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FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] 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. 001-02217
THE COCA-COLA COMPANY
(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 30313
ATLANTA, GEORGIA (Zip Code)
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (404) 676-2121
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ------------------------
COMMON STOCK, $.25 PAR VALUE NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
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 [X] NO [ ]
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. [ ]
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 FEBRUARY 20, 1998, (BASED
ON THE CLOSING SALE PRICE OF THE REGISTRANT'S COMMON STOCK AS
REPORTED ON THE NEW YORK STOCK EXCHANGE ON SUCH DATE) WAS
$147,680,164,792.
THE NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK
AS OF FEBRUARY 26, 1998, WAS 2,471,368,515.
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE COMPANY'S ANNUAL REPORT TO SHARE OWNERS FOR THE
YEAR ENDED DECEMBER 31, 1997, ARE INCORPORATED BY REFERENCE IN
PARTS I, II AND IV.
PORTIONS OF THE COMPANY'S PROXY STATEMENT FOR THE ANNUAL MEETING
OF SHARE OWNERS TO BE HELD ON APRIL 15, 1998, ARE INCORPORATED BY
REFERENCE IN PART III.
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PART I
ITEM 1. BUSINESS
The Coca-Cola Company (the "Company" or the "Registrant") was
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. The Company
is the largest manufacturer, distributor and marketer of soft
drink concentrates and syrups in the world. Finished soft drink
products bearing the Company's trademarks, sold in the United
States since 1886, are now sold in nearly 200 countries and
include the leading soft drink products in most of these
countries. The Company also is the world's largest distributor
and marketer of juice and juice-drink products.
The Company is one of numerous competitors in the commercial
beverages market. Of the approximately 48 billion beverage
servings of all types consumed worldwide every day, beverages
bearing the Company's trademarks ("Company Trademark Beverages")
account for approximately one billion.
The business of the Company is nonalcoholic beverages --
principally soft drinks but also a variety of noncarbonated
beverages. As used in this report, the term "soft drinks" refers
to nonalcoholic carbonated beverages containing flavorings and
sweeteners, excluding flavored waters and carbonated or
noncarbonated teas, coffees and sports drinks.
The Company's operating management structure consists of five
geographic groups plus The Minute Maid Company. The geographic
groups are the Africa Group; the Greater Europe Group; the Latin
America Group; the Middle and Far East Group; and the North
America Group. The Minute Maid Company is an operating group of
the Company that produces, distributes and markets principally
juice and juice-drink products.
Of the Company's consolidated net operating revenues and
operating income for each of the past three years, excluding
corporate operations, the percentage represented by geographic
area (inclusive of The Minute Maid Company, which is primarily
included in the North America Group) is as follows:
Greater Latin Middle North
Africa Europe America and Far America
East
------ ------- ------- ------- -------
Net Operating
Revenues{1}
1997 3% 29% 11% 23% 34%
1996 3% 32% 11% 22% 32%
1995 3% 33% 11% 22% 31%
Operating Income{1}
1997 3% 27% 18% 28% 24%
1996 3% 28% 18% 30% 21%
1995 4% 28% 18% 31% 19%
The Company manufactures and sells soft drink and
noncarbonated beverage concentrates and syrups, including
fountain syrups, some finished beverages, and certain juice and
juice-drink products. Syrups are composed of sweetener, water
and flavoring concentrate. The concentrates and syrups for
bottled and canned beverages are sold by the Company to
authorized bottling and canning operations. The bottlers or
canners of soft drink products either combine the syrup with
carbonated water or combine the concentrate with sweetener, water
and carbonated water to produce finished soft drinks. The
finished soft drinks are packaged in authorized containers
bearing the Company's trademarks -- cans, refillable and non-
refillable glass and plastic bottles -- for
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{1} See Note 15 to the Consolidated Financial Statements, on
page 60 of the Company's Annual Report to Share Owners for the
year ended December 31, 1997, incorporated herein by reference.
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sale to retailers or, in some cases, wholesalers. Fountain
syrups are manufactured and sold by the Company, principally in
the United States, to authorized fountain wholesalers and some
fountain retailers. (Outside the United States, fountain syrups
typically are manufactured by authorized bottlers from
concentrates sold to them by the Company.) Authorized fountain
wholesalers (including certain authorized bottlers) sell fountain
syrups to fountain retailers. The fountain retailers use
dispensing equipment to mix the syrup with carbonated or still
water and then sell finished soft drinks or noncarbonated
beverages to consumers in cups and glasses. Finished beverages
manufactured by the Company are sold by it to authorized bottlers
or distributors, who in turn sell these products to retailers or,
in some cases, wholesalers. Both directly and through a network
of brokers, juice and juice-drink products are sold by the
Company to retailers and wholesalers in North America and in
addition, to a limited extent, are distributed outside North
America.
The Company's beverage products, including bottled and canned
beverages produced by independent and Company-owned bottling and
canning operations, as well as concentrates and syrups, include
Coca-Cola, Coca-Cola classic, caffeine free Coca-Cola, caffeine
free Coca-Cola classic, diet Coke (sold under the trademark
Coca-Cola light in many countries outside the United States),
caffeine free diet Coke, Cherry Coke, diet Cherry Coke, Fanta
brand soft drinks, Sprite, diet Sprite, Mr. PiBB, Mello Yello,
TAB, Fresca, Barq's root beer and other flavors, Surge, Citra,
POWERaDE, Fruitopia, Minute Maid flavors, Saryusaisai, Aquarius,
Bonaqa, Lift and other products developed for specific countries,
including Georgia brand ready-to-drink coffees, and numerous
other brands. The Minute Maid Company, with operations primarily
in the United States and Canada, produces, distributes and
markets principally juice and juice-drink products, including
Minute Maid brand products; Five Alive brand refreshment
beverages; Bright & Early brand breakfast beverages; Bacardi
brand tropical fruit mixers (manufactured and marketed under a
license from Bacardi & Company Limited); and Hi-C brand ready-to-
serve fruit drinks. Additionally, Coca-Cola Nestle Refreshments,
the Company's joint venture with Nestle S.A., markets ready-to-
drink teas and coffees in certain countries.
In 1997, concentrates and syrups for beverages bearing the
trademark "Coca-Cola" or including the trademark "Coke" accounted
for approximately 68% of the Company's total gallon shipments{2} of
beverage concentrates and syrups. (Physical units of concentrate
have been converted to their equivalents in gallons of syrup in
all cases in this report where reference is made to "gallons" or
"gallon shipments" of beverage concentrates and syrups.)
In 1997, approximately 29% of the Company's total gallon
shipments of beverage concentrates and syrups were in the United
States. In 1997, the Company's principal markets outside the
United States, based on gallon shipments of beverage concentrates
and syrups, were Mexico, Brazil, Japan and Germany, which
together accounted for approximately 26% of the Company's total
gallon shipments.
In the United States, in 1997 the Company made approximately
65% of its total United States gallon shipments of beverage
concentrates and syrups ("U.S. gallon shipments") to
approximately 111 authorized bottler ownership groups in
approximately 398 licensed territories. Those bottlers prepare
and sell finished beverages bearing the Company's trademarks for
the food store and vending machine distribution channels and for
other distribution channels supplying home and on-premise
consumption. The remaining 35% of 1997 U.S. gallon shipments was
attributable to fountain syrups sold to fountain retailers and to
approximately 836 authorized fountain wholesalers, some of whom
are authorized bottlers. These fountain wholesalers in turn sell
the syrups or deliver them on the Company's behalf to restaurants
and other fountain retailers. Coca-Cola Enterprises Inc.
("Coca-Cola Enterprises") and its bottling subsidiaries and
divisions accounted for approximately 48% of the
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{2} The Company measures sales volume in two ways: (1) gallon
shipments of concentrates and syrups and (2) unit cases of
finished product. Gallon shipments represent the primary
business of the Company and measure the volume of concentrates
and syrups sold by the Company to the Coca-Cola bottling system.
Most of the Company's revenues are based on this measure of
"wholesale" activity. The Company also measures volume in unit
cases, which represent the amount of finished product the
Coca-Cola bottling system sells to retail customers. The
Company believes unit case volume more accurately measures the
underlying strength of its business system because it measures
trends at the retail level. The Company includes fountain
syrups sold directly to its customers in both measures.
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Company's U.S. gallon shipments in 1997. The Company holds an
ownership interest of approximately 44% in Coca-Cola Enterprises,
which is the world's largest bottler of Company Trademark
Beverages.
In addition to conducting its own independent advertising and
marketing activities, the Company may choose to provide
promotional and marketing services and/or funds and consultation
to its bottlers and to fountain and bottle/can retailers. Also
on a discretionary basis, the Company may develop and introduce
new products, packages and equipment to assist its bottlers,
fountain syrup wholesalers and fountain beverage retailers.
The profitability of the Company's business outside the
United States is subject to many factors, including governmental
trade regulations and monetary policies, economic and political
conditions in the countries in which such business is conducted
and the risk of changes in currency exchange rates and
regulations.
BOTTLER'S AGREEMENTS AND DISTRIBUTION AGREEMENTS
Separate contracts ("Bottler's Agreements") between the
Company and each of its bottlers regarding the manufacture and
sale of soft drinks, subject to specified terms and conditions
and minor variations, generally authorize the bottler to prepare
particular designated Company Trademark Beverages, to package the
same in particular authorized containers, and to distribute and
sell the same in (but generally only in) an identified territory.
The bottler is obligated to purchase its entire requirement of
concentrates or syrups for the designated Company Trademark
Beverages from the Company or other authorized suppliers. The
Company typically agrees to refrain from selling or distributing
or from authorizing third parties to sell or distribute the
designated Company Trademark Beverages throughout the identified
territory in the particular authorized containers; however, the
Company typically reserves for itself or its designee the right
(i) to prepare and package such beverages in such containers in
the territory for sale outside the territory and (ii) to prepare,
package, distribute and sell such beverages in the territory in
any other manner or form.
The Bottler's Agreements between the Company and its
authorized bottlers in the United States differ in certain
respects from those in the other countries in which Company
Trademark Beverages are sold. As hereinafter discussed, the
principal differences involve the duration of the agreements; the
inclusion or exclusion of canned beverage production rights; the
inclusion or exclusion of authorizations to manufacture and
distribute fountain syrups; in some cases, the degree of
flexibility on the part of the Company to determine the pricing
of syrups and concentrates; and the extent, if any, of the
Company's obligation to provide marketing support.
OUTSIDE THE UNITED STATES. The Bottler's Agreements between
the Company and its authorized bottlers outside the United States
generally are of stated duration, subject in some cases to
possible extensions or renewals of the term of the contract.
Generally, these contracts are subject to termination by the
Company following the occurrence of certain designated events,
including defined events of default and certain changes in
ownership or control of the bottler.
In certain parts of the world outside the United States, the
Company has not granted canned beverage production rights to the
bottlers. In such instances, the Company or its designee
typically sells canned Company Trademark Beverages to the
bottlers for sale and distribution throughout the designated
territory under can distribution agreements, often on a non-
exclusive basis. A majority of the Bottler's Agreements in force
between the Company and bottlers outside the United States
authorize the bottler to manufacture and distribute fountain
syrups, usually on a non-exclusive basis.
The Company generally has complete flexibility to determine
the price and other terms of sale of concentrates and syrups to
bottlers outside the United States and, although in its
discretion it may determine to do so, the Company typically has
no obligation under such Bottler's Agreements to provide
marketing support to the bottlers.
WITHIN THE UNITED STATES. In the United States, with certain
very limited exceptions, the Company's Bottler's Agreements for
cola-flavored beverages have no stated expiration date and the
contracts for other flavors are of stated duration, subject to
bottler renewal rights. The Bottler's Agreements in the United
States are subject to termination by the Company for
nonperformance or upon the occurrence of certain defined events
of default which
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may vary from contract to contract. The hereinafter
described "1987 Contract" is terminable by the Company upon the
occurrence of certain events including: (1) the bottler's
insolvency, dissolution, receivership or the like; (2) any
disposition by the bottler or any of its subsidiaries of any
voting securities of any bottler subsidiary without the consent
of the Company; (3) any material breach of any obligation of the
bottler under the 1987 Contract; or (4) except in the case of
certain bottlers, if a person or affiliated group acquires or
obtains any right to acquire beneficial ownership of more than
10% of any class or series of voting securities of the bottler
without authorization by the Company.
Under the terms of the Bottler's Agreements, bottlers in the
United States are authorized to manufacture and distribute
Company Trademark Beverages in bottles and cans, but generally
are not authorized to manufacture fountain syrups. Rather, the
Company manufactures and sells fountain syrups to approximately
836 authorized fountain wholesalers (including certain authorized
bottlers) and some fountain retailers. The wholesalers in turn
sell the syrups or deliver them on the Company's behalf to
restaurants and other retailers. The wholesaler typically acts
as such pursuant to a non-exclusive annual letter of appointment
which neither restricts the pricing of fountain syrups by the
Company nor the territory in which the wholesaler may resell in
the United States.
In the United States, the form of Bottler's Agreement for
cola-flavored soft drinks that covers the largest amount of U.S.
volume (the "1987 Contract") gives the Company complete
flexibility to determine the price and other terms of sale of
soft drink concentrates and syrups for cola-flavored Company
Trademark Beverages ("Coca-Cola Trademark Beverages") and other
Company Trademark Beverages. Bottlers operating under the 1987
Contract accounted for approximately 76% of the Company's total
United States gallon shipments for bottled and canned beverages
("U.S. bottle/can gallon shipments") in 1997. Certain other
forms of the U.S. Bottler's Agreement, entered into prior to
1987, provide for soft drink concentrates or syrups for certain
Coca-Cola Trademark Beverages to be priced pursuant to a stated
formula. The oldest such form of contract, applicable to
bottlers accounting for approximately 1% of U.S. bottle/can
gallon shipments in 1997, provides for a fixed price for
Coca-Cola syrup used in bottles and cans, subject to quarterly
adjustments to reflect changes in the quoted price of sugar.
Bottlers accounting for the remaining approximately 23% of U.S.
bottle/can gallon shipments in 1997 have contracts for certain
Coca-Cola Trademark Beverages with pricing formulas generally
providing for a baseline price that may be adjusted periodically
by the Company, up to a maximum indexed ceiling price, and that
is adjusted quarterly based upon changes in certain sugar or
sweetener prices, as applicable.
Standard contracts with bottlers in the United States for the
sale of concentrates and syrups for non-cola-flavored soft drinks
in bottles and cans permit flexible pricing by the Company.
Under the 1987 Contract, the Company has no obligation to
participate with bottlers in expenditures for advertising and
marketing, but may, at its discretion, contribute toward such
expenditures and undertake independent or cooperative advertising
and marketing activities. Some U.S. Bottler's Agreements that
pre-date the 1987 Contract impose certain marketing obligations
on the Company with respect to certain Company Trademark
Beverages.
SIGNIFICANT EQUITY INVESTMENTS AND COMPANY BOTTLING OPERATIONS
The Company has business relationships with three types of
bottlers: (1) independently owned bottlers, in which the Company
has no ownership interest; (2) bottlers in which the Company has
invested and has a noncontrolling ownership interest; and
(3) bottlers in which the Company has invested and has a
controlling ownership interest. In 1997, independently owned
bottling operations produced and distributed approximately 37% of
the Company's worldwide unit case volume;{3} cost or equity method
investee bottlers in which the Company owns
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{3} As used in this report, the term "unit case" means a unit of
measurement equal to 192 U.S. fluid ounces of finished beverage
(24 eight-ounce servings); and "unit case volume" of the Company,
which refers to the number of unit cases sold by bottlers of
Company Trademark Beverages to customers, includes Company
products (excluding products distributed by The Minute Maid
Company) reported as gallon shipments, and certain other key
products owned by such bottlers.
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a noncontrolling ownership interest produced and distributed
approximately 50% of such worldwide unit case volume; and
controlled and consolidated bottling and fountain operations
produced and distributed approximately 13% of such worldwide unit
case volume.
The Company makes equity investments in selected bottling
operations with the intention of maximizing the strength and
efficiency of the Coca-Cola business system's production,
distribution and marketing systems around the world. These
investments often result in increases in unit case volume, net
revenues and profits at the bottler level, which in turn generate
increased gallon shipments for the Company's concentrate
business. When this occurs, both the Company and the bottlers
benefit from long-term growth in volume, improved cash flows and
increased share-owner value.
The level of the Company's investment generally depends on
the bottler's capital structure and its available resources at
the time of the investment. In certain situations, it can
further the Company's business interests to acquire a controlling
interest in a bottling operation. Although not the Company's
primary long-term business strategy, owning a controlling
interest may compensate for limited local resources, help focus
the bottler's sales and marketing programs, assist in the
development of the bottler's business and information systems,
and assist in the establishment of appropriate capital
structures. In 1997, the Company purchased the bottling assets
of three bottlers of the Company's beverage products in South
Korea. By providing capital and marketing expertise to newly
acquired bottlers, the Company seeks to strengthen their ability
to deliver Company Trademark Beverages to customers and
consumers.
In line with its long-term bottling strategy, the Company
periodically considers options for reducing its ownership
interest in a consolidated bottler. One option for reducing the
Company's ownership interest is to combine the Company's bottling
interests with the bottling interests of others to form strategic
business alliances. Another option is to sell the Company's
interest in a consolidated bottling operation to one of the
Company's noncontrolled equity investee bottlers. In both of
these situations, the Company continues participating in the
previously consolidated bottler's earnings through its portion of
the equity investee's income.
In 1996, a German anchor bottler, Coca-Cola
Erfrischungsgetraenke A.G. ("CCEAG"), was established through the
merger of the Company's then wholly owned east German bottler
with three independent bottlers. In 1997, the Company's
remaining consolidated bottling operation in Germany, Coca-Cola
Rhein-Ruhr, was merged into CCEAG. The Company through a German
subsidiary now owns a 45% interest in CCEAG.
Also in 1996, the Company combined its bottling interests in
Venezuela with the Cisneros Group's bottling companies to form a
new joint venture, Embotelladora Coca-Cola y Hit de Venezuela,
S.A. ("Coca-Cola y Hit"). In 1997, the Company and the Cisneros
Group sold their respective interests in Coca-Cola y Hit to
Panamerican Beverages, Inc. ("Panamco") in exchange for shares of
Panamco stock. At the completion of this transaction, the
Company had an ownership interest in Panamco of approximately 23%
and began accounting for its investment by the equity method.
In cases where the Company's investments in bottlers
represent noncontrolling interests, the Company's intention is to
provide expertise and resources to strengthen those businesses.
