 consecutive quarterly dividends, beginning in 1920.
DIVIDEND AND CASH INVESTMENT PLAN
The Dividend and Cash Investment Plan permits share owners of record
to reinvest dividends from Company stock in shares of The Coca-Cola
Company. The Plan provides a convenient, economical and systematic
method of acquiring additional shares of our common stock. All share
owners of record are eligible to participate. Share owners also may
purchase Company stock through voluntary cash investments of up to
$60,000 per year.
All brokerage commissions associated with participation in the Plan
are paid by the Company.
The Plan's administrator, First Chicago Trust Company of New York,
purchases stock for voluntary cash investments beginning the first
business day of each month, except in December when purchases begin on
the 15th; dividend reinvestment purchases begin on April 1, July 1,
October 1 and December 15.
If your shares are held in street name by your broker and you are
interested in participating in the Dividend and Cash Investment Plan,
you may have your broker transfer the shares to First Chicago Trust
Company of New York electronically.
At year end, 65 percent of the Company's share owners of record were
participants in the Plan. In 1996, share owners invested $35 million
in dividends and $150 million in cash in the Plan.
ANNUAL MEETING OF SHARE OWNERS
April 16, 1997, 9 a.m. local time
The Playhouse Theatre
Du Pont Building
10th and Market Streets
Wilmington, Delaware
INSTITUTIONAL INVESTOR INQUIRIES
(404) 676-5766
SHARE-OWNER ACCOUNT ASSISTANCE
For address changes, dividend checks, direct deposit of dividends,
account consolidation, registration changes, lost stock certificates,
stock holdings and the Dividend and Cash Investment Plan, please
contact:
Registrar and Transfer Agent
First Chicago Trust Company of New York
P.O. Box 2500
Jersey City, NJ 07303-2500
Toll-free: (888) COKESHR (265-3747)
For hearing impaired: (201) 222-4955
E-mail: [email protected]
Internet: http://www.fctc.com
INFORMATION RESOURCES
PUBLICATIONS
THE COMPANY'S ANNUAL AND INTERIM REPORTS, PROXY STATEMENT, FORM 10-K
AND FORM 10-Q REPORTS ARE AVAILABLE FREE OF CHARGE FROM OUR INDUSTRY &
CONSUMER AFFAIRS DEPARTMENT AT THE COMPANY'S CORPORATE ADDRESS, LISTED
ABOVE. Also available are "Our Mission and Our Commitment," "The
Coca-Cola Company and the Environment" and "The Chronicle of Coca-Cola
Since 1886."
INTERNET SITE
Our site (http://www.cocacola.com) offers information about our
Company, as well as periodic marketing features.
HOTLINE
The Company's hotline, (800) INVSTKO (468-7856), offers taped
highlights from the most recent quarter and may be used to request the
most recent quarterly results news release.
AUDIO ANNUAL REPORT
An audiocassette version of this report is available without charge as
a service to the visually impaired. To receive a copy, please contact
our Industry & Consumer Affairs Department at (800) 571-2653.
DUPLICATE MAILINGS
If you are receiving duplicate or unwanted copies of our publications,
please contact the First Chicago Trust Company of New York at the
numbers listed above.
- 72 -
<PAGE>
<PAGE>
GLOSSARY
[Following are certain definitions extracted from page 73:]
DIVIDEND PAYOUT RATIO: Calculated by dividing cash dividends on common
stock by net income available to common share owners.
ECONOMIC PROFIT: Income from continuing operations, after taxes,
excluding interest, in excess of a computed capital charge for average
operating capital employed.
FREE CASH FLOW: Cash provided by operations less cash used in
investing activities. The Company uses free cash flow along with
borrowings to pay dividends and make share repurchases.
NET DEBT AND NET CAPITAL: Debt and capital in excess of cash, cash
equivalents and marketable securities not required for operations and
temporary bottling investments.
RETURN ON CAPITAL: Calculated by dividing income from continuing
operations -- before changes in accounting principles, adjusted for
interest expense -- by average total capital.
RETURN ON COMMON EQUITY: Calculated by dividing income from continuing
operations -- before changes in accounting principles, less preferred
stock dividends -- by average common share-owners' equity.
TOTAL CAPITAL: Equals share-owners' equity plus interest-bearing debt.
TOTAL MARKET VALUE OF COMMON STOCK: Stock price at year end multiplied
by the number of shares outstanding at year end.
