The Coca-Cola Company reported fourth quarter and full year 2016 operating results. Muhtar Kent, Chairman and Chief Executive Officer of The Coca-Cola Company, said, "We are pleased to report that we ended 2016 with fourth quarter top- and bottom-line growth within our expectations. Strong price/mix stemming from our continued focus on driving revenue and solid performance in our developed markets helped offset persistent macroeconomic pressures in our emerging and developing markets. Our flagship market of North America grew net revenues 8% for the quarter and 4% for the year, outperforming total retail value growth for both the North America nonalcoholic ready-to-drink beverage industry and U.S. consumer packaged goods companies."

"In addition to delivering our profit target for the full year, I am encouraged by the strategic actions taken during 2016 to strengthen our global bottling system. In the fourth quarter, we reached a definitive agreement to refranchise all Company-owned bottling operations in China, and we took important steps to further the evolution of Coca-Cola Beverages Africa. During the year, we successfully completed the creation of Coca-Cola European Partners, and we supported the ongoing transformation of the franchise bottling system in Japan. And last, we remain on track to complete the refranchising of Company-owned bottling operations in the United States by the end of 2017. In total, half of our global system revenue has been in motion through our recent actions to strengthen the system. The progress demonstrated by these actions is foundational in positioning our system for prosperity long into the future."

"We also recently made an important decision about the future leadership of The Coca-Cola Company with the announcement that James Quincey will become our next CEO, effective May 1. Having worked closely with James for many years, I know that his knowledge and experience make him the ideal candidate to lead our Company and bottling system into the future. I am partnering with James to ensure a smooth CEO transition and look forward to providing continued support as Chairman of the Board of Directors."

• Net revenues were $9.4 billion for the quarter, a 6% decline from prior year, impacted by a foreign currency exchange headwind of 2% and a headwind from acquisitions, divestitures, and structural items of 10%. Organic revenues (non-GAAP) grew 6% in the quarter, driven by price/mix growth of 6%. Core business organic revenues (non-GAAP) grew 7% in the quarter.

• Net revenues were $41.9 billion for the full year, a 5% decline from the prior year, impacted by a foreign currency exchange headwind of 3% and a headwind from acquisitions, divestitures, and structural items of 6%. Organic revenues (non-GAAP) for the full year grew 3%, driven by price/mix growth of 3%. Core business organic revenues (non-GAAP) grew 4% for the full year.

• We gained global value share in total nonalcoholic ready-to-drink beverages and sparkling beverages in both the quarter and the full year.

• Total unit case volume declined 1% for the quarter and grew 1% for the full year. For the quarter, low single-digit unit case volume growth in our developed markets was offset by continued macroeconomic challenges in several Latin American markets. North America grew unit case volume 1% in the quarter, including 1% growth in sparkling beverages. For the full year, our developed markets grew low single digits while our emerging and developing markets were even.

• Our operating margin for the quarter contracted nearly 80 basis points and our operating margin for the full year expanded more than 90 basis points. These measures included items impacting comparability, the impact of changes in foreign currency exchange rates, and structural impacts. Our comparable currency neutral operating margin (non-GAAP) in the quarter expanded nearly 230 basis points and expanded nearly 140 basis points for the full year. These improvements were driven by continued extensions of our pricing initiatives, a slightly favorable cost environment, and our productivity program.

Strong momentum in transforming our business continued through the last quarter of the year, with key actions driving positive results in many markets around the world. Notable developments included:

• Disciplined brand and growth investments: We advanced our strategy to grow revenues and profits from our sparkling beverage portfolio while at the same time helping consumers reduce consumption of added sugars. In Western Europe, Coca-Cola Zero Sugar once again grew unit case volume double digits in the quarter, boosted by expansion into France, Belgium, Netherlands, and Ireland. These recent moves extend the product beyond its initial launch market of Great Britain. Further expansion is planned in early 2017 for other European markets, Australia, and South Africa, among others. In addition to these moves in our sparkling portfolio, we continued the global expansion of smartwater, one of our premium water brands. While smartwater achieved double-digit unit case volume growth during the year in its home market of North America, it also helped drive full year high single-digit unit case volume growth in the still water category for our Western Europe business unit.