In particular, the Company seeks to improve sales and marketing
programs, assist in the development of effective business and
information systems and help establish appropriate capital
structures. During 1997 the Company increased its interest in
Embotelladora Andina S.A., a bottler headquartered in Chile, from
approximately 6% to approximately 11%; its interest in
Embotelladoras Polar S.A., another bottler headquartered in
Chile, from approximately 17% to approximately 19%; and its
interest in Grupo Continental, S.A., a bottler in Mexico, from
approximately 18% to approximately 20%.
Certain bottling operations in which the Company has a
noncontrolling ownership interest are designated as "anchor
bottlers" due to their level of responsibility and performance.
Anchor bottlers are strongly committed to their own profitable
growth which, in turn, helps the Company meet its strategic goals
and furthers the interests of its worldwide production,
distribution and marketing systems. Anchor bottlers tend to be
large and geographically diverse with strong financial and
management resources. In 1997, the Company's anchor bottlers
produced and
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distributed approximately 38% of the Company's worldwide unit
case volume. As of the date of this report, nine companies are
designated as anchor bottlers, providing the Company with strong
partners on every major continent.
Coca-Cola Nordic Beverages ("CCNB"), a joint venture in which
Carlsberg A/S will own a 51% interest and the Company will own a
49% interest, was designated as an anchor bottler in 1997. CCNB
has bottling operations in Denmark and Sweden. Also in 1997, the
Company sold to Coca-Cola Enterprises the Company's 49% interest
in Coca-Cola & Schweppes Beverages Ltd., a bottler in Great
Britain; its 48% interest in Coca-Cola Beverages Ltd. of Canada;
and its 49% interest in The Coca-Cola Bottling Company of New
York, Inc. In addition, in 1997 the Company and San Miguel
Corporation sold Coca-Cola Bottlers Philippines, Inc. to
Coca-Cola Amatil Limited in exchange for shares of Coca-Cola
Amatil Limited stock.
The Company has substantial equity positions in approximately
42 unconsolidated bottling, canning and distribution operations
for its products worldwide, including bottlers representing
approximately 54% of the Company's total U.S. unit case volume in
1997. Of these, significant equity method investee bottlers
include those hereinafter described.
COCA-COLA ENTERPRISES INC. The Company's ownership interest
in Coca-Cola Enterprises is approximately 44%. Coca-Cola
Enterprises is the world's largest bottler of the Company's
beverage products. In 1997, net sales of concentrates and syrups
by the Company to Coca-Cola Enterprises were approximately $2.5
billion, or approximately 13% of the Company's net operating
revenues. Coca-Cola Enterprises also purchases high fructose
corn syrup through the Company; however, related collections from
Coca-Cola Enterprises and payments to suppliers are not included
in the Company's consolidated statements of income. Coca-Cola
Enterprises estimates that the territories in which it markets
beverage products to retailers (which include portions of 44
states, the District of Columbia, the U.S. Virgin Islands,
Canada, Great Britain, the Netherlands, France and Belgium)
contain approximately 64% of the United States population, 94% of
the population of Canada, 97% of the population of Great Britain,
100% of the populations of the Netherlands and Belgium and 92% of
the population of France.
In 1997, approximately 65% of the unit case volume of
Coca-Cola Enterprises (excluding products in post-mix (fountain)
form) was Coca-Cola Trademark Beverages, approximately 24% of its
unit case volume was other Company Trademark Beverages, and
approximately 11% of its unit case volume was beverage products
of other companies. Coca-Cola Enterprises' net sales of beverage
products were approximately $11.3 billion in 1997.
COCA-COLA AMATIL LIMITED ("COCA-COLA AMATIL"). In 1997, the
Company and San Miguel Corporation sold their respective
interests in Coca-Cola Bottlers Philippines, Inc. to Coca-Cola
Amatil in exchange for approximately 293 million shares in
Coca-Cola Amatil. In connection with this transaction, Coca-Cola
Amatil issued to San Miguel Corporation approximately 210 million
shares. This transaction resulted in the Company's ownership
interest in Coca-Cola Amatil being diluted from approximately 36%
to approximately 33%. Coca-Cola Amatil is the largest bottler of
the Company's beverage products in Australia and also has
bottling and distribution rights, through direct ownership or
joint ventures, in New Zealand, Fiji, Austria, Hungary, Papua New
Guinea, the Czech and Slovak Republics, Indonesia, Belarus,
Slovenia, Ukraine, Poland, Switzerland, Romania, Bosnia-
Herzegovina, Croatia and the Philippines. Net concentrate sales
by the Company to Coca-Cola Amatil were approximately U.S.$588
million in 1997. Coca-Cola Amatil estimates that the territories
in which it markets beverage products contain approximately 99%
of the population of Australia, 100% of the populations of New
Zealand, Fiji, Austria, Switzerland, Poland, Hungary, Croatia,
the Czech and Slovak Republics, Belarus, Slovenia, Ukraine and
the Philippines, 83% of the population of Papua New Guinea, 97%
of the population of Indonesia, 46% of the population of Romania
and 74% of the population of Bosnia-Herzegovina.
In 1997, Coca-Cola Amatil's net sales of beverage products
were approximately U.S.$3.3 billion. In 1997, approximately 62%
of the unit case volume of Coca-Cola Amatil was Coca-Cola
Trademark Beverages, approximately 31% of its unit case volume
was other Company Trademark Beverages, approximately 4% of its
unit case volume was beverage products of Coca-Cola Amatil and
approximately 3% of its unit case volume was beverage products of
other companies.
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PANAMERICAN BEVERAGES, INC. ("PANAMCO"). As of the date of
this report, the Company owns an equity interest of approximately
24% in Panamco, a Panamanian holding company with bottling
subsidiaries operating in a substantial part of central Mexico
(excluding Mexico City), greater Sao Paulo, Campinas and Santos,
Brazil, most of Colombia, and all of Costa Rica, Venezuela and
Nicaragua. Panamco estimates that the territories in which it
markets beverage products contain approximately 19% of the
population of Mexico, 15% of the population of Brazil, 97% of the
population of Colombia and 100% of the populations of Costa Rica,
Venezuela and Nicaragua.
In 1997, Panamco's net sales of beverage products were
approximately U.S.$2.5 billion. In 1997, approximately 72% of
the unit case volume of Panamco was Coca-Cola Trademark
Beverages, approximately 26% of its unit case volume was other
Company Trademark Beverages and approximately 2% of its unit case
volume was beverage products of Panamco or other companies.
COCA-COLA FEMSA, S.A. DE C.V. ("COCA-COLA FEMSA"). The
Company owns a 30% equity interest in Coca-Cola FEMSA, a Mexican
holding company with bottling subsidiaries in the Valley of
Mexico, Mexico's southeastern region and Buenos Aires, Argentina.
During 1997, Coca-Cola FEMSA became the sole owner of its
Argentine subsidiary by purchasing the Company's 25% interest in
such subsidiary. Coca-Cola FEMSA estimates that the territories
in which it markets beverage products contain approximately 28%
of the population of Mexico and 29% of the population of
Argentina.
In 1997, Coca-Cola FEMSA's net sales of beverage products
were approximately U.S.$1.1 billion. In 1997, approximately 77%
of the unit case volume of Coca-Cola FEMSA was Coca-Cola
Trademark Beverages, approximately 22% of its unit case volume
was other Company Trademark Beverages, and approximately 1% of
its unit case volume was beverage products of other companies.
OTHER INTERESTS. Under the terms of the Coca-Cola Nestle
Refreshments ("CCNR") joint venture involving the Company, Nestle
S.A. and certain subsidiaries of Nestle S.A., the Company manages
CCNR's ready-to-drink tea business and Nestle S.A. manages CCNR's
ready-to-drink coffee business. The joint venture has sales in
the United States and approximately 33 other countries.
During 1996, The Minute Maid Company entered into a joint
venture agreement with Groupe Danone to produce, distribute and
sell premium refrigerated ready-to-serve fruit juice products
outside the United States and Canada, with an initial focus in
Europe and Latin America. The Minute Maid Company has a 50%
ownership interest in the joint venture. In 1997, the joint
venture launched Minute Maid Premium juices in France, Spain,
Portugal, Belgium and Luxembourg.
OTHER DEVELOPMENTS
In December 1997, the Company signed a letter of intent with
beverage company Pernod Ricard to purchase its Orangina brands
and, in France, three bottling operations and one concentrate
plant. The transaction, which is valued at approximately five
billion French francs, is subject to due diligence, execution of
definitive agreements and approval by applicable regulatory
authorities. Orangina is a carbonated orange soft drink,
containing orange juice and pulp. Other Orangina brands --
Orangina Light, Orangina Plus and Orangina Rouge -- are also
included in the transaction.
In February 1998, the Company announced a proposal for its
Company-owned bottling operations in northern and central Italy
to become part of a new publicly traded European anchor bottler
called Coca-Cola Beverages ("CCB"). CCB is planned to be formed
via a proposed spin-off by Coca-Cola Amatil of its European
operations. Additionally, it was announced that agreement in
principle has been reached for Company-owned bottling operations
in South Korea to be acquired by Coca-Cola Amatil, after the
proposed spin-off is completed.
Once the proposed spin-off of CCB has been completed, (1)
Company-owned bottling assets in northern and central Italy will
be acquired by CCB in exchange for CCB shares and cash in a
transaction valued at approximately U.S.$979 million and (2)
Company-owned bottling assets in South Korea will be acquired by
Coca-Cola Amatil in exchange for Coca-Cola Amatil shares in a
transaction valued at approximately U.S.$588 million. These
proposed
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transactions are subject to certain conditions, including the
execution of definitive agreements and approvals by holders of
ordinary shares of Coca-Cola Amatil stock and applicable
regulatory authorities.
SEASONALITY
Soft drink and noncarbonated beverage sales are somewhat
seasonal, with the second and third calendar quarters accounting
for the highest sales volumes in the Northern Hemisphere. The
volume of sales in the beverages business may be affected by
weather conditions.
COMPETITION
The Company competes in the nonalcoholic beverages segment of
the commercial beverages industry. That segment is highly
competitive, consisting of numerous firms. These include firms
that compete, like the Company, in multiple geographical areas as
well as firms that are primarily local in operation. Competitive
products include carbonates, packaged water, juices and nectars,
fruit drinks and dilutables (including syrups and powdered
drinks), sports and energy drinks, coffee and tea, still drinks
and other beverages. Nonalcoholic beverages are sold to
consumers in both ready-to-drink and not-ready-to-drink form.
Most of the Company's beverages business currently is in soft
drinks, as that term is defined in this report. The soft drink
business, which is part of the nonalcoholic beverages segment, is
itself highly competitive. The Company is the leading seller of
soft drink concentrates and syrups in the world. Numerous firms,
however, compete in that business. These consist of a range of
firms, from local to international, that compete against the
Company in numerous geographical areas.
In many parts of the world in which the Company does
business, demand for soft drinks is growing at the expense of
other commercial beverages. Competitive factors with respect to
the Company's business include pricing, advertising and sales
promotion programs, product innovation, increased efficiency in
production techniques, the introduction of new packaging, new
vending and dispensing equipment and brand and trademark
development and protection.
RAW MATERIALS
The principal raw material used by the Company's business in
the United States is high fructose corn syrup, a form of sugar,
which is available from numerous domestic sources and is
historically subject to fluctuations in its market price. The
principal raw material used by the Company's business outside the
United States is sucrose. The Company has a specialized
sweetener procurement staff and has not experienced any
difficulties in obtaining its requirements. In the United States
and certain other countries, the Company has authorized the use
of high fructose corn syrup in syrup for Coca-Cola and other
Company Trademark Beverages for use in both fountain syrup and
finished beverages in bottles and cans.
Generally, raw materials utilized by the Company in its
business are readily available from numerous sources. However,
aspartame, which is usually used alone or in combination with
either saccharin or acesulfame potassium in the Company's low-
calorie soft drink products, is currently purchased by the
Company primarily from The NutraSweet Kelco Company, a subsidiary
of Monsanto Company, and from Holland Sweetener. Acesulfame
potassium is currently purchased from Hoechst Aktiengesellschaft.
With regard to juice and juice-drink products, the citrus
industry is subject to the variability of weather conditions, in
particular the possibility of freezes in central Florida, which
may result in higher prices and lower consumer demand for orange
juice throughout the industry. Due to the Company's long-
standing relationship with a supplier of high-quality Brazilian
orange juice concentrate, the supply of juice available that
meets the Company's standards is normally adequate to meet
demand.
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PATENTS, TRADE SECRETS, TRADEMARKS AND COPYRIGHTS
The Company is the owner of numerous patents, copyrights and
trade secrets, as well as substantial know-how and technology
(herein collectively referred to as "technology"), which relate
to its products and the processes for their production, the
packages used for its products, the design and operation of
various processes and equipment used in its business and certain
quality assurance and financial software. Some of the technology
is licensed to suppliers and other parties. The Company's soft
drink and other beverage formulae are among the important trade
secrets of the Company.
The Company owns numerous trademarks which are very important
to its business. Depending upon the jurisdiction, trademarks are
valid as long as they are in use and/or their registrations are
properly maintained and they have not been found to have become
generic. Registrations of trademarks can generally be renewed
indefinitely as long as the trademarks are in use. The majority
of the Company's trademark license agreements are included in the
Company's bottler agreements. The Company has registered and
licenses the right to use its trademarks in conjunction with
certain merchandise other than soft drinks.
GOVERNMENTAL REGULATION
The production, distribution and sale in the United States of
many of the Company's products are subject to the Federal Food,
Drug and Cosmetic Act; the Occupational Safety and Health Act;
the Lanham Act; various environmental statutes; and various other
federal, state and local statutes regulating the production,
transportation, sale, safety, advertising, labeling and
ingredients of such products.
A California law requires that any person who exposes another
to a carcinogen or a reproductive toxicant must provide a warning
to that effect. Because the law does not define quantitative
thresholds below which a warning is not required, virtually all
food manufacturers are confronted with the possibility of having
to provide warnings on their food products due to the presence of
trace amounts of defined substances. Regulations implementing
the law exempt manufacturers from providing the required warning
if it can be demonstrated that the defined substances occur
naturally in the product or are present in municipal water used
to manufacture the product. The Company has assessed the impact
of the law and its implementing regulations on its soft drink
products and other products and has concluded that none of its
products currently requires a warning under the law. The Company
cannot predict whether, or to what extent, food industry efforts
to minimize the law's impact on foods will succeed; nor can the
Company predict what impact, either in terms of direct costs or
diminished sales, imposition of the law will have.
Bottlers of the Company's beverage products presently offer
non-refillable, recyclable containers in all areas of the United
States and Canada. Some such bottlers also offer refillable
containers, which are also recyclable, although overall U.S.
sales in refillable containers are relatively limited. Measures
have been enacted in various localities and states which require
that a deposit be charged for certain non-refillable beverage
containers. The precise requirements imposed by these measures
vary. Deposit proposals have been introduced in other states and
localities and in Congress, and the Company anticipates that
similar legislation may be introduced in the future at both the
state and the federal level.
All of the Company's facilities in the United States are
subject to federal, state and local environmental laws and
regulations. Compliance with these provisions has not had, and
the Company does not expect such compliance to have, any material
adverse effect upon the Company's capital expenditures, net
income or competitive position.
EMPLOYEES
As of December 31, 1997, the Company and its subsidiaries
employed approximately 29,500 persons, up from 26,000 in 1996.
Approximately 10,000 of these employees are located in the United
States. The Company, through its divisions and subsidiaries, has
entered into numerous collective bargaining agreements, and the
Company has no reason to believe it will not be able to
renegotiate any such agreements on satisfactory terms. The
Company believes that its relations with its employees are
generally satisfactory.
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FINANCIAL INFORMATION ON GEOGRAPHIC AREAS
For financial information on operations in geographic areas,
see page 60 of the Annual Report to Share Owners for the year
ended December 31, 1997, which is incorporated herein by
reference.
ITEM 2. PROPERTIES
The Company's worldwide headquarters is located on a 35-acre
office complex in Atlanta, Georgia. The complex includes the
approximately 620,600 square foot headquarters building, the
approximately 869,500 square foot Coca-Cola USA building and the
approximately 263,800 square foot Coca-Cola Plaza building. Also
located in the complex are several other buildings, including the
technical and engineering facilities, learning center and the
Company's Reception Center. The Company leases approximately
278,100 square feet of office space at Ten Peachtree Place,
Atlanta, Georgia, owned by a joint venture of which an indirect
subsidiary of the Company is a partner. The Company also leases
approximately 219,000 square feet of office space at One Atlantic
Center, Atlanta, Georgia. The Company and its subsidiaries and
divisions have facilities for administrative operations,
manufacturing, processing, packaging, packing, storage and
warehousing throughout the United States.
The Company owns and operates 33 principal beverage
concentrate and/or syrup manufacturing plants located throughout
the world. The Company currently owns or holds a majority
interest in operations with 35 principal beverage bottling and
canning plants located outside the United States.
The Minute Maid Company, whose business headquarters is
located in Houston, Texas, occupies its own office building,
which contains approximately 330,000 square feet. The Minute
Maid Company operates six production facilities throughout the
United States and Canada and utilizes a system of contract
packers to produce and distribute certain products in areas where
The Minute Maid Company does not have its own manufacturing
centers or during periods when it experiences shortfalls in
manufacturing capacity.
The Company directly or through wholly owned subsidiaries
owns or leases additional real estate throughout the world,
including a wholly owned office and retail building at 711 Fifth
Avenue in New York, New York. This real estate is used by the
Company as office space, bottling, warehouse or retail operations
or, in the case of some owned property, is leased to others.
Management believes that the facilities for the production of
its products are suitable and adequate for the business conducted
therein, that they are being appropriately utilized in line with
past experience and that they have sufficient production capacity
for their present intended purposes. The extent of utilization
of such facilities varies based upon the seasonal demand for
product. While it is not possible to measure with any degree of
certainty or uniformity the productive capacity and extent of
utilization of these facilities, management believes that
additional production can be obtained at the existing facilities
by the addition of personnel and capital equipment and, in some
facilities, the addition of shifts of personnel or expansion of
such facilities. The Company continuously reviews its
anticipated requirements for facilities and, on the basis of that
review, may from time to time acquire additional facilities
and/or dispose of existing facilities.
ITEM 3. LEGAL PROCEEDINGS
On January 30, 1997, the Brazilian Federal Revenue Service
issued Notices of Assessment to Recofarma Industrias do Amazonas
Ltda. ("Recofarma"), an indirect wholly owned subsidiary of the
Company, for the period from January 1, 1992 to February 28,
1994. The assessments allege that Recofarma should have paid a
Brazilian excise tax on intra-company transfers of product
manufactured at its Manaus plant to its warehouse in Rio de
Janeiro. Assessments of tax, interest and penalties total
approximately $530 million as of the assessment date and accrue
interest from such date. The transfer of product from the plant
to the warehouse, which was discontinued in February 1994, was
the subject of a favorable advance ruling issued by the Federal
Revenue Service on September 24, 1990. In the Company's opinion,
the ruling has continuing effect and Recofarma's operations
conformed with the ruling. On March 3, 1997, Recofarma filed
appeals with the Brazilian Federal Revenue Service contesting the
assessments.
