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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission File No. 001-02217
The Coca-Cola Company
(Exact name of Registrant as specified in its Charter)
Delaware 58-0628465
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Coca-Cola Plaza 30313
Atlanta, Georgia (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code (404) 676-2121
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
------- -------
Indicate the number of shares outstanding of each of the Registrant's
classes of Common Stock as of the latest practicable date.
Class of Common Stock Outstanding at April 26, 1999
--------------------- -----------------------------
$.25 Par Value 2,467,589,633 Shares
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<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
Index
Part I. Financial Information
Item 1. Financial Statements (Unaudited) Page Number
Condensed Consolidated Balance Sheets
March 31, 1999 and December 31, 1998 3
Condensed Consolidated Statements of Income
Three months ended March 31, 1999 and 1998 5
Condensed Consolidated Statements of Cash Flows
Three months ended March 31, 1999 and 1998 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 21
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 5. Other Information 24
Item 6. Exhibits and Reports on Form 8-K 27
2
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Part I. Financial Information
Item 1. Financial Statements (Unaudited)
THE COCA-COLA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions except share data)
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------- -----------
<S> <C> <C>
CURRENT
Cash and cash equivalents $ 1,593 $ 1,648
Marketable securities 161 159
----------- -----------
1,754 1,807
Trade accounts receivable, less
allowances of $15 at March 31
and $10 at December 31 1,601 1,666
Inventories 931 890
Prepaid expenses and other assets 1,966 2,017
----------- -----------
TOTAL CURRENT ASSETS 6,252 6,380
----------- -----------
INVESTMENTS AND OTHER ASSETS
Equity method investments
Coca-Cola Enterprises Inc. 782 584
Coca-Cola Amatil Limited 1,254 1,255
Coca-Cola Beverages plc 827 879
Other, principally bottling companies 3,218 3,573
Cost method investments,
principally bottling companies 406 395
Marketable securities and other assets 1,844 1,863
----------- -----------
8,331 8,549
----------- -----------
PROPERTY, PLANT AND EQUIPMENT
Land 195 199
Buildings and improvements 1,544 1,507
Machinery and equipment 4,303 3,855
Containers 186 124
----------- -----------
6,228 5,685
Less allowances for depreciation 2,091 2,016
----------- -----------
4,137 3,669
----------- -----------
GOODWILL AND OTHER INTANGIBLE ASSETS 762 547
----------- -----------
$ 19,482 $ 19,145
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</TABLE>
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THE COCA-COLA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions except share data)
LIABILITIES AND SHARE-OWNERS' EQUITY
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------- -----------
<S> <C> <C>
CURRENT
Accounts payable and accrued expenses $ 2,932 $ 3,141
Loans and notes payable 4,949 4,459
Current maturities of long-term debt 10 3
Accrued income taxes 942 1,037
----------- -----------
TOTAL CURRENT LIABILITIES 8,833 8,640
----------- -----------
LONG-TERM DEBT 694 687
----------- -----------
OTHER LIABILITIES 912 991
----------- -----------
DEFERRED INCOME TAXES 555 424
----------- -----------
SHARE-OWNERS' EQUITY
Common stock, $.25 par value
Authorized: 5,600,000,000 shares
Issued: 3,461,947,609 shares at March 31;
3,460,083,686 shares at December 31 866 865
Capital surplus 2,393 2,195
Reinvested earnings 20,274 19,922
Accumulated other comprehensive income
and unearned compensation on
restricted stock (1,895) (1,434)
----------- -----------
$ 21,638 $ 21,548
Less treasury stock, at cost
(994,646,413 shares at March 31;
994,566,196 shares at December 31) 13,150 13,145
----------- -----------
8,488 8,403
----------- -----------
$ 19,482 $ 19,145
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<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
4
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THE COCA-COLA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In millions except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1999 1998
--------- ---------
<S> <C> <C>
NET OPERATING REVENUES $ 4,428 $ 4,457
Cost of goods sold 1,331 1,318
--------- --------
GROSS PROFIT 3,097 3,139
Selling, administrative
and general expenses 1,953 1,857
--------- --------
OPERATING INCOME 1,144 1,282
Interest income 64 52
Interest expense 77 62
Equity income (loss) (95) (24)
Other income (loss) - net 46 (5)
--------- --------
INCOME BEFORE INCOME TAXES 1,082 1,243
Income taxes 335 386
--------- --------
NET INCOME $ 747 $ 857
========= ========
BASIC NET INCOME PER SHARE $ .30 $ .35
========= ========
DILUTED NET INCOME PER SHARE $ .30 $ .34
========= ========
DIVIDENDS PER SHARE $ .16 $ .15
========= ========
AVERAGE SHARES OUTSTANDING 2,466 2,471
========= ========
Dilutive effect of stock options 21 31
--------- --------
AVERAGE SHARES OUTSTANDING
ASSUMING DILUTION 2,487 2,502
========= ========
<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
5
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THE COCA-COLA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In millions)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1999 1998
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 747 $ 857
Depreciation and amortization 185 152
Deferred income taxes (15) (10)
Equity (income) loss, net of dividends 99 30
Foreign currency adjustments 52 28
Other items 75 7
Net change in operating assets
and liabilities (806) (553)
--------- ---------
Net cash provided by operating activities 337 511
--------- ---------
INVESTING ACTIVITIES
Acquisitions and investments,
principally bottling companies (229) (206)
Purchases of investments and other assets (85) (107)
Proceeds from disposals of investments
and other assets 35 28
Purchases of property, plant and equipment (228) (185)
Proceeds from disposals of property, plant
and equipment 6 6
Other investing activities (11) (21)
--------- ---------
Net cash used in investing activities (512) (485)
--------- ---------
Net cash provided by (used in) operations
after reinvestment (175) 26
--------- ---------
FINANCING ACTIVITIES
Issuances of debt 535 881
Payments of debt (15) (143)
Issuances of stock 48 71
Purchases of stock for treasury (5) (294)
Dividends (338) (356)
--------- ---------
Net cash provided by financing activities 225 159
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (105) (34)
--------- ---------
CASH AND CASH EQUIVALENTS
Net increase (decrease) during the period (55) 151
Balance at beginning of period 1,648 1,737
--------- ---------
Balance at end of period $ 1,593 $ 1,888
========= =========
<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
6
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THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all
information and notes required by generally accepted accounting principles
for complete financial statements. However, except as disclosed herein,
there has been no material change in the information disclosed in the notes
to consolidated financial statements included in the Annual Report on
Form 10-K of The Coca-Cola Company (our Company) for the year ended
December 31, 1998. In the opinion of Management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three month
period ended March 31, 1999, are not necessarily indicative of the results
that may be expected for the year ending December 31, 1999.
Certain amounts in our prior period financial statements have been
reclassified to conform to the current period presentation.
NOTE B - SEASONAL NATURE OF BUSINESS
Unit sales of soft drink and noncarbonated beverage products are
generally greater in the second and third quarters due to seasonal factors.
7
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE C - COMPREHENSIVE INCOME
The components of comprehensive income, net of related tax, for the three-
month periods ended March 31, 1999 and 1998 are as follows (in millions):
1999 1998
--------- ---------
Net income $ 747 $ 857
Net foreign currency translation (476) 12
Net change in unrealized gain on
available-for-sale securities 14 16
--------- ---------
Comprehensive income $ 285 $ 885
========= =========
The components of accumulated other comprehensive income, net of related
tax, at March 31, 1999 and December 31, 1998 are as follows (in millions):
1999 1998
--------- ---------
Foreign currency translation adjustment $ (1,796) $ (1,320)
Unrealized gain on
available-for-sale securities 25 11
Minimum pension liability (41) (41)
--------- ---------
Accumulated other comprehensive income $ (1,812) $ (1,350)
========= =========
NOTE D - ISSUANCES OF STOCK BY EQUITY INVESTEES
When one of our equity investees issues additional shares to third
parties, our percentage ownership interest in the investee decreases. In
the event the issuance 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
generally recognized in our net income in the period the change of
ownership interest occurs.
8
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE D - ISSUANCES OF STOCK BY EQUITY INVESTEES (Continued)
If gains have been previously recognized on issuances of an equity
investee's stock and shares of the equity investee are subsequently
repurchased by the equity investee, gain recognition does not occur on
issuances subsequent to the date of a repurchase until shares have been
issued in an amount equivalent to the number of repurchased shares. This
type of transaction is reflected as an equity transaction and the net
effect is reflected in the accompanying condensed consolidated balance
sheets.
In the first quarter of 1999, Coca-Cola Enterprises (CCE) completed its
acquisition of various bottlers. These transactions were funded primarily
with shares of CCE common stock. The CCE common stock issued was valued in
an amount greater than the book value per share of our investment in CCE.
As a result of these transactions, our equity in the underlying net assets
of CCE increased, and we recorded a $241 million increase to our Company's
investment basis in CCE. Due to CCE's share repurchase programs, the
increase in our investment in CCE was recorded as an equity transaction and
no gain was recognized. We recorded a deferred tax liability of
approximately $95 million on this increase to our investment in CCE. The
transactions reduced our ownership in CCE from approximately 42 percent to
approximately 40 percent.
NOTE E - ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The new statement requires all
derivatives to be recorded on the balance sheet at fair value and
establishes new accounting rules for hedging instruments. The statement
is effective for years beginning after June 15, 1999. We are assessing the
impact this statement will have on our Consolidated Financial Statements.
9
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE F - OPERATING SEGMENTS
Our Company's operating structure includes the following operating
segments: the North America Group (including The Minute Maid Company); the
Africa Group; the Greater Europe Group; the Latin America Group; the Middle
& Far East Group; and Corporate. The North America Group includes the
United States and Canada.
Information about our Company's operations by operating segment is as
follows (in millions):
As of and for the Three Months Ended March 31,
<TABLE>
<CAPTION>
Middle
North Greater Latin and
America Africa Europe America Far East Corporate Consolidated
-------- ------ ------- ------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1999
Net operating
revenues $ 1,676 $ 156 $ 1,091 $ 506 $ 965 $ 34 $ 4,428
Operating income 338 58 372 236 245 (105) 1,144
Indentifiable
operating assets 4,635 353 1,872 1,624 2,701 1,810 12,995
Investments 136 71 1,950 1,667 1,833 830 6,487
1998
Net operating
revenues $ 1,591 $ 169 $ 1,211 $ 595 $ 852 $ 39 $ 4,457
Operating income 345 63 415 290 253 (84) 1,282
Indentifiable
operating assets 4,242 425 2,470 1,671 1,650 1,615 12,073
Investments 134 50 1,163 1,514 2,189 176 5,226
</TABLE>
Intercompany transfers between operating segments are not material.
