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20FEB200902055832
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
፤ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2011
OR
អTRANSITION 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
(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
Atlanta, Georgia 30313
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (404) 676-2121
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
COMMON STOCK, $0.25 PAR VALUE NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ፤No អ
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Exchange Act. Yes អNo ፤
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the
past 90 days. Yes ፤No អ
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).
Yes ፤No អ
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is
not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. អ
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer’’ and ‘‘smaller reporting
company’’ in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ፤Accelerated filer អNon-accelerated filer អSmaller reporting company អ
(Do not check if a smaller reporting company)
Indicate by check mark if the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes អNo ፤
The aggregate market value of the common equity held by non-affiliates of the Registrant (assuming for these purposes, but
without conceding, that all executive officers and Directors are ‘‘affiliates’’ of the Registrant) as of July 1, 2011, the last
business day of the Registrant’s most recently completed second fiscal quarter, was $148,385,503,727 (based on the closing sale
price of the Registrant’s Common Stock on that date as reported on the New York Stock Exchange).
The number of shares outstanding of the Registrant’s Common Stock as of February 20, 2012, was 2,263,204,221.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company’s Proxy Statement for the Annual Meeting of Shareowners to be held on April 25, 2012, are
incorporated by reference in Part III.

Table of contents

  • Page 1
    ... closing sale price of the Registrant's Common Stock on that date as reported on the New York Stock Exchange). The number of shares outstanding of the Registrant's Common Stock as of February 20, 2012, was 2,263,204,221. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Company's Proxy Statement...

  • Page 2
    ... of Financial Condition and Results of Operations . Quantitative and Qualitative Disclosures About Market Risk ...Financial Statements and Supplementary Data ...Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . Controls and Procedures ...Other Information ...25...

  • Page 3
    ... as waters, enhanced waters, juices and juice drinks, ready-to-drink teas and coffees, and energy and sports drinks. We own and market four of the world's top five nonalcoholic sparkling beverage brands: Coca-Cola, Diet Coke, Fanta and Sprite. Finished beverage products bearing our trademarks, sold...

  • Page 4
    ... referred to as ''operating groups'' or ''groups'': • Eurasia and Africa • Europe • Latin America • North America • Pacific • Bottling Investments • Corporate Our North America operating segment includes the CCE North American business we acquired on October 2, 2010. Except to the...

  • Page 5
    ...'s sales and marketing programs; assist in the development of the bottler's business and information systems; and establish an appropriate capital structure for the bottler. The Company-owned or controlled bottling operations, other than those managed by CCR, are included in our Bottling Investments...

  • Page 6
    ...equity method investee's earnings or losses. The following table sets forth our most significant brands in each of our major beverage categories: SPARKLING BEVERAGES* Core Sparkling Energy Drinks†STILL BEVERAGES* Coffees and Teas Juices and Juice Drinks Waters Coca-Cola Sprite Fanta5 Diet Coke...

  • Page 7
    ... of beverage products bearing Company trademarks. Also included in unit case volume are certain products licensed to, or distributed by, our Company, and brands owned by Coca-Cola system bottlers for which our Company provides marketing support and from the sale of which we derive economic benefit...

  • Page 8
    ... still beverages. Trademark Coca-Cola Beverages accounted for approximately 49 percent of non-U.S. unit case volume for 2011. In our concentrate operations, we typically sell concentrates and syrups to our bottling partners, who use the concentrate to manufacture finished products which they sell to...

  • Page 9
    ... in increases in unit case volume, net revenues and profits at the bottler level, which in turn generate increased concentrate sales for our Company's concentrate and syrup business. When this occurs, both we and our bottling partners benefit from long-term growth in volume, improved cash flows and...

  • Page 10
    ... and local companies and, in some markets, against retailers that have developed their own store or private label beverage brands. Competitive factors impacting our business include, but are not limited to, pricing, advertising, sales promotion programs, product innovation, increased efficiency in...

  • Page 11
    ...Coca-Cola Bottlers' Sales & Services Company LLC (''CCBSS''). CCBSS is a limited liability company that is owned by authorized Coca-Cola bottlers doing business in the United States. Among other things, CCBSS provides procurement services to our Company for the purchase of various goods and services...

  • Page 12
    ... total number of associates in 2011 was primarily due to an increase in the North America operating segment, mostly related to the Great Plains Coca-Cola Bottling Company acquisition, as well as an increase in the Bottling Investments operating segment. As of December 31, 2011 and 2010, our Company...

  • Page 13
    ... and the quality of available water deteriorates, our system may incur increasing production costs or face capacity constraints which could adversely affect our profitability or net operating revenues in the long run. Changes in the nonalcoholic beverage business environment and retail trends could...

  • Page 14
    ...Coca-Cola system's profitability as well as our share of the income of bottling partners in which we have equity method investments. The current uncertain global credit market conditions and their actual or perceived effects on our and our major bottling partners' results of operations and financial...

  • Page 15
    ... major beer companies. Our beverage products also compete against local or regional brands as well as against store or private label brands developed by retailers, some of which are Coca-Cola system customers. Our ability to gain or maintain share of sales or gross margins in the global market...

  • Page 16
    ... our net operating revenues from sales of concentrates and syrups; could result in a decrease in our equity income; and could negatively affect the carrying values of our investments in bottling partners, resulting in asset write-offs. Increases in income tax rates or changes in income tax laws...

  • Page 17
    ...in the price, disruption of supply or shortage of fuel and other energy sources in North America, in other countries in which we have concentrate plants, or in any of the major markets in which our Company-owned or controlled bottlers operate that may be caused by increasing demand or by events such...

