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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, 2000
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. 1-2217
The Coca-Cola Company
(Exact name of Registrant as specified in its Charter)
Delaware 58-0628465
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Coca-Cola Plaza 30313
Atlanta, Georgia (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code (404) 676-2121
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 28, 2000
--------------------- -----------------------------
$.25 Par Value 2,475,092,541 Shares
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<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, 2000 and December 31, 1999 3
Condensed Consolidated Statements of Income
Three months ended March 31, 2000 and 1999 5
Condensed Consolidated Statements of Cash Flows
Three months ended March 31, 2000 and 1999 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 24
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 25
Item 6. Exhibits and Reports on Form 8-K 27
2
<PAGE>
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,
2000 1999
---------- -----------
<S> <C> <C>
CURRENT
Cash and cash equivalents $ 2,454 $ 1,611
Marketable securities 230 201
----------- -----------
2,684 1,812
Trade accounts receivable, less
allowances of $34 at March 31
and $26 at December 31 1,495 1,798
Inventories 1,223 1,076
Prepaid expenses and other assets 2,023 1,794
----------- -----------
TOTAL CURRENT ASSETS 7,425 6,480
----------- -----------
INVESTMENTS AND OTHER ASSETS
Equity method investments
Coca-Cola Enterprises Inc. 704 728
Coca-Cola Amatil Ltd 1,103 1,133
Coca-Cola Beverages plc 753 788
Other, principally bottling companies 3,460 3,793
Cost method investments,
principally bottling companies 340 350
Marketable securities and other assets 2,217 2,124
----------- -----------
8,577 8,916
----------- -----------
PROPERTY, PLANT AND EQUIPMENT
Land 218 215
Buildings and improvements 1,729 1,528
Machinery and equipment 4,498 4,527
Containers 164 201
------------ -----------
6,609 6,471
Less allowances for depreciation 2,347 2,204
------------ -----------
4,262 4,267
------------ -----------
GOODWILL AND OTHER INTANGIBLE ASSETS 1,959 1,960
------------ -----------
$ 22,223 $ 21,623
</TABLE> ============ ===========
3
<PAGE>
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,
2000 1999
---------- -----------
<S> <C> <C>
CURRENT
Accounts payable and accrued expenses $ 3,892 $ 3,714
Loans and notes payable 6,252 5,112
Current maturities of long-term debt 260 261
Accrued income taxes 723 769
---------- ----------
TOTAL CURRENT LIABILITIES 11,127 9,856
---------- ----------
LONG-TERM DEBT 853 854
---------- ----------
OTHER LIABILITIES 850 902
---------- ----------
DEFERRED INCOME TAXES 491 498
---------- ----------
SHARE-OWNERS' EQUITY
Common stock, $.25 par value
Authorized: 5,600,000,000 shares
Issued: 3,470,546,025 shares at March 31;
3,466,371,904 shares at December 31 868 867
Capital surplus 2,687 2,584
Reinvested earnings 20,295 20,773
Accumulated other comprehensive income and
unearned compensation on restricted stock (1,680) (1,551)
---------- ----------
22,170 22,673
Less treasury stock, at cost
(996,657,866 shares at March 31;
994,796,786 shares at December 31) 13,268 13,160
---------- ----------
8,902 9,513
---------- ----------
$ 22,223 $ 21,623
========== ==========
<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
4
<PAGE>
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,
------------------------
2000 1999
--------- ---------
<S> <C> <C>
NET OPERATING REVENUES $ 4,391 $ 4,400
Cost of goods sold 1,398 1,303
--------- ---------
GROSS PROFIT 2,993 3,097
Selling, administrative and general expenses 2,073 1,953
Other operating charges 680 -
--------- ---------
OPERATING INCOME 240 1,144
Interest income 67 64
Interest expense 99 77
Equity income (loss) - net (85) (95)
Other income (loss) - net (26) 46
--------- ---------
INCOME BEFORE INCOME TAXES 97 1,082
Income taxes 155 335
--------- ---------
NET INCOME (LOSS) $ (58) $ 747
========= =========
BASIC NET INCOME (LOSS) PER SHARE $ (0.02) $ .30
========= =========
DILUTED NET INCOME (LOSS) PER SHARE $ (0.02) $ .30
========= =========
DIVIDENDS PER SHARE $ .17 $ .16
========= =========
AVERAGE SHARES OUTSTANDING 2,472 2,466
========= =========
Dilutive effect of stock options - 21
--------- ---------
AVERAGE SHARES OUTSTANDING ASSUMING DILUTION 2,472 2,487
========= =========
<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
5
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In millions)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
2000 1999
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (58) $ 747
Depreciation and amortization 217 190
Deferred income taxes (54) (15)
Equity (income) loss, net of dividends 87 99
Foreign currency adjustments 70 52
Other operating charges 616 -
Other items (8) 75