10
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NOTE G - OTHER TRANSACTIONS
In December 1997, our Company announced its intent to acquire from
beverage company Pernod Ricard, its Orangina brands, three bottling
operations and one concentrate plant in France for approximately 5 billion
French francs. In May 1999, our Company signed a new letter of intent
whereby the distribution of Orangina in the French on-premise channel for a
period of 10 years will be handled by an independent third party. Our
Company would have full rights to market and distribute the brand outside
the French on-premise channel. The amended transaction is now valued at
4.7 billion French francs (approximately $761 million) and is subject to
approvals from regulatory authorities of the French government.
11
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
BEVERAGE VOLUME
In the first quarter of 1999, our worldwide unit case volume (excluding
volume of The Minute Maid Company) decreased 1 percent and gallon sales of
concentrates and syrups declined 6 percent, cycling first quarter 1998
increases of 14 percent and 15 percent, respectively. The decrease in
volume is primarily a result of the impacts of difficult economic conditions
in many parts of the world.
In the first quarter of 1999, volume increased 5 percent for The Minute
Maid Company compared to a 4 percent increase in the first quarter of 1998.
NET OPERATING REVENUES AND GROSS MARGIN
Net operating revenues declined 1 percent in the first quarter of 1999
reflecting the 6 percent decline in gallon sales, the impact of a stronger
U.S. dollar and the sale in 1998 of our previously consolidated bottling
operations in Italy, partially offset by selective price increases and the
consolidation in 1999 of our recently acquired bottling operations in India
and our vending operations in Japan.
Our gross profit margin decreased to 69.9 percent in the first quarter of
1999 from 70.4 percent in the first quarter of 1998. The decrease in gross
margin for the first quarter of 1999 was due primarily to the consolidation
in 1999 of our bottling operations in India and our vending operations in
Japan.
SELLING, ADMINISTRATIVE AND GENERAL EXPENSES
Selling, administrative and general expenses were $1,953 million in the
first quarter of 1999, compared to $1,857 million in the first quarter of
1998. The increase was due primarily to the consolidation in 1999 of our
recently acquired bottling operations in India and our vending operations
in Japan, partially offset by the sale of our wholly owned Italian bottling
operations to Coca-Cola Beverages plc in June 1998.
12
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<PAGE>
RESULTS OF OPERATIONS (Continued)
OPERATING INCOME AND OPERATING MARGIN
Operating income for the first quarter of 1999 totaled $1,144 million,
a decrease of $138 million from the first quarter of 1998. First quarter
1999 operating income reflects the difficult economic conditions in many
markets throughout the world, the impact of the stronger U.S. dollar and
the consolidation in 1999 of our recently acquired bottling operations
in India and our vending operations in Japan. Operating margin for the
first quarter of 1999 was 25.8 percent, compared to 28.8 percent for the
comparable period in 1998.
INTEREST INCOME AND INTEREST EXPENSE
Interest income increased $12 million in the first quarter of 1999
relative to the comparable period in 1998, due primarily to higher average
cash balances in the first quarter of 1999. Interest expense increased
$15 million in the first quarter of 1999 relative to the comparable period
in 1998, due to an increase in average commercial paper debt balances.
EQUITY INCOME (LOSS)
Our Company's share of losses from equity method investments for the
first quarter of 1999 totaled $95 million, compared to a loss of $24 million
in the first quarter of 1998. The first quarter 1999 loss was due primarily
to the negative impact of difficult economic conditions in many worldwide
markets as well as the seasonal nature of bottling operations.
OTHER INCOME (LOSS) - NET
Other income (loss) - net increased to $46 million income for the first
quarter of 1999 compared to a $5 million loss for the first quarter of 1998.
The increase reflects a foreign currency gain recorded during the first
quarter of 1999 as a result of effective treasury management practices for
Brazil.
INCOME TAXES
Our effective tax rate was 31.0 percent for the first quarter of 1999 and
1998. Our effective tax rate reflects tax benefits derived from significant
operations outside the United States which are taxed at rates lower than the
U.S. statutory rate of 35 percent.
NET CASH FLOW PROVIDED BY OPERATIONS AFTER REINVESTMENT
In the first three months of 1999, net cash used in operations
after reinvestment totaled $175 million compared to $26 million in net cash
provided by operations after reinvestment for the first three months of
1998.
13
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FINANCIAL CONDITION
Net cash provided by operating activities in the first three months of 1999
amounted to $337 million, a $174 million decrease compared to the first
three months of 1998. The decrease was primarily due to an increased use
of cash for operating assets and liabilities in the first three months of
1999 relative to the comparable period in 1998.
Net cash used in investing activities totaled $512 million for the first
three months of 1999 compared to $485 million in net cash used in investing
activities for the first three months of 1998. The increase was primarily
the result of reinvestment in the business through increased investments in
property, plant and equipment.
FINANCING
Our financing activities primarily consist of net borrowings, dividend
payments and share repurchases. Net cash provided by financing activities
totaled $225 million and $159 million for the first three months of 1999
and 1998, respectively. Our Company had net borrowings of $520 million and
$738 million for the first three months of 1999 and 1998, respectively.
Cash used for share repurchases was $5 million for the first three months
of 1999, compared to $294 million for the first three months of 1998. This
decrease in treasury stock repurchases was due primarily to our pending
acquisitions from Cadbury Schweppes plc and Pernod Ricard for approximately
$1.85 billion and $761 million, respectively. Both of these transactions
are subject to certain conditions including approvals from regulatory
authorities in various countries.
FINANCIAL POSITION
The change in the carrying value of our investment in Coca-Cola
Enterprises (CCE) in the first three months of 1999 is primarily a result
of CCE's issuance of stock in an acquisition as discussed in Note D of the
accompanying condensed consolidated financial statements. The increase in
our property, plant and equipment and goodwill and other intangible assets
is primarily due to the consolidation in 1999 of our recently acquired
bottling operations in India and our vending operations in Japan.
14
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FINANCIAL CONDITION (Continued)
EURO CONVERSION
In January 1999, certain member countries of the European Union
established permanent, fixed conversion rates between their existing
currencies and the European Union's common currency (the Euro).
The transition period for the introduction of the Euro is scheduled to
phase in over a period ending January 1, 2002, with the existing currency
being completely removed from circulation on July 1, 2002. Our Company has
been preparing for the introduction of the Euro for several years. The
timing of our phasing out all uses of the existing currencies will comply
with the legal requirements and also be scheduled to facilitate optimal
coordination with the plans of our vendors, distributors and customers.
Our work related to the introduction of the Euro and the phasing out of the
other currencies includes converting information technology systems;
recalculating currency risk; recalibrating derivatives and other financial
instruments; evaluating and taking action, if needed, regarding continuity
of contracts; and modifying our processes for preparing tax, accounting,
payroll and customer records.
Based on our work to date, we believe the Euro replacing the other
currencies will not have a material impact on our operations or our
Consolidated Financial Statements.
EXCHANGE
Our international operations are subject to certain opportunities and
risks, including currency fluctuations and governmental actions. We
closely monitor our operations in each country and adopt appropriate
strategies responsive to each environment. In the first quarter of 1999,
the U.S. dollar was approximately 3% stronger versus all of our functional
currencies. This does not include the effects of our hedging activities
and therefore, does not reflect the actual impact of fluctuations on our
operating results. Our foreign currency management program mitigates over
time a portion of the impact of exchange on net income and earnings per
share.
15
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FINANCIAL CONDITION (Continued)
YEAR 2000
Certain computer programs written with two digits rather than four
to define the applicable year may experience problems handling dates near
the end of and beyond the year 1999 (Year 2000 failure dates). This may
cause computer applications to fail or to create erroneous results unless
corrective measures are taken. The Year 2000 problem can arise at any
point in the Company's supply, manufacturing, processing, distribution and
financial chains.
Aided by third party service providers, we are implementing a plan to
address the anticipated impacts of the Year 2000 problem on our information
technology (IT) systems and on non-IT systems involving embedded chip
technologies (non-IT systems). We are also surveying selected third
parties to determine the status of their Year 2000 compliance programs.
In addition, we are developing contingency plans specifying what the
Company will do if it or important third parties experience disruptions as
a result of the Year 2000 problem.
With respect to IT systems, our Year 2000 plan includes programs relating
to (i) computer applications, including those for mainframes, client server
systems, minicomputers and personal computers (the Applications Program)
and (ii) IT infrastructure, including hardware, software, network
technology and voice and data communications (the Infrastructure Program).
In the case of non-IT systems, our Year 2000 plan includes programs relating
to (i) equipment and processes required to produce and distribute beverage
concentrates and syrups, finished beverages, juices and juice-drink products
(the Manufacturing Program) and (ii) equipment and systems in buildings not
encompassed by the Manufacturing Program that our Company occupies or leases
to third parties (the Facilities Program).
Each of these programs is being conducted in phases, described as follows:
INVENTORY PHASE -- Identify hardware, software, processes or devices that
use or process date information.
ASSESSMENT PHASE -- Identify Year 2000 date processing deficiencies and
related implications.
PLANNING PHASE -- Determine for each deficiency an appropriate solution
and budget. Schedule resources and develop testing plans.
IMPLEMENTATION PHASE -- Implement designed solutions. Conduct appropriate
systems testing.
16
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FINANCIAL CONDITION (Continued)
YEAR 2000 (Continued)
Certain additional testing may be conducted following completion of the
implementation phase. The plan also includes a control element intended to
ensure that changes to IT and non-IT systems do not introduce additional
Year 2000 issues.
Our Year 2000 plan is subject to modification and is revised periodically
as additional information is developed. The Company currently believes
that its Year 2000 plan will be completed in all material respects prior to
the anticipated Year 2000 failure dates. For the Company and its
consolidated subsidiaries, status reports regarding the Applications,
Infrastructure, Manufacturing and Facilities Programs as of the respective
dates indicated below are as follows:
APPLICATIONS PROGRAM (AS OF MARCH 31, 1999) -- We have completed the
inventory, assessment and planning phases for all 46 applications considered
to be mission-critical, and implementation phase progress is as follows:
42 are complete and four are expected to be completed by June 1999. Of
approximately 2,890 other applications we have identified, all have
been assessed and approximately 1,880 of these have been determined to
require Year 2000 planning and implementation phase work. We have
completed the planning and implementation phases for approximately 1,810
and 1,510 applications, respectively, and we estimate completion of the
remainder by May and July 1999, respectively.
INFRASTRUCTURE PROGRAM (AS OF MARCH 31, 1999) -- The inventory phase is
estimated to be approximately 96 percent complete and is expected to be
fully completed by May 1999. Approximately 4,400 "components" have been
identified. (We define a component as a particular type - of which there
may be numerous individual iterations - of software package, computer or
telecommunications hardware, or lab or research equipment, including any
supporting software and utilities.) The assessment, planning and
implementation phases are estimated to be approximately 94 percent, 91
percent and 75 percent complete, respectively, and are expected to be fully
completed by June, June and October 1999, respectively.