  • Page 18
    Changes in laws and regulations relating to beverage containers and packaging could increase our costs and reduce demand for our products. We and our bottlers currently offer nonrefillable, recyclable containers in the United States and in various other markets around the world. Legal requirements ...

  • Page 19
    ... operations could increase our costs or reduce our net operating revenues. Our Company's business is subject to various laws and regulations in the numerous countries throughout the world in which we do business, including laws and regulations relating to competition, product safety, advertising...

  • Page 20
    ... among our locations around the world and between Company personnel and our bottlers and other customers, suppliers and consumers. Because information systems are critical to many of the Company's operating activities, our business processes may be impacted by system shutdowns or service disruptions...

  • Page 21
    ... financial reporting to newly acquired or controlled bottling operations, which may increase the risk of failure to prevent misstatements in such operations' financial records and in our consolidated financial statements. In 2011, net operating revenues generated by our Bottling Investments group...

  • Page 22
    ... North America operating segment is a portion of the Atlanta office complex. Additionally, as of December 31, 2011, our Company owned and operated 20 principal beverage concentrate manufacturing plants outside of North America, of which four are included in the Eurasia and Africa operating segment...

  • Page 23
    ... of Fulton County, Georgia, alleging violations of state law by certain individual current and former members of the Board of Directors of the Company and senior management, including breaches of fiduciary duties, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment...

  • Page 24
    ... Financial Officer of Coca-Cola North America from 2004 until 2007. In 2007, he was appointed Vice President and Controller of the Company and served in that capacity until August 2009. In June 2009, Mr. Anderson was named to lead the newly formed Global Business and Technology Services organization...

  • Page 25
    ... and Chief Operating Officer, North Asia, Eurasia and Middle East Group, an organization serving a broad and diverse region that included China, Japan and Russia. He was appointed President, Coca-Cola International in January 2006 and was elected Executive Vice President of the Company in February...

  • Page 26
    ... in roles of increasing responsibility in planning, marketing, business development and operations in New York, Paris, Hong Kong and Guam. Mr. Tripodi joined the Company as Chief Marketing and Commercial Officer effective September 2007 and was elected Senior Vice President of the Company in October...

  • Page 27
    ... listed and traded is the New York Stock Exchange. The following table sets forth, for the quarterly periods indicated, the high and low market prices per share for the Company's common stock, as reported on the New York Stock Exchange composite tape, and dividend per share information: Common Stock...

  • Page 28
    ... the Exchange Act. Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs2 Maximum Number of Shares That May Yet Be Purchased Under the Publicly Announced Plans or Programs Period Total Number of Shares Purchased1 Average Price Paid Per Share October 1, 2011 through...

  • Page 29
    ... Graph Comparison of Five-Year Cumulative Total Return Among The Coca-Cola Company, the Peer Group Index and the S&P 500 Index Total Return Stock Price Plus Reinvested Dividends $250 12/31/06 12/31/07 12/31/08 12/31/09 12/31/10 12/31/11 Peer KO Group S&P $100 $100 $100 $130 $119 $105 $ 99 $ 91...

  • Page 30
    ... millions except per share data) 2011 20101 2009 2008 2007 SUMMARY OF OPERATIONS Net operating revenues Net income attributable to shareowners of The Coca-Cola Company PER SHARE DATA Basic net income Diluted net income Cash dividends BALANCE SHEET DATA Total assets Long-term debt 1 $ 46,542 8,572...

  • Page 31
    ... as waters, enhanced waters, juices and juice drinks, ready-to-drink teas and coffees, and energy and sports drinks. We own and market four of the world's top five nonalcoholic sparkling beverage brands: Coca-Cola, Diet Coke, Fanta and Sprite. Finished beverage products bearing our trademarks, sold...

  • Page 32
    ... 31, 2011 2010 2009 Concentrate operations Finished products operations2 Net operating revenues 1 1 39% 613 51% 493 54% 46 100% 100% 100% Includes concentrates sold by the Company to authorized bottling partners for the manufacture of fountain syrups. The bottlers then typically sell the...

  • Page 33
    ...New CCE the right to negotiate the acquisition of our majority interest in our German bottler at any time from 18 to 39 months after February 25, 2010, at the then current fair value and subject to terms and conditions as mutually agreed. The Nonalcoholic Beverage Segment of the Commercial Beverage...

  • Page 34
    ...local resources; help focus the bottler's sales and marketing programs; assist in the development of the bottler's business and information systems; and establish an appropriate capital structure for the bottler. Our Company has a long history of providing world-class customer service, demonstrating...

  • Page 35
    ...in addressing water and sanitation needs. We are actively engaged in assessing the specific water-related risks that we and many of our bottling partners face and have implemented a formal water risk management program. We are working with our global partners to develop water sustainability projects...

  • Page 36
    ... accounting policies and estimates relate to the following: • Principles of Consolidation • Purchase Accounting for Acquisitions • Recoverability of Noncurrent Assets • Pension Plan Valuations • Revenue Recognition • Income Taxes Management has discussed the development, selection...

  • Page 37
    ... statements of income, and our investment in these entities was reported as equity method investments in our consolidated balance sheets. Refer to the heading ''Operations Review - Structural Changes, Acquired Brands and New License Agreements'' below for additional information. Purchase Accounting...

  • Page 38
    ... are impacted by our current business environment and are discussed throughout this report, as appropriate. Our Company faces many uncertainties and risks related to various economic, political and regulatory environments in the countries in which we operate, particularly in developing or emerging...