Net change in operating assets and liabilities (701) (811)
--------- ---------
Net cash provided by operating activities 169 337
--------- ---------
INVESTING ACTIVITIES
Acquisitions and investments,
principally trademarks and bottling companies (73) (275)
Purchases of investments and other assets (137) (85)
Proceeds from disposals of investments
and other assets 24 35
Purchases of property, plant and equipment (227) (228)
Proceeds from disposals of property, plant
and equipment 3 6
Other investing activities 15 35
--------- ---------
Net cash used in investing activities (395) (512)
--------- ---------
Net cash used in operations
after reinvestment (226) (175)
--------- ---------
FINANCING ACTIVITIES
Issuances of debt 3,112 535
Payments of debt (2,014) (15)
Issuances of stock 84 48
Purchases of stock for treasury (108) (5)
Dividends - (338)
--------- ---------
Net cash provided by financing activities 1,074 225
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS (5) (105)
--------- ---------
CASH AND CASH EQUIVALENTS
Net increase (decrease) during the period 843 (55)
Balance at beginning of period 1,611 1,648
---------- ---------
Balance at end of period $ 2,454 $ 1,593
========== =========
<FN>
See Notes to Condensed Consolidated Financial Statements.
</TABLE>
6
<PAGE>
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, 1999. 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, 2000, are not necessarily indicative of the results that may be
expected for the year ending December 31, 2000.
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.
NOTE C - COMPREHENSIVE INCOME (LOSS)
For the first three months of 2000, total comprehensive loss was $205
million, primarily reflecting a net reduction for foreign currency translation
of approximately $108 million and a net decrease in the unrealized gain on
available-for-sale securities of approximately $39 million. Total comprehensive
income was $285 million for the first three months of 1999, primarily reflecting
a net reduction for foreign currency translation of approximately $476 million.
7
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE D - INCOME TAXES
Our effective tax rate was 160 percent for the first quarter of 2000
compared to 31 percent for the first quarter of 1999. The change in our
effective tax rate in 2000 was primarily the result of our current inability to
realize a tax benefit on the $405 million impairment charges, as discussed in
"Note G - Other Operating Charges". Excluding the impact of these impairment
charges, the effective tax rate on operations was 31 percent for the first
quarter of 2000 which 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.
During the first quarter of 2000, the United States and Japanese taxing
authorities entered into an Advance Pricing Agreement (APA) whereby the level of
royalties paid by the Coca-Cola (Japan) Company, Ltd. (our Subsidiary) to our
Company has been established for the years 1993 through 2001. Pursuant to the
terms of the APA, our Subsidiary has filed amended returns for the applicable
periods reflecting the negotiated royalty rate. These amended returns resulted
in the payment during the first quarter of additional Japanese taxes, the effect
of which on both our financial performance and our effective tax rate was not
material, due primarily to offsetting tax credits on our U.S. income tax return.
The majority of the offsetting tax credits are expected to be realized within
the next twelve months.
8
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE E - ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133 (SFAS No. 133), "Accounting
for Derivative Instruments and Hedging Activities." The statement requires all
derivatives to be recorded on the balance sheet at fair value and establishes
new accounting rules for hedging instruments. In June 1999, the FASB deferred
the effective date of SFAS No. 133 for one year, making it now applicable for
fiscal years beginning after June 15, 2000. We are assessing the impact SFAS No.
133 will have on our Consolidated Financial Statements.
NOTE F - OPERATING SEGMENTS
Effective January 1, 2000, two of our Company's operating segments were
geographically reconfigured and renamed. The Middle East and North Africa
Division was added to the Africa Group, which changed its name to the Africa and
Middle East Group. At the same time the Middle and Far East Group, less the
relocated Middle East and North Africa Division, changed its name to the Asia
Pacific Group. Prior period amounts have been reclassified to conform to the
current period presentation.
Our Company's operating structure includes the following operating
segments: the North America Group (including The Minute Maid Company); the
Africa and Middle East Group; the Greater Europe Group; the Latin America Group;
the Asia Pacific Group; and Corporate. The North America Group includes the
United States and Canada.