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On September 30, 1997, the Rio de Janeiro Branch of the
Brazilian Federal Revenue Service dismissed the assessments
against Recofarma. This determination is subject to an automatic
ex officio appeal ("recurso ex-oficio") on the Federal Revenue
Service's behalf to the Taxpayers Council in Brazilia. This
appeal is currently pending.
In May 1993, the Company discovered that its Carolina, Puerto
Rico plant was unintentionally discharging, without a permit,
process wastewater to a stormwater sewer which ultimately
discharged to a surface waterbody. The Company immediately
remedied the unintentional discharge and reported it to
appropriate environmental agencies. The plant was sold in 1994;
however, the Company has agreed to retain any potential legal
liability resulting from the unintentional discharge. The
statutory maximum penalty which could be sought against the
Company is in excess of $100,000.
The Company is involved in various other legal proceedings.
The Company believes that any liability to the Company which may
arise as a result of these proceedings, including the proceedings
specifically discussed above, will not have a material adverse
effect on the financial condition of the Company and its
subsidiaries taken as a whole.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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ITEM X. EXECUTIVE OFFICERS OF THE COMPANY
The following are the executive officers of the Company:
M. Douglas Ivester, 50, is Chief Executive Officer and
Chairman of the Board of Directors of the Company. In
January 1985, Mr. Ivester was elected Senior Vice President
and Chief Financial Officer of the Company and served in that
capacity until June 1989, when he was appointed President of
the European Community Group of the International Business
Sector. He was appointed President of Coca-Cola USA in
August 1990, and was appointed President of the North America
Business Sector in September 1991. He served in the latter
capacity until April 1993 when he was elected Executive Vice
President of the Company and Principal Operating
Officer/North America. In July 1994, he was elected
President and Chief Operating Officer and a Director of the
Company. Mr. Ivester was elected to his current positions in
October 1997.
James E. Chestnut, 47, is Senior Vice President and Chief
Financial Officer of the Company. Mr. Chestnut joined the
Company in 1972 in London. In 1984, he was named Finance
Manager for the Philippine Region in Manila and, in 1987,
Manager of International Treasury Services, Pacific Group, in
Atlanta. He was named Finance Manager for the North Pacific
Division of the International Business Sector in 1989 before
being elected Vice President and Controller of the Company in
1993. He was elected to his current position in July 1994.
Jack L. Stahl, 44, is Senior Vice President of the Company
and President of the North America Group. In March 1985, Mr.
Stahl was named Manager, Planning and Business Development
and was appointed Assistant Vice President in April 1985. He
was elected Vice President and Controller in February 1988
and served in that capacity until he was elected Senior Vice
President and Chief Financial Officer in June 1989. He was
appointed to his current position in July 1994.
Douglas N. Daft, 54, is Senior Vice President of the
Company and President of the Middle and Far East Group. In
November 1984, Mr. Daft was appointed President of Coca-Cola
Central Pacific Ltd. In October 1987, he was appointed
Senior Vice President of the Pacific Group of the
International Business Sector. In January 1989, he was named
President of Coca-Cola (Japan) Company, Limited and President
of the North Pacific Division of the International Business
Sector. Effective 1991 he was elected Senior Vice President
of the Company and named President of the Pacific Group of
the International Business Sector. He was appointed to his
current position, effective January 1995.
Carl Ware, 54, is Senior Vice President of the Company and
President of the Africa Group. In 1979, Mr. Ware was
appointed Vice President, Special Markets, Coca-Cola USA. In
March 1982, he was appointed Vice President, Urban Affairs,
of the Company. He was elected Senior Vice President and
Director, Corporate External Affairs in 1986 and became
Deputy Group President of the Northeast Europe/Africa Group
of the International Business Sector in July 1991, a position
he held until he was named to his current position, effective
January 1993.
Timothy J. Haas, 51, is Senior Vice President of the
Company and President of the Latin America Group. Mr. Haas
was appointed Vice President, Sales, of Coca-Cola Foods in
1983 and Senior Vice President, Sales, of Coca-Cola Foods in
1985. In March 1991, he was appointed President and Chief
Executive Officer of Coca-Cola Foods. In April 1991, he was
elected Vice President of the Company. In 1995, he was named
Executive Vice President of the Latin America Group and
served in that capacity until he was appointed President of
the Latin America Group, effective January 1, 1997. He was
elected Senior Vice President in February 1997.
Ralph H. Cooper, 58, is Senior Vice President of the
Company and President and Chief Executive Officer of The
Minute Maid Company, formerly known as Coca-Cola Foods. Mr.
Cooper was appointed Senior Vice President of the Europe and
Africa Group in July 1984 and was named Senior Vice President
of Coca-Cola International and President of the Northwest
European Division in January 1989. He was elected Senior
Vice President of the Company and President of the European
Community Group of the International
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Soft Drink Business Sector in August 1990. In January 1995,
he was named Executive Vice President of Coca-Cola Foods and
served in that capacity until he was appointed President and
Chief Executive Officer in July 1995.
William P. Casey, 57, is Senior Vice President of the
Company and President of the Greater Europe Group. In 1985,
Mr. Casey was appointed Executive Vice President, Bottler
Operations, Coca-Cola USA. In 1992, he was elected President
and Chief Executive Officer of Coca-Cola Beverages Ltd., a
Canadian company in which the Company held an interest. Mr.
Casey was elected to his current position in February 1998.
Joseph R. Gladden, Jr., 55, is Senior Vice President and
General Counsel of the Company. In October 1985, Mr. Gladden
was elected Vice President. He was named Deputy General
Counsel in October 1987 and served in that capacity until he
was elected Vice President and General Counsel in April 1990.
He was elected Senior Vice President in April 1991.
Sergio Zyman, 52, is Senior Vice President of the Company
and Chief Marketing Officer. Mr. Zyman first joined the
Company in 1979 and later served as Senior Vice President of
Marketing for Coca-Cola USA until 1986. After a seven year
absence from the Company, during which he acted as consultant
to different companies through Sergio Zyman & Co. and Core
Strategy Group, he returned to assume his current position in
August 1993.
Earl T. Leonard, Jr., 61, is Senior Vice President of the
Company with responsibility for Corporate Affairs. Mr.
Leonard was elected to his current position in April 1983.
Anton Amon, 54, is Senior Vice President of the Company
and Manager of the Company's Product Integrity Division. Dr.
Amon was named Senior Vice President of Coca-Cola USA in
1983. In 1988, he joined Coca-Cola Enterprises as Vice
President, Operations. In September 1989, Dr. Amon returned
to the Company as director, Corporate Quality Assurance. He
was elected Vice President in October 1989. He became
Manager, Product Integrity Division, in January 1992 and was
elected to his current position in July 1992.
George Gourlay, 56, is Senior Vice President of the
Company and Manager of the Technical Operations Division.
Mr. Gourlay was named Manager, Corporate Concentrate
Operations in 1986, named Assistant Vice President in 1988,
and was elected Vice President in 1989. Mr. Gourlay became
head of the Technical Operations Division in January 1992 and
was elected to his current position in July 1992.
All executive officers serve at the pleasure of the Board of
Directors.
There is no family relationship between any of the executive
officers of the Company.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
SHARE-OWNER MATTERS
"Financial Review Incorporating Management's Discussion and
Analysis" on pages 33 through 41, "Selected Financial Data" for
the years 1996 and 1997 on page 42, "Stock Prices" on page 63 and
"Common Stock", "Stock Exchanges" and "Dividends" under the
heading "Share-Owner Information" on page 66 of the Company's
Annual Report to Share Owners for the year ended December 31,
1997, are incorporated herein by reference.
During the fiscal year ended December 31, 1997, no equity
securities of the Registrant were sold by the Registrant which
were not registered under the Securities Act of 1933, as amended.
ITEM 6. SELECTED FINANCIAL DATA
"Selected Financial Data" for the years 1993 through 1997, on
pages 42 and 43 of the Company's Annual Report to Share Owners
for the year ended December 31, 1997, is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
"Financial Review Incorporating Management's Discussion and
Analysis" on pages 33 through 41 of the Company's Annual Report
to Share Owners for the year ended December 31, 1997, is
incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
"Financial Risk Management" on page 36 of the Company's Annual
Report to Share Owners for the year ended December 31, 1997, is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the
Registrant and its subsidiaries, included in the Company's Annual
Report to Share Owners for the year ended December 31, 1997, are
incorporated herein by reference:
Consolidated Balance Sheets -- December 31, 1997 and 1996.
Consolidated Statements of Income -- Years ended December 31,
1997, 1996 and 1995.
Consolidated Statements of Cash Flows -- Years ended December
31, 1997, 1996 and 1995.
Consolidated Statements of Share-Owners' Equity -- Years
ended December 31, 1997, 1996 and 1995.
Notes to Consolidated Financial Statements.
Report of Independent Auditors.
"Quarterly Data (Unaudited)" on page 63 of the Company's
Annual Report to Share Owners for the year ended December 31,
1997, is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
For information on Directors of the Registrant, the
subsections under the heading "Election of Directors" entitled
"Board of Directors" and "Recommendation of the Board of
Directors Concerning the Election of Directors" on pages 2
through 5 and under the heading "Section 16(a) Beneficial
Ownership Reporting Compliance" on page 7 of the Company's Proxy
Statement for the Annual Meeting of Share Owners to be held April
15, 1998, is incorporated herein by reference. See Item X in
Part I hereof for information regarding executive officers of the
Registrant.
ITEM 11. EXECUTIVE COMPENSATION
The subsection under the heading "Election of Directors"
entitled "Committees of the Board of Directors; Meetings and
Compensation of Directors" on pages 8 through 10 and the portion
of the section entitled "Executive Compensation" set forth on
pages 11 through 17 and under the subsection "Compensation
Committee Interlocks and Insider Participation" on page 23 of the
Company's Proxy Statement for the Annual Meeting of Share Owners
to be held April 15, 1998, are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The subsections under the heading "Election of Directors"
entitled "Ownership of Equity Securities in the Company" on pages
6 and 7 and "Principal Share Owners" on page 8, and the
subsection under the heading "Certain Investee Companies"
entitled "Ownership of Securities in Coca-Cola Enterprises" on
pages 24 and 25 of the Company's Proxy Statement for the Annual
Meeting of Share Owners to be held April 15, 1998, are
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The subsections under the heading "Election of Directors"
entitled "Committees of the Board of Directors; Meetings and
Compensation of Directors" and "Certain Transactions" on pages 8
through 10, the subsection under the heading "Executive
Compensation" entitled "Compensation Committee Interlocks and
Insider Participation" on page 23 and the section under the
heading "Certain Investee Companies" on pages 23 through 25 of
the Company's Proxy Statement for the Annual Meeting of Share
Owners to be held April 15, 1998, are incorporated herein by
reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON
FORM 8-K
(a) 1. Financial Statements
The following consolidated financial statements of The
Coca-Cola Company and subsidiaries, included in the
Registrant's Annual Report to Share Owners for the year
ended December 31, 1997, are incorporated by reference
in Part II, Item 8:
Consolidated Balance Sheets -- December 31, 1997 and
1996.
Consolidated Statements of Income -- Years ended December
31, 1997, 1996 and 1995.
Consolidated Statements of Cash Flows -- Years ended
December 31, 1997, 1996 and 1995.
Consolidated Statements of Share-Owners' Equity -- Years
ended December 31, 1997, 1996 and 1995.
Notes to Consolidated Financial Statements.
Report of Independent Auditors.
2. The following consolidated financial statement schedule of
The Coca-Cola Company and subsidiaries is included in Item 14(d):
Schedule II -- Valuation and Qualifying Accounts.
All other schedules for which provision is made in the
applicable accounting regulation of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable and, therefore, have
been omitted.
3.Exhibits
EXHIBIT NO.
- -----------
3.1 Certificate of Incorporation of the Registrant,
including Amendment of Certificate of Incorporation,
effective May 1, 1996 -- incorporated herein by reference
to Exhibit 3 of the Registrant's Form 10-Q Quarterly
Report for the quarter ended March 31, 1996. (With
regard to applicable cross references in this report,
the Company's Current, Quarterly and Annual Reports are
filed with the Securities and Exchange Commission under
File No. 1-2217.)
3.2 By-Laws of the Registrant, as amended and restated
through December 17, 1997.
4.1 The Registrant agrees to furnish to the Securities and
Exchange Commission, upon request, a copy of any
instrument defining the rights of holders of long-term
debt of the Registrant and all of its consolidated
subsidiaries and unconsolidated subsidiaries for which
financial statements are required to be filed with the
Securities and Exchange Commission.
10.1 The Key Executive Retirement Plan of the Registrant, as
amended -- incorporated herein by reference to
Exhibit 10.2 of the Registrant's Form 10-K Annual Report
for the year ended December 31, 1995.*
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EXHIBIT NO.
- -----------
10.2 Supplemental Disability Plan of the Registrant, as
amended -- incorporated herein by reference to
Exhibit 10.3 of the Registrant's Form 10-K Annual Report
for the year ended December 31, 1991.*
10.3 Annual Performance Incentive Plan of the Registrant, as
amended -- incorporated herein by reference to
Exhibit 10.4 of the Registrant's Form 10-K Annual Report
for the year ended December 31, 1995.*
10.4.1 1987 Stock Option Plan of the Registrant, as amended
through October 17, 1996 -- incorporated herein by
reference to Exhibit 10.8.1 of the Registrant's
Form 10-K Annual Report for the year ended December 31,
1996.*
10.4.2 Resolutions, dated October 17, 1996, adopted by the
Compensation Committee of the Board of Directors of the
Registrant -- incorporated herein by reference to
Exhibit 10.8.2 of the Registrant's Form 10-K Annual
Report for the year ended December 31, 1996.*
10.4.3 Resolutions, dated October 17, 1996, adopted by the
Stock Option Subcommittee of the Compensation Committee
of the Board of Directors of the Registrant --
incorporated herein by reference to Exhibit 10.8.3 of
the Registrant's Form 10-K Annual Report for the year
ended December 31, 1996.*
10.5.1 1991 Stock Option Plan of the Registrant, as amended
through October 17, 1996 -- incorporated herein by
reference to Exhibit 10.9.1 of the Registrant's
Form 10-K Annual Report for the year ended December 31,
1996.*
10.5.2 Resolutions, dated October 17, 1996, adopted by the
Compensation Committee of the Board of Directors of the
Registrant -- incorporated herein by reference to
Exhibit 10.9.2 of the Registrant's Form 10-K Annual
Report for the year ended December 31, 1996.*
10.5.3 Resolutions, dated October 17, 1996, adopted by the
Stock Option Subcommittee of the Compensation Committee
of the Board of Directors of the Registrant --
incorporated herein by reference to Exhibit 10.9.3 of
the Registrant's Form 10-K Annual Report for the year
ended December 31, 1996.*
10.6 1983 Restricted Stock Award Plan of the Registrant, as
amended -- incorporated herein by reference to
Exhibit 10.11 of the Registrant's Form 10-K Annual
Report for the year ended December 31, 1991.*
10.7.1 1989 Restricted Stock Award Plan of the Registrant, as
amended through October 17, 1996 -- incorporated herein
by reference to Exhibit 10.11.1 of the Registrant's
Form 10-K Annual Report for the year ended December 31,
1996.*
10.7.2 Resolutions, dated October 17, 1996, adopted by the
Restricted Stock Subcommittee of the Compensation
Committee of the Board of Directors of the Registrant --
incorporated herein by reference to Exhibit 10.11.2 of
the Registrant's Form 10-K Annual Report for the year
ended December 31, 1996.*
10.8.1 Compensation Deferral & Investment Program of the
Registrant, as amended, including Amendment Number Four
dated November 28, 1995 -- incorporated herein by
reference to Exhibit 10.13 of the Registrant's Form 10-K
Annual Report for the year ended December 31, 1995.*
17
<PAGE>
<PAGE>
EXHIBIT NO.
- -----------
10.8.2 Amendment Number 5 to the Compensation Deferral &
Investment Program of the Registrant, effective as of
January 1, 1998.*
10.9 Special Medical Insurance Plan of the Registrant, as
amended -- incorporated herein by reference to
Exhibit 10.16 of the Registrant's Form 10-K Annual
Report for the year ended December 31, 1995.*
10.10.1 Supplemental Benefit Plan of the Registrant, as amended
-- incorporated herein by reference to Exhibit 10.17 of
the Registrant's Form 10-K Annual Report for the year
ended December 31, 1993.*
10.10.2 Amendment Number Five to the Supplemental Benefit Plan
of the Registrant -- incorporated herein by reference to
Exhibit 10.17.2 of the Registrant's Form 10-K Annual
Report for the year ended December 31, 1996.*
10.11 Retirement Plan for the Board of Directors of
Registrant, as amended -- incorporated herein by
reference to Exhibit 10.22 of the Registrant's Form 10-K
Annual Report for the year ended December 31, 1991.*
10.12 Deferred Compensation Plan for Non-Employee Directors of
the Registrant, adopted as of October 16, 1997.*
10.13 Deferred Compensation Agreement for Officers or Key
Executives of the Registrant -- incorporated herein by
reference to Exhibit 10.20 of the Registrant's Form 10-K
Annual Report for the year ended December 31, 1993.*
10.14 Long Term Performance Incentive Plan of the Registrant,
as amended February 16, 1994 -- incorporated herein by
reference to Exhibit 10.21 of the Registrant's Form 10-K
Annual Report for the year ended December 31, 1993.*
10.15 Executive Performance Incentive Plan of the Registrant,
as amended -- incorporated herein by reference to Exhibit
10.22 of the Registrant's Form 10-K Annual Report for
the year ended December 31, 1994.*
10.16 Form of United States Master Bottle Contract, as
amended, between the Registrant and Coca-Cola
Enterprises Inc. ("Coca-Cola Enterprises") or its
subsidiaries -- incorporated herein by reference to
Exhibit 10.24 of Coca-Cola Enterprises' Annual Report on
Form 10-K for the fiscal year ended December 30, 1988
(File No. 01-09300).
10.17 Letter Agreement dated March 15, 1989, between the
Registrant and Coca-Cola Enterprises regarding the
United States Master Bottle Contracts, as amended by
letter agreement dated December 18, 1991 -- incorporated
herein by reference to Exhibit 10.23 of Coca-Cola
Enterprises' Annual Report on Form 10-K for the fiscal
year ended December 31, 1991 (File No. 01-09300).