  • Page 39
    ... closing prices of publicly traded shares, and our Company's cost basis in publicly traded bottlers accounted for as equity method investments (in millions): December 31, 2011 Fair Value Carrying Value Difference Coca-Cola FEMSA, S.A.B. de C.V. Coca-Cola Amatil Limited Coca-Cola Hellenic Bottling...

  • Page 40
    ... of time in which the Company intends to use the asset, a significant decrease in market value, a significant change in the business climate in a particular market, or a current period operating or cash flow loss combined with historical losses or projected future losses. When such events or changes...

  • Page 41
    .... We acquired CCE's North American business on October 2, 2010, which resulted in the Company recording $14,327 million of intangible assets, including goodwill. Refer to Note 2 of Notes to Consolidated Financial Statements. The acquired intangible assets included $5,850 million of bottler franchise...

  • Page 42
    ... statement of income. We classified the impact of the remeasurement loss in the line item effect of exchange rate changes on cash and cash equivalents in our consolidated statement of cash flows. In early June 2010, the Venezuelan government introduced a newly regulated foreign currency exchange...

  • Page 43
    ... returns and manage risk. The weighted-average expected long-term rate of return used to calculate our net periodic benefit cost was 8.25 percent and 8.0 percent in 2011 and 2010, respectively. In 2011, the Company's total pension expense related to defined benefit plans was $249 million. In 2012...

  • Page 44
    ... tax rates used to determine deferred tax assets or liabilities are the enacted tax rates in effect for the year and manner in which the differences are expected to reverse. Based on the evaluation of all available information, the Company recognizes future tax benefits, such as net operating loss...

  • Page 45
    ... groups'' or ''groups'': Eurasia and Africa; Europe; Latin America; North America; Pacific; Bottling Investments; and Corporate. For further information regarding our operating segments, refer to Note 19 of Notes to Consolidated Financial Statements. Structural Changes, Acquired Brands and New...

  • Page 46
    ... net operating revenues but lower gross profit margins and operating margins for the North America operating segment and our consolidated operating results. Prior to the acquisition of CCE's North American business, the Company reported unit case volume for the sale of Company beverage products sold...

  • Page 47
    ...existing long-term debt that was assumed in connection with our acquisition of CCE's North American business in the fourth quarter of 2010. The remaining cash from the issuance was used to reduce the Company's outstanding commercial paper balance and exchange a certain amount of short-term debt. 45

  • Page 48
    ... impact on our operating results and certain key metrics in 2011, when compared to 2010. Prior to the closing of this acquisition, we had accounted for our investment in CCE under the equity method of accounting. Under the equity method of accounting, we recorded our proportionate share of CCE's net...

  • Page 49
    .... Information about our volume growth by operating segment is as follows: Percent Change 2011 vs. 2010 2010 vs. 2009 Concentrate Concentrate Unit Cases1,2 Sales Unit Cases1,2 Sales Year Ended December 31, Worldwide Eurasia & Africa Europe Latin America North America Pacific Bottling Investments...

  • Page 50
    ... acquisition of Nidan in the third quarter of 2010. Excluding the impact of the acquired Nidan juice, Russia's overall unit case volume declined 2 percent in 2011. Eurasia and Africa also benefited from unit case volume growth of 8 percent in the Company's Middle East and North Africa Business Unit...

  • Page 51
    ... in Trademark Simply. Unit case volume for sparkling beverages in North America increased 1 percent, primarily due to the sale of DPS brands under the new license agreements. Coca-Cola Zero continued its strong performance in North America with 15 percent growth in 2010. The group's strong marketing...

  • Page 52
    ... rates for individual operating segments in 2011 and 2010 were primarily due to the timing of concentrate shipments and the impact of unit case volume from certain joint ventures in which the Company has an equity interest, but to which the Company does not sell concentrates, syrups, beverage bases...

  • Page 53
    Analysis of Consolidated Statements of Income Percent Change 2011 vs. 2010 2010 vs. 2009 Year Ended December 31, (In millions except percentages and per share data) 2011 2010 2009 NET OPERATING REVENUES Cost of goods sold GROSS PROFIT GROSS PROFIT MARGIN Selling, general and administrative ...

  • Page 54
    ... exchange fluctuations. The following table illustrates, on a percentage basis, the estimated impact of key factors resulting in the increase (decrease) in net operating revenues for each of our international and Bottling Investments operating segments: Percent Change 2011 vs. 2010 Structural Price...

  • Page 55
    ... Eurasia and Africa, Europe, Latin America, Pacific and Bottling Investments operating segments. Refer to the heading ''Liquidity, Capital Resources and Financial Position - Foreign Exchange.'' Year Ended December 31, 2010, versus Year Ended December 31, 2009 Net operating revenues increased $4,129...

  • Page 56
    ...Financial Position - Foreign Exchange.'' Net Operating Revenues by Operating Segment Information about our net operating revenues by operating segment as a percentage of Company net operating revenues is as follows: Year Ended December 31, 2011 2010 2009 Eurasia & Africa Europe Latin America North...

  • Page 57
    ...and product mix, price increases in many of our key markets and foreign currency exchange fluctuations. In addition, the sale of our Norwegian and Swedish bottling operations during the fourth quarter of 2010 had a favorable impact on our full year 2011 gross profit margin. The Company's acquisition...

  • Page 58
    ... impact of a decrease in the weighted-average discount rate used to calculate the Company's benefit obligation. Refer to the heading ''Liquidity, Capital Resources and Financial Position'' below for information related to these contributions. Refer to the heading ''Critical Accounting Policies...

  • Page 59
    ... to Consolidated Financial Statements for additional information related to this integration initiative. During 2011, the Company successfully completed our four-year global productivity program and exceeded our target of providing $500 million in annualized savings from these initiatives by the...