9
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE F - OPERATING SEGMENTS (Continued)
Information about our Company's operations as of and for the three months
ended March 31, 2000 and 1999, by operating segment, is as follows (in
millions):
<TABLE>
<CAPTION>
Africa
and
North Middle Greater Latin Asia
America East Europe America Pacific Corporate Consolidated
--------- --------- --------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
2000
Net operating
revenues $ 1,797 $ 139 $ 978 $ 505 $ 964 $ 8 $ 4,391
Operating income {1,2} 274 3 348 224 (339) (270) 240
Identifiable
operating
assets 4,308 682 2,029 2,042 2,394 4,408 15,863
Investments 136 337 1,781 1,863 1,477 766 6,360
1999
Net operating
revenues $ 1,677 $ 190 $ 1,089 $ 507 $ 903 $ 34 $ 4,400
Operating income 357 52 384 250 261 (160) 1,144
Identifiable
operating
assets 3,783 578 2,166 1,624 2,411 2,433 12,995
Investments 135 325 1,950 1,667 1,580 830 6,487
Intercompany transfers between operating segments are not material.
<FN>
1 Operating income was reduced by $3 million for North America, $397 million
for Asia Pacific and $5 million for Corporate as a result of other
operating charges recorded for asset impairments.
2 Operating income was reduced by $43 million for North America, $2 million
for Africa and Middle East, $5 million for Greater Europe, $18 million for
Latin America, $90 million for Asia Pacific, and $117 million for Corporate
as a result of other operating charges associated with the Company's
organizational realignment.
</TABLE>
10
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE G - OTHER OPERATING CHARGES
In the first quarter of 2000, we recorded charges of approximately $680
million. Of this $680 million, approximately $405 million related to the
impairment of certain bottling, manufacturing and intangible assets, primarily
within our Indian bottling operations. In January 2000, we announced our plans
to perform a comprehensive review of our India bottling franchise investments
during the first quarter of 2000 with the intention of streamlining the business
and evaluating the carrying value of the long-lived assets. As a result of this
review, we determined that the long-lived assets within our Indian bottling
operations were impaired. Therefore, an impairment charge was recorded to reduce
the carrying value of the identified assets to fair value. Fair value was
derived using cash flow analysis. The charge was primarily the result of our
revised outlook for the Indian beverage market including the future expected tax
environment. The remaining carrying value of long-lived assets within our Indian
bottling operations, as of March 31, 2000, was approximately $300 million.
The remainder of the $680 million charge, approximately $275 million,
related to costs associated with the Company's organizational realignment (the
Realignment). In January 2000, the Company announced that it was undertaking the
Realignment which will reduce our workforce around the world and transfer
responsibilities from our corporate headquarters to local revenue-generating
operating units. The intent of the Realignment is to effectively align our
corporate resources, support systems, and business culture to fully leverage the
local capabilities of our system.
11
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE G - OTHER OPERATING CHARGES (Continued)
Employees have been separated from almost all functional areas of the
Company's operations including certain activities which have been outsourced to
third parties. The total number of employees separated as of March 31, 2000, was
approximately 2,225. Employees separating from the Company as a result of the
Realignment have been offered severance or early retirement packages, as
appropriate, which include both financial and non-financial components. As
further discussed in Management's Discussion and Analysis of Financial Condition
and Results of Operations, the total workforce reduction under the Realignment
includes employees separated from the Company as well as the elimination of open
positions and contract labor. During the first quarter of 2000, the Company
incurred total Realignment expenses pretax of $275 million. This amount includes
costs associated with involuntary termination, voluntary retirement and other
direct costs associated with implementing the Realignment. Other direct costs
include repatriating and relocating employees to local markets, and costs
associated with the development, communication and administration of the
Realignment.
The accrued Realignment expenses and amounts charged against the accrual as
of March 31, 2000, were as follows (in millions):
<TABLE>
<CAPTION>
Accrued
Charge Payments Non-Cash Balance
---------- --------- --------- ---------
Description
- -----------
<S> <C> <C> <C> <C>
Employees Involuntarily Separated
Severance Pay and Benefits $ 68 $ (18) $ - $ 50
Outside services - Legal, Outplacement,
Consulting 12 (3) - 9
Other - primarily asset write-downs 15 - (15) -
Employees Voluntarily Separated
Special Retirement Pay and Benefits 168 (39) - 129
Outside Services - Legal, Outplacement,
Consulting 4 (1) - 3
Other Direct Costs 8 (3) - 5
---------- --------- --------- ---------
$ 275 $ (64) $ (15) $ 196
---------- --------- --------- ---------
12
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE G - OTHER OPERATING CHARGES (Continued)
In December of 1999, the Company recorded a $196 million charge related to
the impairment of the distribution and bottling assets of our vending operations
in Japan and our bottling operations in the Baltics. This charge reduced the
carrying value of these assets to their fair value less cost to sell. Management
has committed to a plan to sell the Company's ownership interest in these
operations during the year 2000. No circumstances have arisen during the first
three months of 2000 to alter management's original expectation for the disposal
of these assets. The remaining carrying value of long-lived assets within these
operations and the income from operations on an after-tax basis as of and for
the three month period ending March 31, 2000, were approximately $145 million
and $6 million, respectively.