- 73 -
EXHIBIT 21.1
<TABLE>
SUBSIDIARIES OF THE COCA-COLA COMPANY
AS OF DECEMBER 31, 1996
<CAPTION>
Organized Percentages
Under of Voting
Laws of: Power
--------- -----------
<S> <C> <C>
The Coca-Cola Company Delaware
Subsidiaries consolidated, except as noted:
Barq's, Inc. Mississippi 100
Bottling Investments Corporation Delaware 100
ACCBC Holding Company Georgia 100
Caribbean International Sales Corporation, Inc. Nevada 100
Caribbean Refrescos, Inc. Delaware 100
Carolina Coca-Cola Bottling Investments, Inc. Delaware 100
Coca-Cola Financial Corporation Delaware 100
Coca-Cola Interamerican Corporation Delaware 100
Montevideo Refrescos, S.A. Uruguay 55.53
Coca-Cola Overseas Parent Limited Delaware 100
Coca-Cola Holdings (Overseas) Limited Delaware and 100
Australia
Coca-Cola South Asia Holdings, Inc. Delaware 100
Coca-Cola (Thailand) Limited Thailand 100
CTI Holdings, Inc. Delaware 100
55th & 5th Avenue Corporation New York 100
The Coca-Cola Export Corporation Delaware 100
Amalgamated Beverage Canners (Pty) Ltd. South Africa 51.55
Atlantic Industries Cayman Islands 100
Ansan Ankara Gida Mesrubat ve Meyva Sulari Sanayii
ve Ticaret A.S. Turkey 66.63
Coca-Cola Bevande Italia S.r.l. Italy 100
Azienda Bevande di Gaglianico-ABEG-S.r.l. Italy 100
Societa Bevande Meridionale-SOBEM S.r.l. Italy 100
Maksan Manisa Mesrubat Kutulama Sanayi A.S. Turkey 66.66
Barlan, Inc. Delaware 100
Varoise de Concentres S.A. France 100
Coca-Cola G.m.b.H. Germany 100
Coca-Cola Rhein-Ruhr G.m.b.H. Germany 100
Societa Imbottigliamento Bevande Roma-SIBER-S.p.A. Italy 100
Beverage Products, Ltd. Delaware 100
Coca-Cola de Argentina S.A. Argentina 100
Coca-Cola de Chile, S.A. Chile 100
Coca-Cola Ges.m.b.H. Austria 100
Coca-Cola Industrias Ltda. Brazil 100
Recofarma Industria do Amazonas Ltda. Brazil 100
Coca-Cola Ltd. Canada 100
The Minute Maid Company Canada Inc. Canada 100
Coca-Cola (Japan) Company, Limited Japan 100
Coca-Cola Korea Company, Limited Korea 100
Coca-Cola Nigeria Limited Nigeria 100
Coca-Cola Southern Africa (Pty) Limited South Africa 100
Conco Limited Cayman Islands 100
</TABLE>
-1-
<PAGE>
<TABLE>
SUBSIDIARIES OF THE COCA-COLA COMPANY
AS OF DECEMBER 31, 1996
<CAPTION>
continued from page 1
Organized Percentages
Under of Voting
Laws of: Power
--------- -----------
<S> <C> <C>
International Beverages Ireland 100
Coca-Cola Refreshments Moscow Russia 100
Minute Maid SA Switzerland 100
Refreshment Product Services, Inc. Delaware 100
Coca-Cola de Colombia, S.A. Colombia 100
Coca-Cola Holdings (Nederland) B.V. Netherlands 100
Coca-Cola Holdings (United Kingdom) Limited England and 100
Wales
The Inmex Corporation Florida 100
Servicios Integrados de Administracion Mexico 100
y Alta Gerencia, S.A. de C.V.
Other subsidiaries whose combined size is not significant:
Fourteen domestic wholly owned subsidiaries consolidated
Ninety-five foreign wholly owned subsidiaries consolidated
Fifteen foreign majority-owned subsidiaries consolidated
-2-
</TABLE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual
Report on Form 10-K of The Coca-Cola Company of our report dated
January 24, 1997, included in the 1996 Annual Report to Share
Owners of The Coca-Cola Company.
Our audits also included the financial statement schedule of
The Coca-Cola Company listed in Item 14(a). This schedule is the
responsibility of The Coca-Cola Company's management. Our
responsibility is to express an opinion based on our audits. In
our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements
taken as a whole, presents fairly in all material respects the
information set forth therein.
