Coca Cola 2004 Annual Report Download - page 97

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
NOTE 13: RESTRICTED STOCK, STOCK OPTIONS AND OTHER STOCK PLANS (Continued)
The 2002 Stock Option Plan (the ‘‘2002 Option Plan’’) was approved by shareowners in April 2002. Under
the 2002 Option Plan, a maximum of 120 million shares of our common stock was approved to be issued or
transferred to certain officers and employees pursuant to stock options and stock appreciation rights granted
under the 2002 Option Plan. The stock appreciation rights permit the holder, upon surrendering all or part of
the related stock option, to receive common stock in an amount up to 100 percent of the difference between the
market price and the option price. No stock appreciation rights have been issued under the 2002 Stock Option
Plan as of December 31, 2004. Options to purchase common stock under the 2002 Option Plan have been
granted to Company employees at fair market value at the date of grant.
Stock options granted in December 2003 and thereafter generally become exercisable over a four-year
vesting period and expire 10 years from the date of grant. Stock option grants from 1999 through July 2003
generally become exercisable over a four-year vesting period and expire 15 years from the date of grant. Prior to
1999, stock options generally became exercisable over a three-year vesting period and expired 10 years from the
date of grant.
The following table sets forth information about the fair value of each option grant on the date of grant using
the Black-Scholes-Merton option-pricing model and the weighted-average assumptions used for such grants:
2004 2003 2002
Weighted-average fair value of options granted $ 8.84 $ 13.49 $ 13.10
Dividend yields 2.5% 1.9% 1.7%
Expected volatility 23.0% 28.1% 30.2%
Risk-free interest rates 3.8% 3.5% 3.4%
Expected lives 6 years 6 years 6 years
To ensure the best market-based assumptions were used to determine the estimated fair value of stock
options granted in 2004, 2003 and 2002, we obtained two independent market quotes. Our Black-Scholes-
Merton option-pricing model value was not materially different from the independent quotes.
A summary of stock option activity under all plans is as follows (shares in millions):
2004 2003 2002
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
Outstanding on January 1 167 $ 50.56 159 $ 50.24 141 $ 51.16
Granted131 41.63 24 49.67 29 44.69
Exercised (5) 35.54 (4) 26.96 (3) 31.09
Forfeited/expired2(10) 51.64 (12) 51.45 (8) 54.21
Outstanding on December 31 183 $ 49.41 167 $ 50.56 159 $ 50.24
Exercisable on December 31 116 $ 52.02 102 $ 51.97 80 $ 51.72
Shares available on December 31 for
options that may be granted 85 108 122
1No grants were made from the 1991 Option Plan during 2004, 2003 or 2002.
2Shares forfeited/expired relate to the 1991, 1999 and 2002 Option Plans.
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