13
<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 2000, our worldwide unit case volume increased
3 1/2 percent on a reported basis and 2 percent on a comparable basis in
comparison to the first quarter of 1999. (Reference to "comparable" changes in
volume are computed based on the exclusion of the Schweppes brands acquired
during the third quarter of 1999.) The increase in unit case volume reflects the
strong performance in international markets, such as Mexico, Brazil, Spain and
Japan. Reported gallon sales of concentrates and syrups decreased by 4 percent.
The decrease in gallon shipments was attributable to the planned reduction of
concentrate inventory by selected bottlers within the Coca-Cola system. In
January 2000, we announced the intention of the Coca-Cola system to reduce
concentrate inventory levels at selected bottlers. This was based on a review
performed in conjunction with bottlers around the world in order to determine
the optimum level of bottler concentrate inventories. Management of the
Coca-Cola system determined that opportunities existed to reduce the level of
concentrate inventory carried by bottlers in selected regions of the world. As
such, bottlers in these regions reduced concentrate inventory levels during the
first quarter of 2000. Further reductions of bottler concentrate inventory
levels are anticipated in the second quarter of 2000 in line with the Company's
previously stated expectations.
NET OPERATING REVENUES AND GROSS MARGIN
Net operating revenues declined slightly from the first quarter of 1999.
The decrease was due primarily to the planned inventory reduction by selected
bottlers, partially offset by improved business conditions in our key markets
and price increases in selected countries.
Our gross profit margin decreased to 68.2 percent in the first quarter of
2000 from 70.4 percent in the first quarter of 1999. The decrease in our gross
profit margin for the first quarter of 2000 was due primarily to gallon
shipments for the Asia Pacific Group declining by approximately 16 percent as a
result of the planned reduction of concentrate inventory levels, primarily
by bottlers in Japan.
14
<PAGE>
RESULTS OF OPERATIONS (Continued)
SELLING, ADMINISTRATIVE AND GENERAL EXPENSES
Selling, administrative and general expenses were approximately $2,073
million in the first quarter of 2000, compared to $1,953 million in the first
quarter of 1999. This increase was due primarily to higher marketing
expenditures consistent with the Company's unit case volume growth and
structural change, primarily related to the consolidation in 2000 of F&N
Coca-Cola, our recently acquired bottling operation in Southeast Asia.
OTHER OPERATING CHARGES
In the first quarter of 2000, we recorded charges of approximately $680
million. Of this $680 million, approximately $405 million, or $0.16 per share
after tax, related to the impairment of certain bottling, manufacturing and
intangible assets, primarily within our Indian bottling operations. In January
2000, we announced our plans to perform a comprehensive review of our India
bottling franchise investments during the first quarter of 2000 with the
intention of streamlining the business and evaluating the carrying value of the
long-lived assets. As a result of this review, we determined that the long-lived
assets within our Indian bottling operations were impaired. Therefore, an
impairment charge was recorded to reduce the carrying value of the identified
assets to fair value. Fair value was derived using cash flow analysis. The
charge was primarily the result of our revised outlook for the Indian beverage
market including the future expected tax environment. The remaining carrying
value of long-lived assets within our Indian bottling operations, as of March
31, 2000, was approximately $300 million.
The remainder of the $680 million charge, approximately $275 million, or
$0.08 per share after tax, related to costs associated with the Realignment. In
January 2000, the Company announced that it was undertaking the Realignment
which will reduce our workforce around the world and transfer responsibilities
from our corporate headquarters to local revenue-generating operating units. The
intent of the Realignment is to effectively align our corporate resources,
support systems, and business culture to fully leverage the local capabilities
of our system.
15
<PAGE>
RESULTS OF OPERATIONS (Continued)
OTHER OPERATING CHARGES (Continued)
Employees have been separated from almost all functional areas of the
Company's operations including certain activities which have been outsourced to
third parties. The total number of employees separated as of March 31, 2000, was
approximately 2,225. Employees separating from the Company as a result of the
Realignment have been offered severance or early retirement packages, as
appropriate, which include both financial and non-financial components. The
total workforce reduction under the Realignment includes employees separated
from the Company as well as the elimination of open positions and contract
labor. During the first quarter of 2000, the Company incurred total Realignment
expenses pretax of $275 million. This amount includes costs associated with
involuntary termination, voluntary retirement and other direct costs associated
with implementing the Realignment. Other direct costs include repatriating and
relocating employees to local markets, and costs associated with the
development, communication and administration of the Realignment.