We also consent to the incorporation by reference in the
registration statements and related prospectuses of The Coca-Cola
Company listed below of our report dated January 24, 1997 with
respect to the consolidated financial statements of The Coca-Cola
Company incorporated herein by reference, and our report included
in the preceding paragraph with respect to the financial statement
schedule included in this Annual Report on Form 10-K for the year
ended December 31, 1996:
1. Registration Statement Number 2-58584 on Form S-8
2. Registration Statement Number 2-79973 on Form S-3
3. Registration Statement Number 2-88085 on Form S-8
4. Registration Statement Number 2-98787 on Form S-3
5. Registration Statement Number 33-21529 on Form S-8
6. Registration Statement Number 33-21530 on Form S-3
7. Registration Statement Number 33-26251 on Form S-8
8. Registration Statement Number 33-39840 on Form S-8
9. Registration Statement Number 33-45763 on Form S-3
10. Registration Statement Number 33-50743 on Form S-3
11. Registration Statement Number 33-61531 on Form S-3
ERNST & YOUNG LLP
Atlanta, Georgia
March 10, 1997
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, ROBERTO C. GOIZUETA,
Chairman of the Board, Chief Executive Officer and a Director
of The Coca-Cola Company (the "Company"), do hereby appoint
M. DOUGLAS IVESTER, President, Chief Operating Officer and a
Director of the Company, JAMES E. CHESTNUT, Senior Vice
President and Chief Financial Officer of the Company,
JOSEPH R. GLADDEN, JR., Senior Vice President and General
Counsel of the Company, SUSAN E. SHAW, Secretary of the
Company, and CAROL C. HAYES, Assistant Secretary of the
Company, or any one of them, my true and lawful attorneys-in-
fact for me and in my name for the purpose of executing on my
behalf in any and all capacities the Company's Annual Report
for the year ended December 31, 1996 on Form 10-K, or any
amendment or supplement thereto, and causing such Annual
Report or any such amendment or supplement to be filed with
the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
20th day of February 1997.
/s/Roberto C. Goizueta
Chairman of the Board,
Chief Executive Officer and
Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, JAMES E. CHESTNUT,
Senior Vice President and Chief Financial Officer of
The Coca-Cola Company (the "Company"), do hereby appoint
ROBERTO C. GOIZUETA, Chairman of the Board, Chief Executive
Officer and a Director of the Company, M. DOUGLAS IVESTER,
President, Chief Operating Officer and a Director of the
Company, JOSEPH R. GLADDEN, JR., Senior Vice President and
General Counsel of the Company, SUSAN E. SHAW, Secretary of
the Company, and CAROL C. HAYES, Assistant Secretary of the
Company, or any one of them, my true and lawful attorneys-in-
fact for me and in my name for the purpose of executing on my
behalf in any and all capacities the Company's Annual Report
for the year ended December 31, 1996 on Form 10-K, or any
amendment or supplement thereto, and causing such Annual
Report or any such amendment or supplement to be filed with
the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
20th day of February 1997.
/s/James E. Chestnut
Senior Vice President
and Chief Financial Officer
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, GARY P. FAYARD, Vice
President and Controller of The Coca-Cola Company (the
"Company"), do hereby appoint ROBERTO C. GOIZUETA, Chairman
of the Board, Chief Executive Officer and a Director of the
Company, M. DOUGLAS IVESTER, President, Chief Operating
Officer and a Director of the Company, JAMES E. CHESTNUT,
Senior Vice President and Chief Financial Officer of the
Company, JOSEPH R. GLADDEN, JR., Senior Vice President and
General Counsel of the Company, SUSAN E. SHAW, Secretary of
the Company, and CAROL C. HAYES, Assistant Secretary of the
Company, or any one of them, my true and lawful attorneys-in-
fact for me and in my name for the purpose of executing on my
behalf in any and all capacities the Company's Annual Report
for the year ended December 31, 1996 on Form 10-K, or any
amendment or supplement thereto, and causing such Annual
Report or any such amendment or supplement to be filed with
the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
17th day of February 1997.