• Innovating in different ways: Portfolio innovations in the quarter extended beyond ongoing product and reformulation initiatives. Sparkling beverage performance in Japan kept its momentum in the quarter, boosted by the Coca-Cola ribbon package innovation that was made available in the market during November and December. This festive bottle for Trademark Coca-Cola brands in Japan provided consumers with a label that could be transformed into a holiday bow. Coffee in Japan also continued to grow, driven by the bottle-can package innovation for GEORGIA The Premium launched in early 2016. In our Central & Eastern Europe business unit, the launch of a new Fanta spiral bottle led to full year mid single-digit unit case volume growth for the brand and helped drive a value share gain in sparkling beverages for the full year.

• Strengthening the global bottling system: We remain on track to complete the refranchising of our Company-owned bottling operations in the United States by the end of 2017. In China, we signed a definitive agreement with COFCO Coca-Cola Beverages Limited and Swire Beverages Holdings Limited to refranchise all existing Company-owned bottling operations. We also reached an important agreement in the evolution of Coca-Cola Beverages Africa regarding the transition of Anheuser-Busch InBev's 54.5% stake in CCBA as well as its interests in other African and Latin American bottling operations.

• Planning a seamless leadership transition: In December, the Board of Directors unanimously approved Chairman and Chief Executive Officer Muhtar Kent's recommendation for Company veteran James Quincey to become the next CEO, effective May 1, 2017. Kent will continue as Chairman of the Board of Directors following the CEO succession. The Board intends to nominate Quincey to stand for election as a director at the 2017 Annual Meeting of Shareowners in April.

• Advancing sustainable business practices: We continued to advance sustainability investments around the world. During the quarter, we announced a combined pledge with the U.S. Agency for International Development of up to $22 million to support the next five-year phase of USAID's Water and Development Alliance. This initiative aims to provide safe water access and sanitation to communities in developing nations in Africa, the Middle East, Asia, and Latin America. During the first phase of this partnership from 2005 to 2017, 35 projects were implemented in 30 different countries. By the end of 2015, these projects had yielded improved water access to over 600,000 people and improved sanitation for over 250,000 people.

Note: Certain rows may not add due to rounding.

¹ For Bottling Investments, this represents the percent change in net revenues attributable to the increase (decrease) in unit case volume after considering the impact of structural changes.
² Organic revenues, comparable currency neutral income before taxes, comparable currency neutral income before taxes (structurally adjusted), and comparable currency neutral EPS are non-GAAP financial measures. Refer to the Reconciliation of GAAP and Non-GAAP Financial Measures section.
³ Effective August 1, 2016, the Company formed a new Europe, Middle East & Africa operating group consisting of business units that were previously included in the Europe and the Eurasia & Africa operating groups.

Note: Certain rows may not add due to rounding.

¹ For Bottling Investments, this represents the percent change in net revenues attributable to the increase (decrease) in unit case volume after considering the impact of structural changes.
² Organic revenues, comparable currency neutral income before taxes, comparable currency neutral income before taxes (structurally adjusted), and comparable currency neutral EPS are non-GAAP financial measures. Refer to the Reconciliation of GAAP and Non-GAAP Financial Measures section.
³ Effective August 1, 2016, the Company formed a new Europe, Middle East & Africa operating group consisting of business units that were previously included in the Europe and the Eurasia & Africa operating groups.

In addition to the data in the preceding tables, operating results were impacted by the following:

• Positive price/mix in the quarter included 2 points of positive segment mix, primarily driven by Latin America. Segment mix did not have a significant impact on the full year positive price/mix.

• Sparkling beverage unit case volume declined 2% for the quarter and was even for the full year. Still beverage unit case volume grew 2% for the quarter and 3% for the full year.

• The decline in income before taxes for both the quarter and the full year included items impacting comparability, primarily due to the derecognition of intangible assets associated with the refranchising of bottling territories in North America. The decline was also impacted by changes in foreign currency exchange rates and structural items. Comparable currency neutral income before taxes (structurally adjusted) (non-GAAP) for both the quarter and the full year benefited from the impact of our productivity initiatives and an increase in equity income, partially offset by a swing from net interest income to net interest expense.