MANUFACTURING PROGRAM (AS OF MARCH 31, 1999 EXCEPT AS OTHERWISE NOTED) --
We have identified 98 separate manufacturing operations, all of which
have completed the inventory and assessment phases. Of the 98 operations,
all but one (which subsequently completed on April 29, 1999) have completed
the planning phase. Implementation phase work has been completed in 55
operations and is expected to be fully completed by July 1999.
17
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FINANCIAL CONDITION (Continued)
YEAR 2000 (Continued)
FACILITIES PROGRAM (AS OF MARCH 31, 1999) -- Of the 59 non-manufacturing
buildings we have identified, 21 were found to have no Year 2000 issues and
the remaining 38 were either found to have Year 2000 issues requiring
planning and implementation or have not yet completed the inventory and
assessment phases. Status by phase is as follows:
Not Yet In Total Estimated 100%
Phase Started Progress Complete Buildings Completion Date
- ----- ------- -------- -------- --------- ---------------
Inventory 1 5 53 59 April 1999
Assessment 4 2 53 59 June 1999
Planning 5 1 32 38 June 1999
Implementation 10 25 3 38 December 1999
Owners of properties leased by our Company are being contacted in order
to assess the Year 2000 readiness of their facilities.
THIRD PARTY YEAR 2000 READINESS. The Company has material relationships
with third parties whose failure to be Year 2000 compliant could have
materially adverse impacts on our Company's business, operations or
financial condition in the future. Third parties that we consider to be in
this category for Year 2000 purposes (Key Business Partners) include
critically important bottlers, customers, suppliers, vendors and public
entities such as government regulatory agencies, utilities, financial
entities and others.
BOTTLERS. We derive most of our net operating revenues from sales of
concentrates, syrups and finished products to authorized third parties,
including bottling and canning operations (Bottlers), that produce, package
and distribute beverages bearing the Company's brands. We have made Year
2000 awareness information available to all Bottlers and have asked each
Bottler to advise us of the Bottler's plans for reaching Year 2000 readiness
with respect to non-IT systems. All of our Bottlers have made their plans
available to us. We have also contacted the Bottlers to inquire about their
state of Year 2000 readiness with respect to IT systems as well as the
actions being taken by Bottlers with respect to third parties. We may take
further action as we deem it appropriate in particular cases.
CUSTOMERS. We have met and exchanged information with a limited number
of key non-Bottler customers regarding Year 2000 readiness and business
continuity issues.
18
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FINANCIAL CONDITION (Continued)
YEAR 2000 (Continued)
SUPPLIERS AND VENDORS. The Company classifies as "critical" those
suppliers of products or services consumed on an ongoing basis that, if
interrupted, would materially disrupt our Company's ability to deliver
products or conduct operations. We are conducting reviews of suppliers
identified as critical on a worldwide basis, for purposes of assessing
their Year 2000 plans and their progress toward implementation. We expect
all of these reviews to be completed by May 1999. Thereafter, additional
assessments may occur during the remainder of the year. In addition, each
Company field location is working to assess the likelihood of supply issues
with suppliers classified as critical on a regional basis.
Suppliers of less critical importance to our business, and vendors from
whom we buy goods expected to be in service beyond 1999, have been sent a
questionnaire from us asking about the status of their Year 2000 plans.
Responses are being evaluated and periodically reassessed, certain selected
goods are being tested, and follow-up action is being taken by the Company
as it deems appropriate.
PUBLIC ENTITIES. We also have a Year 2000 program that involves
interaction with and assessment of public entities such as government
regulatory agencies, utilities, financial entities and others.
CONTINGENCY PLANS. The Company is preparing contingency plans relating
specifically to identified Year 2000 risks and developing cost estimates
relating to these plans. Contingency plans may include stockpiling raw and
packaging materials, increasing inventory levels, securing alternate sources
of supply, adopting workaround procedures, and other appropriate measures.
We anticipate completion of the Year 2000 contingency plans during the first
half of 1999. Once developed, Year 2000 contingency plans and related cost
estimates will be tested in certain respects and continually refined as
additional information becomes available.
19
<PAGE>
<PAGE>
FINANCIAL CONDITION (Continued)
YEAR 2000 (Continued)
YEAR 2000 RISKS. While the Company currently believes that it will be
able to modify or replace its affected systems in time to minimize any
significant detrimental effects on its operations, failure to do so, or the
failure of Key Business Partners or other third parties to modify or replace
their affected systems, could have materially adverse impacts on the
Company's business, operations or financial condition in the future. There
can be no guarantee that such impacts will not occur. In particular,
because of the interdependent nature of business systems, the Company could
be materially adversely affected if private businesses, utilities and
governmental entities with which it does business or that provide essential
products or services are not Year 2000 ready. The Company currently
believes that the greatest risk of disruption in its businesses exists in
certain international markets. Reasonably likely consequences of failure
by the Company or third parties to resolve the Year 2000 problem include,
among other things, temporary slowdowns or cessations of operations at one
or more Company or Bottler facilities, delays in the delivery or
distribution of products, delays in the receipt of supplies, invoice and
collection errors, and inventory and supply obsolescence. However, the
Company believes that its Year 2000 readiness program, including related
contingency planning, should significantly reduce the possibility of
significant interruptions of normal operations.
COSTS. As of March 31, 1999, the Company's total incremental costs
(historical plus estimated future costs) of addressing Year 2000 issues are
estimated to be in the range of $130 million to $160 million, of which
approximately $90 million has been incurred. These costs are being funded
through operating cash flow. These amounts do not include: (i) any costs
associated with the implementation of contingency plans, which are in the
process of being developed, or (ii) costs associated with replacements of
computerized systems or equipment in cases where replacement was not
accelerated due to Year 2000 issues.
Implementation of our Company's Year 2000 plan is an ongoing process.
Consequently, the above described estimates of costs and completion dates
for the various components of the plan are subject to change.
For further information regarding Year 2000 matters, see the disclosures
under Forward-Looking Statements on page 24.
20
<PAGE>
<PAGE>
Item 3. Quantitative and Qualitative Disclosures
About Market Risk
We have no material changes to the disclosure on this matter made in our
report on Form 10-K for the year ended December 31, 1998.
21
<PAGE>
<PAGE>
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Share Owners was held on Wednesday, April 21, 1999,
in Wilmington, Delaware, at which the following matters were submitted to a
vote of the share owners:
(a) Votes regarding the election of four Directors for a term
expiring in 2002 were as follows:
FOR WITHHELD
-------------- ----------
Cathleen P. Black 2,158,335,124 15,457,895
Warren E. Buffett 2,156,626,650 17,166,369
M. Douglas Ivester 2,156,325,734 17,467,285
Susan B. King 2,147,252,537 26,540,482
Additional Directors, whose terms of office as Directors
continued after the meeting, are as follows:
Term expiring in 2000 Term expiring in 2001
--------------------- ---------------------
Ronald W. Allen Herbert A. Allen
Donald F. McHenry James D. Robinson III
Sam Nunn Peter V. Ueberroth
Paul F. Oreffice
James B. Williams
(b) Votes regarding reapproval of the Company's Long-Term
Performance Incentive Plan were as follows:
ABSTENTIONS
AND
BROKER
FOR AGAINST NON-VOTES
------------- ------------- -------------
2,115,073,591 44,904,353 13,815,075
(c) Votes regarding reapproval of the Company's Executive
Performance Incentive Plan were as follows:
ABSTENTIONS
AND
BROKER
FOR AGAINST NON-VOTES
------------- ------------- -------------
2,107,662,013 50,819,205 15,311,801
22
<PAGE>
<PAGE>
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (Continued)
(d) Votes regarding approval of the Company's 1999 Stock Option
Plan were as follows:
ABSTENTIONS
AND
BROKER
FOR AGAINST NON-VOTES
------------- ------------- -------------
1,906,701,710 251,825,068 15,266,241
(e) Votes regarding ratification of the appointment of Ernst &
Young LLP as independent auditors of the Company to serve for
the 1999 fiscal year were as follows:
ABSTENTIONS
AND
BROKER
FOR AGAINST NON-VOTES
------------- ------------- -------------
2,162,450,587 4,593,467 6,748,965
23
<PAGE>
<PAGE>
Part II. Other Information
Item 5. Other Information
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 our
Company. Our Company and its representatives may from time to time make
written or verbal forward-looking statements, including statements
contained in this report and other Company filings with the Securities and
Exchange Commission and in our reports to share owners. All statements
which address operating performance, events or developments that we expect
or anticipate will occur in the future, including statements relating to
volume growth, share of sales and earnings per share growth, statements
expressing general optimism about future operating results, and non-
historical Year 2000 information, 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.
FACTORS THAT MAY IMPACT FORWARD-LOOKING STATEMENTS OR FINANCIAL PERFORMANCE
The following are some of the factors that could affect our financial
performance or could cause actual results to differ materially from
estimates contained in or underlying our Company's forward-looking
statements:
-- Our ability to generate sufficient cash flows to support capital
expansion plans, share repurchase programs and general operating
activities.
-- Competitive product and pricing pressures and our 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.
-- Our 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 assurance that we
will achieve the projected level or mix of product sales.
24
<PAGE>
<PAGE>
FORWARD-LOOKING STATEMENTS (Continued)
-- 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. We use
derivative financial instruments to reduce our net exposure to
financial risks. There can be no assurance, however, that our
financial risk management program will be successful in reducing
foreign currency exposures.
-- Economic and political conditions in international markets, including
civil unrest, governmental changes and restrictions on the ability to
transfer capital across borders.
-- Our ability to penetrate developing and emerging markets, which also
depends 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 effectiveness of our advertising, marketing and promotional
programs.
-- The uncertainties of litigation, as well as other risks and
uncertainties detailed from time to time in our Company's Securities
and Exchange Commission filings.
-- Adverse weather conditions, which could reduce demand for Company
products.
25
<PAGE>
<PAGE>
FORWARD-LOOKING STATEMENTS (Continued)
-- Our ability and the ability of our Key Business Partners and other
third parties to replace, modify or upgrade computer systems in ways
that adequately address the Year 2000 problem. Given the numerous
and significant uncertainties involved, there can be no assurance
that Year 2000-related estimates and anticipated results will be
achieved, and actual results could differ materially. Specific
factors that might cause such material differences include, but are
not limited to, the ability to identify and correct all relevant
computer codes and embedded chips, unanticipated difficulties or
delays in the implementation of Year 2000 project plans and the
ability of third parties to adequately address their own Year 2000
issues.
-- Our ability to timely resolve issues relating to introduction of the
European Union's common currency (the Euro).
The foregoing list of important factors is not exclusive.
