At this time, I would like to welcome everyone to The Coca-Cola Company's full-year and fourth quarter 2012 earnings results conference call. Today's call is being recorded. If you have any objections, you may disconnect at this time. All participants will be in a listen-only mode until the formal question-and-answer portion of the call. (Operator Instructions) Due to the interest in this call, we request a limit of one question per person. I would like to remind everyone that the purpose of this conference is to talk with investors, and therefore, questions from the media will not be addressed. Media participants should contact Coca-Cola's Media Relations department if they have questions. I would now like to introduce Mr. Jackson Kelly, Vice President and Investor Relations Officer. Mr. Kelly, you may begin.

Good morning and thank you for being with us today. I am joined by Muhtar Kent, our Chairman and Chief Executive Officer; Gary Fayard, our Chief Financial Officer, Ahmet Bozer, President of Coca-Cola International, Steve Cahillane, President of Coca-Cola Americas and Irial Finan, President of our Bottling Industries Group. Following prepared remarks by Muhtar and Gary this morning, we will turn the call over for your questions. Before we begin, I would like to remind you that this conference call may contain forward-looking statements, including statements concerning long-term earnings objectives and should be considered in conjunction with cautionary statements contained in our earnings release and in the company's most recent periodic SEC report. In addition, I would also like to note that we have posted schedules on our company website at www.coca-colacompany.com, under the Reports and Financial Information tab in the Investors section, which reconciles certain non-GAAP financial measures that may be referred to by our senior executives in our discussion this morning, and from time-to-time in discussing our financial performance to our results as reported under Generally Accepted Accounting Principles. Please look on our website for this information. Now, let me turn the call over to Muhtar.

Thank you, Jackson and good morning, everyone. Let me start by saying that we are pleased with our reported results today. In a year marked by further uncertainty in the global economy, once again, we delivered solid volume, solid revenue and solid profit growth. We grew our worldwide volume by 3% in the quarter and 4% for the full year. We generated, in comparable currency neutral, net revenue growth of 5% in the quarter and 6% for the full year in the process delivering net revenues over $48 billion in 2012, consistent with the outlook we provided last quarter, we delivered full year comparable currency neutral operating income growth of 6%. This growth also translated into our company-generating record comparable operating income of more than $11 billion for 2012. Importantly, we met our long-term volume revenue and profit targets for the full year, an accomplishment we are proud of meeting or exceeding every year since we announced our 2020 Vision. In fact, since the first quarter of 2010, and the start of our 2020 Vision, during one of the most difficult macroeconomic environments in recent history, we have firstly grown our daily servings by more than $200 million serving more consumers daily on a global basis than at any other time in our history. Secondly, increased our global volume and value share of both, our Spark or our core sparkling and nonalcoholic ready-to-drink beverages to their highest levels since 2003, and thirdly we added over $30 billion to our company's market capitalization. We are well on our way to doubling our systems' revenues by 2020 to $200 billion, reflecting the ongoing commitment of our entire global system to keep investing together for a better tomorrow, and we are crystal-clear on why we do what we do, so it is our…

Thanks, Muhtar, and good morning, everyone. We are pleased to have once again delivered quality performance results in 2012, making this seventh straight year that our volume and operating income results have been in line with or ahead of our long-term growth targets. Achieving such consistent performance during a time of ongoing macroeconomic uncertainty is a real testament to our global systems' ability to execute our strategic priorities and alignment with our 2020 Vision. Therefore, we remain confident that we will continue to deliver full year volume, revenue and operating income results in line with our long-term growth targets. So let's review our results in more detail starting with our comparable earnings per share which came in at $0.45 this quarter, up 15% versus the prior year. Our full year comparable earnings per share came in at $2.01, up 5% despite facing what we estimate was about a 4% currency headwind for the full year. Our comparable currency neutral net revenues grew 5% in the quarter. The currency impact on this quarter's comparable net revenue results was a 1% headwind. Our full year comparable currency neutral net revenue growth was up 6% in line with our long-term growth target. On a comparable basis, the impact of currency on our full-year net revenue results was a 3% headwind. Our comparable currency neutral operating income was up double digits this quarter consistent with the outlook that we shared in our earnings call last quarter. As Muhtar shared a few moments ago, on a full-year basis our comparable currency neutral operating income came in at 6% as expected and in line with our long-term growth target. During our last few earnings call we shared a more specific full year 2012 outlook across several financial items to help those of you who model our…

(Operator Instructions) Our first question is from Bill Schmitz of Deutsche Bank.