  • Page 60
    ... our acquisition of CCE's North American business and the sale of our Norwegian and Swedish bottling operations to New CCE; and $10 million of charges related to bottling activities in Eurasia. The Company's integration activities include costs associated with the integration of CCE's North American...

  • Page 61
    ...the Eurasia and Africa, Europe, Latin America, Pacific and Bottling Investments operating segments. Refer to the heading ''Liquidity, Capital Resources and Financial Position - Foreign Exchange.'' • In 2011, operating income was favorably impacted by fluctuations in foreign currency exchange rates...

  • Page 62
    ... pricing increases in key markets, partially offset by continued investments in the business. • In 2011, the operating margin for North America was unfavorably impacted by the full year impact of the Company's acquisition of CCE's North American business. Generally, bottling and finished products...

  • Page 63
    ... income and operating margin during the year. • In 2010, the operating margin for the North America operating segment was unfavorably impacted by the Company's acquisition of CCE's North American business. Generally, bottling and finished products operations have higher net operating revenues...

  • Page 64
    ..., the Company stopped recording equity income related to CCE beginning October 2, 2010, and our 2011 consolidated statement of income reflects the full year impact of not having an equity interest in New CCE. Refer to the heading ''Structural Changes, Acquired Brands and New License Agreements...

  • Page 65
    ...equity investment in CCE to fair value upon the close of our acquisition of CCE's North American business and a $597 million gain related to the sale of all our ownership interests in our Norwegian and Swedish bottling operations to New CCE. Refer to the heading ''Structural Changes, Acquired Brands...

  • Page 66
    ... impacted our income tax expense by $193 million, $145 million and $191 million for the years ended December 31, 2011, 2010 and 2009, respectively. In addition, our effective tax rate reflects the benefits of having significant earnings generated in investments accounted for under the equity method...

  • Page 67
    ... Financial Statements. A reconciliation of the changes in the gross balance of unrecognized tax benefit amounts is as follows (in millions): Year Ended December 31, 2011 2010 2009 Beginning balance of unrecognized tax benefits Increases related to prior period tax positions Decreases related...

  • Page 68
    ... tax rate in future years. Liquidity, Capital Resources and Financial Position We believe our ability to generate cash from operating activities is one of our fundamental financial strengths. Refer to the heading ''Cash Flows from Operating Activities'' below. The near-term outlook for our business...

  • Page 69
    ... heading ''Operations Review - Structural Changes, Acquired Brands and New License Agreements'' above and Note 2 of Notes to Consolidated Financial Statements for additional information related to our acquisitions during the year. In 2009, our Company's acquisition and investment activities totaled...

  • Page 70
    ... to the full year impact of our acquisition of CCE's North American business during the fourth quarter of 2010. Refer to the heading ''Operations Review - Structural Changes, Acquired Brands and New License Agreements.'' Generally, bottling and finished products operations are more capital intensive...

  • Page 71
    ...our mix of short-term and long-term debt and our mix of fixed-rate and variable-rate debt, results in a lower overall cost of borrowing. Our debt management policies, in conjunction with our share repurchase programs and investment activity, can result in current liabilities exceeding current assets...

  • Page 72
    ... statement of income during the year ended December 31, 2011. This net charge was due to the exchange, repurchase and/or extinguishment of long-term debt described above. In 2010, the Company had issuances of debt of $15,251 million, which included $1,171 million of net issuances of commercial...

  • Page 73
    ..., the Board of Directors of the Company authorized a share repurchase program of up to 300 million shares of the Company's common stock. The program took effect on October 31, 2006. The table below presents annual shares repurchased and average price per share: Year Ended December 31, 2011 2010 2009...

  • Page 74
    ... our long-term fixed-rate debt based on the applicable rates and payment dates. We typically expect to settle such interest payments with cash flows from operating activities and/or short-term borrowings. Refer to Note 14 of Notes to Consolidated Financial Statements for information regarding income...

  • Page 75
    ... impact that the recent credit crisis and financial system instability had on the value of our pension plan assets and the decrease in the weighted-average discount rate used to calculate the Company's benefit obligation. As of December 31, 2011, the projected benefit obligation of all pension plans...

  • Page 76
    ..., over time, a portion of the impact of exchange rate changes on our net income and earnings per share. The total currency impact on operating income, including the effect of our hedging activities, was an increase of approximately 4 percent and 3 percent in 2011 and 2010, respectively. Based on the...

  • Page 77
    ... 2011 2010 Increase (Decrease) Percent Change Cash and cash equivalents Short-term investments Marketable securities Trade accounts receivable - net Inventories Prepaid expenses and other assets Equity method investments Other investments, principally bottling companies Other assets Property, plant...

  • Page 78
    ... of short-term debt versus long-term debt. From time to time, we enter into interest rate swap agreements to manage our mix of fixed-rate and variable-rate debt. Based on the Company's variable-rate debt and derivative instruments outstanding as of December 31, 2011, a 1 percentage point increase in...

  • Page 79
    ... DATA TABLE OF CONTENTS Page Consolidated Statements of Income ...Consolidated Balance Sheets ...Consolidated Statements of Cash Flows ...Consolidated Statements of Shareowners' Equity ...Notes to Consolidated Financial Statements ...Report of Management ...Report of Independent Registered Public...

  • Page 80
    THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Year Ended December 31, (In millions except per share data) 2011 2010 2009 NET OPERATING REVENUES Cost of goods sold GROSS PROFIT Selling, general and administrative expenses Other operating charges OPERATING INCOME ...

