Coca Cola 2006 Annual Report Download - page 54

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Operating Income and Operating Margin
Information about our operating income contribution by operating segment on a percentage basis is as
follows:
Year Ended December 31, 2006 2005 2004
Africa 6.7% 6.5% 5.9%
East, South Asia and Pacific Rim 5.7 4.6 7.7
European Union 35.7 36.5 37.3
Latin America 23.0 19.3 18.5
North America 26.7 25.5 28.2
North Asia, Eurasia and Middle East 24.7 29.0 29.3
Bottling Investments —(1.0) (8.0)
Corporate (22.5) (20.4) (18.9)
100.0% 100.0% 100.0%
Information about our operating margin on a consolidated basis and by operating segment is as follows:
Year Ended December 31, 2006 2005 2004
Consolidated 26.2% 26.3% 26.2%
Africa 38.4% 35.8% 35.0%
East, South Asia and Pacific Rim 45.0 39.5 62.2
European Union 64.3 54.1 54.3
Latin America 57.9 57.0 59.2
North America 24.0 23.3 25.0
North Asia, Eurasia and Middle East 39.1 42.4 43.0
Bottling Investments —(1.0) (11.4)
Corporate ***
* Calculation is not meaningful.
As demonstrated by the tables above, the percentage contribution to operating income and operating
margin by each operating segment fluctuated from year to year. Operating income and operating margin by
operating segment were influenced by a variety of factors and events including the following:
• In 2006, foreign currency exchange rates unfavorably impacted operating income by approximately
1 percent, primarily related to a weaker Japanese yen, which impacted North Asia, Eurasia and Middle
East. The unfavorable impact from the weaker Japanese yen was partially offset by favorable foreign
currency exchange rate changes primarily related to the euro, which impacted the European Union and
Bottling Investments, and the Brazilian real, which impacted Latin America and Bottling Investments.
• In 2006, price increases across the majority of operating segments favorably impacted both operating
income and operating margins.
• In 2006, increased spending on marketing and innovation activities impacted the majority of the
operating segments’ operating income and operating margins. Refer to the heading ‘‘Selling, General and
Administrative Expenses.’’
• In 2006, operating income was reduced by approximately $3 million for Africa, $44 million for East,
South Asia and Pacific Rim, $36 million for the European Union, $17 million for North Asia, Eurasia and
Middle East, $88 million for Bottling Investments and $1 million for Corporate primarily due to contract
termination costs related to production capacity efficiencies, asset impairments and other restructuring
costs. Refer to Note 20 of Notes to Consolidated Financial Statements.
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