Good morning. Muhtar, I know you have been doing a lot of globe hopping recently. So maybe you can just talk about the global macro, maybe some granularity about regional growth rates. I know you were at Sochi and Davos, just can you give us some color on how you sense things are going to trend over the next year. I know you have kind of covered this but maybe some more granularity?

Yes, Bill, I think I have recently been to Korea, to Australia, in the last 10 days to also Southern Russia and Sochi but I think essentially in Europe there is a sentiment there that people are beginning to feel that it is not going to get any worse, that there will be some expansion happening as we move forward and sort of just purely fiscal restraint and monetary restraint. So that feeling is beginning to emerge but I think it is going to be long recovery. Certainly in China we are seeing the transition happened from a purely export led economy to one that is more balanced with consumer spending and a combination consumer spending as well as export led, a balanced economy I think there was challenges in that transition initially where there was a divergence between GDP growth and pure disposable incomes for a while but I think, long-term that’s going to be very beneficial for every one, this transition in China. I think in general Japan is going to also, the consumer sentiment will continue to be mobile and volatile there and it is subdued. For the rest of the world, whether it's Africa, the youngest billion, Latin America, Eurasia, our Middle East, we see and of course, Asia, Southeast Asia and other parts of Asia, Indian subcontinent, we see growth, we see very disciplined, monetary policy, balanced budgets, good banking system and the consumer is more positive, and so it's modeled, and it's mixed here into United States, we see some signs of improvement. We need to wait and evaluate the impact of the payroll taxes as well as the higher gasoline prices. It's too early to say that it's a recovery that is at best look on, but we feel that it could get better. That's how we see the world, and based on that we continue to invest for opportunity, we continue to invest based on our long-term models and plans with our bottling partners to continue to generate both, volume, top line and income growth.

Great. Thanks very much. Then a follow-up with the change in the structure of CCR North America, I mean, does this change your philosophy on sort of how long you are going to own the asset and maybe how it's going to be operated going forward.

Sorry. Are you talking about just the restructuring?

Exactly, three different regions, I guess there were seven businesses and now there is three. Does that change your view on how long that asset stays with GCC?

Yes. It's got nothing to do with that that at all. Think if it as last year we announced a new productivity reinvestment program that includes continued synergies from our North America CCR, Coca-Cola Refreshment operations to be able to enable us to continue to invest in our brands to grow in North America, 11 consecutive quarters of growth. When we first talked about growth in North America back in '09, people thought that we were trying to go to the moon without lighter, and now its reality 11 quarters of consecutive growth and we intend to continue that. We see this as a growth market and therefore enabled us to continue to invest in our brands. This is just ordinary course of business. Think about it exactly like that It's not a big deal, ordinary course of business and therefore it's got nothing to do with the United States' bottling structure. It's just part of our ongoing business and I'll have Steve Cahillane is here with me on this call, as well as, Ahmet Bozer in area of finance, so I can ask Steve to also comment.

Yes. You said it very well. This is very much an effectiveness play. Two years ago, when we put these businesses together, we had a simple mantra. First was, we're going to make it work. Then we were going to make it better than then we were going to make it best. We've learned a lot over the course of last two-and-a-half years. One of our most successful organizations is our food service organization, which is aligned around three geographic units. we're moving our national retail sales and our field sales organization also around the same two units which will really build our total efficiency and effectiveness, our ability to work together, our ability to continue to invest in this market, invest against our brands, put more feet on the street, so we are very excited about new organization in Bangalore, to get us from making it better to making it.

Your next question comes from Bill Pecoriello of Consumer Edge Research.

Good morning, everybody. I just wanted to re-clarify one thing first Gary. Hitting the long-term FX neutral operating profit target you expect to do that in 2013 as well as in the long run. And then in with closing euro operating expense leverage guided for '13 despite the savings, you're signaling step up spending, so just want to get an idea of where you are focusing that incremental spending on. Thanks.

Thanks, Bill. Yes. And, I was trying to be pretty clear, but let me be very clear. We expect to hit our long-term growth target targets both, in 2013 and long-term. That applies to 2013 as well, so we are comfortable with that and we would expect to be able to deliver that. The second thing is, we have always had demand to invest through a crisis. We've been in a global crisis for a number of years now, but we've got history and we've seen what happens when you invest through the crisis when you come at the other end, as Muhtar says, we see things slowly improving across the globe, but we expect to come out that the other end much stronger than we were even going in. And so, we are going to continue to drive efficiencies, productivity and then reinvestment that back to grow the business and growing the brand. The brands are stronger than they have ever been but we think we can drive it even further. So we are going to continue to invest behind the brands.