26
<PAGE>
<PAGE>
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
2.1 - Amendment No. 1, dated April 19, 1999, to Amended and
Restated Purchase Agreement, dated as of December 11,
1998, among the Company, Atlantic Industries and Cadbury
Schweppes plc
10.1 - The Coca-Cola Company 1987 Stock Option Plan, as amended
and restated through April 20, 1999
10.2 - The Coca-Cola Company 1991 Stock Option Plan, as amended
and restated through April 20, 1999
10.3 - The Coca-Cola Company 1999 Stock Option Plan
10.4 - Long-Term Performance Incentive Plan of the Company, as
amended and restated effective April 21, 1999
10.5 - Executive Performance Incentive Plan of the Company, as
amended and restated effective April 21, 1999
12 - Computation of Ratios of Earnings to Fixed Charges
27 - Financial Data Schedule for the three months ended
March 31, 1999, submitted to the Securities and Exchange
Commission in electronic format
(b) Reports on Form 8-K:
No report on Form 8-K has been filed by the Registrant during the
quarter for which this report is filed.
27
<PAGE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE COCA-COLA COMPANY
(REGISTRANT)
Date: May 12, 1999 By: /s/ Gary P. Fayard
----------------------------
Gary P. Fayard
Vice President and Controller
(On behalf of the Registrant and
as Chief Accounting Officer)
28
<PAGE>
<PAGE>
EXHIBIT INDEX
Exhibit Number and Description
2.1 - Amendment No. 1, dated April 19, 1999, to Amended and
Restated Purchase Agreement, dated as of December 11,
1998, among the Company, Atlantic Industries and Cadbury
Schweppes plc
10.1 - The Coca-Cola Company 1987 Stock Option Plan, as amended
and restated through April 20, 1999
10.2 - The Coca-Cola Company 1991 Stock Option Plan, as amended
and restated through April 20, 1999
10.3 - The Coca-Cola Company 1999 Stock Option Plan
10.4 - Long-Term Performance Incentive Plan of the Company, as
amended and restated effective April 21, 1999
10.5 - Executive Performance Incentive Plan of the Company, as
amended and restated effective April 21, 1999
12 - Computation of Ratios of Earnings to Fixed Charges
27 - Financial Data Schedule for the three months ended
March 31, 1999, submitted to the Securities and Exchange
Commission in electronic format
<PAGE>
EXHIBIT 2.1
AMENDMENT NO. 1 TO
AMENDED AND RESTATED PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 (this "Amendment") dated April 19, 1999 to the
AMENDED AND RESTATED PURCHASE AGREEMENT (the "Purchase Agreement") dated as
of December 11, 1998 by and among THE COCA-COLA COMPANY ("KO"), ATLANTIC
INDUSTRIES ("AI"), and CADBURY SCHWEPPES PLC ("CS");
W I T N E S S E T H:
WHEREAS, KO, AI and CS are parties to the Purchase Agreement;
WHEREAS, KO, AI and CS desire to enter into this Amendment in order
to amend certain terms and conditions of the Purchase Agreement and to
provide for certain other agreements;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein and in the Purchase
Agreement, the parties do hereby agree to amend the Purchase Agreement as
follows:
1. Section 1.01(a) of the Purchase Agreement is hereby amended
by (i) adding the phrase "and Belgium" to the end of the definition of
"Know-how" on page three (3) of the Purchase Agreement, and (ii) adding the
following sentence to the end of the second full paragraph on page three (3)
of the Purchase Agreement which begins with the words "Notwithstanding the
foregoing,":
"In addition, the term 'Excluded Assets' shall
include (1) all trademarks, trademark registrations and
trademark applications in Belgium and all other assets and
properties related to the beverages business of CS and its
Affiliates in Belgium (the 'Belgium Assets'), and (2) all
trademarks, trademark registrations and trademark
applications referred to on Schedule 2.13(a)(i) as being
registered in 'Benelux' (such trademarks, trademark
registrations and trademark applications referred in this
clause (2) being referred to as the 'Benelux Trademarks')."
2. Section 1.02(a) of the Purchase Agreement is hereby amended
by replacing the phrase "U.S. $1,720,000,000" with the phrase
"U.S. $1,658,120,000".
3. Section 4.04 of the Purchase Agreement is hereby amended by
adding the following language at the end of Section 4.04:
"Subject to paragraph 5 of the Amendment among the
parties dated April 19, 1999 (the "Amendment"), nothing in
this Section 4.04 shall prevent CS from transferring or
assigning any interest in any of the Belgium Assets or the
Benelux Trademarks."
<PAGE>
4. The parties hereby agree as follows:
"BELGIUM. The parties intend to negotiate and
cooperate in good faith in a timely manner to seek to
develop a transaction structure that would enable KO to
acquire for fair value tangible and intangible assets
relating to the trademarks used in CS's beverages business
in Belgium and the entire associated value stream. If such
a transaction is developed, the obligations of the parties
under Section 5.01 of the Purchase Agreement shall apply to
such transaction, including, without limitation, by
appealing to the Brussels Court of Appeals in Belgium."
5. The parties hereby agree as follows:
"BENELUX TRADEMARKS. At the Threshold Closing, CS
or the relevant Affiliate of CS and KO or the relevant
Affiliate of KO shall enter into an exclusive royalty-free,
freely transferable license agreement (the 'Benelux License
Agreement'), with a right to sublicense in form and
substance reasonably satisfactory to the parties and in
substantially the same form as the Excluded Country License
Agreement, pursuant to which CS will grant to KO the right
to use in perpetuity the Benelux Trademarks with respect to
The Netherlands and Luxembourg and any brand, trademark,
trade name or similar right connected or associated
therewith with respect to The Netherlands and Luxembourg.
The Benelux License Agreement shall include, without
limitation, terms providing KO or the relevant KO Affiliate
with brand extensions and rights to new packaging. If the
entering into of the Benelux License Agreement would not be
permitted at the Threshold Closing, the Purchase Price will
be adjusted by the amount attributable to The Netherlands
and Luxembourg as determined in the manner provided by the
last two sentences of Section 1.02(c) of the Purchase
Agreement. If CS or any of its Affiliates transfers any of
the Benelux Trademarks, CS shall cause any such transferee
to honor and be bound by the provisions of this paragraph."
6. The parties hereby agree as follows:
"BELGIUM CONCENTRATE AGREEMENT. At the Threshold
Closing, with respect to Belgium, the parties will enter
into an agreement for the provision by KO to CS of specific
support services in such form as the parties may mutually
agree. Such services will include, without limitation,
the supply of concentrates, as well as services related to
new products and packaging, to the extent necessary to
permit CS to continue its operations in Belgium in a manner
comparable to currently conducted operations. The supply of
concentrates shall be at KO's cost as determined below. CS
and KO will negotiate in good faith on an arms-length basis
the amounts of payments to be made by CS to KO in return for
such services to be provided by KO. For purposes of this
paragraph, 'KO's cost' means all
-2-
<PAGE>
direct costs and reasonable overhead and other indirect
costs associated with the provision of such supplies and
services."
7. Exhibit 5.01 of the Purchase Agreement is hereby amended by
deleting the words "Brussels Court of Appeals in Belgium" from such Exhibit.
8. Schedule 1.01(b) to the Purchase Agreement is hereby
restated in the form attached to this Amendment as Exhibit A.
9. Schedule 1.02(b)-1 to the Purchase Agreement is hereby
amended by (i) deleting the word "Belgium" from such Schedule, (ii) deleting
all corresponding values in the row of such Schedule in which the word
"Belgium" appears, and (iii) reducing the respective amounts in the row
entitled "Total Value" by the amounts in each column corresponding to
Belgium.
10. Schedules 1.02(b)-2, 1.02(b)-3 and 1.02(c)-1 to the
Purchase Agreement are hereby amended by deleting the word "Belgium" from
each such Schedule.
11. Except as set forth in this Amendment, the Purchase
Agreement shall remain in full force and effect.
12. This Amendment may be executed in one or more counterparts,
each of which shall constitute an original and all of which shall
constitute one and the same Amendment.
13. Except as otherwise provided in this Amendment, capitalized
terms used in this Amendment have the meaning given to such terms in the
Purchase Agreement.
-3-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf on the date first above written.
THE COCA-COLA COMPANY
By: /s/ James E. Chestnut
---------------------
Name: James E. Chestnut
Title: Senior Vice President and
Chief Financial Officer
ATLANTIC INDUSTRIES
By: /s/ James E. Chestnut
---------------------
Name: James E. Chestnut
Title: Vice President and
Chief Financial Officer
CADBURY SCHWEPPES PLC
By: /s/ Hester Blanks
-----------------
Name: Hester Blanks
Title: Legal Director AIMEE
-4-
<PAGE>
LIST OF EXHIBITS
Exhibit A Revised Schedule 1.01(b) -- Certain Countries
-5-
<PAGE>
The Coca-Cola Company agrees to furnish supplementally to the Securities
and Exchange Commission a copy of any omitted schedule or similar attachment
upon request.
-6-
EXHIBIT 10.1
THE COCA-COLA COMPANY
1987 STOCK OPTION PLAN
as amended through April 20, 1999
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 Related Companies (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 Related Companies 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 Related
Companies.
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 Related Companies (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
Related Companies, the Committee, the Board, officers and the affected
employees of the Company and/or its Related Companies and their respective
successors in interest.
<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 Related Companies. The terms "Related Company" or "Related
Companies" shall mean corporation(s) or other business organization(s) in
which the Company owns, directly or indirectly, 20 percent or more of the
voting stock or capital at the relevant time; provided, however, that no
ISO may be granted to any employee of a Related Company which is not a
corporation or to any employee of a Related Company 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, except as provided in the next sentence. For exercises of NSOs
executed by Merrill Lynch, Pierce Fenner & Smith using the cashless
method, the exercise price shall be paid in full no later than the close of
business on the third business day following the exercise. "Business day"
means a day on which the New York Stock Exchange is open for securities
trading.
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
an 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
reported market price at which a share of Stock shall have most recently
traded prior to the time the exercise order was processed. Such price
will be determined by reference to the New York Stock Exchange Composite
Transactions listing.
- 2 -
<PAGE>
(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 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 Related Company 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 Related Company 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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<PAGE>
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 the 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 Related
Companies 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 Related Company or within six (6) months from the date of
termination of employment with the Company or any Related Company 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 Related
Companies 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 Related Companies 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,
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<PAGE>
the 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 Section 16 of the
Exchange Act, or to correct any defect or supply an omission or reconcile
any
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<PAGE>
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 10.2
THE COCA-COLA COMPANY
1991 STOCK OPTION PLAN
as amended through April 20, 1999
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 Related Companies (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 Related
Companies. In addition, the Plan is intended to aid the Company and its
Related Companies 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 Related Companies.
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 Related Companies (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 Related
Companies, the Committee, the Board, officers and the affected employees of
the Company and/or its Related Companies 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
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
<PAGE>
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 Related Companies. The terms "Related Company" or "Related Companies"
shall mean corporation(s) or other business organization(s) in which the
Company owns, directly or indirectly, 20% 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 a Related Company
which is not a corporation or to any employee of a Related Company which is
not at least 50% owned, directly or indirectly, by the Company. Any ISOs
held by an optionee of a Related Company which ceases to be 50% owned will
become NSOs three (3) months after the date that the Company's ownership of
the Related Company falls below 50%. If ownership falls below 20% an
optionee will be considered terminated for purposes of Section 8 on the
date that the Company's ownership of the Related Company falls below 20%.