/s/Gary P. Fayard
Vice President and Controller
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, HERBERT A. ALLEN, a
Director of The Coca-Cola Company (the "Company"), do hereby
appoint ROBERTO C. GOIZUETA, Chairman of the Board, Chief
Executive Officer and a Director of the Company, M. DOUGLAS
IVESTER, President, Chief Operating Officer and a Director of
the Company, JAMES E. CHESTNUT, Senior Vice President and
Chief Financial Officer of the Company, JOSEPH R. GLADDEN,
JR., Senior Vice President and General Counsel of the
Company, SUSAN E. SHAW, Secretary of the Company, and
CAROL C. HAYES, Assistant Secretary of the Company, or any
one of them, my true and lawful attorneys-in-fact for me and
in my name for the purpose of executing on my behalf in any
and all capacities the Company's Annual Report for the year
<PAGE>
ended December 31, 1996 on Form 10-K, or any amendment or
supplement thereto, and causing such Annual Report or any
such amendment or supplement to be filed with the Securities
and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
20th day of February 1997.
/s/Herbert A. Allen
Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, RONALD W. ALLEN, a
Director of The Coca-Cola Company (the "Company"), do hereby
appoint ROBERTO C. GOIZUETA, Chairman of the Board, Chief
Executive Officer and a Director of the Company, M. DOUGLAS
IVESTER, President, Chief Operating Officer and a Director of
the Company, JAMES E. CHESTNUT, Senior Vice President and
Chief Financial Officer of the Company, JOSEPH R. GLADDEN,
JR., Senior Vice President and General Counsel of the
Company, SUSAN E. SHAW, Secretary of the Company, and
CAROL C. HAYES, Assistant Secretary of the Company, or any
one of them, my true and lawful attorneys-in-fact for me and
in my name for the purpose of executing on my behalf in any
and all capacities the Company's Annual Report for the year
ended December 31, 1996 on Form 10-K, or any amendment or
supplement thereto, and causing such Annual Report or any
such amendment or supplement to be filed with the Securities
and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
20th day of February 1997.
/s/Ronald W. Allen
Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, CATHLEEN P. BLACK, a
Director of The Coca-Cola Company (the "Company"), do hereby
appoint ROBERTO C. GOIZUETA, Chairman of the Board, Chief
Executive Officer and a Director of the Company, M. DOUGLAS
IVESTER, President, Chief Operating Officer and a Director of
the Company, JAMES E. CHESTNUT, Senior Vice President and
Chief Financial Officer of the Company, JOSEPH R. GLADDEN,
JR., Senior Vice President and General Counsel of the
Company, SUSAN E. SHAW, Secretary of the Company, and
CAROL C. HAYES, Assistant Secretary of the Company, or any
one of them, my true and lawful attorneys-in-fact for me and
in my name for the purpose of executing on my behalf in any
and all capacities the Company's Annual Report for the year
ended December 31, 1996 on Form 10-K, or any amendment or
supplement thereto, and causing such Annual Report or any
such amendment or supplement to be filed with the Securities
and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
20th day of February 1997.
/s/Cathleen P. Black
Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, WARREN E. BUFFETT, a
Director of The Coca-Cola Company (the "Company"), do hereby
appoint ROBERTO C. GOIZUETA, Chairman of the Board, Chief
Executive Officer and a Director of the Company, M. DOUGLAS
IVESTER, President, Chief Operating Officer and a Director of
the Company, JAMES E. CHESTNUT, Senior Vice President and
Chief Financial Officer of the Company, JOSEPH R. GLADDEN,
JR., Senior Vice President and General Counsel of the
Company, SUSAN E. SHAW, Secretary of the Company, and
CAROL C. HAYES, Assistant Secretary of the Company, or any
one of them, my true and lawful attorneys-in-fact for me and
in my name for the purpose of executing on my behalf in any
and all capacities the Company's Annual Report for the year
ended December 31, 1996 on Form 10-K, or any amendment or
supplement thereto, and causing such Annual Report or any
such amendment or supplement to be filed with the Securities
and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
20th day of February 1997.
/s/Warren E. Buffett
Director
The Coca-Cola Company
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, CHARLES W.
DUNCAN, JR., a Director of The Coca-Cola Company (the
"Company"), do hereby appoint ROBERTO C. GOIZUETA, Chairman
of the Board, Chief Executive Officer and a Director of the
Company, M. DOUGLAS IVESTER, President, Chief Operating
Officer and a Director of the Company, JAMES E. CHESTNUT,
Senior Vice President and Chief Financial Officer of the
Company, JOSEPH R. GLADDEN, JR., Senior Vice President and
General Counsel of the Company, SUSAN E. SHAW, Secretary of
the Company, and CAROL C. HAYES, Assistant Secretary of the
Company, or any one of them, my true and lawful attorneys-in-
fact for me and in my name for the purpose of executing on my
behalf in any and all capacities the Company's Annual Report
for the year ended December 31, 1996 on Form 10-K, or any
amendment or supplement thereto, and causing such Annual
Report or any such amendment or supplement to be filed with
the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
20th day of February 1997.