Just one point to add on that, Bill. I always say, as you go up the air gets thinner. Always remember, we are adding on top of significant increases from prior years all the time. Just on sparkling beverages alone, we have added over 0.5 billion cases each year. So we are cycling that every year and we are continuing to grow. I think that is really important and in three years, the worse that gets probably macroeconomic environment we have seen for a long time, we were able to generate volume growth in line with our growth expectations, revenue growth in line with our growth expectations and income growth and generating record revenues of $48 billion record income as well as record cash flow. So I think it needs to be taken into that context. Continue to crack the calculus for growth.

Your next question comes from Judy Hong of Goldman Sachs.

So, Muhtar, I know you spoke a lot about the macro environment but maybe you can speak a little bit about the competitive environment particularly around U.S. sparkling, China and parts of Western Europe where you have seen some step up in competitive pressure and how that's affected your volume performance and how you see that trending in 2013?

I think in the United States where, as you have heard, we continued to gain both volume and value share. All over the world, our share is at an all-time high. Everywhere across the world in NARTD as well as in the different categories that were operating in and competing in and we choose to compete in. Similarly in China in sparkling we have widened our gap to our nearest international competitor in sparkling. In Europe, I there has been a month or two where we have had some challenges but overall for the whole year, we have again gained share across the whole of broader Europe, in Western Europe as well as Eastern Europe and in Southeast Europe across the whole continent, in both volume and value share. To be frank, we see competition is healthy and it keeps us on our toes, it keeps us executing better and being better, becoming more efficient and more productive and all we strive every single day as the business system together with our assembly by bottlers around the world as we strive to get better at making decisions, quicker so that we can be more nimble and more innovative. As you know we have launched more than 800 types of different products over the last four or five years. Many of them are new innovative products that are gaining great traction as they are in the United States. Look at the performance of our still business. Look at the relative performance of our sparkling business. I mentioned that between 2009 and 2012, spend per person on our brands went up from $56 to $60. So transactions are up the United States. Our brand, price, package and channel allocation architecture is working in the United States. So both in China transactions are ahead of our volume as well as in the United States immediate consumption business. So judge us not only by pure volume, judge us by the quality of our volume and transaction growth. We sell and the end-consumers buy packages and products, a combination of packages and products, each one at a time. They don’t buy liters. So that is really important thing to understand and how we think about it.

Okay, and then Gary just following up on currency guidance for the full year. So it seems like the first quarter guidance is actually a little bit worse than I thought. So can you just help us understand, is that based on our hedge position and with the Yen moving pretty sharply how much are you hedge spending in?

Judy, we are actually fully hedged on the Yen, Euro and Sterling. So coming back to the last Yen position that we have are actually on the money, they are in a good place. So that’s not an issue. When you look at the first quarter, it was actually, I said 4%, it was pre-Venezuela, 4.5%. So the Venezuela devaluation obviously is a big one when devalued 50%. So that's number one. But number two, the real impact is not what you would expect. It's not the yen, the impact are the rates that were cycling in the emerging markets particularly, Latin America. If you look at Brazil, look at Mexico, goes look at the rate at early last year and then they started devaluing South Africa as well. So, if you look at those you will see improving trend, so towards the latter part of 2013, based on where spot is today, we actually turned positive all with kind of even to minus 1 for the full year, but it's frontend loaded negative and then it is improving throughout the year.

And then on Venezuela, Gary, just the impact you are purely looking at translational impact or some sort of margin impact as you have the pricing control in place?

We've got a wealth of monitor assets. That was 100 to 125, and so if you look in the Wall Street Journal article this morning, we just were on a list of other companies that have the same issue, so that's kind of a one-time items, but I am just telling you has occurred, will occur. Then the translation impact of the revenues will be about 1% drag in the first quarter.

Your next question comes from John Faucher with JPMC.

Thank you. Just two questions here. Gary, just sort of more of a housekeeping type of thing, as you look at the commentary on the net interest line, it seems as though that can create a situation and there is probably not much leverage if any below the operating lines. If you could just sort of confirm that. And then secondly, as we look at the organic top line growth in terms of just simply the bottler case sales, volume less price mix decelerated. It looks like to me at least every quarter this year, so can you talk about how you see that trending up as we go through the course of 2012. You got difficult comparisons in the first half of the year, and sort of how that's going to play into your comfort level of hitting that 6% to 8% currency neutral operating profit target. Thanks.