• Cash from operations for the full year was $8.8 billion, down $1.7 billion. This decrease was driven by fluctuations in foreign currency exchange rates and our ongoing refranchising of North America bottling territories as well as bottling transactions in Europe and Africa.

• Purchases of stock for treasury for the full year were $3.7 billion. Net share repurchases (non-GAAP) totaled $2.3 billion for the full year.

• Even price/mix for the quarter included 1 point of unfavorable geographic mix. Positive price/mix for the full year included 1 point of favorable geographic mix. Acquisitions, divestitures, and structural items for the quarter and the full year reflect the impact of bottling transactions in Europe and Africa.

• The decline in income before taxes for both the quarter and the full year included the impact of changes in foreign currency exchange rates and structural items. Comparable currency neutral income before taxes (non-GAAP) for both the quarter and the full year included the unfavorable impact of bottling transactions in Europe and Africa.

• We gained value share in still beverages during the quarter. Unit case volume growth of 1% for both the quarter and the full year included 1 point of growth from acquired brands, which were primarily water brands in Africa. For the full year, sparkling beverage volume was even and still beverage volume grew 3%. Unit case volume growth for the year in our West Africa and Middle East & North Africa business units was partially offset by a decline in our Central & Eastern Europe business unit, which was primarily driven by a unit case volume decline in Russia.

• Positive price/mix for the quarter and for the full year benefited from solid performance in Mexico and several inflationary markets across Latin America.

• We gained value share in total NARTD beverages, sparkling beverages and still beverages during the quarter. For the full year, sparkling beverage volume declined 2% and still beverage volume grew 2%. The total unit case volume decline of 1% for the year was driven by high single-digit declines in both our Brazil and Latin Center business units amidst continued macroeconomic challenges in those regions. These declines were partially offset by mid single-digit unit case volume growth in Mexico.

• Positive price/mix for the quarter and for the full year reflects the continued execution of disciplined occasion, brand, price, and package strategy. Sparkling beverage price/mix grew 4% for the quarter and 3% for the full year.

• Income before taxes for both the quarter and the full year included items impacting comparability and structural impacts. Comparable currency neutral income before taxes (non-GAAP) for the quarter was favorably impacted by the ongoing refranchising in North America.

• We gained value share in total NARTD beverages for the 27^th consecutive quarter. For the full year, sparkling beverage volume growth was slightly positive, rounding to even. Growth in Sprite, Fanta, and energy drinks was offset primarily by a decline in Diet Coke. Full year still beverage volume grew 3%, primarily driven by growth in water which included double-digit growth in smartwater. Volume in the dairy category grew double digits and vitaminwater grew mid single digits.

• Positive price/mix for the quarter included 1 point of favorable geographic mix. Geographic mix did not have a significant impact on the negative price/mix for the full year.

• We gained value share in sparkling beverages during the quarter. For the full year, sparkling beverage volume growth was slightly positive, rounding to even. Full year still beverage volume grew 5%. Unit case volume growth for the full year included mid single-digit growth in our ASEAN business unit and low single-digit growth in our Japan business unit, partially offset by a low single-digit decline in our Greater China & Korea business unit.

• Full year positive price/mix reflects solid performance across several of our key bottling operations, particularly North America and India.

• The decline in income before taxes for both the quarter and the full year included items impacting comparability and structural impacts. For both the quarter and the full year, comparable currency neutral income before taxes (non-GAAP) was unfavorably impacted by the ongoing refranchising of North America bottling territories and the deconsolidation of our German and South African bottling operations. For the full year, comparable currency neutral income before taxes (non-GAAP) also included a favorable impact from the expanded distribution of Monster Beverage Corporation products.

Our 2017 outlook for organic revenues, comparable currency neutral income before taxes (structurally adjusted), and comparable EPS are non-GAAP financial measures that exclude or have otherwise been adjusted for items impacting comparability, the impact of changes in foreign currency exchange rates, acquisitions and divestitures, and the impact of structural items, as applicable. We are not able to reconcile these forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures without unreasonable efforts because we are unable to predict with a reasonable degree of certainty the actual impact of changes in foreign currency exchange rates and the exact timing of acquisitions, divestitures, and/or structural changes throughout 2017. The unavailable information could have a significant impact on our full year 2017 GAAP financial results.