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, except as provided in the next sentence. For
exercises of ISOs granted on or after October 15, 1998, and
exercises of NSOs, if such exercises are executed by Merrill Lynch,
Pierce, Fenner & Smith using the cashless method, the exercise
price shall be paid in full no later than the close of business on
the third business day following the exercise. "Business day"
means a day on which the New York Stock Exchange is open for
securities trading.
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.
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<PAGE>
If shares are delivered to pay the option price or if shares are
withheld for U.S. taxpayers to satisfy such tax liabilities, the
value of the shares delivered or withheld shall be computed on the
basis of the reported market price at which a share of Stock most
recently traded prior to the time the exercise order was processed.
Such price will be determined by reference to 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" or disability of the optionee, as both are defined in
Section 8, or death of the optionee 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 Related Company 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 Related Company 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, however, that no
Right may be exercised and cash paid in partial or
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<PAGE>
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. 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 Related Companies shall be terminated by reason of death or
disability or in the event of a Change in Control, all Options held by the
optionee shall become exercisable. If an optionee's employment with the
Company and/or its Related Companies shall be terminated by reason of
Retirement (as defined below), all Options held by the optionee for at
least twelve full calendar months prior to Retirement shall become
exercisable. Death or disability of the optionee occurring after
termination of employment with the Company and/or its Related Companies
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.
(b) EXERCISE PERIOD. If an optionee's employment with the Company
and/or its Related Companies 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.
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<PAGE>
If an optionee shall become disabled while an employee of the
Company or any Related Company or within six (6) months after the date of
termination of employment with the Company or any Related Company 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 Related Company or within six (6) months from the date of termination
of employment with the Company or any Related Company 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 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.
-5-
<PAGE>
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 10.3
THE COCA-COLA COMPANY
1999 STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of The Coca-Cola Company 1999 Stock Option Plan (the "Plan") is
to advance the interest of The Coca-Cola Company (the "Company") and its Related
Companies (as defined in Section 2) by encouraging and enabling the acquisition
of a financial interest in the Company by officers and other key employees of
the Company or its Related Companies. In addition, the Plan is intended to aid
the Company and its Related Companies 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 Related Companies.
SECTION 2. DEFINITIONS
"Business Day" means a day on which the New York Stock Exchange is open for
securities trading.
"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 under the Securities Exchange Act of 1934 ("1934 Act") as in
effect on January 1, 1999, 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 as in
effect on January 1, 1999) 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 share owners of the Company
approve any merger or consolidation as a result of which the KO Common
Stock (as defined below) 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 share owners of
the Company approve any merger or consolidation to which the Company is a
party as a result of which the persons who were share owners 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.
"Committee" means a committee appointed by the Board of Directors in
accordance with the Company's By-Laws 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 Stock Option Subcommittee of the Board
shall function as the Committee. Eligibility requirements for members of
the Committee shall comply with Rule 16b-3 under the 1934 Act, or any
successor rule or regulation.
"Disabled" or "Disability" means the optionee meets the definition of
"disabled" under the terms of the Company's Long Term Disability Income
Plan in effect on the date in question, whether or not the optionee is
covered by such plan.
"ISO" means an incentive stock option within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended.
<PAGE>
"KO Common Stock" means The Coca-Cola Company Common Stock, par value $.25
per share.
"Majority-Owned Related Company" means a Related Company in which the
Company owns, directly or indirectly, 50% or more of the voting stock of
capital on the date an Option is granted.
"NSO" means a stock option that does not constitute an ISO.
"Options" means ISOs and NSOs granted under this Plan.
"Related Company" or "Related Companies" means corporation(s) or other
business organization(s) in which the Company owns, directly or indirectly,
20% or more of the voting stock or capital at the relevant time.
"Retire" means to enter Retirement.
"Retirement" means 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"), whether or not the employee is
covered by the ERP.
SECTION 3. OPTIONS
The Company may grant ISOs and NSOs to those persons meeting the
eligibility requirements in Section 6.
SECTION 4. ADMINISTRATION
The Plan shall be administered by the Committee. 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 Related Companies (including officers, whether or not they are
directors) to whom, and the time or times at which, Options will be granted; the
number of shares to be subject to each Option; the duration of each Option; the
time or times within which the Option may be exercised; the cancellation of the
Option (with the consent of the holder thereof); and the other conditions of the
grant of the Option, at grant or while outstanding, pursuant to the terms of the
Plan. The provisions and conditions of the Options need not be the same with
respect to each optionee or with respect to each Option.
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 granted hereunder by the Committee, shall be final
and conclusive for all purposes and upon all persons including, but without
limitation, the Company, its Related Companies, the Committee, the Board,
officers and the affected employees of the Company and/or its Related
Companies, optionees and the respective successors in interest of any of the
foregoing.
SECTION 5. STOCK
The KO Common Stock to be issued, transferred and/or sold under the Plan
shall be made available from authorized and unissued KO Common Stock or from the
Company's treasury shares. The total number of shares of KO Common Stock that
may be issued or transferred under the Plan pursuant to Options granted
thereunder may not exceed 120,000,000 shares (subject to adjustment as described
below). Such number of shares shall be subject to adjustment in accordance with
Section 5 and Section 11. KO Common Stock subject to any unexercised portion of
an Option which expires or is canceled, surrendered or terminated for any reason
may again be subject to Options granted under the Plan.
-2-
<PAGE>
SECTION 6. ELIBIGILITY
Options may be granted to employees of the Company and its Majority-Owned
Related Companies. No employee shall be granted the right to acquire, pursuant
to Options granted under the Plan, more than 5% of the aggregate number of
shares of KO Common Stock originally authorized under the Plan, as adjusted
pursuant to Section 11. Also, the Committee may grant Options to particular
employee(s) of a Related Company, who within the past eighteen (18) months were
employee(s) of the Company or a Majority-Owned Related Company, and in
rare instances to be determined by the Committee in its sole discretion,
employees of a Related Company who have not been employees of the Company or a
Majority-Owned Related Company within the past eighteen (18) months.
SECTION 7. AWARDS OF OPTIONS
Except as otherwise specifically provided in this Plan, 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 KO Common Stock on the date of grant. The fair market value of
a share of KO Common Stock shall be the average of the high and low market
prices at which a share of KO Common 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, except as provided in the next sentence. If an exercise is
executed by Merrill Lynch, Pierce, Fenner & Smith using the cashless
method, the exercise price shall be paid in full no later than the close of
business on the third Business Day following the exercise.
Payment may be in cash or, upon conditions established by the
Committee, by delivery of shares of KO Common Stock owned for at least six
(6) months 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 of shares of KO Common Stock.
If shares are delivered to pay the option price or if shares are
withheld for U.S. taxpayers to satisfy such tax liabilities, the value of
the shares delivered or withheld shall be computed on the basis of the
reported market price at which a share of KO Common Stock most recently
traded prior to the time the exercise order was processed. Such price will
be determined by reference to the New York Stock Exchange Composite
Transactions listing.
(c) Exercise May Be Delayed Until Withholding is Satisfied. The
Company may refuse to exercise an Option if the optionee has not made
arrangements satisfactory to the Company to satisfy the tax withholding
which the Company determines is necessary to comply with applicable
requirements.
(d) Duration of Options. The duration of Options shall be determined
by the Committee, but in no event shall the duration of an ISO exceed ten
(10) years from the date of its grant or the duration of an NSO exceed
fifteen (15) years from the date of its grant.
(e) 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, including vesting
provisions; provided, however, that, except in the event of a Change in
Control or the Disability or death of the optionee, 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. The grant of an Option to any employee
shall not affect in any way the right of the Company and any Related
Company to terminate the employment of the holder thereof.
-3-
<PAGE>
(f) 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 KO Common 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 Majority-Owned
Related Company of the Company shall adopt a stock option plan under which
options constituting ISOs 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 under this Plan in any calendar year.
SECTION 8. NONTRANSFERABILITY OF OPTIONS
No Option 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 shall be exercisable only by the optionee personally or by
the optionee's legal representative.
<TABLE>
<CAPTION>
SECTION 9. EFFECT OF TERMINATION OF EMPLOYMENT, OTHER CHANGES OF EMPLOYMENT
OR EMPLOYER STATUS, DEATH, RETIREMENT OR A CHANGE IN CONTROL
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------
EVENT | IMPACT ON VESTING | IMPACT ON EXERCISE PERIOD
- ---------------------------------|------------------------------------|------------------------------------
Employment terminates upon | All options become immediately | Option expiration date provided
Disability | vested | in grant continues to apply
- ---------------------------------|------------------------------------|------------------------------------
Employment terminates upon | Option held at least 12 full | Option expiration date provided
Retirement | calendar months become | in grant continues to apply
| immediately vested; options held |
| less than 12 full calendar months |
| are forfeited |
- ---------------------------------|------------------------------------|------------------------------------
Employment terminates | All options become immediately | Right of executor, administrator
upon death | vested | of estate (or other transferee
| | permitted by Section 8)
| | terminates on earlier of (1) 12
| | months from the date of death,
| | or (2) the expiration date
| | provided in the Option
- ---------------------------------|------------------------------------|------------------------------------
Employment terminates upon | All options become immediately | Option expiration date provided
Change in Control | vested | in grant continues to apply
- ---------------------------------|------------------------------------|------------------------------------
Termination of employment | Unvested options are forfeited | Expires upon earlier of 6 months
for other reasons (Optionees | | from termination date or option
should be aware that the | | expiration date provided in grant
receipt of severance does not | |
extend their termination date) | |
- ---------------------------------|------------------------------------|------------------------------------
US military leave | Vesting continues during leave | Option expiration date provided
| | in grant continues to apply
- ---------------------------------|------------------------------------|------------------------------------
Eleemosynary service | Committee's discretion | Committee's discretion
- ---------------------------------|------------------------------------|------------------------------------
US FMLA leave of absence | Vesting continues during leave | Option expiration date provided
| | in grant continues to apply
- -----------------------------------------------------------------------------------------------------------
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------
EVENT | IMPACT ON VESTING | IMPACT ON EXERCISE PERIOD
- ---------------------------------|------------------------------------|------------------------------------
Company investment in | Unvested options are forfeited | Expires upon earlier of 6 months
optionee's employer falls | | from termination date or option
under 20% (this constitutes a | | expiration date provided in grant
termination of employment | |
under the Plan, effective the | |
date the investment falls | |
below 20%) | |
OR | |
employment is transferred to | |
an entity in which the | |
Company's ownership | |
interest is less than 20% | |
- ---------------------------------|------------------------------------|------------------------------------
Employment transferred to | Vesting continues after transfer | Option expiration date provided
Related Company | | in grant continues to apply
- ---------------------------------|------------------------------------|------------------------------------
Death after employment has | Not applicable | Right of executor, administrator
terminated but before option | | of estate (or other transferee
has expired (note that | | permitted by Section 8)
termination of employment | | terminates on earlier of (1) 12
may have resulted in a | | months from the date of death, or
change to the original option | | (2) the Option expiration that
expiration date provided in | | applied at the date of death (note
the grant) | | that termination of employment may
| | have resulted in a change to the
| | original option expiration date
| | provided in the grant)
- -----------------------------------------------------------------------------------------------------------
</TABLE>
In the case of other leaves of absence not specified above, optionees will
be deemed to have terminated employment (so that options unvested will expire
and the option exercise period will end on the earlier of 6 months from the date
the leave began or the option expiration date provided in the grant), unless the
Committee identifies a valid business interest in doing otherwise in which case
it may specify what provisions it deems appropriate in its sole discretion;
provided that the Committee shall have no obligation to consider any such
matters.