12.1 Computation of Ratios of Earnings to Fixed Charges for
the years ended December 31, 1997, 1996, 1995, 1994 and
1993.
13.1 Portions of the Registrant's 1997 Annual Report to Share
Owners expressly incorporated by reference herein:
Pages 33-61, 63, 66 and 67 (definitions of "Dividend
Payout Ratio," "Economic Profit," "Free Cash Flow," "Net
Debt and Net Capital," "Return on Capital," "Return on
Common Equity," "Total Capital" and "Total Market Value
of Common Stock").
18
<PAGE>
<PAGE>
EXHIBIT NO.
- -----------
21.1 List of subsidiaries of the Registrant as of
December 31, 1997.
23.1 Consent of Independent Auditors.
24.1 Powers of Attorney of Officers and Directors signing
this report.
27.1 Restated Financial Data Schedule for the year ended
December 31, 1995, submitted to the Securities and
Exchange Commission in electronic format.
27.2 Restated Financial Data Schedule for the year ended
December 31, 1996, submitted to the Securities and
Exchange Commission in electronic format.
27.3 Financial Data Schedule for the year ended December 31,
1997, submitted to the Securities and Exchange
Commission in electronic format.
99.1 Cautionary Statement Relative to Forward-Looking
Statements.
- -------------------
* Management contracts and compensatory plans and arrangements
required to be filed as exhibits pursuant to Item 14(c) of this
report.
(b) Reports on Form 8-K.
The Registrant filed a report on Form 8-K on October 24, 1997.
Item 5. Other Events -- At a special meeting of the Board of
Directors of the Registrant held on October 23, 1997,
the Board elected M. Douglas Ivester Chairman of the
Board and Chief Executive Officer of the Registrant.
The Registrant also announced that Mr. Ivester will
relinquish the office of President and that such office
will not be filled at this time.
Item 7. Financial Statements and Exhibits -- Exhibit 99: Press
release of the Registrant issued October 23, 1997.
(c) Exhibits -- The response to this portion of Item 14 is
submitted as a separate section of this report.
(d) Financial Statement Schedule -- The response to this portion
of Item 14 is submitted as a separate section of this report.
19
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
THE COCA-COLA COMPANY
(Registrant)
By: /s/ M. DOUGLAS IVESTER
----------------------
M. Douglas Ivester
Chairman, Board of Directors,
Chief Executive Officer
and a Director
Date: March 9, 1998
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated.
/s/ M. DOUGLAS IVESTER *
- ----------------------- ---------------------
M. Douglas Ivester Cathleen P. Black
Chairman, Board of Directors, Director
Chief Executive
Officer and a Director
(Principal Executive Officer)
March 9, 1998 March 9, 1998
/s/ JAMES E. CHESTNUT *
- ----------------------- ---------------------
James E. Chestnut Warren E. Buffett
Senior Vice President and Chief Director
Financial Officer
(Principal Financial Officer)
March 9, 1998 March 9, 1998
/s/ GARY P. FAYARD *
- ----------------------- ----------------------
Gary P. Fayard Charles W. Duncan, Jr.
Vice President and Controller Director
(Principal Accounting Officer)
March 9, 1998 March 9, 1998
* *
- ----------------------- ---------------------
Herbert A. Allen Susan B. King
Director Director
March 9, 1998 March 9, 1998
* *
- ----------------------- ---------------------
Ronald W. Allen Donald F. McHenry
Director Director
March 9, 1998 March 9, 1998
20
<PAGE>
<PAGE>
* *
- ----------------------- ---------------------
Sam Nunn Peter V. Ueberroth
Director Director
March 9, 1998 March 9, 1998
* *
- ----------------------- ---------------------
Paul F. Oreffice James B. Williams
Director Director
March 9, 1998 March 9, 1998
*
- -----------------------
James D. Robinson III
Director
March 9, 1998
* By: /s/ CAROL C. HAYES
-------------------
Carol C. Hayes
Attorney-in-fact
March 9, 1998
21
<PAGE>
<PAGE>
ANNUAL REPORT ON FORM 10-K
ITEM 14(d)
FINANCIAL STATEMENT SCHEDULE
YEAR ENDED DECEMBER 31, 1997
THE COCA-COLA COMPANY AND SUBSIDIARIES
<PAGE>
<PAGE>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
THE COCA-COLA COMPANY AND SUBSIDIARIES
Year ended December 31, 1997
(in millions)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- ----------------------------------------------------------------------------------------
Additions
-------------------
(1) (2)
Balance at Charged to Charged Balance
Beginning of Costs and to Other Deductions at End
Description Period Expenses Accounts (Note 1) of Period
- ----------- ----------- ---------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED IN THE
BALANCE SHEET FROM THE
ASSETS TO WHICH THEY
APPLY
Allowance for losses on:
Trade accounts receivable.. $ 30 $ 4 $ - $ 11 $ 23
Miscellaneous investments
and other assets........... 339 41 - 79 301
Deferred tax assets........ 18 3 - - 21
---- --- --- --- ----
$ 387 $ 48 $ - $ 90 $ 345
==== === === === ====
</TABLE>
- -------------------------------
Note 1 - The amounts shown in Column D consist of the following:
<TABLE>
<CAPTION>
Trade Miscellaneous Deferred
Accounts Investments Tax
Receivable and Other Assets Assets Total
---------- ---------------- -------- -----
<S> <C> <C> <C> <C>
Charge off of uncollectible accounts.. $ 4 $ - $ - $ 4
Write-off of impaired assets.......... - 65 - 65
Other transactions.................... 7 14 - 21
--- --- --- ---
$ 11 $ 79 $ - $ 90
=== === === ===
</TABLE>
F-1
<PAGE>
<PAGE>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
THE COCA-COLA COMPANY AND SUBSIDIARIES
Year ended December 31, 1996
(in millions)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- ----------------------------------------------------------------------------------------
Additions
-------------------
(1) (2)
Balance at Charged to Charged Balance
Beginning of Costs and to Other Deductions at End
Description Period Expenses Accounts (Note 1) of Period
- ----------- ------------ ---------- -------- ---------- ---------
<C> <C> <C> <C> <C>
RESERVES DEDUCTED IN THE
BALANCE SHEET FROM THE
ASSETS TO WHICH THEY
APPLY
Allowance for losses on:
Trade accounts receivable.. $ 34 $ 9 $ - $ 13 $ 30
Miscellaneous investments
and other assets........... 55 287 - 3 339
Deferred tax assets........ 42 - - 24 18
---- ---- --- --- ----
$ 131 $ 296 $ - $ 40 $ 387
==== ==== === === ====
</TABLE>
- ------------------------------
Note 1 - The amounts shown in Column D consist of the following:
<TABLE>
<CAPTION>
Trade Miscellaneous Deferred
Accounts Investments Tax
Receivable and Other Assets Assets Total
---------- ---------------- -------- -----
<S> <C> <C> <C> <C>
Charge off of uncollectible accounts.. $ 6 $ - $ - $ 6
Foreign exchange adjustments.......... 1 - - 1
Other transactions.................... 6 3 24 33
--- --- --- ---
$ 13 $ 3 $ 24 $ 40
=== === === ====
</TABLE>
F-2
<PAGE>
<PAGE>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
THE COCA-COLA COMPANY AND SUBSIDIARIES
Year ended December 31, 1995
(in millions)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- ---------------------------------------------------------------------------------------
Additions
(1) (2)
Balance at Charged to Charged Balance
Beginning of Costs and to Other Deductions at End
Description Period Expenses Accounts (Note 1) of Period
- ----------- ------------ ---------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED IN THE
BALANCE SHEET FROM THE
ASSETS TO WHICH THEY
APPLY
Allowance for losses on:
Trade accounts receivable.. $ 33 $ 15 $ - $ 14 $ 34
Miscellaneous investments
and other assets........... 79 5 - 29 55
Deferred tax assets........ 46 15 - 19 42
---- --- --- --- ----
$ 158 $ 35 $ - $ 62 $ 131
==== === === === ====
</TABLE>
- -----------------------------
Note 1 - The amounts shown in Column D consist of the following:
<TABLE>
<CAPTION>
Trade Miscellaneous Deferred
Accounts Investments Tax
Receivable and Other Assets Assets Total
---------- ---------------- -------- -----
<S> <C> <C> <C> <C>
Charge off of uncollectible accounts.. $ 13 $ 6 $ - $ 19
Foreign exchange adjustments.......... (1) - - (1)
Other transactions.................... 2 23 19 44
--- --- --- ---
$ 14 $ 29 $ 19 $ 62
=== === === ===
</TABLE>
F-3
<PAGE>
<PAGE>
EXHIBIT INDEX
DESCRIPTION
EXHIBIT NO.
- -----------
3.1 Certificate of Incorporation of the Registrant,
including Amendment of Certificate of Incorporation,
effective May 1, 1996 - incorporated herein by reference
to Exhibit 3 of the Registrant's Form 10-Q Quarterly
Report for the quarter ended March 31, 1996. (With
regard to applicable cross references in this report,
the Company's Current, Quarterly and Annual Reports are
filed with the Securities and Exchange Commission under
File No. 1-2217.)
3.2 By-Laws of the Registrant, as amended and restated
through December 17, 1997.
4.1 The Registrant agrees to furnish to the Securities and
Exchange Commission, upon request, a copy of any
instrument defining the rights of holders of long-term
debt of the Registrant and all of its consolidated
subsidiaries and unconsolidated subsidiaries for which
financial statements are required to be filed with the
Securities and Exchange Commission.
10.1 The Key Executive Retirement Plan of the Registrant, as
amended - incorporated herein by reference to
Exhibit 10.2 of the Registrant's Form 10-K Annual Report
for the year ended December 31, 1995.*
10.2 Supplemental Disability Plan of the Registrant, as
amended - incorporated herein by reference to
Exhibit 10.3 of the Registrant's Form 10-K Annual Report
for the year ended December 31, 1991.*
10.3 Annual Performance Incentive Plan of the Registrant, as
amended - incorporated herein by reference to
Exhibit 10.4 of the Registrant's Form 10-K Annual Report
for the year ended December 31, 1995.*
10.4.1 1987 Stock Option Plan of the Registrant, as amended
through October 17, 1996 - incorporated herein by
reference to Exhibit 10.8.1 of the Registrant's
Form 10-K Annual Report for the year ended December 31,
1996.*
10.4.2 Resolutions, dated October 17, 1996, adopted by the
Compensation Committee of the Board of Directors of the
Registrant - incorporated herein by reference to
Exhibit 10.8.2 of the Registrant's Form 10-K Annual
Report for the year ended December 31, 1996.*
10.4.3 Resolutions, dated October 17, 1996, adopted by the
Stock Option Subcommittee of the Compensation Committee
of the Board of Directors of the Registrant -
incorporated herein by reference to Exhibit 10.8.3 of
the Registrant's Form 10-K Annual Report for the year
ended December 31, 1996.*
<PAGE>
<PAGE>
EXHIBIT NO.
- -----------
10.5.1 1991 Stock Option Plan of the Registrant, as amended
through October 17, 1996 - incorporated herein by
reference to Exhibit 10.9.1 of the Registrant's
Form 10-K Annual Report for the year ended December 31,
1996.*
10.5.2 Resolutions, dated October 17, 1996, adopted by the
Compensation Committee of the Board of Directors of the
Registrant - incorporated herein by reference to
Exhibit 10.9.2 of the Registrant's Form 10-K Annual
Report for the year ended December 31, 1996.*
10.5.3 Resolutions, dated October 17, 1996, adopted by the
Stock Option Subcommittee of the Compensation Committee
of the Board of Directors of the Registrant -
incorporated herein by reference to Exhibit 10.9.3 of
the Registrant's Form 10-K Annual Report for the year
ended December 31, 1996.*
10.6 1983 Restricted Stock Award Plan of the Registrant, as
amended - incorporated herein by reference to
Exhibit 10.11 of the Registrant's Form 10-K Annual
Report for the year ended December 31, 1991.*
10.7.1 1989 Restricted Stock Award Plan of the Registrant, as
amended through October 17, 1996 - incorporated herein
by reference to Exhibit 10.11.1 of the Registrant's
Form 10-K Annual Report for the year ended December 31,
1996.*
10.7.2 Resolutions, dated October 17, 1996, adopted by the
Restricted Stock Subcommittee of the Compensation
Committee of the Board of Directors of the Registrant -
incorporated herein by reference to Exhibit 10.11.2 of
the Registrant's Form 10-K Annual Report for the year
ended December 31, 1996.*
10.8.1 Compensation Deferral & Investment Program of the
Registrant, as amended, including Amendment Number Four
dated November 28, 1995 - incorporated herein by
reference to Exhibit 10.13 of the Registrant's Form 10-K
Annual Report for the year ended December 31, 1995.*
10.8.2 Amendment Number 5 to the Compensation Deferral &
Investment Program of the Registrant, effective as of
January 1, 1998.*
10.9 Special Medical Insurance Plan of the Registrant, as
amended - incorporated herein by reference to
Exhibit 10.16 of the Registrant's Form 10-K Annual
Report for the year ended December 31, 1995.*
10.10.1 Supplemental Benefit Plan of the Registrant, as amended
- incorporated herein by reference to Exhibit 10.17 of
the Registrant's Form 10-K Annual Report for the year
ended December 31, 1993.*
10.10.2 Amendment Number Five to the Supplemental Benefit Plan
of the Registrant - incorporated herein by reference to
Exhibit 10.17.2 of the Registrant's Form 10-K Annual
Report for the year ended December 31, 1996.*
2
<PAGE>
<PAGE>
EXHIBIT NO.
- -----------
10.11 Retirement Plan for the Board of Directors of
Registrant, as amended - incorporated herein by
reference to Exhibit 10.22 of the Registrant's Form 10-K
Annual Report for the year ended December 31, 1991.*
10.12 Deferred Compensation Plan for Non-Employee Directors of
the Registrant, adopted as of October 16, 1997.*
10.13 Deferred Compensation Agreement for Officers or Key
Executives of the Registrant - incorporated herein by
reference to Exhibit 10.20 of the Registrant's Form 10-K
Annual Report for the year ended December 31, 1993.*
10.14 Long Term Performance Incentive Plan of the Registrant,
as amended February 16, 1994 - incorporated herein by
reference to Exhibit 10.21 of the Registrant's Form 10-K
Annual Report for the year ended December 31, 1993.*
10.15 Executive Performance Incentive Plan of the Registrant,
as amended - incorporated herein by reference to Exhibit
10.22 of the Registrant's Form 10-K Annual Report for
the year ended December 31, 1994.*
10.16 Form of United States Master Bottle Contract, as
amended, between the Registrant and Coca-Cola
Enterprises Inc. ("Coca-Cola Enterprises") or its
subsidiaries - incorporated herein by reference to
Exhibit 10.24 of Coca-Cola Enterprises' Annual Report on
Form 10-K for the fiscal year ended December 30, 1988
(File No. 01-09300).
10.17 Letter Agreement dated March 15, 1989, between the
Registrant and Coca-Cola Enterprises regarding the
United States Master Bottle Contracts, as amended by
letter agreement dated December 18, 1991 - incorporated
herein by reference to Exhibit 10.23 of Coca-Cola
Enterprises' Annual Report on Form 10-K for the fiscal
year ended December 31, 1991 (File No. 01-09300).
12.1 Computation of Ratios of Earnings to Fixed Charges for
the years ended December 31, 1997, 1996, 1995, 1994 and
1993.
13.1 Portions of the Registrant's 1997 Annual Report to Share
Owners expressly incorporated by reference herein:
Pages 33-61, 63, 66 and 67 (definitions of "Dividend
Payout Ratio," "Economic Profit," "Free Cash Flow," "Net
Debt and Net Capital," "Return on Capital," "Return on
Common Equity," "Total Capital" and "Total Market Value
of Common Stock").
21.1 List of subsidiaries of the Registrant as of
December 31, 1997.
23.1 Consent of Independent Auditors.
24.1 Powers of Attorney of Officers and Directors signing
this report.
3
<PAGE>
<PAGE>
EXHIBIT NO.
- -----------
27.1 Restated Financial Data Schedule for the year ended
December 31, 1995, submitted to the Securities and
Exchange Commission in electronic format.
27.2 Restated Financial Data Schedule for the year ended
December 31, 1996, submitted to the Securities and
Exchange Commission in electronic format.
27.3 Financial Data Schedule for the year ended December 31,
1997, submitted to the Securities and Exchange
Commission in electronic format.
99.1 Cautionary Statement Relative to Forward-Looking
Statements.
- -------------------
* Management contracts and compensatory plans and arrangements
required to be filed as exhibits pursuant to Item 14(c) of this
report.
4
EXHIBIT 3.2
BY-LAWS
OF
THE COCA-COLA COMPANY
AS AMENDED THROUGH DECEMBER 17, 1997
ARTICLE I
SHAREHOLDERS:
Section 1. PLACE, DATE AND TIME OF HOLDING ANNUAL
MEETINGS. Annual meetings of shareholders shall be held at
such place, date and time as shall be designated from time
to time by the Board of Directors. In the absence of a
resolution adopted by the Board of Directors establishing
such place, date and time, the annual meeting shall be held
at 1209 Orange Street, Wilmington, Delaware, on the third
Wednesday in April of each year at 9:00 A.M. (local time).
Section 2. VOTING. Each outstanding share of common
stock of the Company is entitled to one vote on each matter
submitted to a vote. Directors shall be elected by
plurality votes cast in the election for such directors.
All other action shall be authorized by a majority of the
votes cast unless a greater vote is required by the laws of
Delaware. A shareholder may vote in person or by proxy
authorized by an instrument in writing or by a transmission
permitted by law filed in accordance with the procedures
established for the meeting. Any copy, facsimile
telecommunication or other reliable reproduction of the
writing or transmission created pursuant to this section may
be substituted or used in lieu of the original writing or
the transmission that could be used, provided that such
copy, facsimile telecommunication or other reproduction
shall be a complete reproduction of the entire original
writing or transmission.
Section 3. QUORUM. The holders of a majority of the
issued and outstanding shares of the common stock of the
Company, present in person or represented by proxy, shall
constitute a quorum at all meetings of shareholders.
Section 4. ADJOURNMENT OF MEETINGS. In the absence
of a quorum or for any other reason, the chairman of the
meeting may adjourn the meeting from time to time. If the
adjournment is not for more than thirty days, the adjourned
meeting may be held without notice other than an announcement
at the meeting. If the adjournment is for more than
thirty days, or if a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall
be given to each shareholder of record entitled to vote at
such meeting. At any such adjourned meeting at which a
quorum is present, any business may be transacted which
might have been transacted at the meeting originally called.