  • Page 81
    ...-term investments TOTAL CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS Marketable securities Trade accounts receivable, less allowances of $83 and $48, respectively Inventories Prepaid expenses and other assets TOTAL CURRENT ASSETS EQUITY METHOD INVESTMENTS OTHER INVESTMENTS, PRINCIPALLY BOTTLING...

  • Page 82
    ...COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, (In millions) 2011 2010 2009 OPERATING ACTIVITIES Consolidated net income Depreciation and amortization Stock-based compensation expense Deferred income taxes Equity (income) loss - net of dividends...

  • Page 83
    ... an acquisition Tax benefit (charge) from employees' stock option and restricted stock plans Stock-based compensation Other activities Balance at end of year REINVESTED EARNINGS Balance at beginning of year Net income attributable to shareowners of The Coca-Cola Company Dividends (per share - $1.88...

  • Page 84
    ... as waters, enhanced waters, juices and juice drinks, ready-to-drink teas and coffees, and energy and sports drinks. We own and market four of the world's top five nonalcoholic sparkling beverage brands: Coca-Cola, Diet Coke, Fanta and Sprite. Finished beverage products bearing our trademarks, sold...

  • Page 85
    .... We use the equity method to account for investments in companies, if our investment provides us with the ability to exercise significant influence over operating and financial policies of the investee. Our consolidated net income includes our Company's proportionate share of the net income or loss...

  • Page 86
    ... operations in developing and emerging markets; fluctuations in foreign currency exchange rates; interest rate increases; an inability to maintain good relationships with our bottling partners; a deterioration in our bottling partners' financial condition; increases in income tax rates or changes...

  • Page 87
    ... the year ended December 31, 2011. Our customers do not pay us separately for shipping and handling costs related to finished goods. Net Income Per Share Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting...

  • Page 88
    ... most of our investments in publicly traded companies are often readily available based on quoted market prices. For investments in nonpublicly traded companies, management's assessment of fair value is based on valuation methodologies including discounted cash flows, estimates of sales proceeds and...

  • Page 89
    ... accounts receivable is derived from sales of our products in international markets. Refer to Note 19. We also generate a significant portion of our net operating revenues by selling concentrates and syrups to bottlers in which we have a noncontrolling interest, including Coca-Cola Hellenic Bottling...

  • Page 90
    ... related to the asset, the historical performance of the asset, the Company's long-term strategy for using the asset, any laws or other local regulations which could impact the useful life of the asset, and other economic factors, including competition and specific market conditions. Intangible...

  • Page 91
    ..., a component of AOCI. Refer to Note 15. Income statement accounts are translated using the monthly average exchange rates during the year. Monetary assets and liabilities denominated in a currency that is different from a reporting entity's functional currency must first be remeasured from the...

  • Page 92
    ...additional investment in Coca-Cola Central Japan Company (''Central Japan''). In addition, the Company's acquisition and investment activities during 2011 included immaterial cash payments for the finalization of working capital adjustments related to our acquisition of CCE's North American business...

  • Page 93
    ... market and distribute our nonalcoholic beverage brands in North America. Refer to Note 18 for information related to the Company's integration initiative associated with this acquisition. Under the terms of the merger agreement, the Company acquired the 67 percent of CCE's North American business...

  • Page 94
    ... PSU of The Coca-Cola Company, determined by multiplying the number of shares of each PSU by an exchange ratio (the ''closing exchange ratio'') equal to the closing price of a share of CCE common stock on the last day of trading prior to the acquisition date divided by the closing price of the...

  • Page 95
    ...) Cash and cash equivalents Marketable securities Trade accounts receivable3 Inventories Other current assets4 Property, plant and equipment4 Bottlers' franchise rights with indefinite lives4,5 Other intangible assets4,6 Other noncurrent assets Total identifiable assets acquired Accounts payable...

  • Page 96
    ... acquisition of CCE's North American business and the divestiture of our Norwegian and Swedish bottling operations had occurred on January 1, 2009, nor is it indicative of the future operating results of The Coca-Cola Company. The unaudited pro forma financial information does not reflect the impact...

  • Page 97
    ... of the Company's net operating revenues. Definitive Agreement to Acquire an Investment in Aujan Industries On December 14, 2011, the Company entered into a definitive agreement with Aujan Industries (''Aujan''), one of the largest independent beverage companies in the Middle East, to acquire...

  • Page 98
    ... disposal of bottling companies and other investments totaled $240 million, none of which was individually significant. NOTE 3: INVESTMENTS Investments in debt and marketable securities, other than investments accounted for under the equity method, are classified as trading, available-for-sale or...

  • Page 99
    ... (in millions): December 31, 2011 AvailableHeld-tofor-Sale Maturity Securities Securities December 31, 2010 AvailableHeld-tofor-Sale Maturity Securities Securities Cash and cash equivalents Marketable securities Other investments, principally bottling companies Other assets $ - 5 986 410 $ 112...

  • Page 100
    ... at a predetermined rate or price during a period or at a time in the future. A collar is a strategy that uses a combination of options to limit the range of possible positive or negative returns on an underlying asset or liability to a specific range, or to protect expected future cash flows. To do...

  • Page 101
    ... fair values or cash flows of the related underlying exposures. Any ineffective portion of a financial instrument's change in fair value is immediately recognized into earnings. The Company determines the fair values of its derivatives based on quoted market prices or using standard valuation models...

  • Page 102
    ... our mix of short-term debt and long-term debt. From time to time, we manage our risk to interest rate fluctuations through the use of derivative financial instruments. The Company had no outstanding derivative instruments under this cash flow hedging program as of December 31, 2011 and 2010. 100

  • Page 103
    ...17) Net operating revenues Interest expense Cost of goods sold $ (62) (10) (47) $ (59) $ (119) The Company records gains and losses reclassified from AOCI in income for the effective portion and ineffective portion, if any, to the same line items in our consolidated statements of income. Includes...