Notwithstanding the foregoing 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 Options at the
time of grant or (with the consent of the affected optionee) outstanding
Options. However, no Option can have a term of more than fifteen years.
SECTION 10. NO RIGHTS AS A SHARE OWNER
An optionee or a transferee of an optionee pursuant to Section 8 shall have
no right as a share owner with respect to any KO Common Stock covered by an
Option or receivable upon the exercise of an Option until the optionee or
transferee shall have become the holder of record of such KO Common Stock, and
no adjustments shall be made for dividends in cash or other property or other
distributions or rights in respect to such KO Common 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 KO Common Stock acquired pursuant to
the Option.
SECTION 11. ADJUSTMENT IN THE NUMBER OF SHARES AND IN OPTION PRICE
In the event there is any change in the shares of KO Common 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 KO Common Stock available for
Options as well as the number of shares of KO Common Stock subject
-5-
<PAGE>
to any outstanding Option 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 without payment therefor.
SECTION 12. AMENDMENTS, MODIFICATIONS AND TERMINATION OF THE PLAN
The Board or the Committee may terminate the Plan at any time. From time to
time, the Board or the Committee may suspend the Plan, in whole or in part. From
time to time, the Board or the Committee may amend the Plan, in whole or in
part, including the adoption of amendments deemed necessary or desirable to
qualify the Options 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
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 granted thereunder, or
for any other purpose or to any effect permitted by applicable laws and
regulations, without the approval of the share owners of the Company. However,
in no event may additional shares of KO Common Stock be allocated to the Plan or
any outstanding option be repriced or replaced without share-owner 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 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 theretofore granted upon a finding by the Committee that such
amendment or modification is in the best interest of holders of outstanding
Options affected thereby. Grants of ISOs may be made under this Plan until
February 18, 2009 or such earlier date as this Plan is terminated, and grants of
NSOs may be made until all of the 120,000,000 shares of KO Common Stock
authorized for issuance hereunder (adjusted as provided in Sections 5 and 11)
have been issued or until this Plan is terminated, whichever first occurs. The
Plan shall terminate when there are no longer Options outstanding under the
Plan, unless earlier terminated by the Board or by the Committee.
SECTION 13. 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 10.4
LONG-TERM PERFORMANCE INCENTIVE PLAN
OF THE COCA-COLA COMPANY
as amended and restated effective April 21, 1999
SECTION 1. PURPOSE
The purpose of the Long-Term Performance Incentive Plan of The Coca-Cola
Company (the "Plan") is to advance the interests of The Coca-Cola Company (the
"Company") by providing a competitive level of incentive for eligible senior
executives which will encourage them to more closely identify with share-owner
interests and to achieve financial results consistent with the Company's long
range business plans. It will also provide a vehicle to attract and retain key
executives who are responsible for moving the business forward.
SECTION 2. ADMINISTRATION
The Plan will be administered by the Compensation Committee of the Board of
Directors of the Company or a subcommittee thereof (the "Committee") consisting
of not less than two members of the Board of Directors. The Committee will
determine which of the eligible key employees of the Company and its Related
Companies (as hereinafter defined) to whom, and the time or times at which,
Long-Term Incentive Awards will be granted under the Plan, and the other
conditions of the grant of the Long-Term Incentive Awards. The provisions and
conditions of the grants of Long-Term Incentive Awards need not be the same with
respect to each grantee or with respect to each Long-Term Incentive Award.
The Committee will, 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 will make determinations and will take such
other action in connection with or in relation to accomplishing the objectives
of 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 Long-Term Incentive Awards
granted hereunder by the Committee will be final and conclusive for all purposes
and upon all persons including, but without limitation, the Company, its Related
Companies, the Committee, the Board, officers, the affected employees of the
Company and/or its Related Companies, and any participant or former participant
under the Plan, as well as their respective successors in interest.
SECTION 3. ELIGIBILITY
The Chief Executive Officer, the President (if any), each executive officer
and such other senior officers of the Company as the Committee may designate
(the executive officers and designated senior officers, together "Eligible
Officers") will be eligible to participate in the Plan, but no individual will
have a right to participate. Long-Term Incentive Awards may be granted to such
Eligible Officers of the Company and its Related Companies as determined in the
sole discretion of the Committee. The term "Related Company" or "Related
Companies" will mean any corporation or business organization in which the
Company owns, directly or indirectly, during the relevant time, either (i) 50%
or more of the voting stock or capital where such entity is not publicly held,
or (ii) an interest which causes the other entity's financial results to be
consolidated with the Company's financial results for financial reporting
purposes.
SECTION 4. GRANTS OF LONG-TERM INCENTIVE AWARDS
(a) Annual Selection by the Committee of Participants. Annually,
participants will be selected within 90 days after the beginning of a
three-year performance period ("Performance Period") in
<PAGE>
accordance with Section 162(m) of the Internal Revenue Code of 1986
(the "Code"). Following such selection by the Committee, the Chief
Executive Officer will advise such Eligible Officers that they are
participants in the Plan for a Performance Period. Each Performance
Period will be of three years duration and will commence on the first
day of January of the applicable year. A new three-year Performance
Period will commence each year.
(b) Calculation of Performance Incentive Base. Annually, within 90
days after the beginning of a Performance Period, the Committee will
calculate the participant's Performance Incentive Base for that Performance
Period. The Performance Incentive Base will be the participant's salary
grade midpoint at the time of notification, times a percentage predicated
upon the participant's relative responsibility level within the Company.
The percentage will be progressively higher for correspondingly higher
levels of responsibility within the Company. Once the Performance Incentive
Base (i.e., the employee's salary grade midpoint and the applicable
percentage) is determined at the commencement of each Performance Period,
that Performance Incentive Base will not change for that Performance
Period.
SECTION 5. PERFORMANCE CRITERIA
Performance will be measured based upon two or more objective criteria for
each Performance Period. Criteria will be measured annually over the three-year
Performance Period. Within 90 days of the beginning of a Performance Period, the
Committee shall specify which of the following criteria will apply during such
Performance Period, together with those factors related to such criteria as are
noted below as well as any applicable matrices, schedules or formulae applicable
to weighting of such criteria in determining performance:
(a) Growth in Unit Case Sales. The annual compound "growth in Unit
Case Sales" will mean the growth in the number of cases of 24 8 oz. (U.S.)
servings sold during a year compared to the number sold in the previous
year, as determined by the Controller.
(b) Operating Profit Margin. "Operating Profit Margin" for a calendar
year will be determined by the Controller using the following formula:
consolidated operating profit as a percent of consolidated revenues
excluding Company-owned bottling operations and after adjustment for
deviations from budgeted exchange rates.
(c) Share of Sales. "Share of Sales" will be determined by the
Controller using the following formula: percent of the total unit case
volume for the soft-drink category (or such other category or categories as
the Committee specifies at the time it selects the criterion for a
Performance Period) of the commercial beverages industry.
(d) Growth in Economic Profit. "Growth in Economic Profit" shall be
determined for each calendar year in accordance with the definition of
Economic Profit provided by the Controller and approved by the Committee
within 90 days of the start of the Performance Period in which it would
apply. At such time, the Committee may, but is not obligated to, specify an
independent inflation/deflation index and/or exchange rate index that will
be applied to the calculation of Economic Profit to eliminate any effect of
inflation and/or exchange rates on the calculation of Economic Profit.
SECTION 6. AWARD DETERMINATION
Awards will be determined after the close of each Performance Period, based
upon measures established by the Committee in accordance with Section 5 of this
Plan.
-2-
<PAGE>
In no event will any Long-Term Incentive Award to a participant for any
Performance Period exceed the amount of $3,500,000, excluding interest on any
Contingent Award, deferred Vested Cash Award or deferred Contingent Award.
The Committee may, in its sole discretion, reduce the amount of any
Long-Term Incentive Award or refuse to pay any Long-Term Incentive Award.
SECTION 7. PAYMENT OF LONG-TERM INCENTIVE AWARDS
(a) Conditions to Payment of Long-Term Incentive Awards. Prior to the
payment of any Long-Term Incentive Award, the Committee will certify the
performance under the applicable criteria. In addition, no Long-Term
Incentive Award will be payable pursuant to this Plan until share-owner
approval of the Plan (within the meaning of Code Section 162(m)) has been
received. Long-Term Incentive Awards are subject to forfeiture as provided
below.
(b) All Payments Are In Cash. Long-Term Incentive Awards will be paid
in cash, at the times provided in Section 7 (c) and portions of awards are
subject to forfeiture until paid, as provided below.
(c) Timing of Payment of Long-Term Incentive Awards. Long-Term
Incentive Awards will be paid in two installments as provided in
subsections (c) (1) and (c) (2) below except as otherwise provided in this
Plan.
(1) The Vested Cash Award. One-half of the Long-Term Incentive
Award (the "Vested Cash Award") will be paid in cash to each participant
within sixty days after the date on which the Committee certifies the
criteria and makes the Long-Term Incentive Award. The date on which the
certification is made is called the "Award Certification Date" in this
Plan.
(2) Contingent Award. The second half of the Long-Term Incentive
Award is referred to herein as the "Contingent Award." The Contingent
Award, plus interest at the Applicable Interest Rate (as defined below)
thereon from the Award Certification Date, will be paid in cash to each
participant within sixty days after the expiration of the second year
following the end of the final year of the applicable Performance Period,
provided that such Contingent Award has not been forfeited as set forth in
the following sentence. The Contingent Award will be forfeited to the
Company (unless the Committee in its sole discretion otherwise determines)
if, within two years from the end of the Performance Period, the
participant terminates his or her employment with the Company (for reasons
other than death, leave of absence, retirement or disability, as such
events may be defined by the Committee). If a participant retires, is
granted a leave of absence, becomes disabled or dies after the end of the
Performance Period but prior to the expiration of such two-year period, the
participant or his or her estate shall be entitled to receive the whole
Contingent Award, with interest accruing only through and including the
date of such event, within 60 days of the date of such event.