Section 5. SPECIAL MEETINGS. Special meetings of
the shareholders for any purpose or purposes may be called
by the Board of Directors, the Chairman of the Board of
Directors or the President. Special meetings shall be held
at the place, date and time fixed by the Secretary.
<PAGE>
Section 6. NOTICE OF SHAREHOLDERS MEETING. Written
notice, stating the place, date, hour and purpose of the
annual or special meeting shall be given by the Secretary
not less than ten nor more than sixty days before the date
of the meeting to each shareholder entitled to vote at such
meeting.
Section 7. ORGANIZATION. The Chairman of the Board
of Directors shall preside at all meetings of shareholders.
In the absence of, or in case of a vacancy in the office of,
the Chairman of the Board of Directors, the President, or in
his absence or in the event that the Board of Directors has
not selected a President, any Senior Executive Vice
President, Executive Vice President, Senior Vice President
or Vice President in order of seniority as specified in this
sentence, and, within each classification of office in order
of seniority in time in that office, shall preside. The
Secretary of the Company shall act as secretary at all
meetings of the shareholders and in the Secretary's absence,
the presiding officer may appoint a secretary.
Section 8. INSPECTORS OF ELECTION. All votes by
ballot at any meeting of shareholders shall be conducted by
such number of inspectors of election as are appointed for
that purpose by either the Board of Directors or by the
chairman of the meeting. The inspectors of election shall
decide upon the qualifications of voters, count the votes
and declare the results.
Section 9. RECORD DATE. The Board of Directors, in
order to determine the shareholders entitled to notice of or
to vote at any meeting of shareholders or any adjournment
thereof, or entitled to express consent to corporate action
in writing without a meeting, or entitled to receive payment
of any dividend or other distribution or allotment of any
rights or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose
of any other lawful action, shall fix in advance a record
date which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty
days prior to any other action and in such case only such
shareholders as shall be shareholders of record on the date
so fixed, shall be entitled to such notice of or to vote at
such meeting or any adjournment thereof, or entitled to
express consent to such corporate action in writing without
a meeting, or be entitled to receive payment of any such
dividend or other distribution or allotment of any rights or
be entitled to exercise any such rights in respect of stock
or to take any such other lawful action, as the case may be,
notwithstanding any transfer of any stock on the books of
the Company after any such record date fixed as aforesaid.
Section 10. NOTICE OF SHAREHOLDER PROPOSALS. A
proposal for action to be presented by any shareholder at an
annual or special meeting of shareholders shall be out-of-
order and shall not be acted upon at such meeting unless
such proposal was specifically described in the Company's
notice to all shareholders of the meeting and the matters to
be acted upon thereat or unless such proposal shall have
been submitted in writing to the Chairman of the Board of
Directors of the Company and received at the principal
executive offices of the Company at least sixty (60) days
prior to the date of such annual or special meeting, by the
shareholder who intends to present such proposal, and such
proposal is, under law, an appropriate subject of
shareholder action.
Page 2
<PAGE>
ARTICLE II
DIRECTORS:
Section 1. NUMBER AND TERM AND CLASSES OF DIRECTORS.
The whole Board of Directors shall consist of not less than
ten (10) nor more than twenty (20) members, the exact number
to be set from time to time by the Board of Directors. No
decrease in the number of directors shall shorten the term
of any incumbent director. In absence of the Board of
Directors setting the number of directors, the number shall
be 20. The Board of Directors shall be divided into three
classes of as nearly equal size as practicable. The term of
office of the members of each class shall expire at the
third annual meeting of shareholders following the election
of such members, and at each annual meeting of shareholders,
directors shall be chosen for a term of three years to
succeed those whose terms expire; provided, whenever classes
are or, after the next annual meeting of shareholders, will
be uneven, the shareholders, for the sole purpose of making
the number of members in such class as equal as practicable,
may elect one or more members of such class for less than 3
years.
Section 2. REGULAR MEETINGS. Regular meetings of
the Board of Directors shall be held at such times as the
Board of Directors may determine from time to time.
Section 3. SPECIAL MEETINGS. Special meetings of the
Board of Directors may be called by the Chairman of the
Board of Directors, the Secretary or by a majority of the
directors by written request to the Secretary.
Section 4. NOTICE OF MEETINGS. The Secretary shall
give notice of all meetings of the Board of Directors by
mailing the notice at least three days before each meeting
or by telegraphing or telephoning the directors not later
than one day before the meeting. The notice shall state the
time, date and place of the meeting, which shall be
determined by the Chairman of the Board of Directors, or, in
absence of the Chairman, by the Secretary of the Company,
unless otherwise determined by the Board of Directors.
Section 5. QUORUM AND VOTING. A majority of the
directors holding office shall constitute a quorum for the
transaction of business. Except as otherwise specifically
required by Delaware law or by the Certificate of
Incorporation of the Company or by these By-Laws, any action
required to be taken shall be authorized by a majority of
the directors present at any meeting at which a quorum is
present.
Section 6. GENERAL POWERS OF DIRECTORS. The business
and affairs of the Company shall be managed under the
direction of the Board of Directors.
Section 7. CHAIRMAN. At all meetings of the Board of
Directors, the Chairman of the Board of Directors shall
preside and in the absence of, or in the case of a vacancy
in the office of, the Chairman of the Board of Directors, a
chairman selected by the Chairman of the Board of Directors
or, if he fails to do so, by the directors, shall preside.
Page 3
<PAGE>
Section 8. COMPENSATION OF DIRECTORS. Directors and
members of any committee of the Board of Directors shall
be entitled to such reasonable compensation and fees for
their services as shall be fixed from time to time by
resolution of the Board of Directors and shall also be
entitled to reimbursement for any reasonable expenses
incurred in attending meetings of the Board of Directors
and any committee thereof, except that a Director who is
an officer or employee of the Company shall receive no
compensation or fees for serving as a Director or a
committee member.
Section 9. QUALIFICATION OF DIRECTORS. Each person
who shall attain the age of 71 shall not thereafter be
eligible for nomination or renomination as a member of the
Board of Directors.
Any director who was elected or reelected because he
or she was an officer of the Company at the time of that
election or the most recent reelection shall resign as a
member of the Board of Directors simultaneously when he or
she ceases to be an officer of the Company.
ARTICLE III
COMMITTEES OF THE BOARD OF DIRECTORS:
Section 1. COMMITTEES OF THE BOARD OF DIRECTORS. The
Board of Directors shall designate an Executive Committee, a
Finance Committee, an Audit Committee, a Compensation
Committee, a Committee on Directors and a Public Issues
Review Committee, each of which shall have and may exercise
the powers and authority of the Board of Directors to the
extent hereinafter provided. The Board of Directors may
designate one or more additional committees of the Board of
Directors with such powers as shall be specified in the
resolution of the Board of Directors. Each committee shall
consist of such number of directors as shall be determined
from time to time by resolution of the Board of Directors.
Each committee shall keep regular minutes of its
meetings. All action taken by a committee shall be reported
to the Board of Directors at its meeting next succeeding
such action and shall be subject to approval and revision by
the Board, provided that no legal rights of third parties
shall be affected by such revisions.
The Chairman of the Board shall have the power and
authority of a committee of the Board of Directors for
purposes of taking any action which the Chairman of the
Board is authorized to take under the provisions of this
Article.
Section 2. ELECTION OF COMMITTEE MEMBERS. The members
of each committee shall be elected by the Board of Directors
and shall serve until the first meeting of the Board of
Directors after the annual meeting of shareholders and until
their successors are elected and qualified or until the
members' earlier resignation or removal. The Board of
Directors may designate the Chairman and Vice Chairman of
each committee. Vacancies may be filled by the Board of
Directors at any meeting.
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The Chairman of the Board may designate one or more
directors to serve as an alternate member or members at any
committee meeting to replace any absent or disqualified
member, such alternate or alternates to serve for that
committee meeting only, and the Chairman of the Board may
designate a committee member as acting chairman of that
committee, in the absence of the elected committee chairman,
to serve for that committee meeting only.
Section 3. PROCEDURE/QUORUM/NOTICE. The Committee
Chairman, Vice Chairman or a majority of any committee may
call a meeting of that committee. A quorum of any committee
shall consist of a majority of its members unless otherwise
provided by resolution of the Board of Directors. The
majority vote of a quorum shall be required for the
transaction of business. The secretary of the committee or
the chairman of the committee shall give notice of all
meetings of the committee by mailing the notice to the
members of the committee at least three days before each
meeting or by telegraphing or telephoning the members not
later than one day before the meeting. The notice shall
state the time, date and place of the meeting. Each
committee shall fix its other rules of procedure.
Section 4. EXECUTIVE COMMITTEE. During the interval
between meetings of the Board of Directors, the Executive
Committee shall have and may exercise the powers of the
Board of Directors, to act upon any matters which, in the
opinion of the Chairman of the Board, should not be
postponed until the next previously scheduled meeting of the
Board of Directors; but, to the extent prohibited by law,
shall not have the power or authority of the Board of
Directors in reference to (1) approving or adopting, or
recommending to the shareholders, any action or matter
expressly required by the Delaware General Corporation Law
to be submitted to shareholders for approval or
(2) adopting, amending or repealing any By-Law of the
Company.
Section 5. FINANCE COMMITTEE. The Finance Committee
shall periodically formulate and recommend for approval to
the Board of Directors the financial policies of the
Company, including management of the financial affairs of
the Company and its accounting policies. The Finance
Committee shall have prepared for approval by the Board of
Directors annual budgets and such financial estimates as it
deems proper; shall have oversight of the budget and of all
the financial operations of the Company and from time to
time shall report to the Board of Directors on the financial
condition of the Company. All capital expenditures of the
Company shall be reviewed by the Finance Committee and
recommended for approval to the Board of Directors. The
Finance Committee may authorize another committee of the
Board of Directors or one or more of the officers of the
Company to approve borrowings, loans, capital expenditures
and guarantees up to such specified amounts or upon such
conditions as the Finance Committee may establish, subject
to the approval of the Board of Directors; and to open bank
accounts and designate those persons authorized to execute
checks, notes, drafts and other orders for payment of money
on behalf of the Company.
Section 6. AUDIT COMMITTEE. The Audit Committee shall
have the power to recommend to the Board of Directors the
selection and engagement of independent accountants to audit
the books and accounts of the Company and the discharge of
the independent accountants. The Audit Committee shall
review the scope of the audits as recommended by the
independent accountants, the scope of the internal auditing
procedures of the Company and the system of
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internal accounting controls and shall review the reports
to the Audit Committee of the independent accountants and
the internal auditors.
Section 7. COMPENSATION COMMITTEE. The Compensation
Committee shall have the powers and authorities vested in it
by the incentive, stock option and similar plans of the
Company. The Compensation Committee shall have the power to
approve, disapprove, modify or amend all plans designed and
intended to provide compensation primarily for officers of
the Company. There may be one or more subcommittees of the
Compensation Committee which shall have all of the power and
authority of the Compensation Committee to act on those
matters as to which there is any question concerning the
propriety of action by the Compensation Committee in the
specific case because of any law, rule or regulation
relating to the status of its members. The members of each
such subcommittee shall be designated by the Board of
Directors, the Compensation Committee or by the Chairman of
the Board and may include directors who are not members of
the Compensation Committee.
Section 8. COMMITTEE ON DIRECTORS. The Committee on
Directors shall have the power to recommend candidates for
election to the Board of Directors and shall consider
nominees for directorships submitted by shareholders. The
Committee on Directors shall consider issues involving
potential conflicts of interest of directors and committee
members and recommend and review all matters relating to
fees and retainers paid to directors, committee members and
committee chairmen.
Section 9. PUBLIC ISSUES REVIEW COMMITTEE. The Public
Issues Review Committee shall have the power to review
Company policy and practice relating to significant public
issues of concern to the shareholders, the Company, the
business community and the general public. The Committee
may also review management's position on shareholder
proposals involving issues of public interest to be
presented at annual or special meetings of shareholders.
ARTICLE IV
NOTICE AND WAIVER OF NOTICE:
Section 1. NOTICE. Any notice required to be given
to shareholders or directors under these By-Laws, the
Certificate of Incorporation or by law may be given by
mailing the same, addressed to the person entitled thereto,
at such person's last known post office address and such
notice shall be deemed to be given at the time of such
mailing.
Section 2. WAIVER OF NOTICE. Whenever any notice is
required to be given under these By-Laws, the Certificate of
Incorporation or by law, a waiver thereof, signed by the
person entitled to notice, whether before or after the time
stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person
attends a meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the
purpose of any regular or special
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meeting of the shareholders, directors or a committee of
directors need be specified in any written waiver of notice.
ARTICLE V
OFFICERS:
Section 1. OFFICERS OF THE COMPANY. The officers of
the Company shall be selected by the Board of Directors and
shall be a Chairman of the Board of Directors, one or more
Vice Presidents, a Secretary and a Treasurer. The Board of
Directors may elect a Vice Chairman, President and a
Controller and one or more of the following: Senior
Executive Vice President, Executive Vice President, Senior
Vice President, Assistant Vice President, Assistant
Secretary, Associate Treasurer, Assistant Treasurer,
Associate Controller and Assistant Controller. Two or more
offices may be held by the same person.
The Company may have a General Counsel who shall be
appointed by the Board of Directors and shall have general
supervision of all matters of a legal nature concerning the
Company, unless the Board of Directors has also appointed a
General Tax Counsel, in which event the General Tax Counsel
shall have general supervision of all tax matters of a legal
nature concerning the Company.
The Company may have a Chief Financial Officer who
shall be appointed by the Board of Directors and shall have
general supervision over the financial affairs of the
Company. The Company may also have a Chief of Internal
Audits who shall be appointed by the Board of Directors.
Section 2. ELECTION OF OFFICERS. At the first meeting
of the Board of Directors after each annual meeting of
shareholders, the Board of Directors shall elect the
officers. From time to time the Board of Directors may
elect other officers.
Section 3. TENURE OF OFFICE; REMOVAL. Each officer
shall hold office until the first meeting of the Board of
Directors after the annual meeting of shareholders following
the officer's election and until the officer's successor is
elected and qualified or until the officer's earlier
resignation or removal. Each officer shall be subject to
removal at any time, with or without cause, by the
affirmative vote of a majority of the entire Board of
Directors.
Section 4. CHAIRMAN OF THE BOARD OF DIRECTORS. The
Chairman of the Board of Directors shall be the Chief
Executive Officer of the Company and subject to the overall
direction and supervision of the Board of Directors and
Committees thereof shall be in general charge of the affairs
of the Company; and shall consult and advise with the Board
of Directors and committees thereof on the business and the
affairs of the Company. The Chairman of the Board of
Directors shall have the power to make and execute contracts
on behalf of the Company and to delegate such power to
others.
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Section 5. PRESIDENT. The Board of Directors may
select a President who shall have such powers and perform
such duties as may be assigned by the Board of Directors or
by the Chairman of the Board of Directors. In the absence
or disability of the President his or her duties shall be
performed by such Vice Presidents as the Chairman of the
Board of Directors or the Board of Directors may designate.
The President shall also have the power to make and execute
contracts on the Company's behalf and to delegate such power
to others.
Section 6. VICE PRESIDENTS. Each Senior Executive
Vice President, Executive Vice President, Senior Vice
President and Vice President shall have such powers and
perform such duties as may be assigned to the Officer by the
Board of Directors or by the Chairman of the Board of
Directors or the President.
Section 7. SECRETARY. The Secretary shall keep
minutes of all meetings of the shareholders and of the Board
of Directors, and shall keep, or cause to be kept, minutes
of all meetings of Committees of the Board of Directors,
except where such responsibility is otherwise fixed by the
Board of Directors. The Secretary shall issue all notices
for meetings of the shareholders and Board of Directors and
shall have charge of and keep the seal of the Company and
shall affix the seal attested by the Secretary's signature
to such instruments as may properly require same. The
Secretary shall cause to be kept such books and records as
the Board of Directors, the Chairman of the Board of
Directors or the President may require; and shall cause to
be prepared, recorded, transferred, issued, sealed and
cancelled certificates of stock as required by the
transactions of the Company and its shareholders. The
Secretary shall attend to such correspondence and such other
duties as may be incident to the office of the Secretary or
assigned by the Board of Directors, the Chairman of the
Board of Directors, or the President.
In the absence of the Secretary, an Assistant Secretary
is authorized to assume the duties herein imposed upon the
Secretary.
Section 8. TREASURER. The Treasurer shall perform all
duties and acts incident to the position of Treasurer, shall
have custody of the Company funds and securities, and shall
deposit all money and other valuable effects in the name and
to the credit of the Company in such depositories as may be
designated by the Board of Directors. The Treasurer shall
disburse the funds of the Company as may be authorized,
taking proper vouchers for such disbursements, and shall
render to the Board of Directors, whenever required, an
account of all the transactions of the Treasurer and of the
financial condition of the Company. The Treasurer shall
vote all of the stock owned by the Company in any
corporation and may delegate this power to others. The
Treasurer shall perform such other duties as may be assigned
to the Treasurer and shall report to the Chief Financial
Officer or, in the absence of the Chief Financial Officer,
to the Chairman of the Board of Directors.
In the absence of the Treasurer, an Assistant Treasurer
is authorized to assume the duties herein imposed upon the
Treasurer.
Section 9. CONTROLLER. The Board of Directors may
select a Controller who shall keep or cause to be kept in
the books of the Company provided for that purpose a true
account of all
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transactions and of the assets and liabilities of the
Company. The Controller shall prepare and submit to the
Chief Financial Officer or, in the absence of the Chief
Financial Officer to the Chairman of the Board of
Directors, such financial statements and schedules as may be
required to keep the Chief Financial Officer and the
Chairman of the Board of Directors currently informed of the
operations and financial condition of the Company, and
perform such other duties as may be assigned by the Chief
Financial Officer or the Chairman of the Board.
In the absence of the Controller, an Assistant
Controller is authorized to assume the duties herein imposed
upon the Controller.
Section 10. CHIEF OF INTERNAL AUDITS. The Board of
Directors may select a Chief of Internal Audits, who shall
cause to be performed, and have general supervision over,
auditing activities of the financial transactions of the
Company, including the coordination of such auditing
activities with the independent accountants of the Company
and who shall perform such other duties as may be assigned
to him from time to time. The Chief of Internal Audits
shall report to the Chief Financial Officer or, in the
absence of the Chief Financial Officer, to the Chairman of
the Board of Directors. From time to time at the request of
the Audit Committee, the Chief of Internal Audits shall
inform that Committee of the auditing activities of the
Company.