Full Year 2017 Underlying Performance:

• Approximately 3% growth in organic revenues (non-GAAP)

• 7% to 8% growth in comparable currency neutral income before taxes (structurally adjusted) (non-GAAP), driven by strong operating performance partially offset by an increasing interest rate environment

Full Year 2017 Currency Impact:

• Net revenues: 1% to 2% headwind based on the current spot rates and including the impact of hedged positions

• Income before taxes: 3% to 4% headwind based on the current spot rates and including the impact of hedged positions

Full Year 2017 Acquisitions, Divestitures, and Structural Items Impact:

• Net revenues: 18% to 19% headwind from acquisitions, divestitures, and structural items

• Income before taxes: 5% to 6% structural headwind

Full Year 2017 Other Items:

• Underlying effective tax rate (non-GAAP): 24%*

• Net share repurchases (non-GAAP): Approximately $2.0 billion

• Net capital expenditures: $2.0 billion to $2.5 billion

Full Year 2017 EPS: Comparable EPS (non-GAAP) 1% to 4% decline versus $1.91 in 2016

First Quarter 2017 Considerations:

• Net revenues: 12% to 13% headwind from acquisitions, divestitures, and structural items; 1% to 2% currency headwind based on the current spot rates and including the impact of hedged positions

• Income before taxes: 1% to 2% structural headwind; 3% to 4% currency headwind based on the current spot rates and including the impact of hedged positions

• Two fewer days when compared to first quarter 2016

Full Year 2018 Considerations:

• Net revenues: 16% to 17% headwind from acquisitions, divestitures, and structural items

• Income before taxes: 1% to 2% structural headwind; low single-digit currency headwind based on the current spot rates and including the impact of hedged positions

• Underlying effective tax rate (non-GAAP): 26%*

^{*Does not include any impact from potential tax reform}

• All references to growth rate percentages and share compare the results of the period to those of the prior year comparable period.

• All references to volume and volume percentage changes indicate unit case volume, unless otherwise noted. All volume percentage changes are computed based on average daily sales for the fourth quarter, unless otherwise noted, and are computed on a reported basis for the full year. "Unit case" means a unit of measurement equal to 24 eight-ounce servings of finished beverage. "Unit case volume" means the number of unit cases (or unit case equivalents) of Company beverages directly or indirectly sold by the Company and its bottling partners to customers.

• "Core business" represents the combined performance from the Europe, Middle East & Africa; Latin America; North America; Asia Pacific; and Corporate operating segments offset by intersegment eliminations.

• "Concentrate sales" represents the amount of concentrates, syrups, beverage bases, and powders sold by, or used in finished beverages sold by, the Company to its bottling partners or other customers. In the reconciliation of reported net revenues, "concentrate sales" represents the percent change in net revenues attributable to the increase (decrease) in concentrate sales volume for our geographic operating segments (expressed in equivalent unit cases) after considering the impact of structural changes. For our Bottling Investments operating segment, this represents the percent change in net revenues attributable to the increase (decrease) in unit case volume after considering the impact of structural changes. Our Bottling Investments operating segment reflects unit case volume growth for consolidated bottlers only.

• "Price, product, and geographic mix" represents the change in revenues caused by factors such as price changes, the mix of products and packages sold, and the mix of channels and geographic territories in which sales occurred.

• "Sparkling beverages" means NARTD beverages with carbonation, including carbonated energy drinks and waters.

• "Still beverages" means nonalcoholic beverages without carbonation, including noncarbonated waters, flavored waters and enhanced waters, juices and juice drinks, teas, coffees, sports drinks, dairy, and noncarbonated energy drinks.

• First quarter 2016 financial results were impacted by one less day and fourth quarter 2016 financial results were impacted by two additional days. Unit case volume results for the quarters are not impacted by the variance in days due to the average daily sales computation referenced above.