(d) Deferral of Vested Cash Awards or Contingent Awards. All Vested
Cash Awards will be paid in cash at the time prescribed in subparagraph
(c)(1) above, unless the Committee has received and, in its sole
discretion, approved a request to defer payment of the Vested Cash Award.
All Contingent Awards will be paid in cash at the time prescribed in
subparagraph (c)(2) above, unless the Committee has received and, in its
sole discretion, approved a request to defer payment of the Contingent
Award. Committee approval of a request to defer payment of a Vested Cash
Award or a Contingent Award must be granted no later than the last day of
the second year of the Performance Period. All requests to defer payments
of a Vested Cash Award or a Contingent Award, must specify an election as
to the timing for receipt of the deferred amounts, from among the following
options:
(1) full cash payment at a date not less than one year from the
Award Certification Date nor more than one year after the date of
retirement,
-3-
<PAGE>
(2) equal annual installments over a period not to exceed fifteen
years, commencing not less than one year from the date of retirement, or
(3) full cash payment upon retirement.
Any amounts deferred will bear interest from the Award Certification Date.
Notwithstanding any election to defer a Vested Cash Award or a Contingent Award,
in the event of a participant's death, all amounts elected to be deferred will
be paid in full to the executor or administrator of a participant's estate
within a reasonable time after notice to the Committee of such participant's
death.
(e) Applicable Interest Rate. Contingent Awards and deferred Vested
Cash Awards will bear interest calculated at a rate, called the "Applicable
Interest Rate," determined pursuant to rules promulgated by the Committee,
provided that in no event may the Applicable Interest Rate constitute
interest which is "above-market" as set forth in Item 402 of Regulation S-K
(or any successor provision) promulgated by the Securities and Exchange
Commission.
(f) Withholding for Taxes. The Company will have the right to deduct
from all Long-Term Incentive Award payments any taxes required to be
withheld with respect to such payments.
(g) Payments to Estates. Long-Term Incentive Awards and earnings
thereon, if any, to the extent that they are due to a participant pursuant
to the provisions hereof and which remain unpaid at the time of the
participant's death, will be paid in full to the participant's estate.
SECTION 8. TERMINATION OF EMPLOYMENT DURING A PERFORMANCE PERIOD
(a) For Reasons Other Than Retirement, Leave of Absence, Disability or
Death. If the participant's employment by the Company or a Related Company
terminates for any reason (other than retirement, leave of absence,
disability or death) during any Performance Period, the Committee may in
its discretion determine that the participant will not be entitled to any
Long-Term Incentive Award for that Performance Period; otherwise the
participant will receive a prorated Long-Term Incentive Award calculated in
accordance with Section 8(c). Generally, the Committee will use its
negative discretion so that those participants who choose to leave the
Company during a Performance Period will receive no Long-Term Incentive
Award for such Performance Period.
(b) For Retirement, Leave of Absence, Disability or Death. If a
participant's employment with the Company or a Related Company terminates
during a Performance Period because of retirement, leave of absence,
disability or death during any Performance Period, the participant (or his
or her estate in the event of death) will be entitled to a prorated
Long-Term Incentive Award calculated in accordance with Section 8(c).
(c) Calculation and Payment of Prorated Long-Term Incentive Awards for
Termination During a Performance Period. Any prorated Long-Term Incentive
Award to be paid in accordance with Section 8 (a) or (b) will be calculated
as if the Performance Period ended on the last day of the year in which the
participant's employment terminated. The Committee will certify performance
based upon the applicable criteria as if the Performance Period has ended.
The portion of the Long-Term Incentive Award to be paid to the participant
or his or her estate would then be determined by multiplying the Long-Term
Incentive Award amount times a fraction, the numerator of which will be the
number of months of the Performance Period that elapsed prior to the
termination of employment (rounding up to the next whole number) and the
denominator of which will be 36. The prorated amount would be paid within
sixty days after the Award Certification Date for such prorated Long-Term
Incentive Award. Such prorated amount will be paid in a lump sum so that
there will be no Contingent Award owing to the participant or his or her
estate and no ability to defer payment of such prorated Long-Term Incentive
Award.
-4-
<PAGE>
SECTION 9. AMENDMENTS, MODIFICATION AND TERMINATION OF THE PLAN
The Board or the Committee may terminate the Plan at any time. From time to
time, the Board or the Committee may suspend the Plan, in whole or in part. From
time to time, the Board or the Committee may amend the Plan, including the
adoption of amendments deemed necessary or desirable to correct any defect or
supply an omission or reconcile any inconsistency in the Plan or in any
Long-Term Incentive Award granted hereunder so long as share-owner approval has
been obtained if required by Code Section 162(m). No amendment, termination or
modification of the Plan may in any manner affect Long-Term Incentive Awards
theretofore granted without the consent of the participant unless the Committee
has made a determination that an amendment or modification is in the best
interest of all persons to whom Long-Term Incentive Awards have theretofore been
granted, but in no event may such amendment or modification result in an
increase in the amount of compensation payable pursuant to such Long-Term
Incentive Award.
SECTION 10. GOVERNING LAW
The Plan and all determinations made and actions taken pursuant thereto
will be governed by the laws of the State of Georgia and construed in accordance
therewith.
SECTION 11. EFFECT ON BENEFIT PLANS
Long-Term Incentive Awards will be included in the computation of benefits
under the Employee Retirement Plan, Overseas Retirement Plan and other
retirement plans maintained by the Company under which the Participant may be
covered and the Thrift and Investment Plan, subject to all applicable laws and
in accordance with the provisions of those plans.
Long-Term Incentive Awards will not be included in the computation of
benefits under any group life insurance plan, travel accident insurance plan,
personal accident insurance plan or under Company policies such as severance pay
and payment for accrued vacation, unless required by applicable laws.
SECTION 12. CHANGE IN CONTROL
If there is a Change in Control (as hereinafter defined) while the Plan
remains in effect, then
(a) each participant's Long-Term Incentive Awards accrued through the
date of such Change in Control for each Performance Period then in effect
automatically will become nonforfeitable on such date,
(b) the Committee immediately after the date of such Change in Control
will determine each participant's Long-Term Incentive Award accrued through
the end of the calendar month which immediately precedes the date of such
Change in Control, and such determination will be made based on a formula
established by the Committee which computes such Long-Term Incentive Award
using (1) actual performance data for each full Plan Year in each
Performance Period for which such data is available and (2) projected data
for each other Plan Year, which projection will be based on a comparison
(for the Plan Year which includes the Change in Control) of the actual
performance versus budgeted performance for each criteria applicable to the
Long-Term Incentive Award for the full calendar months (in such Plan Year)
which immediately precede the Change in Control, multiplied by (3) a
fraction, the numerator of which will be the number of full calendar months
in each such Performance Period before the date of the Change in Control
and the denominator of which will be thirty-six,
(c) each participant's accrued Long-Term Incentive Award (as
determined under Section 12(b) and his then unpaid Vested Cash Award and
Contingent Award(s) under Section 7 (computed with interest at the weighted
prime rate at SunTrust Bank, Atlanta, accrued on such Long-Term Incentive
-5-
<PAGE>
Awards under Section 7 through the date of such Change in Control but in no
event constituting an "above-market" rate of interest as set forth in Item
402 of Regulation S-K promulgated by the Securities and Exchange Commission
(or any successor provision) will be paid to him in a lump sum in cash
promptly after the date of such Change in Control in lieu of any other
additional payments under the Plan for the related Performance Periods, and
(d) any federal golden parachute payment excise tax paid or payable
under Section 4999 of the Code, or any successor to such Section, by a
participant for his taxable year for which he reports the payment made
under Section 12(c) on his federal income tax return will be deemed
attributable to such payment under Section 12(c), and the Company promptly
on written demand from the participant (or, if he is dead, from his estate)
will pay to him (or, if he is dead, to his estate) an amount equal to such
excise tax.
A "Change in Control" for purposes of this Section 12 will 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 Securities
Exchange Act of 1934 (the "Exchange Act") as in effect on January 1, 1999,
provided that such a change in control will 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 as in effect on January 1, 1999) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act as in effect on January
1, 1999) 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 share owners of the Company approve
any merger or consolidation as a result of which its stock will 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 share
owners of the Company approve any merger or consolidation to which the Company
is a party as a result of which the persons who were share owners of the Company
immediately prior to the effective date of the merger or consolidation will 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 will 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.
-6-
EXHIBIT 10.5
EXECUTIVE PERFORMANCE INCENTIVE PLAN
OF THE COCA-COLA COMPANY
as amended and restated effective April 21, 1999
I. PLAN OBJECTIVE
The purpose of the Executive Performance Incentive Plan of The Coca-Cola
Company is to promote the interests of The Coca-Cola Company by providing
additional incentive for participating executive and senior officers who
contribute to the improvement of operating results of the Company and to reward
outstanding performance on the part of those individuals whose decisions and
actions most significantly affect the growth and profitability and efficient
operation of the Company.
II. DEFINITIONS
The terms used herein will have the following meanings:
a. "Plan" means this Executive Performance Incentive Plan of
The Coca-Cola Company.
b. "Code" means the Internal Revenue Code of 1986, as amended.
c. "Company" means The Coca-Cola Company and any corporation or other
business organization in which the Company owns, directly or indirectly, at
least 20% of the voting stock or capital.
d. "Board of Directors" means the Board of Directors of The Coca-Cola
Company.
e. "Committee" means the Compensation Committee of the Board of
Directors or a subcommittee thereof consisting of not less than two members
of the Board of Directors.
f. "Opportunity" will have the meaning set forth in Section V(a)
hereof.
g. "Award" means an award, with adjustments (if any), paid pursuant to
the provisions of the Plan.
h. "Plan Year" means the 12 month period beginning January 1 and
ending December 31.
i. "Participant" means an executive or senior officer who is selected
for participation by the Committee.
III. ADMINISTRATION OF THE PLAN
The Committee will have full power and authority to interpret and
administer the Plan in accordance with the rules and determinations adopted by
it.
IV. ELIGIBILITY
Eligibility for participation in the Plan is limited to executive officers
who are selected in the sole discretion of the Committee. No person will be
automatically entitled to participate in the Plan in any Plan Year. Any person
who has been designated a Participant for a particular Plan Year will be
ineligible to participate in the Annual Performance Incentive Plan of the
Company for such Plan Year.
<PAGE>
The fact that an executive or senior officer has been designated eligible
to participate in the Plan in one Plan Year does not assure that such officer
will be eligible to participate in any subsequent year. The fact that an
executive officer participates in the Plan for any Plan Year does not mean that
such officer will receive an Award in any Plan Year.