Sure, John. Yes. Let me see if I can get the first half of your question. First, the low operating income growth, you are right, because we will see net interest flow from interest income to interest expense. There are a couple of things going on in there. Primarily its rates and just rates are down, particularly in some of the emerging markets where we've got some cash, which was generating a lot of interest income. You saw that happening during the latter part of this year and all the reason that interest income was actually a lot better than in the fourth quarter than I told you to expected to be was actually we put on some interest rate swap hedges a couple of years ago. There is a small ineffectiveness piece to that hedge and ineffective piece has to go through the P&L. That was actually pretty large this quarter, positive and it gave us lot of interest income, so that's part of what you are seeing. In equity income, you are going to get some leverage just going to be up because of structural items that talked about from some of the transactions that have occurred. Then if we go to the second half of your question was tell me again?

Just looking at the deceleration in the organic top line growth and again how that maps out over the course of the year and the comfort on, let's say, the 6% there?

Well, I think there are a couple of different things. There, I think, we are going to see improving and slowly improving trends in many of the markets around the world. Europe, I think, will improve. My expectation is that Europe will improve in 2013 from well, we had pretty good improvement from the fourth quarter of 2012. So I would say, you are going to actually see sequential improvement in Europe, you are going to see sequential improvement in China for sure. I think that U.S. is poised now also in a pretty good place. Number one, I think, volumes in 2012 dipped a little bit in the fourth quarter. Our view is that is not the start of a trend. We think that just it happened but it is not the start of a trend and we would expect volume actually to be okay in 2013 and we think it will sequentially start coming back and be better and be okay in 2013.

John, just to add on that. I think very little is always said about the 120 or so countries which have a per capita around 125 in our business where volume growth for just 2012 will again 7%. These countries represented about a little more than one third of our total global volumes. Countries that we never talk about. Whether it is Sub-Sahara or whether it is in Asia or Middle East or Central Asia and so forth. But we grew in these countries 9% in 2010, 7% in 2011, 7% in 2012. We keep on growing. This is the beauty of our portfolio, in fact. So while you may have a quarter where China doesn’t grow, or where Europe doesn’t grow, we still continue to be able to deliver on our long-term growth model, both volume and also for revenues. Imagine what would have happened to our volume if Europe did grow this past quarter and China. So this is that the benefit of having this portfolio which is getting stronger and bigger as we continue to invest with our bottling partners in alignment.

Okay, and then finally one housekeeping question. Gary you mentioned the equity income line. That’s coming out of the operating profit line. So as you look at hitting your target, I am assuming that’s before the bottler deconsolidation, right? So that 6% to 8%, minus one for the bottler minus one for the FX, is kind of how we should look at it?

Yes, John. That is exactly right. So when I said, hit the target, we hit the target before structural but then you would have to adjust for structural. That's with pretax or net income being sign. This is just what is the geographies within the P&L.

Thank you. Your next question comes from Ali Dibadj with Bernstein.

Can you give us a little bit more of a sense of against the go forward evolution of the brands globally and in the U.S.? If you look at Germany, that strength this quarter and you wanted to do some system changes there, Japan showing inconsistent changes and that’s a struggle, China is struggling a little bit and there were competitive system changes there, also the U.S. sparkling bottling just got tough and you have got it back to a year ago. Gary has pointed volume trends are a trend or not, it just seems that given all that, you might actually for next few years with very large changes through the Coca-Cola system and the industry overall, so if you were to close your eyes and see with us, how would you see the structure of the system of the future looking versus what it is today?

Ali, I have always said that the fact that we are a total believer in the franchise system. It is a beautiful system when you get to work as we have aligned in four divisions, aligned with its goals and aligned in its ownership objectives and goals. That’s what we have. Therefore we will continue to drive this bottling system with an aligned vision which we have. As I said, we have got three years that we have accomplished that and seven years to go and we are confident that we can continue to accomplish. As we move through the system, you have already heard us talk about what we see in the business for the U.S. system where we have a role, again, for our bottling partners. We still have the same time table for that. I won't repeat that the time table was. We said about four to five years since the time that we close the transaction and you can figure we still believe that this doable. As we move along different parts of the world, you see us creating stronger systems like Brazil, stronger systems like Kanto. That is a huge milestone in the 55 year history of our Japanese business getting the four Kanto bottlers to unite and to take cost out of it and continue to invest to drive top line growth for our system. You will see us doing well as we move forward. Again refranchising Philippines is another example, so don't think of this as seismic changes in our bottling system. We will continue to fine-tune and evolve as needed as necessary to drive the goals that we have outlined.