/s/Charles W. Duncan, Jr.
Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, M. DOUGLAS IVESTER,
President, Chief Operating Officer and a Director of
The Coca-Cola Company (the "Company"), do hereby appoint
ROBERTO C. GOIZUETA, Chairman of the Board, Chief Executive
Officer and a Director of the Company, JAMES E. CHESTNUT,
Senior Vice President and Chief Financial Officer of the
Company, JOSEPH R. GLADDEN, JR., Senior Vice President and
General Counsel of the Company, SUSAN E. SHAW, Secretary of
the Company, and CAROL C. HAYES, Assistant Secretary of the
Company, or any one of them, my true and lawful attorneys-in-
fact for me and in my name for the purpose of executing on my
behalf in any and all capacities the Company's Annual Report
for the year ended December 31, 1996 on Form 10-K, or any
amendment or supplement thereto, and causing such Annual
Report or any such amendment or supplement to be filed with
the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
20th day of February 1997.
/s/M. Douglas Ivester
President, Chief Operating Officer
and Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, SUSAN B. KING, a
Director of The Coca-Cola Company (the "Company"), do hereby
appoint ROBERTO C. GOIZUETA, Chairman of the Board, Chief
Executive Officer and a Director of the Company, M. DOUGLAS
IVESTER, President, Chief Operating Officer and a Director of
the Company, JAMES E. CHESTNUT, Senior Vice President and
Chief Financial Officer of the Company, JOSEPH R. GLADDEN,
JR., Senior Vice President and General Counsel of the
Company, SUSAN E. SHAW, Secretary of the Company, and
CAROL C. HAYES, Assistant Secretary of the Company, or any
one of them, my true and lawful attorneys-in-fact for me and
in my name for the purpose of executing on my behalf in any
and all capacities the Company's Annual Report for the year
ended December 31, 1996 on Form 10-K, or any amendment or
supplement thereto, and causing such Annual Report or any
such amendment or supplement to be filed with the Securities
and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
20th day of February 1997.
/s/Susan B. King
Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, DONALD F. MCHENRY, a
Director of The Coca-Cola Company (the "Company"), do hereby
appoint ROBERTO C. GOIZUETA, Chairman of the Board, Chief
Executive Officer and a Director of the Company, M. DOUGLAS
IVESTER, President, Chief Operating Officer and a Director of
the Company, JAMES E. CHESTNUT, Senior Vice President and
Chief Financial Officer of the Company, JOSEPH R. GLADDEN,
JR., Senior Vice President and General Counsel of the
Company, SUSAN E. SHAW, Secretary of the Company, and
CAROL C. HAYES, Assistant Secretary of the Company, or any
one of them, my true and lawful attorneys-in-fact for me and
in my name for the purpose of executing on my behalf in any
and all capacities the Company's Annual Report for the year
<PAGE>
ended December 31, 1996 on Form 10-K, or any amendment or
supplement thereto, and causing such Annual Report or any
such amendment or supplement to be filed with the Securities
and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
20th day of February 1997.
/s/Donald F. McHenry
Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, SAM NUNN, a Director
of The Coca-Cola Company (the "Company"), do hereby appoint
ROBERTO C. GOIZUETA, Chairman of the Board, Chief Executive
Officer and a Director of the Company, M. DOUGLAS IVESTER,
President, Chief Operating Officer and a Director of the
Company, JAMES E. CHESTNUT, Senior Vice President and Chief
Financial Officer of the Company, JOSEPH R. GLADDEN, JR.,
Senior Vice President and General Counsel of the Company,
SUSAN E. SHAW, Secretary of the Company, and CAROL C. HAYES,
Assistant Secretary of the Company, or any one of them, my
true and lawful attorneys-in-fact for me and in my name for
the purpose of executing on my behalf in any and all
capacities the Company's Annual Report for the year ended
December 31, 1996 on Form 10-K, or any amendment or
supplement thereto, and causing such Annual Report or any
such amendment or supplement to be filed with the Securities
and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
20th day of February 1997.