The Committee will determine an executive or senior officer's participation
in the Plan prior to the time when substantial services as an executive or
senior officer relating to the Plan Year are rendered. In the case of an
employee who becomes an executive or senior officer after the commencement of
the Plan Year, the Committee will determine whether the employee will become a
Participant for the Plan Year during which he became an executive or senior
officer.
V. DETERMINATION OF GOALS
a. Within 90 days after the beginning of each Plan Year, the Committee will
determine a dollar amount for each Participant which will represent a percentage
of the Participant's annual salary and level of responsibility (the
"Opportunity") for that Plan Year. The Opportunity cannot be increased for the
Plan Year. The Committee will also, at the time the Opportunity is determined,
construct a matrix in which one axis will consist of volume growth as compared
to budget and the other axis will consist of the change in earnings per share of
the Common Stock of The Coca-Cola Company from the immediately prior Plan Year
to the current Plan Year. These factors are given approximate equal weight. The
Committee will construct a matrix pairing volume growth, although the actual
targets for performance may vary, for each of (i) the Company as a whole, and
(ii) other operating groups of the Company as specified by the Committee in each
case, with earnings per share change. For each matrix, the intersection of axes
on each matrix will be a percentage which will be multiplied against the
Opportunity.
In the event that a Participant is assigned an Opportunity following the
time at which Opportunities are normally established for the Plan Year due to
placement in an executive or senior position after the start of the Plan Year,
the Committee will adopt a matrix with respect to such Opportunity. Volume
growth and earnings per share gain under the matrix will be determined by
comparing (1) volume and earnings per share for the period commencing on the
first day of the calendar month in which the Participant becomes an executive or
senior officer and ending on the last day of the Plan Year, to (2) volume and
earnings per share for the same calendar months during the preceding Plan Year.
After completion of the Plan Year, volume growth, operating profit and
earnings per share will be calculated for the Company and for operating groups
as required for the appropriate period, and applied to the appropriate matrices.
The resulting percentage will then be multiplied against the Opportunity. The
resulting dollar amount will be further adjusted by increasing the result by 5%
if share of carbonated soft drink sales (as defined by the Committee at the time
of its determination of Opportunities for the Plan Year) increased for the
Company or the operating group covered by the grid by at least 1% and decreased
by 5% if such share decreased by at least 1% of the prior share.
For the Chief Executive Officer, the President (if any) and other executive
officers with staff functions, the above-described calculations will be
performed only on the matrix relating to the Company's consolidated results. For
the executive or senior officers whose responsibilities fall under the specified
operating groups of the Company, the Award will be determined 30% by the above
calculation performed on the Company's consolidated results and 70% based on the
results of the matrix for the relevant operating groups. Participants who change
executive positions during the Plan Year and who retain the Opportunity
initially set for them will have their Award determined by prorating the portion
of the Award that would be derived under each applicable matrix for the portion
of the year during which such matrix applies to the Participant. If a matrix
does not exist with respect to the Participant's new executive or senior
position, the portion of his Award relating to the new position will be
determined with reference to the matrix for the Company's consolidated results.
b. Attainment of performance goals for a particular Plan Year will be
certified by the Committee and Awards will be paid for such Plan Year at such
time following the end of the Plan Year as will be determined by the
-2-
<PAGE>
Committee. The date on which the Committee certifies the attainment of
performance goals and determines the Awards is called the "Award
Certification Date."
VI. LIMITATION ON AWARDS
No Award for any Plan Year to a Participant will exceed $3,000,000.
VII. METHOD OF PAYMENT OF AWARDS
All Awards will be paid in cash within 60 days of the Award Certification
Date unless the Committee has, no later than the grant of an Award, received
and, in its sole discretion, approved a request by a Participant to defer
receipt of any Award in accordance with the following options:
a. An option to receive full cash payment at a date, specified in the
request, not less than one year from the date of the Award nor more than
one year after the Participant's date of retirement; or
b. An option to receive the Award in equal annual installments over a
period, specified in the request, of not more than 15 years, such period
commencing not less than one year from the Award Certification Date nor
more than one year after the Award Certification Date.
Any request to defer receipt of an Award will specify the particular option
chosen. Any amount deferred in accordance with the above options will bear
interest at the prime rate of SunTrust Bank, Atlanta as in effect from time to
time from the date on which Awards which have not been deferred in accordance
with this Section VII are paid to the date of payment, but interest will in no
case constitute interest which is "above-market" as set forth in Item 402 of
Regulation S-K (or any successor provision) promulgated by the Securities and
Exchange Commission.
The Company will have the right to deduct from any payment, in whole or in
part, of an Award, any taxes required to be withheld with respect to such
payment.
A Participant who retires, is granted a leave of absence or whose
employment is otherwise terminated prior to the end of such Plan Year will have
his Award pro-rated to reflect his actual term of service. The Committee, in its
sole discretion, may reduce or refuse to pay such pro-rated Award.
Awards and interest thereon, if any, which are due to a Participant and
which remain unpaid at the time of his or her death will be paid in full to the
executor or administrator of such Participant's estate within 90 days from the
date of the Participant's death.
VIII. EFFECT ON BENEFIT PLANS
Awards will be included in the computation of benefits under the Employee
Retirement Plan, Overseas Retirement Plan and other retirement plans maintained
by the Company under which the Participant may be covered and the Thrift and
Investment Plan, subject to all applicable laws and in accordance with the
provisions of those plans.
Awards will not be included in the computation of benefits under any group
life insurance plan, travel accident insurance plan, personal accident insurance
plan or under Company policies such as severance pay and payment for accrued
vacation, unless required by applicable laws.
IX. DETERMINATIONS OF THE COMMITTEE
The Committee will, 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 will make determinations and will take such
-3-
<PAGE>
other action in connection with or in relation to accomplishing the
objectives of 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 Awards granted hereunder by the Committee will be final and conclusive
for all purposes and upon all persons including, but without limitation,
the Participants, the Company, the Committee, the Board of Directors, the
officers, the affected employees of the Company and their respective
successors in interest. The Committee has full discretion to reduce the
amount of any Award or to refuse to pay any Award.
X. AMENDMENT AND TERMINATION
The Board or the Committee may terminate the Plan at any time. From time to
time the Committee may suspend the Plan, in whole or in part. From time to time,
the Board or the Committee may amend the Plan, including the adoption of
amendments deemed necessary or desirable to correct any defect or supply an
omission or reconcile any inconsistency in the Plan or in any Award granted
hereunder, so long as share-owner approval has been obtained if required by Code
Section 162(m). No amendment, termination or modification of the Plan may in any
manner affect Awards theretofore granted without the consent of the Participant
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, but in no event may such amendment or modification result in an
increase in the amount of compensation payable pursuant to such Award.
XI. APPLICABLE LAW
The Plan and all rules and determinations made and taken pursuant hereto
will be governed by the laws of the State of Georgia and construed accordingly.
XII. CHANGE IN CONTROL
Except as set forth herein, the Committee has no obligation to pay any
amounts under the Plan to a Participant who leaves the employ of the Company
prior to the end of the Plan Year for any reason. If there is a Change in
Control (as defined in this Section XII) at any time during a Plan Year, the
Committee promptly will determine the Award which would have been payable to
each Participant under the Plan for such Plan Year if he had continued to work
for the Company for such entire year and all goals established under Section V
had been met in full for such Plan Year, and such Award multiplied by a
fraction, the numerator of which will be the number of full calendar months he
is an employee of the Company during such Plan Year and the denominator of which
will be 12 or the number of full calendar months the Plan is in effect during
such Plan Year, whichever is less. The payment of a Participant's nonforfeitable
interest in his Award under this Section XII will be made in cash as soon as
practicable after his employment by the Company terminates or as soon as
practicable after the end of such Plan Year, whichever comes first.
A "Change in Control," for purposes of this Section XII, will 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 Securities Exchange
Act of 1934 (the "Exchange Act") as in effect on January 1, 1999, provided that
such a change in control will 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 as in effect on January 1, 1999) is or becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act as in effect on January 1, 1999)
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 share owners of the Company approve any
merger or consolidation as a result of which its stock will 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
-4-
<PAGE>
earning power of the Company; or (iv) the share owners of the Company
approve any merger or consolidation to which the Company is a party as a
result of which the persons who were share owners of the Company immediately
prior to the effective date of the merger or consolidation will 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 will 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.
-5-
Exhibit 12
THE COCA-COLA COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(In millions except ratios)
<TABLE>
<CAPTION>
Three Months
Ended Year Ended December 31,
March 31, ------------------------------------------------
1999 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
EARNINGS:
Income before income
taxes and changes in
accounting principles $ 1,082 $ 5,198 $ 6,055 $ 4,596 $ 4,328 $ 3,728
Fixed charges 88 320 300 324 318 236
Adjustments:
Capitalized
interest, net (4) (17) (17) (7) (9) (5)
Equity (income) loss,
net of dividends 99 31 (108) (89) (25) (4)
-------- -------- -------- -------- -------- --------
Adjusted earnings $ 1,265 $ 5,532 $ 6,230 $ 4,824 $ 4,612 $ 3,955
======== ======== ======== ======== ======== ========
FIXED CHARGES:
Gross interest
incurred $ 81 $ 294 $ 275 $ 293 $ 281 $ 204
Interest portion of
rent expense 7 26 25 31 37 32
-------- -------- -------- -------- -------- --------
Total fixed charges $ 88 $ 320 $ 300 $ 324 $ 318 $ 236
======== ======== ======== ======== ======== ========
Ratios of earnings
to fixed charges 14.4 17.3 20.8 14.9 14.5 16.8
======== ======== ======== ======== ======== ========
At March 31, 1999, our Company is contingently liable for guarantees of
indebtedness owed by third parties in the amount of $395 million. Fixed charges
for these contingent liabilities have not been included in the computations of
the above ratios as the amounts are immaterial and, in the opinion of Management,
it is not probable that our Company will be required to satisfy the guarantees.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS OF THE COCA-COLA COMPANY FOR THE QUARTER ENDED
MARCH 31, 1999 AS SET FORTH IN ITS FORM 10-Q FOR SUCH QUARTER, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,593
<SECURITIES> 161
<RECEIVABLES> 1,616
<ALLOWANCES> 15
<INVENTORY> 931
<CURRENT-ASSETS> 6,252
<PP&E> 6,228
<DEPRECIATION> 2,091
<TOTAL-ASSETS> 19,482
<CURRENT-LIABILITIES> 8,833
<BONDS> 694
0
0
<COMMON> 866
<OTHER-SE> 7,622
<TOTAL-LIABILITY-AND-EQUITY> 19,482
<SALES> 4,428
<TOTAL-REVENUES> 4,428
<CGS> 1,331
<TOTAL-COSTS> 1,331
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 77
<INCOME-PRETAX> 1,082
<INCOME-TAX> 335
<INCOME-CONTINUING> 747
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 747
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
</TABLE>