The Company has revised its initial estimate and now believes approximately
5,200 positions worldwide, including employees of the Company, open positions
and contract labor, will be eliminated during calendar year 2000. We now
estimate that as a result of the Realignment, our Company will incur total costs
pretax of approximately $725 million in calendar year 2000, inclusive of the
$275 million charge incurred during the first quarter.
16
<PAGE>
RESULTS OF OPERATIONS (Continued)
OPERATING INCOME AND OPERATING MARGIN
Operating income was $240 million in the first quarter of 2000, compared to
$1,144 million in the first quarter of 1999. Our consolidated operating margin
for the first quarter of 2000 was 5.5 percent, compared to 26.0 percent for the
comparable period in 1999. The first quarter 2000 results reflect the recording
of approximately $680 million in charges as discussed under the heading, "Other
Operating Charges", as well as the effect of the previously discussed planned
reduction of concentrate inventory by selected bottlers within the Coca-Cola
system.
INTEREST INCOME AND INTEREST EXPENSE
Interest income increased approximately 5 percent to $67 million in the
first quarter of 2000 relative to the comparable period in 1999, due primarily
to higher average cash balances in the first quarter of 2000. Interest expense
increased $22 million in the first quarter of 2000 relative to the comparable
period in 1999, due to both an increase in average commercial paper debt
balances and higher interest rates.
EQUITY INCOME (LOSS) - NET
Our Company's share of losses from equity method investments for the first
quarter of 2000 totaled $85 million, compared to a loss of $95 million in the
first quarter of 1999. The first quarter 2000 and first quarter 1999 losses were
due primarily to the negative impact of difficult economic conditions in certain
worldwide markets as well as the seasonal nature of bottling operations.
OTHER INCOME (LOSS) - NET
Other income (loss) - net decreased to $26 million loss for the first
quarter of 2000 compared to $46 million income for the first quarter of 1999.
The decrease was due primarily to other income in the first quarter of 1999
including a foreign currency gain resulting from effective treasury management
practices for Brazil during a period of significant currency volatility.
17
<PAGE>
RESULTS OF OPERATIONS (Continued)
INCOME TAXES
Our effective tax rate was 160 percent for the first quarter of 2000
compared to 31 percent for the first quarter of 1999. The change in our
effective tax rate in 2000 was primarily the result of our current inability to
realize a tax benefit on the $405 million impairment charges, as previously
discussed under the heading "Other Operating Charges". Excluding the impact
of these impairment charges, the effective tax rate on operations was 31 percent
for the first quarter of 2000 which reflects tax benefits derived from
ignificant operations outside the United States, which are taxed at rates
lower than the U.S. statutory rate of 35 percent.
During the first quarter of 2000, the United States and Japanese taxing
authorities entered into an Advance Pricing Agreement (APA) whereby the level of
royalties paid by the Coca-Cola (Japan) Company, Ltd. (our Subsidiary) to our
Company has been established for the years 1993 through 2001. Pursuant to the
terms of the APA, our Subsidiary has filed amended returns for the applicable
periods reflecting the negotiated royalty rate. These amended returns resulted
in the payment during the first quarter of additional Japanese taxes, the effect
of which on both our financial performance and our effective tax rate was not
material, due primarily to offsetting tax credits on our U.S. income tax return.
The majority of the offsetting tax credits are expected to be realized within
the next twelve months.
18
<PAGE>
FINANCIAL CONDITION
NET CASH FLOW USED IN OPERATIONS AFTER REINVESTMENT
In the first three months of 2000, net cash used in operations after
reinvestment totaled $226 million compared to $175 million for the first three
months of 1999.
Net cash provided by operating activities in the first three months of 2000
amounted to $169 million, a $168 million decrease compared to the first three
months of 1999. The decrease was due primarily to the previously mentioned
planned inventory reduction by selected bottlers, as well as cash payments made
to separated employees under the Realignment as previously discussed under the
heading "Other Operating Charges".
Net cash used in investing activities totaled $395 million for the first
three months of 2000 compared to $512 million in net cash used in investing
activities for the first three months of 1999. The decrease was primarily the
result of a reduction in trademark and bottling company acquisition activity.