  • Page 104
    ... with changes in foreign currency exchange rates. The changes in fair value of economic hedges used to offset the variability in U.S. dollar net cash flows are recognized into earnings in the line items net operating revenues and cost of goods sold in our consolidated statements of income. The...

  • Page 105
    ... statements of income and our carrying value in that investment. The Company's proportionate share of the net income or loss of our equity method investees includes significant operating and nonoperating items recorded by our equity method investees. These items can have a significant impact...

  • Page 106
    ... summarized financial information for CCE for the nine months ended October 1, 2010, and for the year ended December 31, 2009 (in millions): Nine Months Ended October 1, 2010 Year Ended December 31, 2009 Net operating revenues Cost of goods sold Gross profit Operating income (loss) Net income (loss...

  • Page 107
    ...2010 and 2009, respectively. If valued at the December 31, 2011, quoted closing prices of shares actively traded on stock markets, the value of our equity method investments in publicly traded bottlers would have exceeded our carrying value by $6.2 billion. Net Receivables and Dividends from Equity...

  • Page 108
    ...of Great Plains' rights to distribute Trademark Coca-Cola beverages in specified territories as well as the finalization of purchase accounting for the Company's 2010 acquisition of CCE's North American business. Refer to Note 2. The increase in 2011 was primarily related to the acquisition of Great...

  • Page 109
    ... by operating segment (in millions): Eurasia & Africa Europe Latin America North America Pacific Bottling Investments Total 2010 Balance as of January 1 Effect of foreign currency translation Acquisitions1 Adjustments related to the finalization of purchase accounting Divestitures, deconsolidations...

  • Page 110
    ... assumed in connection with our acquisition of CCE's North American business. The remaining cash from the issuance was used to reduce the Company's outstanding commercial paper balance and exchange a certain amount of short-term debt. The general terms of the notes issued during 2011 are as follows...

  • Page 111
    ... $2,910 million of long-term debt. The remaining cash from the issuance was used to reduce our outstanding commercial paper balance. The repurchased debt consisted of $1,827 million of debt assumed in our acquisition of CCE's North American business and $1,083 million of the Company's debt that was...

  • Page 112
    ... and future costs for certain product liability and other claims. A division of Aqua-Chem manufactured certain boilers that contained gaskets that Aqua-Chem purchased from outside suppliers. Several years after our Company sold this entity, Aqua-Chem received its first lawsuit relating to asbestos...

  • Page 113
    .... Refer to Note 14. Risk Management Programs The Company has numerous global insurance programs in place to help protect the Company from the risk of loss. In general, we are self-insured for large portions of many different types of claims; however, we do use commercial insurance above our self...

  • Page 114
    ... the impact of any future stock-based compensation awards. As a result of our acquisition of CCE's North American business, the Company assumed certain stock-based compensation plans previously sponsored by CCE. Shares from these plans remain available for future grant to current employees who...

  • Page 115
    ... officers and key employees of our Company. As of December 31, 2011, 19 million shares remain available for grant under the Restricted Stock Award Plans. The Company issues restricted stock to employees as a result of performance share unit awards, time-based awards and performance-based awards...

  • Page 116
    ...criteria. Economic profit is our net operating profit after tax less the cost of the capital used in our business. In the event the financial results equal the predefined target, the Company will grant the number of restricted shares equal to the target award in the underlying performance share unit...

  • Page 117
    ...the 2009 performance period. The majority of the remaining shares are scheduled for release in the second quarter of 2012. Time-Based and Performance-Based Restricted Stock and Restricted Stock Unit Awards The Coca-Cola Company 1989 Restricted Stock Award Plan allows for the grant of time-based and...

  • Page 118
    ... 130,000, respectively. Time-based and performance-based restricted awards were not significant to our consolidated financial statements. In 2010, the Company issued time-based restricted stock unit replacement awards in connection with our acquisition of CCE's North American business. Refer to Note...

  • Page 119
    ...benefit plans during 2011 and 2010 included $62 million and $31 million, respectively, that were paid from Company assets. Related to the acquisition of CCE's North American business during the fourth quarter of 2010. Refer to Note 2. Primarily related to the sale of our Norwegian bottling operation...

  • Page 120
    ... final average pay formula to a cash balance formula. In general, employees may receive credits based on age, service, pay and interest under the new method. The primary pension plan acquired by the Company in connection with our acquisition of CCE's North American business transitioned to a cash...

  • Page 121
    ... a higher rate of return than that available from publicly traded equity securities. These investments are inherently illiquid and require a long-term perspective in evaluating investment performance. Investment Strategy for Non-U.S. Pension Plans As of December 31, 2011, the long-term target...

  • Page 122
    ...(in millions): Pension Benefits 2011 2010 2009 Other Benefits 2011 2010 2009 Year Ended December 31, Service cost Interest cost Expected return on plan assets Amortization of prior service cost (credit) Amortization of actuarial loss Net periodic benefit cost (credit) Settlement charge Curtailment...

  • Page 123
    ...5.25% N/A Certain weighted-average assumptions used in computing net periodic benefit cost are as follows: Pension Benefits 2011 2010 2009 Other Benefits 2010 2009 December 31, 2011 Discount rate Rate of increase in compensation levels Expected long-term rate of return on plan assets 5.50% 4.00...

  • Page 124
    ... the countries. The rate of compensation increase assumption is determined by the Company based upon annual reviews. We review external data and our own historical trends for health care costs to determine the health care cost trend rate assumptions. Cash Flows Our estimated future benefit payments...