Section 11. ASSISTANT VICE PRESIDENTS. The Company
may have assistant vice presidents who shall be appointed by
a committee whose membership shall include one or more
executive officers of the Company (the "Committee"). Each
such assistant vice president shall have such powers and
shall perform such duties as may be assigned from time to
time by the Committee, the Chairman of the Board of
Directors, the President or any Vice President, and which
are not inconsistent with the powers and duties granted and
assigned by these By-Laws or the Board of Directors.
Assistant vice presidents appointed by the Committee shall
be subject to removal at any time, with or without cause, by
the Committee. Annually the Committee shall report to the
Board of Directors who it has appointed to serve as
assistant vice presidents and their respective
responsibilities.
ARTICLE VI
RESIGNATIONS: FILLING OF VACANCIES:
Section 1. RESIGNATIONS. Any director, member of a
committee, or officer may resign at any time. Such
resignation shall be made in writing and shall take effect
at the time specified therein, and, if no time be specified,
at the time of its receipt by the Chairman of the Board of
Directors or the Secretary. The acceptance of a resignation
shall not be necessary to make it effective.
Section 2. FILLING OF VACANCIES. If the office of any
director becomes vacant, the directors in office, although
less than a quorum, or, if the number of directors is
increased, the directors in office, may elect any qualified
person to fill such vacancy. In the case of a vacancy in
the office of a director caused by an increase in the number
of directors, the person so elected shall hold office until
the next annual meeting of shareholders, or until his
successor shall be elected and qualified.
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In the case of a vacancy in the office of a director
resulting otherwise than from an increase in the number of
directors, the person so elected to fill such vacancy shall
hold office for the unexpired term of the director whose
office became vacant. If the office of any officer becomes
vacant, the Chairman of the Board of Directors may appoint
any qualified person to fill such vacancy temporarily until
the Board of Directors elects any qualified person for the
unexpired portion of the term. Such person shall hold
office for the unexpired term and until the officer's
successor shall be duly elected and qualified or until the
officer's earlier resignation or removal.
ARTICLE VII
INDEMNIFICATION:
Section 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS;
INSURANCE. The Company shall indemnify any person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Company) by
reason of the fact that he is or was a director, officer,
employee, or agent of the Company, or is or was serving at
the request of the Company as a director, officer, employee
or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be
in or not opposed to the best interest of the Company, and,
with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in
a manner which he reasonably believed to be in or not
opposed to the best interest of the Company, and with
respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
The Company shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of
the Company to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or
agent of the Company, or is or was serving at the request of
the Company, as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Company
and except that no indemnification shall be made in respect
of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the Company unless and
only to the extent that the Court of Chancery or the court
in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for
such expenses which the Court of Chancery or such other
court shall deem proper.
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To the extent that a director, officer, employee or
agent of the Company has been successful on the merits or
otherwise in defense of any action, suit or proceeding
referred to in the first two paragraphs of this Section or
in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection
therewith.
Any indemnification under the first two paragraphs of
this Section (unless ordered by a court) shall be made by
the Company only as authorized in the specific case upon a
determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because the
applicable standard of conduct set forth in the first two
paragraphs of this Section has been met. Such determination
shall be made (1) by the Board of Directors by a majority
vote of a quorum consisting of directors who were not
parties to such action, suit or proceedings, or (2) if such
a quorum is not obtainable, or, even if obtainable, a quorum
of disinterested directors so directs, by independent legal
counsel in a written opinion, or (3) by the shareholders.
Expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid by the Company in
advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of
the director, officer, employee or agent to repay such
amount unless it shall ultimately be determined that he is
entitled to be indemnified by the Company as authorized by
this Section.
The indemnification and advancement of expenses
provided by or granted pursuant to this Section shall not be
deemed exclusive of any other rights to which those
indemnified or those who receive advances may be entitled
under any By-Law, agreement, vote of shareholders or
disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of the heirs, executors and
administrators of such a person.
The Company shall have power to purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director,
officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as
such, whether or not the Company would have the power to
indemnify him against such liability under the provisions of
this Section.
The indemnification and advancement of expenses
provided by, or granted pursuant to, this section shall,
unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such a person.
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ARTICLE VIII
CAPITAL STOCK:
Section 1. FORM AND EXECUTION OF CERTIFICATES. The
certificates of shares of the capital stock of the Company
shall be in such form as shall be approved by the Board of
Directors. The certificates shall be signed by the Chairman
of the Board of Directors or the President, or a Vice
President, and by the Secretary or an Assistant Secretary or
the Treasurer or an Assistant Treasurer. Each certificate
of stock shall certify the number of shares owned by the
shareholder in the Company.
A facsimile of the seal of the Company may be used in
connection with the certificates of stock of the Company,
and facsimile signatures of the officers named in this
Section may be used in connection with said certificates.
In the event any officer whose facsimile signature has been
placed upon a certificate shall cease to be such officer
before the certificate is issued, the certificate may be
issued with the same effect as if such person was an officer
at the date of issue.
Section 2. RECORD OWNERSHIPS. All certificates shall
be numbered appropriately and the names of the owners, the
number of shares and the date of issue shall be entered in
the books of the Company. The Company shall be entitled to
treat the holder of record of any share of stock as the
holder in fact thereof and accordingly shall not be bound to
recognize any equitable or other claim to or interest in any
share on the part of any other person, whether or not it
shall have express or other notice thereof, except as
required by the laws of Delaware.
Section 3. TRANSFER OF SHARES. Upon surrender to the
Company or to a transfer agent of the Company of a
certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment, or authority to
transfer, it shall be the duty of the Company, if it is
satisfied that all provisions of law regarding transfers of
shares have been duly complied with, to issue a new
certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
Section 4. LOST, STOLEN OR DESTROYED STOCK
CERTIFICATES. Any person claiming a stock certificate in
lieu of one lost, stolen or destroyed shall give the Company
an affidavit as to such person's ownership of the
certificate and of the facts which go to prove that it was
lost, stolen or destroyed. The person shall also, if
required by the Board of Directors, give the Company a bond,
sufficient to indemnify the Company against any claims that
may be made against it on account of the alleged loss, theft
or destruction of any such certificate or the issuance of
such new certificate. Any Vice President or the Secretary
or any Assistant Secretary of the Company is authorized to
issue such duplicate certificates or to authorize any of the
transfer agents and registrars to issue and register such
duplicate certificates.
Section 5. REGULATIONS. The Board of Directors from
time to time may make such rules and regulations as it may
deem expedient concerning the issue, transfer and
registration of shares.
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Section 6. TRANSFER AGENT AND REGISTRAR. The Board of
Directors may appoint such transfer agents and registrars of
transfers as may be deemed necessary, and may require all
stock certificates to bear the signature of either or both.
ARTICLE IX
SEAL:
Section 1. SEAL. The Board of Directors shall provide
a suitable seal containing the name of the Company, the year
of its creation, and the words, "CORPORATE SEAL, DELAWARE,"
or other appropriate words. The Secretary shall have
custody of the seal.
ARTICLE X
FISCAL YEAR:
Section 1. FISCAL YEAR. The fiscal year of the
Company shall be the calendar year.
ARTICLE XI
AMENDMENTS:
Section 1. DIRECTORS MAY AMEND BY-LAWS. The Board of
Directors shall have the power to make, amend and repeal the
By-Laws of the Company at any regular or special meeting of
the Board of Directors.
Section 2. BY-LAWS SUBJECT TO AMENDMENT BY
SHAREHOLDERS. All By-Laws shall be subject to amendment,
alteration, or repeal by the shareholders entitled to vote
at any annual meeting or at any special meeting.
ARTICLE XII
EMERGENCY BY-LAWS:
Section 1. EMERGENCY BY-LAWS. This Article XII shall
be operative during any emergency resulting from an attack
on the United States or on a locality in which the Company
conducts its business or customarily holds meetings of its
Board of Directors or its stockholders, or during any
nuclear or atomic disaster or during the existence of any
catastrophe or other similar emergency condition, as a
result of which a quorum of the Board of Directors or the
Executive Committee thereof cannot be readily convened (an
"emergency"), notwithstanding any different or conflicting
provision in the preceding Articles of these By-Laws or in
the Certificate of Incorporation of the Company. To the
extent not inconsistent with the provisions of this Article,
the By-Laws provided in the preceding Articles and the
provisions of the Certificate of Incorporation of the
Company shall remain in effect during such emergency, and
upon termination of such emergency, the provisions of this
Article XII shall cease to be operative.
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Section 2. MEETINGS. During any emergency, a meeting
of the Board of Directors, or any committee thereof, may be
called by any officer or director of the Company. Notice of
the time and place of the meeting shall be given by any
available means of communication by the person calling the
meeting to such of the directors and/or Designated Officers,
as defined in Section 3 hereof, as it may be feasible to
reach. Such notice shall be given at such time in advance
of the meeting as, in the judgment of the person calling the
meeting, circumstances permit.
Section 3. QUORUM. At any meeting of the Board of
Directors, or any committee thereof, called in accordance
with Section 2 of this Article XII, the presence or
participation of two directors, one director and a
Designated Officer or two Designated Officers shall
constitute a quorum for the transaction of business.
The Board of Directors or the committees thereof, as
the case may be, shall, from time to time but in any event
prior to such time or times as an emergency may have
occurred, designate the officers of the Company in a
numbered list (the "Designated Officers") who shall be
deemed, in the order in which they appear on such list,
directors of the Company for purposes of obtaining a quorum
during an emergency, if a quorum of directors cannot
otherwise be obtained.
Section 4. BY-LAWS. At any meeting called in
accordance with Section 2 of this Article XII, the Board of
Directors or the committees thereof, as the case may be, may
modify, amend or add to the provisions of this Article XII
so as to make any provision that may be practical or
necessary for the circumstances of the emergency.
Section 5. LIABILITY. No officer, director or
employee of the Company acting in accordance with the
provisions of this Article XII shall be liable except for
willful misconduct.
Section 6. REPEAL OR CHANGE. The provisions of this
Article XII shall be subject to repeal or change by further
action of the Board of Directors or by action of the
shareholders, but no such repeal or change shall modify the
provisions of Section 5 of this Article XII with regard to
action taken prior to the time of such repeal or change.
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EXHIBIT 10.8.2
AMENDMENT NUMBER FIVE
TO
THE COCA-COLA COMPANY COMPENSATION DEFERRAL
&
INVESTMENT PROGRAM
Pursuant to the power vested in The Coca-Cola Company
Compensation Deferral & Investment Program Committee (the
"Committee") to amend or terminate The Coca-Cola Company
Compensation Deferral & Investment Program (the "Program"), the
Committee hereby amends the Program effective January 1, 1998 as
follows:
1. Section 2.9, INTEREST CREDIT PERIOD, is amended and
restated in its entirety to read as follows:
"2.9 INTEREST CREDIT PERIOD means
(a) the 12 consecutive month period which begins
on November 1, 1986 and each 12 consecutive month
period which begins on each November 1 thereafter,
through the period which begins on November 1,
1996;
(b) the 2 consecutive month period which begins
on November 1, 1997; and
(c) each calendar month which begins on or after
January 1, 1998."
2. Section 2.12, PROGRAM RATE, is amended and restated in
its entirety to read as follows:
"2.12 PROGRAM RATE - means the interest credit rate
in effect for each Interest Credit Period, which rate
shall equal
(a) for Interest Credit Periods beginning before
January 1, 1998, the greater of
(i) 16% per annum, or
(ii) the annual rate determined by the
Committee based on the average interest rate
reported by the Moody's Investors Service as
in effect on the first business day of each
calendar month for the corporate investment
grade level of bond issues selected by the
Committee for the 12 consecutive month period
ending on April 30
<PAGE>
<PAGE>
which immediately precedes the beginning of
such Interest Credit Period plus 8 percentage
points; and
(b) for Interest Credit Periods beginning on or
after January 1, 1998, 14% per annum.
IN WITNESS WHEREOF, the Compensation Deferral & Investment
Program Committee has caused this Amendment to the Program
to be executed this 23rd day of December, 1997.
THE COCA-COLA COMPANY
COMPENSATION DEFERRAL &
INVESTMENT PROGRAM COMMITTEE
By: /s/ Michael W. Walters
Chairman
/s/ James E. Chestnut
/s/ C. Ron Cheeley
EXHIBIT 10.12
THE COCA-COLA COMPANY
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE. The purpose of The Coca-Cola Company Deferred
Compensation Plan for Non-Employee Directors (the "Plan") is to
provide non-employee Directors of The Coca-Cola Company (the
"Company") with an opportunity to defer certain compensation as a
Director. This Plan replaces the Plan adopted on December 7,
1983 as amended and restated (the "Prior Plan"). All deferrals
made pursuant to the Prior Plan shall remain in effect according
to their terms unless changed pursuant to Section 8 below.
2. EFFECTIVE DATE. The Plan shall become effective upon
approval by the Board of Directors of the Company.
3. ELIGIBILITY. Any Director of the Company who is not an
employee of the Company or of any subsidiary or affiliate of the
Company is eligible to participate in the Plan.
4. ELECTION TO DEFER COMPENSATION.
a. TIME OF ELIGIBILITY. An election to defer
compensation shall be made by a nominee for election as a
Director who is not then serving as a Director prior to the time
of election to the Board for the relevant elected term and prior
to the right to receive any compensation with respect to such
term. A Director who has not previously elected to defer receipt
of compensation or who has subsequently discontinued such
election may elect to defer compensation by giving notice prior
to November 1 of each year, but any such election shall only be
effective for compensation payable during the calendar year
following such notice and thereafter. An election shall continue
in effect until the end of the participant's service as a
Director or until the end of the calendar year during which the
Director gives the Company written notice of the discontinuance
of the election, whichever shall occur first. Such a notice of
discontinuance shall operate prospectively from the first day of
the calendar year following the giving of notice referred to in
the preceding sentence, and compensation payable during any
subsequent calendar year shall not be deferred, but compensation
theretofore deferred shall continue to be withheld and shall be
paid in accordance with the notice of election pursuant to which
it was withheld.
b. AMOUNT OF DEFERRAL. A participant may only elect
to defer receipt of all or a specified portion of the annual
retainer fee receivable by such Director for service as a
Director of the Company, but not any other compensation or
expense reimbursement.
<PAGE>
c. MANNER OF ELECTING DEFERRAL. A participant shall
elect to defer compensation by giving written notice to the
Company in the form attached hereto as Exhibit A. Such notice
shall include:
(i) the percentage or amount of compensation to be
deferred;
(ii) whether the deferral will be into the "Cash Fund"
or "Share Units"; and
(iii) an election of a lump-sum payment or of a
number of annual installments (not to exceed five) for the
payment of the deferred compensation, such lump-sum payment
or the first installment payment occurring on the later of
January 15 of the year following the year in which service
as a Director terminates or six months from the date on
which service as a Director terminates.
5. DEFERRED COMPENSATION ACCOUNT. The Company shall
establish a deferred compensation account (the "Account") for
each participant.
(i) For amounts deferred to the Cash Fund, the Account will
be credited
(a) at the time such amount would otherwise be payable,
with the amount of any compensation, receipt of which the
participant has elected to defer, and
(b) at the end of each calendar year or initial or
terminal portion of a year, with deemed interest, at an
annual rate equivalent to the weighted average prime lending
rate of SunTrust Bank, Atlanta for the relevant year or
portion thereof (the "Interest Equivalents"), upon the
average daily balance in the Account during such year or
portion thereof.
(ii) For amounts deferred to Share Units, the Account
will be credited
(a) at the time such amount would otherwise be
payable, with the amount of any compensation, receipt of
which the participant has elected to defer. Such amount
shall be converted on such date to a number of Share Units
equal to the number of shares which theoretically could have
been purchased on such date with such amount, using the
average share price on the New York Stock Exchange on such
date, or if such date is not a trading day, on the next
trading day;
(b) on each date on which a dividend is paid on the
common shares of The Coca-Cola Company, with the number of
Share Units theoretically which
-2-
<PAGE>
could have been purchased with the amount of dividends
payable on the number of shares equal to the number of
Share Units in the participant's Account immediately prior
to the payment of such dividend; the number of additional
Share Units shall be calculated as in 5(ii)(a) above; and
(c) on the date of any stock split or stock dividend,
with the number of Share Units necessary for an equitable
adjustment.
6. VALUE OF DEFERRED COMPENSATION ACCOUNTS. The value of
each participant's Account shall consist of the compensation
deferred in accordance with paragraph 4(c) above and the Interest
Equivalents in the case of the Cash Fund and the Share Units
described in paragraph 5 above. All credits to an Account shall
be credited with Interest Equivalents or additional Share Units
in relation to the period from the date credited to the date of
payment to a participant or to his or her estate. As promptly as
practicable following the close of each calendar year a statement
will be sent to each participant as to the balance in the
participant's Account as of the end of such year.
7. PAYMENT OF DEFERRED COMPENSATION. No payment may be
made from a participant's Account except as follows:
a. The balance in a participant's Account in the Cash
Fund shall be paid in cash in the manner elected in accordance
with the provisions of paragraph 4(c) above. If annual
installments are elected, the amount of the first payment shall
be a fraction of the balance in the participant's Account as of
December 31 of the year preceding such payment, the numerator of
which is one and the denominator of which is the total number of
installments elected. The amount of each subsequent payment
shall be a fraction of the balance in the participant's Account
as of December 31 of the year preceding each subsequent payment,
the numerator of which is one and the denominator of which is the
total number of installments elected minus the number of
installments previously paid. Each payment pursuant to this
paragraph 7(a) shall include Interest Equivalents, but only on
the amount being paid, from the preceding December 31 to the date
of payment.
b. The balance in a participant's Account in Share
Units shall be paid in the number of actual shares of the common
stock of the Company equal to the number of Share Units in the
participant's Account. If annual installments are elected, the
number of shares of Company common stock in the first payment
shall be a fraction of the number of Share Units in the
participant's Account as of December 31 of the year preceding
such payment, the numerator of which is one and the denominator
of which is the total number of installments elected. The number
of shares of Company
-3-
<PAGE>
common stock in each subsequent payment shall be a fraction of
the Share Units in the participant's Account as of December 31
of the year preceding each subsequent payment, the numerator of
which is one and the denominator of which is the total number
of installments elected minus the number of installments
previously paid.
c. In the event of a participant's death or
termination of service due to conflict of interest, illness or
disability, the balance in the participant's Account (in the case
of the Cash Fund including Interest Equivalents in relation to
the elapsed portion of the year of death or termination of
service) shall be determined as of the date of death or
termination of service due to conflict of interest, illness or
disability and such balance shall be paid in a single payment in
cash in the case of the Cash Fund or in shares of Company common
stock in the case of Share Units to the participant or the
participant's estate, as the case may be, as soon as reasonably
possible thereafter.