FINANCING ACTIVITIES
Our financing activities include net borrowings, dividend payments and
share issuances and repurchases. Net cash provided by financing activities
totaled $1,074 million for the first three months of 2000 compared to $225
million for the first three months of 1999. This increase was due primarily to
additional net borrowings of $1,098 million and timing of the first quarter 2000
dividend payment. The increase in net borrowings was due primarily to the impact
on cash from the planned inventory reduction by selected bottlers, our costs
associated with the Realignment, and the satisfaction of tax obligations
pursuant to the terms of the APA, all of which have been previously discussed
under the headings "Beverage Volume", "Other Operating Charges", and "Income
Taxes" respectively.
Cash used to purchase common stock for treasury was $108 million for the
first three months of 2000, compared to $5 million for the first three months of
1999. The increase in the first quarter of 2000 compared to the first quarter of
1999 was due primarily to the repurchase of shares from employees pursuant to
the provisions of the Company's Stock Option and Restricted Stock Award Plans.
During the first quarter of 2000, our Company did not repurchase any of our
Company's common stock under the stock repurchase plan authorized by our Board
of Directors in October 1996 due to our utilization of cash as explained above.
The Company will reevaluate its cash needs in the second half of 2000.
19
<PAGE>
FINANCIAL CONDITION (Continued)
FINANCIAL POSITION
The increase in loans and notes payable was due primarily to additional
funding required as a result of the planned inventory reduction by selected
bottlers, and in order to meet our cash commitments in connection with both the
Realignment and the terms of the APA, all of which have been previously
discussed under the headings "Beverage Volume", "Other Operating Charges", and
"Income Taxes" respectively.
The decrease in our investment in other equity affiliates was due primarily
to the consolidation of F&N Coca-Cola Pte Limited effective January 1, 2000,
previously recorded as an equity investment. In 1999, our Company moved from 25
percent to 100 percent ownership of F&N Coca-Cola Pte Limited.
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 the 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.
20
<PAGE>
FINANCIAL CONDITION (Continued)
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 seek to adopt appropriate strategies
that are responsive to changing economic and political environments and to
fluctuations in foreign currencies. In the first quarter of 2000, the U.S.
dollar was approximately 5 percent stronger versus a weighted average of all of
our functional currencies. This does not include the effects of our hedging
activities. Our foreign currency management program mitigates over time a
portion of the impact of exchange on net income and earnings per share,
and did not have a significant impact in the first quarter of 2000.
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. Generally, the words "believe," "expect,"
"intend," "estimate," "anticipate," "will" and similar expressions identify
forward-looking statements. 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 and statements expressing general optimism about future operating
results - are forward-looking statements within the meaning of the Act. The
forward-looking statements are and will be based on management's then current
views and assumptions regarding future events and operating performance, and
speak only as of their dates. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
21
<PAGE>
FORWARD-LOOKING STATEMENTS (Continued)
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.
- 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.
22
<PAGE>
FORWARD-LOOKING STATEMENTS (Continued)
- 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.
- Our ability to resolve issues relating to introduction of the
European Union's common currency (the Euro) in a timely fashion.
The foregoing list of important factors is not exclusive.
23
<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, 1999.
24
<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 19, 2000,
in Wilmington, Delaware, at which the following matters were submitted to a vote
of the share owners:
(a) Votes regarding the election of five Directors for a term expiring in
2003 and one Director for a term expiring in 2002 were as follows:
Term expiring in 2003
---------------------
FOR WITHHELD
------------- ----------
Ronald W. Allen 2,044,336,646 47,211,028
Donald F. McHenry 2,063,818,129 27,729,545
Sam Nunn 2,042,137,749 49,409,925
Paul F. Oreffice 2,063,506,803 28,040,871
James B. Williams 2,064,719,043 26,828,631
Term expiring in 2002
---------------------
FOR WITHHELD
------------- ----------
Douglas N. Daft 2,067,293,857 24,253,817
Additional Directors, whose terms of office as Directors continued
after the meeting, are as follows:
Term expiring in 2001 Term expiring in 2002
--------------------- ---------------------
Herbert A. Allen Cathleen P. Black
James D. Robinson III Warren E. Buffett
Peter V. Ueberroth Susan B. King
(b) Votes on a share-owner proposal regarding compensation instruments
were as follows:
ABSTENTIONS
AND
BROKER
FOR AGAINST NON-VOTES
---------- ------------- -----------
79,796,879 1,598,186,476 413,564,319
25
<PAGE>
Submission of Matters to a Vote of Security Holders (Continued)
(c) Votes on a share-owner proposal regarding genetic engineering were as
follows:
ABSTENTIONS
AND
BROKER
FOR AGAINST NON-VOTES
---------- ------------- -----------
58,470,483 1,582,854,562 450,222,629
(d) Votes on a share-owner proposal regarding refillable containers were
as follows:
ABSTENTIONS
AND
BROKER
FOR AGAINST NON-VOTES
---------- ------------- -----------
63,654,208 1,582,353,366 445,540,100
(e) Votes regarding ratification of the appointment of Ernst & Young LLP
as independent auditors of the Company to serve for the 2000 fiscal
year were as follows:
ABSTENTIONS
AND
BROKER
FOR AGAINST NON-VOTES
------------- --------- ----------
2,078,358,754 5,478,060 7,710,860
26
<PAGE>
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10 - 1999 Stock Option Plan of the Company, as amended
through April 18, 2000.
