The Coca-Cola Company Is the Largest Manufacturer, Distributor and Marketer of Nonalcoholic Beverage Concentrates and Syrups in the World
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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, 2006 OR អ 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 20FEB200406462039 (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 អ No ፤ 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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 or a non-accelerated filer. See definition of ‘‘accelerated filer’’ or ‘‘large accelerated filer’’ in Rule 12b-2 of the Exchange Act. Large accelerated filer ፤ Accelerated filer អ Non-accelerated filer អ Indicate by check mark if the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes អ No ፤ 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 June 30, 2006, the last business day of the Registrant’s most recently completed second fiscal quarter, was $95,705,925,512 (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, 2007 was 2,315,288,508. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Company’s Proxy Statement for the Annual Meeting of Shareowners to be held on April 18, 2007, are incorporated by reference in Part III. Table of Contents Page Forward-Looking Statements ..................................................... 1 Part I Item 1. Business .................................................................... 1 Item 1A. Risk Factors ................................................................. 12 Item 1B. Unresolved Staff Comments ..................................................... 19 Item 2. Properties ................................................................... 19 Item 3. Legal Proceedings ............................................................. 20 Item 4. Submission of Matters to a Vote of Security Holders .................................... 24 Item X. Executive Officers of the Company ................................................ 24 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ............................................................ 28 Item 6. Selected Financial Data ......................................................... 31 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ......... 32 Item 7A. Quantitative and Qualitative Disclosures About Market Risk .............................. 65 Item 8. Financial Statements and Supplementary Data ........................................ 66 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ......... 131 Item 9A. Controls and Procedures ........................................................ 131 Item 9B. Other Information ............................................................ 131 Part III Item 10. Directors, Executive Officers and Corporate Governance ................................ 132 Item 11. Executive Compensation ........................................................ 132 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . 132 Item 13. Certain Relationships and Related Transactions, and Director Independence .................. 132 Item 14. Principal Accountant Fees and Services ............................................. 132 Part IV Item 15. Exhibits and Financial Statement Schedules .......................................... 133 Signatures .................................................................. 139 FORWARD-LOOKING STATEMENTS This report contains information that may constitute ‘‘forward-looking statements.’’ Generally, the words ‘‘believe,’’ ‘‘expect,’’ ‘‘intend,’’ ‘‘estimate,’’ ‘‘anticipate,’’ ‘‘project,’’ ‘‘will’’ and similar expressions identify forward- looking statements, which generally are not historical in nature. All statements that 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 views about future operating results—are forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. Our Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our Company’s historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in Part I, ‘‘Item 1A. Risk Factors’’ and elsewhere in this report and those described from time to time in our future reports filed with the Securities and Exchange Commission. PART I ITEM 1. BUSINESS General The Coca-Cola Company is the largest manufacturer, distributor and marketer of nonalcoholic beverage concentrates and syrups in the world. Finished beverage products bearing our trademarks, sold in the United States since 1886, are now sold in more than 200 countries. Along with Coca-Cola, which is recognized as the world’s most valuable brand, we market four of the world’s top five nonalcoholic sparkling brands, including Diet Coke, Fanta and Sprite. In this report, the terms ‘‘Company,’’ ‘‘we,’’ ‘‘us’’ or ‘‘our’’ mean The Coca-Cola Company and all entities included in our consolidated financial statements. Our business is nonalcoholic beverages—principally sparkling beverages, but also a variety of still beverages. We manufacture beverage concentrates and syrups, which we sell to bottling and canning operations, fountain wholesalers and some fountain retailers, as well as some finished beverages, which we sell primarily to distributors. Our Company owns or licenses more than 400 brands, including diet and light beverages, waters, juice and juice drinks, teas, coffees, and energy and sports drinks. In addition, we have ownership interests in numerous bottling and canning operations, although most of these operations are independently owned and managed. We were incorporated in September 1919 under the laws of the State of Delaware and succeeded to the business of a Georgia corporation with the same name that had been organized in 1892. Our Company is one of numerous competitors in the commercial beverages market. Of the approximately 52 billion beverage servings of all types consumed worldwide every day, beverages bearing trademarks owned by or licensed to us account for more than 1.4 billion. We believe that our success depends on our ability to connect with consumers by providing them with a wide variety of choices to meet their desires, needs and lifestyle choices. Our success further depends on the ability of our people to execute effectively, every day. Our goal is to use our Company’s assets—our brands, financial strength, unrivaled distribution system, and the strong commitment of management and employees—to become more competitive and to accelerate growth in a manner that creates value for our shareowners. 1 Operating Segments The Company’s operating structure is the basis for our Company’s internal financial reporting. As of December 31, 2006, our operating structure included the following operating segments, the first seven of which are sometimes referred to as ‘‘operating groups’’ or ‘‘groups:’’ • Africa • East, South Asia and Pacific Rim • European Union • Latin America • North