8. ONE-TIME ELECTION. Participants who were participants
in the Prior Plan may choose to transfer the amounts in the Cash
Fund to Share Units prior to November 1, 1997. Such election is
irrevocable. The number of Share Units will be determined as of
November 1, 1997 in accordance with the method described in
Section 5 (ii)(a) hereof.
9. PARTICIPANT'S RIGHTS UNSECURED. The right of a
participant to receive any unpaid portion of the participant's
Account, whether the Cash Fund or Share Units, shall be an
unsecured claim against the general assets of the Company.
10. NONASSIGNABILITY. The right of a participant to
receive any unpaid portion of the participant's Account shall not
be assigned, transferred, pledged or encumbered or be subject in
any manner to alienation or anticipation.
11. ADMINISTRATION. This Plan shall be administered by the
Secretary of the Company, who shall have the authority to adopt
rules and regulations for carrying out the Plan and to interpret,
construe and implement the provisions thereof.
12. AMENDMENT AND TERMINATION. This Plan may be amended,
modified or terminated at any time by the Board of Directors of
the Company, provided, however, that no such amendment,
modification or termination shall, without the consent of a
participant, adversely affect such participant's rights with
respect to amounts theretofore accrued to the participant's
Account.
-4-
<PAGE>
EXHIBIT A
ELECTION
TO THE SECRETARY OF THE COCA-COLA COMPANY (the "Company"):
Pursuant to paragraph 4 of The Coca-Cola Company Deferred
Compensation Plan for Non-Employee Directors (the "Plan"), the
undersigned hereby elects to defer ______% of all future payments
with respect to the annual retainer fee for service on the Board
of Directors of the Company in accordance with the terms of the
Plan. Of such amount ______% shall be deferred to the Cash Fund
and ______% shall be deferred to Share Units.
The compensation deferred is to be paid to me in the
following manner (check and complete one):
__ single lump-sum payment in cash or Company common
stock, as the case may be, to be paid on the later of
January 15 of the year following the year in which my
service terminates or six months from the termination
of my service; or
__ installment payments in _________ (insert number up to
five) annual installments, the first annual installment
to be paid on the later of January 15 of the year
following the year in which my service terminates or
six months from the termination of my service, and the
subsequent annual installment payments to begin on
January 15 of the year following the year in which my
first payment was made.
It is understood that this election must be submitted to the
Secretary of the Company
- by November 1 for continuing directors to begin
deferrals for payments otherwise to be received beginning
in the next calendar year or
- prior to beginning service on the Board for new
directors.
The undersigned hereby acknowledges that this election is
subject to the terms of the Plan.
__________________________________
(Signature of Director)
Date:___________, 19___ ___________________________________
(Printed or typed name of Director)
Received on the ________ day of ______________, 19___ on
behalf of The Coca-Cola Company.
___________________________________
Secretary
EXHIBIT 12.1
<TABLE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(IN MILLIONS EXCEPT RATIOS)
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
1997 1996 1995 1994 1993
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earnings:
Income from continuing operations
before income taxes and changes
in accounting principles $ 6,055 $ 4,596 $ 4,328 $ 3,728 $ 3,185
Fixed charges 300 324 318 236 213
Less: Capitalized interest, net (17) (7) (9) (5) (16)
Equity income, net of dividends (108) (89) (25) (4) (35)
---------------------------------------------------------
Adjusted earnings $ 6,230 $ 4,824 $ 4,612 $ 3,955 $ 3,347
=========================================================
Fixed charges:
Gross interest incurred $ 275 $ 293 $ 281 $ 204 $ 184
Interest portion of rent expense 25 31 37 32 29
---------------------------------------------------------
Total fixed charges $ 300 $ 324 $ 318 $ 236 $ 213
=========================================================
Ratios of earnings to fixed charges 20.8 14.9 14.5 16.8 15.7
=========================================================
The Company is contingently liable for guarantees of indebtedness owed by third parties in the amount
of $409 million, of which $26 million related to independent bottling licensees. Fixed charges for these
contingent liabilities have not been included in the computation of the above ratios as the amounts are
immaterial and, in the opinion of Management, it is not probable that the Company will be required to
satisfy the guarantees.
</TABLE>
EXHIBIT 13.1
FINANCIAL REVIEW INCORPORATING THE COCA-COLA COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS AND SUBSIDIARIES
- ------------------------------------------------------------------------
Our mission is to maximize share-owner value over time. To
create long-term value, The Coca-Cola Company and its
subsidiaries (our Company) execute a comprehensive business
strategy driven by four key objectives. We strive to (1)
increase volume, (2) expand our share of beverage sales
worldwide, (3) maximize our long-term cash flows and (4)
improve economic profit and create economic value added. We
achieve these goals by strategically investing in the high-
return beverages business and by optimizing our cost of
capital through appropriate financial policies.
INVESTMENTS
With a global business system that operates in nearly 200
countries and generates superior cash flows, our Company is
uniquely positioned to capitalize on profitable new
investment opportunities. Our criterion for investment is
simple: New investments must directly enhance our existing
operations and must be expected to provide cash returns that
exceed our long-term, after-tax, weighted-average cost of
capital, currently estimated at approximately 11 percent.
Because it consistently generates high returns, our
business, beverages, is a particularly attractive investment
for us. In emerging and still-developing markets, our
Company's main objective is to increase the penetration of
our products. In these markets, the bulk of our investments
are for infrastructure enhancements such as production
facilities, distribution networks, sales equipment and
technology. We make these investments by acquiring or forming
strategic business alliances with local bottlers and by
matching local expertise with our experience, resources and
focus. In highly developed markets, our expenditures are
primarily for marketing activities.
Currently, 50 percent of the world's population live in
markets where the average person consumes fewer than 10
servings of our beverages per year. For example, the emerging
markets of China, India, Indonesia and Russia represent
approximately 44 percent of the world's population, yet, on a
combined basis, the average per capita consumption of our
products in these markets is less than 2 percent of the
United States' level. We continue to invest aggressively in
these areas.
Our investment strategy focuses on the four fundamental
components of our business: bottling operations, capital
expenditures, marketing activities and people.
BOTTLING OPERATIONS - Our Company has business relationships
with three types of bottlers: (1) independently owned
bottlers, in which we have no ownership interest; (2)
bottlers in which we have invested and have a noncontrolling
ownership interest; and (3) bottlers in which we have
invested and have a controlling ownership interest.
During 1997, independently owned bottling operations
produced and distributed approximately 37 percent of our
worldwide unit case volume. Bottlers in which we own a
noncontrolling ownership interest produced and distributed
approximately 50 percent of our 1997 worldwide unit case
volume while controlled bottling and fountain operations
produced and distributed approximately 13 percent of 1997
worldwide unit case volume.
The reason we invest in bottling operations is to maximize
the strength and efficiency of our production, distribution
and marketing systems around the world. These investments
often result in increases in unit case volume, net revenues
and profits at the bottler level, which in turn generate
increased gallon shipments for our concentrate business. As a
result, both our Company and the bottlers benefit from long-
term growth in volume, improved cash flows and increased
share-owner value.
The level of our investment generally depends on the
bottler's capital structure and its available resources at
the time of our investment. In certain situations, it can be
advantageous to acquire a controlling interest in a bottling
operation. Although it is not our primary long-term business
strategy, owning a controlling interest allows us to
compensate for limited local resources and enables us to help
focus these bottlers' sales and marketing programs, assist in
developing their business and information systems, and
establish appropriate capital structures.
In 1997, we purchased the bottling assets of three South
Korean bottlers. Also in 1997, the Indian government approved
our plan to invest in Indian bottling operations, allowing us
to set up an integrated bottling system in India. Previously,
we acquired controlling interests in certain bottling
operations in Italy in 1996 and 1995. By providing capital
and marketing expertise to newly acquired bottlers, we
strengthen their ability to deliver our Company's brands to
customers and consumers.
In line with our long-term bottling strategy, we
periodically consider options for reducing our ownership
interest in a consolidated bottler. One option for reducing
our ownership interest is to combine our bottling interests
with the bottling interests of others to form strategic
business alliances. Another option is to sell our interest
in a consolidated bottling operation to one of our equity
investee bottlers. In both of these situations, we continue
participating in the previously consolidated bottler's
earnings through our portion of the equity investee's income.
Consistent with our strategy, in early 1998, we announced a
proposal for our consolidated bottling operations in northern
and central Italy to become part of a new publicly traded
European bottler, Coca-Cola Beverages. Coca-Cola Beverages
will be formed upon the completion of a proposed spin-off by
Coca-Cola Amatil Limited (Coca-Cola Amatil) of its European
operations. After the spin-off, these Italian bottling
operations will be acquired by Coca-Cola Beverages for both
cash and shares of Coca-Cola Beverages stock in a transaction
valued at approximately $979 million. Additionally, once the
proposed spin-off has been completed, our bottling operations
in South Korea will be acquired by Coca-Cola Amatil for shares of
stock in Coca-Cola Amatil in a transaction valued at approximately
$588 million. The proposed transactions are subject to certain
conditions, including approvals by holders of ordinary shares
- 33 -
<PAGE>
<PAGE>
FINANCIAL REVIEW INCORPORATING THE COCA-COLA COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS AND SUBSIDIARIES
- ------------------------------------------------------------------------
of Coca-Cola Amatil stock and applicable regulatory
authorities.
In 1996, we sold our consolidated bottling and canning
operations in France and Belgium to Coca-Cola Enterprises
Inc. (Coca-Cola Enterprises). We also formed a strategic
business alliance in Germany, Coca-Cola Erfrischungsgetraenke
AG (CCEAG), in 1996 through the merger of our then wholly
owned east German bottler with three independent bottlers. In
1997, we merged our consolidated bottling operation in
Germany, Coca-Cola Rhein-Ruhr, into CCEAG. Currently, we have
a 45 percent interest in CCEAG.
Also in 1996, we combined our bottling interests in
Venezuela with the Cisneros Group's bottling companies to
form a new joint venture, Embotelladora Coca-Cola y Hit de
Venezuela, S.A. (Coca-Cola y Hit). In 1997, our Company and
the Cisneros Group sold our respective interests in Coca-Cola
y Hit to Panamerican Beverages, Inc. (Panamco) in exchange
for shares of Panamco stock. At the completion of this
transaction, our ownership in Panamco was approximately 23
percent, and we began accounting for our investment by the
equity method.
As stated earlier, our investments in a bottler can
represent either a noncontrolling or a controlling interest.
Through noncontrolling investments in bottling companies, we
provide expertise and resources to strengthen those
businesses. In 1997, we increased our interest in Grupo
Continental, S.A., a bottler in Mexico, from 18 percent to 20
percent; our interest in Embotelladoras Polar S.A., a bottler
headquartered in Chile, from 17 percent to 19 percent; and
our interest in Embotelladora Andina S.A., another bottler
headquartered in Chile, from 6 percent to 11 percent.
Certain bottling operations in which we have a
noncontrolling ownership interest are designated as "anchor
bottlers" due to their level of responsibility and
performance. Anchor bottlers are strongly committed to their
own profitable growth which, in turn, helps us meet our
strategic goals and furthers the interests of our worldwide
production, distribution and marketing systems. Anchor
bottlers tend to be large and geographically diverse with
strong financial and management resources. In 1997, our
anchor bottlers produced and distributed approximately 38
percent of our total worldwide unit case volume. Anchor
bottlers give us strong partners on every major continent.
Upon its formation, Coca-Cola Beverages, the Coca-Cola
Amatil spin-off which will operate in Europe, will be
designated as our tenth anchor bottler. Additionally, we
designated Coca-Cola Nordic Beverages (CCNB) as an anchor
bottler in 1997. CCNB, a joint venture in which Carlsberg A/S
will own a 51 percent interest and we will own a 49 percent
interest, has bottling operations in Denmark and Sweden.
In 1997, our Company and San Miguel Corporation (San
Miguel) sold Coca-Cola Bottlers Philippines, Inc. to Coca-Cola
Amatil in exchange for shares of Coca-Cola Amatil stock.
Also in 1997, we sold to Coca-Cola Enterprises our 49 percent
interest in Coca-Cola & Schweppes Beverages Ltd., a bottler
in Great Britain; our 48 percent interest in Coca-Cola
Beverages Ltd. of Canada; and our 49 percent interest in The
Coca-Cola Bottling Company of New York, Inc.
In line with our established investment strategy, our
bottling investments have been profitable over time. For
bottling investments that are accounted for by the equity
method, we measure the profitability of our bottling
investments in two ways - equity income and the excess of the
fair values over the carrying values of our investments.
Equity income, which is included in our consolidated net
income, represents our share of the net earnings of our
investee companies. In 1997, equity income was $155 million.
The following table illustrates the excess of the calculated
fair values, based on quoted closing prices of publicly
traded shares, over our Company's carrying values for
selected equity method investees (in millions):
Fair Carrying
December 31, Value Value Excess
- -------------------------------------------------------------------------
1997
Coca-Cola Enterprises Inc. $ 6,008 $ 184 $ 5,824
Coca-Cola Amatil Limited 2,122 1,204 918
Panamerican Beverages, Inc. 924 735 189
Coca-Cola FEMSA, S.A. de C.V. 827 87 740
Grupo Continental, S.A. 272 89 183
Coca-Cola Bottling Co. Consolidated 171 71 100
- -------------------------------------------------------------------------
$ 7,954
=========================================================================
The excess of calculated fair values over carrying values
for our investments illustrates the significant increase in
the value of our investments. Although this excess value for
equity method investees is not reflected in our consolidated
results of operations or financial position, it represents a
true economic benefit to us.
CAPITAL EXPENDITURES - Capital expenditures for property,
plant and equipment and the percentage distribution by
geographic area for 1997, 1996 and 1995 are as follows (in
millions):
Year Ended December 31, 1997 1996 1995
- ---------------------------------------------------------------
Capital expenditures $ 1,093 $ 990 $ 937
- ---------------------------------------------------------------
North America 24% 27% 31%
Africa 2% 3% 2%
Greater Europe 30% 38% 41%
Latin America 7% 8% 9%
Middle & Far East 18% 12% 9%
Corporate 19% 12% 8%
===============================================================
In 1996, our Company launched Project Infinity, a strategic
business initiative utilizing technology to integrate business
systems across our global enterprise over the next several years.
In 1997, we began testing a limited version of the Project
Infinity software technology and anticipate rolling it out to
certain divisions in late 1998. Project Infinity will enhance
- 34 -
<PAGE>
<PAGE>
FINANCIAL REVIEW INCORPORATING THE COCA-COLA COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS AND SUBSIDIARIES
- ------------------------------------------------------------------------
our competitiveness by supplying immediate, detailed
information about our financial position and the marketplace
to our management, associates and bottlers worldwide. By
giving our people real-time data, Project Infinity will
increase our ability to recognize opportunities and make
better and faster decisions about operations, marketing and
finance. Project Infinity will require significant capital
expenditures over the next several years. All related costs
of business process reengineering activities have been
expensed as incurred.
In December 1997, our Company signed a letter of intent
with beverage company Pernod Ricard to purchase its Orangina
brands, three bottling operations and one concentrate plant
in France for approximately 5 billion French francs
(approximately $850 million based on December 1997 exchange
rates). This transaction is subject to approvals from
regulatory authorities.
MARKETING ACTIVITIES - In addition to investing in our
bottling and distribution infrastructure, we make significant
expenditures in marketing to support our trademarks. We
define marketing as anything we do to create consumer demand
for our brands. We focus on continually finding new ways to
differentiate our products and build value into all our
brands. Marketing spending enhances consumer awareness and
increases consumer preference for our brands. This produces
growth in volume, per capita consumption and our share of
worldwide beverage sales.
We heighten consumer awareness and product appeal for our
trademarks using integrated marketing programs. Through our
bottling investments and strategic alliances with other
bottlers of our products, we create and implement these
programs worldwide. In developing a global strategy for a
Company trademark, we conduct product and packaging research,
establish brand positioning, develop precise consumer
communications and solicit consumer feedback. Our integrated
marketing programs include activities such as advertising,
point-of-sale merchandising and product sampling.
To maximize the impact of our advertising expenditures, we
assign specific brands to individual advertising agencies.
This approach enables us to increase accountability and
enhance each brand's global positioning.
PEOPLE - Our continued success depends on recruiting,
training and retaining people who can quickly identify and
act on profitable business opportunities. This means
maintaining and refining a corporate culture that encourages
learning, innovation and value creation on a daily basis. The
Coca-Cola Learning Consortium works with the management of
our entire system to foster learning as a core capability.
This group helps build the culture, systems and processes our
people need to develop the knowledge and skills to take
advantage of new opportunities.
FINANCIAL STRATEGIES
We use several strategies to optimize our cost of capital,
which is a key component of our ability to maximize share-
owner value.
DEBT FINANCING - Our Company maintains debt levels considered
prudent based on our cash flow, interest coverage and
percentage of debt to capital. We use debt financing to lower
our overall cost of capital, which increases our return on
share-owners' equity.
Our capital structure and financial policies have earned
long-term credit ratings of "AA-" from Standard & Poor's and
"Aa3" from Moody's, and the highest credit ratings available
for our commercial paper programs.
Our global presence and strong capital position give us
easy access to key financial markets around the world,
enabling us to raise funds with a low effective cost. This
posture, coupled with the active management of our mix of
short-term and long-term debt, results in a lower overall
cost of borrowing. Our debt management policies, in
conjunction with our share repurchase programs and investment
activity, typically result in current liabilities exceeding
current assets.
<PAGE>
In managing our use of debt capital, we consider the
following financial measurements and ratios:
Year Ended December 31, 1997 1996 1995
- ----------------------------------------------------------
Net debt (in billions) $ 2.0 $ 2.8 $ 2.6
Net debt-to-net capital 22% 31% 32%
Free cash flow to net debt 172% 85% 82%
Interest coverage 22x 17x 16x
Ratio of earnings to
fixed charges 20.8x 14.9x 14.5x
===========================================================
Net debt is debt in excess of cash, cash equivalents and
marketable securities not required for operations and certain
temporary bottling investments.
SHARE REPURCHASES - Our Company demonstrates confidence in
the long-term growth potential of our business by our
continued and consistent use of share repurchase programs. In
1992, our Board of Directors authorized a plan to repurchase
up to 200 million shares of our Company's common stock
through the year 2000. In 1997, we repurchased approximately
20 million shares under the 1992 plan. Through 1997, we had
repurchased 187 million shares under the 1992 plan.
In October 1996, our Board of Directors authorized a new
program to repurchase 206 million additional shares through
the year 2006.
