Coca Cola 2011 Annual Report Download - page 94

Under the terms of the merger agreement, the Company replaced share-based payment awards for certain current and former
employees of CCE’s North American and corporate operations. The following table provides a list of all replacement awards
and the estimated fair value of those awards issued in conjunction with our acquisition of CCE’s North American business
(in millions):
Number of
Shares, Options
and Units Issued Fair Value
Performance share units 1.6 $ 192
Stock options 4.8 109
Restricted share units 0.8 50
Restricted stock 0.2 12
Total 7.4 $ 363
The portion of the fair value of the replacement awards related to services provided prior to the business combination was
included in the total purchase price. The portion of the fair value associated with future service is recognized as expense over the
future service period, which varies by award. The Company determined that $237 million ($154 million net of tax) of the
replacement awards was related to services rendered prior to the business combination.
Each CCE performance share unit (‘‘PSU’’) replaced by the Company was converted at 100 percent of target into an adjusted
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 Company’s common stock on the same day. At the time we issued these
replacement PSUs, they were subject to the same vesting conditions and other terms applicable to the CCE PSUs immediately
prior to the closing date. However, in the fourth quarter of 2010, the Company modified primarily all of these PSUs to eliminate
the remaining holding period, which resulted in $74 million of accelerated expense. Refer to Note 12 for additional information.
Each CCE stock option replaced by the Company was converted into an adjusted stock option of The Coca-Cola Company to
acquire a number of shares of Coca-Cola common stock, determined by multiplying the number of shares of CCE common stock
subject to the CCE stock option by the closing exchange ratio. The exercise price per share of the replacement awards was equal
to the per share exercise price of the CCE stock option divided by the closing exchange ratio. All of the replacement stock
options are subject to the same vesting conditions and other terms applicable to the CCE stock options immediately prior to the
closing date. Refer to Note 12 for additional information.
Each CCE restricted share unit (‘‘RSU’’) replaced by the Company was converted into an adjusted RSU of The Coca-Cola
Company, determined by multiplying the number of shares of each RSU by the closing exchange ratio. All of the replacement
RSUs are subject to the same vesting conditions and other terms applicable to the CCE RSUs immediately prior to the closing
date. Refer to Note 12 for additional information.
Each share of CCE restricted stock replaced by the Company was converted into an adjusted share of restricted stock of The
Coca-Cola Company, determined by multiplying the number of shares of CCE restricted stock by the closing exchange ratio. All
of the replacement shares of restricted stock are subject to the same vesting conditions and other terms applicable to the CCE
shares of restricted stock immediately prior to the closing date. Refer to Note 12 for additional information.
The following table reconciles the total purchase price of the Company’s acquisition of CCE’s North American business, including
adjustments recorded as part of the Company’s purchase accounting (in millions):
October 2,
2010
Fair value of our equity investment in CCE1$ 5,373
Cash consideration21,368
Fair value of share-based payment awards3154
Total purchase price $ 6,895
1Represents the fair value of our 33 percent ownership interest in the outstanding common stock of CCE based on the closing price of CCE’s
common stock on the last day the New York Stock Exchange was open prior to the acquisition date. The fair value reflects our indirect ownership
interest in both CCE’s North American business and European operations.
2Primarily related to the debt shortfall and working capital adjustments.
3Represents the portion of the total fair value of the replacement awards associated with services rendered prior to the business combination, net of
tax.
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