/s/Sam Nunn
Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, PAUL F. OREFFICE, a
Director of The Coca-Cola Company (the "Company"), do hereby
appoint ROBERTO C. GOIZUETA, Chairman of the Board, Chief
Executive Officer and a Director of the Company, M. DOUGLAS
IVESTER, President, Chief Operating Officer and a Director of
the Company, JAMES E. CHESTNUT, Senior Vice President and
Chief Financial Officer of the Company, JOSEPH R. GLADDEN,
JR., Senior Vice President and General Counsel of the
Company, SUSAN E. SHAW, Secretary of the Company, and
CAROL C. HAYES, Assistant Secretary of the Company, or any
one of them, my true and lawful attorneys-in-fact for me and
in my name for the purpose of executing on my behalf in any
and all capacities the Company's Annual Report for the year
ended December 31, 1996 on Form 10-K, or any amendment or
supplement thereto, and causing such Annual Report or any
such amendment or supplement to be filed with the Securities
and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
20th day of February 1997.
/s/Paul F. Oreffice
Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, JAMES D.
ROBINSON III, a Director of The Coca-Cola Company (the
"Company"), do hereby appoint ROBERTO C. GOIZUETA, Chairman
of the Board, Chief Executive Officer and a Director of the
Company, M. DOUGLAS IVESTER, President, Chief Operating
Officer and a Director of the Company, JAMES E. CHESTNUT,
Senior Vice President and Chief Financial Officer of the
Company, JOSEPH R. GLADDEN, JR., Senior Vice President and
General Counsel of the Company, SUSAN E. SHAW, Secretary of
the Company, and CAROL C. HAYES, Assistant Secretary of the
Company, or any one of them, my true and lawful attorneys-in-
fact for me and in my name for the purpose of executing on my
behalf in any and all capacities the Company's Annual Report
for the year ended December 31, 1996 on Form 10-K, or any
amendment or supplement thereto, and causing such Annual
Report or any such amendment or supplement to be filed with
the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
20th day of February 1997.
/s/James D. Robinson III
Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, PETER V. UEBERROTH, a
Director of The Coca-Cola Company (the "Company"), do hereby
appoint ROBERTO C. GOIZUETA, Chairman of the Board, Chief
Executive Officer and a Director of the Company, M. DOUGLAS
IVESTER, President, Chief Operating Officer and a Director of
the Company, JAMES E. CHESTNUT, Senior Vice President and
Chief Financial Officer of the Company, JOSEPH R. GLADDEN,
JR., Senior Vice President and General Counsel of the
Company, SUSAN E. SHAW, Secretary of the Company, and
CAROL C. HAYES, Assistant Secretary of the Company, or any
one of them, my true and lawful attorneys-in-fact for me and
in my name for the purpose of executing on my behalf in any
and all capacities the Company's Annual Report for the year
ended December 31, 1996 on Form 10-K, or any amendment or
supplement thereto, and causing such Annual Report or any
such amendment or supplement to be filed with the Securities
and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
19th day of February 1997.
/s/Peter V. Ueberroth
Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, JAMES B. WILLIAMS, a
Director of The Coca-Cola Company (the "Company"), do hereby
appoint ROBERTO C. GOIZUETA, Chairman of the Board, Chief
Executive Officer and a Director of the Company, M. DOUGLAS
IVESTER, President, Chief Operating Officer and a Director of
the Company, JAMES E. CHESTNUT, Senior Vice President and
Chief Financial Officer of the Company, JOSEPH R. GLADDEN,
JR., Senior Vice President and General Counsel of the
Company, SUSAN E. SHAW, Secretary of the Company, and
CAROL C. HAYES, Assistant Secretary of the Company, or any
one of them, my true and lawful attorneys-in-fact for me and
in my name for the purpose of executing on my behalf in any
and all capacities the Company's Annual Report for the year
ended December 31, 1996 on Form 10-K, or any amendment or
supplement thereto, and causing such Annual Report or any
such amendment or supplement to be filed with the Securities
and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
20th day of February 1997.