12 - Computation of Ratios of Earnings to Fixed Charges.
27 - Financial Data Schedule for the three months ended
March 31, 2000, submitted to the Securities and
Exchange Commission in electronic format.
(b) Reports on Form 8-K:
During the first quarter of 2000, the Company filed a report on
Form 8-K dated January 26, 2000.
Item 5. Other Events - On January 26, 2000, the Company issued
press releases announcing (i) financial results for the
fourth quarter and for the full fiscal year 1999, and
(ii) a major organizational realignment and reduction
in the Company's workforce.
Also during the first quarter of 2000, the Company filed a
report on Form 8-K dated February 17, 2000.
Item 5. Other Events - On February 17, 2000, the Company's
Board of Directors elected Douglas N. Daft as the new
Chairman of the Board of Directors and Chief Executive
Officer of the Company, succeeding M. Douglas Ivester
who retired effective the same date. The Board also
elected Jack L. Stahl as the Company's President and
Chief Operating Officer.
27
<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 11, 2000 By: /s/ Connie D. McDaniel
--------------------------------
Connie D. McDaniel
Vice President and Controller
(On behalf of the Registrant and
as Chief Accounting Officer)
28
<PAGE>
Exhibit Index
Exhibit Number and Description
10 - 1999 Stock Option Plan of the Company, as amended
through April 18, 2000.
12 - Computation of Ratios of Earnings to Fixed Charges.
27 - Financial Data Schedule for the three months ended
March 31, 2000, submitted to the Securities and
Exchange Commission in electronic format.
<PAGE>
</TABLE>
EXHIBIT 10
THE COCA-COLA COMPANY
1999 STOCK OPTION PLAN
AMENDED THROUGH APRIL 2000
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. Also, the Plan is intended to help the Company and its
Related Companies, in certain instances, to attract and compensate
consultants to perform key services.
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.
"KO Common Stock" means The Coca-Cola Company Common Stock, par value
$.25 per share.
<PAGE>
"Majority-Owned Related Company" means a Related Company in which the
Company owns, directly or indirectly, 50% or more of the voting stock or
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(a) and NSOs to those persons meeting the
eligibility requirements in Sections 6(b) and 6(c).
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) and consultants 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 and consultants to 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. ELIGIBILITY
Options may be granted to
(a) employees of the Company and its Majority-Owned Related Companies,
(b) 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, and
(c) consultants providing key services to the Company or its Related
Companies (provided that consultants are natural persons and are not
former employees of the Company or any Related Company, and that
consultants shall be eligible to receive only NSOs and shall not be
eligible to receive ISOs).
No person 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.
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.
-3-
<PAGE>
(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 grant shall provide
that an 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 such
employee. The grant of an Option to any consultant shall not affect in any
way the right of the Company and any Related Company to terminate the
services of such consultant.
(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.