It's helpful, I guess I am still struggling with what can we look forward to changes in terms of not being as reactionary, but maybe thinking going forward and maybe if you can help me? You mentioned the U.S. you mentioned a little while ago, so it's been about two years since you closed the CCE North America transaction. Can you give us a sense of where you think you are ahead of plan and where you are behind plan? Certainly for many investors this quarter was probably (inaudible) because operating margin starts inflect positively, but is it sustainable without any more meaningful restructuring and bigger things? How do you think about the volume trends we have been seeing so far in sparkling when that changes anything how you think not reactionarily, but going forward about the structures here. A different example of.

Well, first, let me just say everywhere we are doing, none of it is reactionary to these four, whether it's Brazil, whether it's Philippines, whether it's Japan and we've got more to talk about too, we are not in a position to talk about right now. All of that is actually prices and U.S. is all about prices. And I can tell you very clearly, once again that as I mentioned in Judy's question judges not only by the meters, judges also by the transaction, judges by how we are doing in terms of value of the business that we are creating and the consumer spend that's coming into our business into our brand and the health of our brands. This is ultimately a brand business. Our brands are healthier than they have ever been both, in sparkling as well as in still beverages. So, I repeat, we see opportunities in the United States for us to keep growing and also for us to keep generating value in both sparkling and in still beverages, and that's how we see it and whatever it takes for us to be able to investment, proactive long-term investment is the key, whatever it takes for us to be able to continue our targeted thoughtful, purposeful investments you will see us continuing to do that, so that we our brands remain healthy, our system remains nimble and flexible as far as rest the market as far as production NSR distribution.

Your next question comes from Bryan Spillane of Bank of America.

Hi, good morning. A kind of question on just the productivity program, just really looking for an update. First, I think if you test the two elements of it, both what was initially announced last year plus the extension of the CCR integration, your expectation was $550 million to $650 million annualized savings by the end of 2015, so is that still the same or has there been any change to what you are expecting in terms of total savings?

Bryan, this is Gary. No changes at all. You are exactly right. What we announced the beginning of last year productivity and reinvestment was $550 million to $650 million. The total company, including North America we are still on track in fact well on track on that program. It was a 2012 through 2015 program and we are continuing to execute against that. So, we are on track. We are taking the savings and from the supply chain optimization, the marketing effectiveness, operational excellence, data and that the system standardization was area of that of that whole program in addition to what we were doing in CCR, and we have taken that and we are reinvesting behind innovation as well as marketing of or brands. And that's still working well. What we talked about in North America just today is just a normal part in evolution of that program and we'll continue to do that around the world to drive effectiveness, because it really helps in several different ways It's not only about saving money. It's about operating more effectively, so we can operate faster. Being more productive means we can make decisions quicker and those are things we are driving for. We want to be fast, flexible and very big.

How much did it continue to drive? How much savings did you drive in 2012?

Outside of North America, we probably had about $40 million to $50 million in savings in 2012. Then North America continues to drive synergies and doing fairly well against their part of their targets as well.

It is fair to say you think certainly it will be a bigger, (inaudible) you pulled the savings to spend back than you had in '12?

Yes, it will be.

Okay, and then just one last one. Just how much, in terms of charges are you expecting to take over the life of the plan relative to the savings?

Let me, Brain, answer it this way. As we continue to update you on where we are how big the plan is. So we will call it back to the 650 today but as you know, a few years ago, we had another program as well that we concluded and started this one. So we continue to look for efficiencies and effectiveness. But everything we look at when we evaluated, we would expect that the one time cost ought to be in a ratio of no more of 1 to 1.5:1 payback. So you are taking about 12 to 18 months on something that’s then continuous benefit to the P&L going forward.

Thank you, Gary, Ahmet, Steve, Irial and Jackson. In closing, we had a strong 2012 and we once again delivered quality full-year performance results. Our business continues to grow, even in the midst of ongoing global economic challenges. Our system is aligned and it is on track to achieve our 2020 Vision. Together, we are consistently investing in our brands on a global scale through world-class marketing and commercial strategies. As we get closer to the midpoint of our 2020 Vision, our system remains resolutely focused on refreshing our achievements, creating value for our customers, maintaining strong partnerships with our bottling partners, strategically investing for the future and expanding shareholder value. As always, we thank you for your interest and your investment in our company and for joining us on this call.

Thank you for participating in today's conference call with The Coca-Cola Company. Audio playback is available via the company's website thecoca-colacompany.com. You may now all disconnect.