  • Page 125
    ...million gain due to the remeasurement of our equity investment in CCE to fair value upon our acquisition of CCE's North American business. Refer to Note 2. Income tax expense consisted of the following for the years ended December 31, 2011, 2010 and 2009 (in millions): United States State and Local...

  • Page 126
    ... 31, 2011 2010 2009 Statutory U.S. federal tax rate State and local income taxes - net of federal benefit Earnings in jurisdictions taxed at rates different from the statutory U.S. federal rate Equity income or loss CCE transaction Sale of Norwegian and Swedish bottling operations Other operating...

  • Page 127
    ... impacted our income tax expense by $193 million, $145 million and $191 million for the years ended December 31, 2011, 2010 and 2009, respectively. In addition, our effective tax rate reflects the benefits of having significant earnings generated in investments accounted for under the equity method...

  • Page 128
    ... to current period tax positions Decreases related to settlements with taxing authorities Reductions as a result of a lapse of the applicable statute of limitations Increase related to acquisition of CCE's North American business Increases (decreases) from effects of foreign currency exchange rates...

  • Page 129
    ... 31, 2011 2010 Deferred tax assets: Property, plant and equipment Trademarks and other intangible assets Equity method investments (including translation adjustment) Net change in unrealized gain/loss Other liabilities Benefit plans Net operating/capital loss carryforwards Other Gross deferred tax...

  • Page 130
    ... with our acquisition of CCE's North American business. The Company also recognized an increase in the valuation allowances due to the carryforward of expenses disallowed in the current year and changes to deferred tax assets and a related valuation allowance on certain equity method investments. In...

  • Page 131
    ... shareowners of The Coca-Cola Company, including our proportionate share of equity method investees' OCI, for the years ended December 31, 2011, 2010 and 2009, is as follows (in millions): Before-Tax Amount Income Tax After-Tax Amount 2011 Net foreign currency translation adjustment Net gain (loss...

  • Page 132
    ... Securities The fair values of our investments in trading and available-for-sale securities were primarily determined using quoted market prices from daily exchange traded markets. The fair values of instruments using quoted market prices were based on the closing price as of the balance sheet date...

  • Page 133
    ... the years ended December 31, 2011 and 2010, are summarized below (in millions): Gains (Losses) 2011 2010 December 31, Exchange of investment in equity securities Valuation of shares in equity method investee Equity method investments Available-for-sale securities Inventories Cold-drink equipment...

  • Page 134
    ...to assets and liabilities that are included in our consolidated balance sheets, but is also applied to certain other assets that indirectly impact our consolidated financial statements. For example, our Company sponsors and/or contributes to a number of pension and other postretirement benefit plans...

  • Page 135
    ... and Commingled Funds Real Estate Equity Securities Other Total 2010 Balance at beginning of year Actual return on plan assets: Related to assets still held at the reporting date Related to assets sold during the year Purchases, sales and settlements - net Business combinations and divestitures...

  • Page 136
    ... fact that it was not probable a sale would be completed within one year. Refer to Note 16 for the related fair value disclosures of the impairments. Refer to Note 19 for the impact these charges had on our operating segments. Other Nonoperating Items Equity Income (Loss) - Net In 2011, the Company...

  • Page 137
    ... holds an investment in Arca Contal that we account for as an available-for-sale security. This net gain impacted the Corporate operating segment. The Company also recognized a net gain of $122 million during 2011, primarily as a result of an equity method investee issuing additional shares of its...

  • Page 138
    ... shares in one of our equity method investees. Refer to Note 16 for fair value disclosures related to these impairments. Refer to Note 19 for the impact these charges had on our operating segments. During 2009, the Company realized a gain of $44 million in other income (loss) - net on the sale...

  • Page 139
    ... with the management of our existing foodservice business; Minute Maid and Odwalla juice businesses; North America supply chain operations; and Company-owned bottling operations in Philadelphia, Pennsylvania, into a unified bottling and customer service organization called Coca-Cola Refreshments, or...

  • Page 140
    ... operating segment, and equity income from the majority of our equity method investments. Company-owned or consolidated bottling operations derive the majority of their revenues from the sale of finished beverages. Subsequent to our acquisition of CCE's North American business on October 2, 2010...

  • Page 141
    ... of consolidated net operating revenues in 2011, 9 percent in 2010 and 10 percent in 2009. Principally cash and cash equivalents, trade accounts receivable, inventories, goodwill, trademarks and other intangible assets and property, plant and equipment - net. Property, plant and equipment - net in...

  • Page 142
    ...our acquisition of CCE's North American business. Refer to Note 12. • Equity income (loss) - net and income (loss) before income taxes were reduced by $66 million for Bottling Investments. This net charge was primarily attributable to the Company's proportionate share of unusual tax charges, asset...

  • Page 143
    ...cost method investment. Refer to Note 17. NOTE 20: NET CHANGE IN OPERATING ASSETS AND LIABILITIES Net cash provided by (used in) operating activities attributable to the net change in operating assets and liabilities is composed of the following (in millions): Year Ended December 31, 2011 2010 2009...

  • Page 144
    ..., management believes that the Company maintained effective internal control over financial reporting as of December 31, 2011. The Company's independent auditors, Ernst & Young LLP, a registered public accounting firm, are appointed by the Audit Committee of the Company's Board of Directors...

  • Page 145
    ... the Audit Committee. Our Audit Committee's Report can be found in the Company's 2012 Proxy Statement. 25FEB200913564291 Muhtar Kent Chairman of the Board of Directors, Chief Executive Officer and President February 23, 2012 22FEB201023414934 Kathy N. Waller Vice President and Controller February...