SECTION 9. EFFECT OF TERMINATION OF EMPLOYMENT, OTHER CHANGES OF EMPLOYMENT
OR EMPLOYER STATUS, DEATH, RETIREMENT OR A CHANGE IN CONTROL
(a) For Employees. For optionees who are employees of the Company or its
Related Companies on the date of grant, the following provisions shall apply:
- -------------------------------------------------------------------------------
EVENT IMPACT ON VESTING IMPACT ON EXERCISE PERIOD
- --------------------------------------------------------------------------------
Employment terminates All options become Option expiration date
upon Disability immediately vested provided in grant
continues to apply
- --------------------------------------------------------------------------------
Employment terminates Option held at least Option expiration date
upon Retirement 12 full calendar months provided in grant
become immediately continues to apply
vested; options held
less than 12 full
calendar months are
forfeited
- --------------------------------------------------------------------------------
Employment terminates All options become Right of executor, ad-
upon death immediately vested ministrator 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 All options become Option expiration date
upon Change in Control immediately vested provided in grant
continues to apply
- --------------------------------------------------------------------------------
-4-
<PAGE>
- -----------------------------------------------------------------------------
EVENT IMPACT ON VESTING IMPACT ON EXERCISE PERIOD
- -----------------------------------------------------------------------------
Termination of employ- Unvested options are Expires upon earlier of
ment for other reasons forfeited 6 months from termination
(Optionees should be termination date or
aware that receipt of option expiration date
severance does not provided in grant
extend their termina-
tion date)
- --------------------------------------------------------------------------------
US military leave Vesting continues Option expiration date
during leave provided in grant
continues to apply
- --------------------------------------------------------------------------------
Eleeomysynary service Committee's discretion Committee's discretion
- --------------------------------------------------------------------------------
US FMLA leave of Vesting continues during Option expiration date
absence leave provided in grant
continues to apply
- --------------------------------------------------------------------------------
Company investment in Unvested options are Expires upon earlier of 6
optionee's employer forfeited months from termination
falls under 20% (this date or option expiration
constitutes a termina- date provided in grant
tion of employment
under the Plan, effec-
tive the date the
investment falls below
20%)
- --------------------------------------------------------------------------------
OR
- --------------------------------------------------------------------------------
employment is trans-
ferred to an entity in
which the Company's
ownership interest is
less than 20%
- --------------------------------------------------------------------------------
Employment transferred Vesting continues after Option expiration date
to Related Company transfer provided in grant
continues to apply
- --------------------------------------------------------------------------------
Death after employment Not applicable Right of executor,
has terminated but administrator of estate
before option has (or other transferee
expired (note that permitted by Section 8)
termination of employ- terminates on earlier of
ment may have resulted (1) 12 months from the
in a change to the date of death, or
original option (2) the Option expiration
expiration date that applied at the date
provided in the grant) of death (note that
termination of employment
may have resulted in a
change to the original
option expiration date
provided in the grant)
- -------------------------------------------------------------------------------
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.
(b) For Consultants. For optionees who are consultants, the provisions
relating to changes of work assignment, death, disability, Change in Control,
or any other provision of an option shall be determined by the Committee at
the date of the grant.
(c) Committee Retains Discretion To Establish Different Terms Than Those
Provided in Sections 9(a) or 9(b). 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.
<PAGE>
-5-
<PAGE>
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 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 optionees 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-
<PAGE>
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
March 31, Year Ended December 31,
--------------------------------------------------------------
2000 1999 1998 1997 1996 1995
---------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS:
Income before income
taxes and changes in
accounting principles $ 97 $ 3,819 $ 5,198 $ 6,055 $ 4,596 $ 4,328
Fixed charges 111 386 320 300 324 318
Adjustments:
Capitalized
interest, net (4) (18) (17) (17) (7) (9)
Equity (income) loss,
net of dividends 87 292 31 (108) (89) (25)
---------- --------- --------- --------- --------- ---------
Adjusted earnings $ 291 $ 4,479 $ 5,532 $ 6,230 $ 4,824 $ 4,612
========== ========= ========= ========= ========= =========
FIXED CHARGES:
Gross interest
incurred $ 103 $ 355 $ 294 $ 275 $ 293 $ 281
Interest portion of
rent expense 8 31 26 25 31 37
---------- --------- --------- --------- --------- ---------
Total fixed charges $ 111 $ 386 $ 320 $ 300 $ 324 $ 318
========== ========= ========= ========== ========= =========
Ratios of earnings
to fixed charges 2.6 11.6 17.3 20.8 14.9 14.5
========== ========= ========= ========== ========= =========
</TABLE>
At March 31, 2000, our Company is contingently liable for guarantees of
indebtedness owed by third parties in the amount of $378 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.
<PAGE>
<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, 2000 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-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,454
<SECURITIES> 230
<RECEIVABLES> 1,529
<ALLOWANCES> 34
<INVENTORY> 1,223
<CURRENT-ASSETS> 7,425
<PP&E> 6,609
<DEPRECIATION> 2,347
<TOTAL-ASSETS> 22,223
<CURRENT-LIABILITIES> 11,127
<BONDS> 853
0
0
<COMMON> 868
<OTHER-SE> 8,034
<TOTAL-LIABILITY-AND-EQUITY> 22,223
<SALES> 4,391
<TOTAL-REVENUES> 4,391
<CGS> 1,398
<TOTAL-COSTS> 1,398
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 99
<INCOME-PRETAX> 97
<INCOME-TAX> 155
<INCOME-CONTINUING> (58)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (58)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