/s/James B. Williams
Director
The Coca-Cola Company
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THE COCA-COLA COMPANY FOR THE YEAR ENDED DECEMBER 31,
1996, AS SET FORTH IN ITS FORM 10-K FOR SUCH YEAR, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,433
<SECURITIES> 225
<RECEIVABLES> 1,671
<ALLOWANCES> 30
<INVENTORY> 952
<CURRENT-ASSETS> 5,910
<PP&E> 5,581
<DEPRECIATION> 2,031
<TOTAL-ASSETS> 16,161
<CURRENT-LIABILITIES> 7,406
<BONDS> 1,116
0
0
<COMMON> 858
<OTHER-SE> 5,298
<TOTAL-LIABILITY-AND-EQUITY> 16,161
<SALES> 18,546
<TOTAL-REVENUES> 18,546
<CGS> 6,738
<TOTAL-COSTS> 6,738
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 286
<INCOME-PRETAX> 4,596
<INCOME-TAX> 1,104
<INCOME-CONTINUING> 3,492
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,492
<EPS-PRIMARY> 1.40<F1>
<EPS-DILUTED> 0
<FN>
<F1> A two-for-one stock split with respect to the Company's Common Stock,
$.25 par value per share, was effective on May 1, 1996. Financial data
schedules for prior years have not been restated for this recapitalization.
</FN>
</TABLE>
EXHIBIT 99.1
CAUTIONARY STATEMENT RELATIVE TO FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 (the
"Act") provides a safe harbor for forward-looking statements
made by or on behalf of the Company. The Company and its
representatives may from time to time make written or verbal
forward-looking statements, including statements contained
in the Company's filings with the Securities and Exchange
Commission and in its reports to share owners. All
statements which address operating performance, events or
developments that the Company expects or anticipates will
occur in the future, including statements relating to volume
growth, share of sales, and earnings per share growth or
statements expressing general optimism about future
operating results, are forward-looking statements within the
meaning of the Act. The forward-looking statements are and
will be based on management's then current views and
assumptions regarding future events and operating
performance.
The following are some of the factors that could cause
actual results to differ materially from estimates contained
in the Company's forward-looking statements:
- - the ability to generate sufficient cash flows to support
capital expansion plans, share repurchase programs and
general operating activities.
- - competitive product and pricing actions and the ability
to gain or maintain share of sales in the global market
as a result of actions by competitors. While we believe
our opportunities for sustained, profitable growth are
considerable, unanticipated actions of competitors could
impact our earnings, share of sales, and volume growth.
- - changes in laws and regulations, including changes in
accounting standards, taxation requirements (including
tax rate changes, new tax laws, and revised tax law
interpretations), and environmental laws in domestic or
foreign jurisdictions.
- - fluctuations in the cost and availability of raw
materials and the ability to maintain favorable supplier
arrangements and relationships.
- - the ability to achieve earnings forecasts, which are
generated based on projected volumes and sales of many
product types, some of which are more profitable than
others. There can be no assurances the Company will
achieve the projected level or mix of product sales.
- - interest rate fluctuations and other capital market
conditions, including foreign currency rate fluctuations.
Most of our exposures to capital markets, including
interest and foreign currency, are managed on a
consolidated basis, which allows us to net certain
exposures and, thus, take advantage of any natural
offsets. With more than three-fourths of our operating
income generated outside the United States, weakness in
one particular capital market is often offset by
strengths in others. Additionally, we use derivative
financial instruments to reduce our net exposure to
financial and commodity risks. There can be no
assurance, however, that our financial risk management
program will be successful in reducing these exposures.
- - economic and political conditions in international
markets, including civil unrest, governmental changes,
and restrictions on the ability to transfer capital
across borders.
- - the ability to penetrate developing and emerging markets,
which is also dependent on economic and political
conditions, and how well we are able to acquire or form
strategic business alliances with local bottlers and make
necessary infrastructure enhancements to production
facilities, distribution networks, sales equipment and
technology. Moreover, the supply of products in
developing markets must match the customers' demand for
those products, and due to product price and cultural
differences, there can be no assurance of product
acceptance in any particular market.
- - the ability to invest strategically in global and
domestic bottling operations and to reduce our ownership
interest in bottlers as deemed necessary or desirable,
either by selling our interest in a consolidated bottling
operation to one or more of our equity investee bottlers
or by combining our bottling interests with the bottling
interests of others to form strategic alliances.
Strategic alliances may require, among other things,
integration or coordination with a different company
culture, management team organization, and business
infrastructure.
- - the effectiveness of the Company's advertising, marketing
and promotional programs.
- - the uncertainties of litigation, as well as other risks
and uncertainties detailed from time to time in the
Company's Securities and Exchange Commission filings.
- - adverse weather conditions, which could reduce demand for
Company products.
The Company cautions that the foregoing list of important
factors is not exclusive.