  • Page 146
    ...Coca-Cola Company and subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of income, shareowners' equity, and cash flows for each of the three years in the period ended December 31, 2011. These financial statements are the responsibility of the Company's management...

  • Page 147
    ... Board (United States), the consolidated balance sheets of The Coca-Cola Company and subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of income, shareowners' equity, and cash flows for each of the three years in the period ended December 31, 2011, and our report...

  • Page 148
    ... per share data) Second Quarter Third Quarter Fourth Quarter Full Year 2011 Net operating revenues Gross profit Net income attributable to shareowners of The Coca-Cola Company Basic net income per share Diluted net income per share 2010 Net operating revenues Gross profit Net income attributable...

  • Page 149
    ...working capital adjustments related to the sale of all our ownership interests in our Norwegian and Swedish bottling operations to New CCE. Refer to Note 17. • Charge of $3 million for Corporate due to the impairment of an investment in an entity accounted for under the equity method of accounting...

  • Page 150
    ...of CCE's North American business and the sale of our Norwegian and Swedish bottling operations to New CCE and other charges related to bottling activities in Eurasia. Refer to Note 17 and Note 18. • Benefit of $4,978 million for Corporate due to the remeasurement of our equity investment in CCE to...

  • Page 151
    ... supply contracts acquired in connection with our acquisition of CCE's North American business. Refer to Note 17. • Charge of $11 million for Bottling Investments, primarily attributable to the Company's proportionate share of restructuring charges recorded by equity method investees. Refer...

  • Page 152
    ...of areas. As business processes change related to these transformation initiatives, the Company identifies, documents and evaluates controls to ensure controls over our financial reporting remain strong. ITEM 9B. OTHER INFORMATION Not applicable. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND...

  • Page 153
    ...' Equity - Years ended December 31, 2011, 2010 and 2009. Notes to Consolidated Financial Statements. Report of Independent Registered Public Accounting Firm. Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting. 2. Financial Statement Schedules...

  • Page 154
    ... Company's Current Report on Form 8-K filed on March 3, 2010. Share Purchase Agreement, dated as of March 20, 2010, by and among The Coca-Cola Company, Bottling Holdings (Luxembourg) s.a.r.l., Coca-Cola Enterprises Inc. and International CCE, Inc. Exhibit I Exhibit II Form of Corporate Name Letter...

  • Page 155
    ... 18, 2010. Form of Exchange and Registration Rights Agreement among the Company, the representatives of the initial purchasers of the Notes and the other parties named therein - incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed August 8, 2011. Form...

  • Page 156
    ... Company's Annual Report on Form 10-K for the year ended December 31, 2009.* The Coca-Cola Company Supplemental 401(k) Plan (f/k/a the Supplemental Thrift Plan of the Company), Amended and Restated Effective January 1, 2012, dated December 14, 2011.* The Coca-Cola Company Supplemental Cash Balance...

  • Page 157
    ... 31, 2000.* Deferred Compensation Plan of the Company, as amended and restated December 8, 2010 - incorporated herein by reference to Exhibit 10.16 of the Company's Annual Report on Form 10-K for the year ended December 31, 2010.* The Coca-Cola Export Corporation Employee Share Plan, effective as of...

  • Page 158
    ... Coca-Cola Refreshments USA, Inc.'s (formerly known as Coca-Cola Enterprises Inc.) Annual Report on Form 10-K for the year ended December 31, 2007.* Form of Stock Option Agreement (Chief Executive Officer and Senior Officers) under the Coca-Cola Enterprises Inc. 2007 Incentive Award Plan for Awards...

  • Page 159
    ... 30, 2011.* Amendment to certain Coca-Cola Refreshments USA, Inc.'s (formerly known as Coca-Cola Enterprises Inc.) Employee Benefit Plans and Equity Plans, effective December 6, 2010 - incorporated herein by reference to Exhibit 10.49 to the Company's Annual Report on Form 10-K for the year ended...

  • Page 160
    ..., Executive Vice President and Chief Financial Officer of The Coca-Cola Company. The following financial information from The Coca-Cola Company's Annual Report on Form 10-K for the year ended December 31, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements...

  • Page 161
    ... a Director (Principal Executive Officer) February 23, 2012 /s/ GARY P. FAYARD Gary P. Fayard Executive Vice President and Chief Financial Officer (Principal Financial Officer) February 23, 2012 /s/ KATHY N. WALLER Kathy N. Waller Vice President and Controller (Principal Accounting Officer) February...

  • Page 162
    ..., 2012 * Sam Nunn Director February 23, 2012 * James D. Robinson III Director February 23, 2012 James B. Williams Director February 23, 2012 Jacob Wallenberg Director February 23, 2012 Peter V. Ueberroth Director February 23, 2012 * * * *By: /s/ GLORIA K. BOWDEN Gloria K. Bowden Attorney-in-fact...

  • Page 163
    ..., Chairman of the Board of Directors, Chief Executive Officer and President of The Coca-Cola Company, certify that: 1. 2. I have reviewed this annual report on Form 10-K of The Coca-Cola Company; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to...

  • Page 164
    ...I, Gary P. Fayard, Executive Vice President and Chief Financial Officer of The Coca-Cola Company, certify that: 1. 2. I have reviewed this annual report on Form 10-K of The Coca-Cola Company; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state...

  • Page 165
    ... Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ MUHTAR KENT Muhtar Kent Chairman of the Board of Directors, Chief Executive Officer and President February 23, 2012...

  • Page 166
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