Since the inception of our initial share repurchase program
in 1984 through our current program as of December 31, 1997,
we have repurchased more than 1 billion shares, representing
31 percent of the shares outstanding as of January 1, 1984,
at an average price per share of $11.27.
- 35 -
<PAGE>
<PAGE>
FINANCIAL REVIEW INCORPORATING THE COCA-COLA COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS AND SUBSIDIARIES
- ------------------------------------------------------------------------
DIVIDEND POLICY - At its February 1998 meeting, our Board of
Directors again increased our quarterly dividend to $.15 per
share, equivalent to a full-year dividend of $.60 in 1998,
our 36th consecutive annual increase. Our annual common stock
dividend was $.56 per share, $.50 per share and $.44 per
share in 1997, 1996 and 1995, respectively.
In 1997, our dividend payout ratio was approximately 34
percent of our net income. To free up additional cash for
reinvestment in our high-return beverages business, our Board
of Directors intends to gradually reduce our dividend payout
ratio to 30 percent over time.
FINANCIAL RISK MANAGEMENT
Our Company uses derivative financial instruments primarily
to reduce our exposure to adverse fluctuations in interest
rates and foreign exchange rates, and to a lesser extent, to
reduce our exposure to adverse fluctuations in commodity
prices and other market risks. We do not enter into
derivative financial instruments for trading purposes. As a
matter of policy, all our derivative positions are used to
reduce risk by hedging an underlying economic exposure.
Because of the high correlation between the hedging
instrument and the underlying exposure, fluctuations in the
value of the instruments are generally offset by reciprocal
changes in the value of the underlying exposure. The
derivatives we use are straightforward instruments with
liquid markets.
Our Company monitors our exposure to financial market risks
using several objective measurement systems, including value-
at-risk models. For the value-at-risk calculations discussed
below, we used a historical simulation model to estimate
potential future losses our Company could incur as a result
of adverse movements in foreign currency and interest rates.
We have not considered the potential impact of favorable
movements in foreign currency and interest rates on our
calculations. We examined historical weekly returns over the
previous 10 years to calculate our value at risk. Our value-
at-risk calculations do not purport to represent the actual
losses that our Company expects to incur.
FOREIGN CURRENCY - We manage most of our foreign currency
exposures on a consolidated basis, which allows us to net
certain exposures and take advantage of any natural offsets.
With approximately 77 percent of our 1997 operating income
generated outside the United States, weakness in one
particular currency is often offset by strengths in others.
We use derivative financial instruments to further reduce our
net exposure to currency fluctuations.
Our Company enters into forward exchange contracts and
purchases currency options (principally European currencies
and Japanese yen) to hedge firm sale commitments denominated
in foreign currencies. We also purchase currency options
(principally European currencies and Japanese yen) to hedge
certain anticipated sales. Premiums paid and realized gains
and losses, including those on terminated contracts, if any,
are included in prepaid expenses and other assets. These are
recognized in income, along with unrealized gains and losses,
in the same period the hedged transactions are realized.
Gains and losses on derivative financial instruments that are
designated and effective as hedges of net investments in
international operations are included in share-owners' equity
as a foreign currency translation adjustment.
Our value-at-risk calculation estimates foreign currency
risk on our derivative and other financial instruments. We
have not included in our calculation the effects of currency
movements on anticipated foreign currency denominated sales
and other hedged transactions. According to our calculation,
on December 31, 1997, we estimate with 95 percent confidence
that the fair value of our derivative and other financial
instruments would decline by less than $58 million over a one-
week period due to an adverse move in foreign currency
exchange rates. However, we would expect that any loss in the
fair value of our derivative and other financial instruments
would be generally offset by an increase in the fair value of
our underlying exposures.
INTEREST RATES - Our Company maintains our percentage of
fixed and variable rate debt within defined parameters. We
enter into interest rate swap agreements that maintain the
fixed/variable mix within these parameters. Any differences
paid or received on interest rate swap agreements are
recognized as adjustments to interest expense over the life
of each swap.
Our value-at-risk calculation estimates interest rate risk
on our derivative and other financial instruments. According
to our calculation, on December 31, 1997, we estimate with 95
percent confidence that any increase in our net interest
expense due to an adverse move in interest rates over a one-
week period would not have a material impact on our
consolidated financial position, results of operations or
cash flows.
PERFORMANCE TOOLS
Economic profit and economic value added provide a framework
by which we measure the value of our actions. We define
economic profit as income from continuing operations after
taxes, excluding interest, in excess of a computed capital
charge for average operating capital employed. Economic value
added represents the growth in economic profit from year to
year. To ensure that our management team stays clearly
focused on the key drivers of our business, economic value
added and economic profit are used in determining annual
incentive awards and long-term incentive awards for most
eligible employees.
During 1996, we implemented a new tool to help us improve
our performance - value-based management (VBM). VBM does not
replace the economic value added concept; rather, it is a
tool to manage economic profit. It requires us to think about
creating value in everything we do, every day.
VBM's principles assist us in managing economic profit by
clarifying our understanding of what creates value and what
destroys it and encouraging us to manage for increased value.
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FINANCIAL REVIEW INCORPORATING THE COCA-COLA COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS AND SUBSIDIARIES
- ------------------------------------------------------------------------
With VBM, we determine how best to create value in every area
of our business. We believe that using VBM as a planning and
execution tool, and economic profit as a performance
measurement tool, greatly enhances our ability to build share-
owner value over time.
TOTAL RETURN TO SHARE OWNERS
Our Company has provided share owners with an excellent
return on their investment over the past decade. A $100
investment in our Company's common stock on December 31,
1987, together with reinvested dividends, grew in pretax
value to approximately $1,643 on December 31, 1997, an
average annual compound return of 32 percent.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OUR BUSINESS
We are the largest manufacturer, distributor and marketer of
soft-drink beverage concentrates and syrups in the world. Our
Company manufactures beverage concentrates and syrups and, in
certain instances, finished beverages, which we sell to
bottling and canning operations, authorized fountain
wholesalers and some fountain retailers. In addition, we have
ownership interests in numerous bottling and canning
operations. We are also the world's largest distributor and
marketer of juice and juice-drink products.
We own some of the world's most valuable brands, more than
160 brands in all. These include soft drinks and
noncarbonated beverages such as sports drinks, juice drinks,
milk products, water products, teas and coffees.
VOLUME
We measure our sales volume in two ways: (1) gallon shipments
of concentrates and syrups and (2) unit cases of finished
product. Gallon shipments represent our primary business and
measure the volume of concentrates and syrups we sell to our
bottling system. Most of our revenues are based on this
measure of "wholesale" activity. We also measure volume in
unit cases, which represent the amount of finished product
our bottling system sells to retail customers. We believe
unit case volume more accurately measures the underlying
strength of our business system because it measures trends at
the retail level. We include fountain syrups sold directly to
our customers in both measures.
In 1997, our worldwide unit case volume increased 9
percent, on top of an 8 percent increase in 1996. Our
business system sold 14.9 billion unit cases in 1997, an
increase of 1.2 billion unit cases over 1996. Our 1997
results are the product of years of systematically investing
not only in marketing, but also in our worldwide
infrastructure that includes bottlers, capital, information
systems and people.
OPERATIONS
NET OPERATING REVENUES AND GROSS MARGIN - On a consolidated
basis, our net revenues increased 1 percent and our gross
profit grew 8 percent in 1997. The growth in revenues
reflects gallon shipment increases and price increases in
certain markets, offset by the full-year impact of the sale
of previously consolidated bottling and canning operations in
France, Belgium and eastern Germany in 1996 as well as the
effects of a stronger U.S. dollar. Our gross profit margin
increased to 68 percent in 1997 from 64 percent in 1996,
primarily due to the sale in 1996 of previously consolidated
bottling operations, which shifted proportionately more
revenue to our higher margin concentrate business.
On a consolidated basis, our net revenues grew 3 percent
and our gross profit grew 7 percent in 1996. The increase in
revenues was due primarily to an increase in gallon shipments
and selective price increases offset by a stronger U.S.
dollar and the disposition of our French, Belgian and east
German bottling and canning operations. Our gross profit
margin increased to 64 percent in 1996 from 62 percent in
1995, primarily due to the sale of our previously
consolidated bottling and canning operations as well as
favorable results from changes in our product mix.
Additionally, gross margins improved in 1996 due to favorable
price variances in raw materials, such as packaging, at our
consolidated bottlers.
SELLING, ADMINISTRATIVE AND GENERAL EXPENSES - Selling
expenses were $6,244 million in 1997, $6,018 million in 1996
and $5,508 million in 1995. The increases in 1997 and 1996
were primarily due to higher marketing expenditures in
support of our Company's volume growth.
Administrative and general expenses totaled $1,608 million
in 1997, $2,002 million in 1996 and $1,653 million in 1995.
The decrease in 1997 was principally due to certain
nonrecurring provisions recorded in 1996, as discussed below,
partially offset by a $60 million nonrecurring provision
recorded in 1997 related to enhancing manufacturing
efficiencies in North America.
Administrative and general expenses increased in 1996 due
to certain nonrecurring provisions. In the third quarter of
1996, we recorded provisions of approximately $276 million in
administrative and general expenses related to our plans for
strengthening our worldwide system. Of this $276 million,
approximately $130 million related to streamlining our
operations, primarily in Greater Europe and Latin America. Our
management took actions to consolidate certain manufacturing
operations and, as a result, recorded charges to recognize the
impairment of certain manufacturing assets and the estimated
losses on the disposal of other assets. The remainder of this
$276 million provision was for impairment charges to certain
production facilities and reserves for losses on the disposal
of other production facilities of The Minute Maid Company.
Also in the third quarter of 1996, we recorded in administrative
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MANAGEMENT'S DISCUSSION AND ANALYSIS AND SUBSIDIARIES
- ------------------------------------------------------------------------
and general expenses an $80 million impairment charge to
recognize Project Infinity's impact on existing information
systems and a $28.5 million charge as a result of our
decision to make a contribution to The Coca-Cola Foundation,
a not-for-profit charitable organization.
Administrative and general expenses, as a percentage of net
operating revenues, were approximately 9 percent in 1997, 11
percent in 1996 and 9 percent in 1995.
OPERATING INCOME AND OPERATING MARGIN - On a consolidated
basis, our operating income increased 28 percent in 1997,
following a 3 percent decrease in 1996. The increase in 1997
was due to increased gallon shipments coupled with an
increase in gross profit margins, as well as the recording of
several nonrecurring provisions in the third quarter of 1996.
In addition, the curtailment of concentrate shipments
decreased 1996 operating income by an estimated $290 million.
Our consolidated operating margin was 27 percent in 1997 and
21 percent in 1996.
MARGIN ANALYSIS
[bar chart]
1997 1996 1995
- -------------------------------------------------------
Net Operating Revenues $18.9 $18.7 $18.1
(in billions)
Gross Margin 68% 64% 62%
Operating Margin 27% 21% 22%
- -------------------------------------------------------
INTEREST INCOME AND INTEREST EXPENSE - In 1997, our interest
income decreased 11 percent due primarily to decreases in
international interest rates. Interest expense decreased 10
percent in 1997 due to lower average commercial paper
borrowings.
In 1996, our interest income decreased 3 percent, due
primarily to lower average short-term investments and lower
average interest rates in Latin America. Interest expense
increased 5 percent in 1996, due to higher average debt
balances.
EQUITY INCOME - Equity income decreased 27 percent to $155
million in 1997, due primarily to the significant amount of
structural change in our global bottling system, which was
partially offset by solid results at key equity bottlers.
Equity income increased 25 percent to $211 million in 1996,
due primarily to stronger operating performances by Coca-Cola
Enterprises, Coca-Cola Beverages Ltd. of Canada and The
Coca-Cola Bottling Company of New York, Inc.
OTHER INCOME-NET - In 1997, other income-net increased $496
million and includes gains totaling $508 million on the sales
of our interests in Coca-Cola & Schweppes Beverages Ltd.,
Coca-Cola Beverages Ltd. of Canada and The Coca-Cola Bottling
Company of New York, Inc. Gains on other bottling
transactions are also included in other income-net.
In 1996, other income-net increased $1 million and included
gains recorded on the sale of our bottling and canning
operations in France and Belgium, as well as gains on other
bottling transactions.
GAINS ON ISSUANCES OF STOCK BY EQUITY INVESTEES - In 1997,
our Company and San Miguel sold our respective interests in
Coca-Cola Bottlers Philippines, Inc. to Coca-Cola Amatil in
exchange for approximately 293 million shares of Coca-Cola
Amatil stock. In connection with this transaction, Coca-Cola
Amatil issued to San Miguel approximately 210 million shares
valued at approximately $2.4 billion. The issuance to San
Miguel resulted in a one-time noncash pretax gain for our
Company of approximately $343 million, and resulted in our 36
percent interest in Coca-Cola Amatil being diluted to
approximately 33 percent.
Also in 1997, our Company and the Cisneros Group sold our
respective interests in Coca-Cola y Hit to Panamco in
exchange for approximately 30.6 million shares of Panamco
stock. In connection with this transaction, Panamco issued to
the Cisneros Group approximately 13.6 million shares valued
at approximately $402 million. The issuance to the Cisneros
Group resulted in a one-time noncash pretax gain for our
Company of approximately $20 million. At the completion of
this transaction, our ownership in Panamco was approximately
23 percent.
In 1996, Coca-Cola Amatil issued approximately 46 million
shares in exchange for approximately $522 million. This
issuance reduced our ownership in Coca-Cola Amatil from
approximately 39 percent to approximately 36 percent and
resulted in a noncash pretax gain for our Company of
approximately $130 million.
Also in 1996, Coca-Cola Erfrischungsgetraenke G.m.b.H.
(CCEG), our wholly owned east German bottler, issued new
shares to effect a merger with three independent German
bottling operations. The shares were valued at approximately
$925 million, based upon the fair values of the assets of the
three acquired bottling companies. Approximately 24.4 million
shares were issued, resulting in a noncash pretax gain
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FINANCIAL REVIEW INCORPORATING THE COCA-COLA COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS AND SUBSIDIARIES
- ------------------------------------------------------------------------
of approximately $283 million for our Company. We own a 45
percent interest in the resulting anchor bottler, CCEAG.
In 1996, Coca-Cola FEMSA de Buenos Aires, S.A. (CCFBA)
issued approximately 19 million shares to Coca-Cola FEMSA,
S.A. de C.V. This issuance reduced our ownership in CCFBA
from 49 percent to approximately 32 percent. We recognized a
noncash pretax gain of approximately $18 million as a result
of this transaction. In subsequent transactions, our Company
disposed of its remaining interest in CCFBA.
INCOME TAXES - Our effective tax rates were 31.8 percent in
1997, 24.0 percent in 1996 and 31.0 percent in 1995. Our 1997
effective tax rate of 31.8 percent reflects tax benefits
derived from significant operations outside the United
States, which are taxed at rates lower than the U.S.
statutory rate of 35 percent, partially offset by the tax
impact of certain gains recognized from previously discussed
bottling transactions. These transactions are generally taxed
at rates higher than our Company's effective rate on
operations.
In the third quarter of 1996, our Company reached an
agreement in principle with the U.S. Internal Revenue Service
(IRS) settling certain U.S.-related income tax matters,
including issues in litigation related to our operations in
Puerto Rico dating back to 1981 and extending through 1995.
This settlement resulted in a one-time reduction of $320
million to our 1996 income tax expense as a result of a
reversal of previously accrued income tax liabilities and
reduced our effective tax rate in 1996. Excluding the
favorable impact of the settlement with the IRS, our 1996
effective tax rate would have been 31.0 percent.
INCOME PER SHARE - Accelerated by our Company's share
repurchase program, our basic net income per share grew 19
percent in 1997, 1996 and 1995, and diluted net income per
share grew 19 percent in 1997, 18 percent in 1996 and 19
percent in 1995.
LIQUIDITY AND CAPITAL RESOURCES
We believe our ability to generate cash from operations in
excess of our capital reinvestment and dividend requirements
is one of our fundamental financial strengths. We anticipate
that our operating activities in 1998 will continue to
provide us with sufficient cash flows to meet all our
financial commitments and to capitalize on opportunities for
business expansion.
FREE CASH FLOW - Free cash flow is the cash remaining from
operations after we have satisfied our business reinvestment
opportunities. We focus on increasing free cash flow to
achieve our primary objective, maximizing share-owner value
over time. We use free cash flow, along with borrowings, to
pay dividends and make share repurchases.
The consolidated statements of our cash flows are summarized
as follows (in millions):
Year Ended December 31, 1997 1996 1995
- ------------------------------------------------------------------------
Cash flows provided by (used in):
Operations $ 4,033 $ 3,463 $ 3,328
Investment activities (500) (1,050) (1,226)
- ------------------------------------------------------------------------
FREE CASH FLOW 3,533 2,413 2,102
Cash flows used in:
Financing
Share repurchases (1,262) (1,521) (1,796)
Other financing activities (1,833) (581) (482)
Exchange (134) (45) (43)
- ------------------------------------------------------------------------
Increase (decrease) in cash $ 304 $ 266 $ (219)
========================================================================
Cash provided by operations in 1997 amounted to $4.0
billion, a 16 percent increase from 1996. This increase is
primarily due to growth in net income in 1997. In 1996, cash
provided by operations amounted to $3.5 billion, a 4 percent
increase from 1995. This increase resulted from the continued
growth of our business and includes the cash effect of
significant items recorded in 1996. These items have been
discussed previously in Management's Discussion and Analysis
on pages 37 through 39.
In 1997, net cash used in investment activities decreased
from 1996, primarily due to the increase in proceeds from the
disposal of investments and other assets including the
dispositions of our interests in Coca-Cola & Schweppes
Beverages Ltd., The Coca-Cola Bottling Company of New York,
Inc. and Coca-Cola Beverages Ltd. of Canada. The growth in
proceeds from disposals was partially offset by increased
acquisitions and investments, primarily in bottling
operations, including the South Korean bottlers. In 1996, net
cash used in investment activities decreased from 1995, also
due to the increase in proceeds from the disposal of
investments and other assets including the disposition of our
bottling and canning operations in France and Belgium. The
increase in proceeds from disposals was partially offset by
significant acquisitions and investments, including our
investment in Coca-Cola y Hit.
FINANCING ACTIVITIES - Our financing activities include net
borrowings, dividend payments and share repurchases. Net cash
used in financing activities totaled $3.1 billion in 1997,
$2.1 billion in 1996 and $2.3 billion in 1995. The change
between 1997 and 1996 was primarily due to net reductions of
debt in 1997 compared to net borrowings of debt in 1996. Cash
used to purchase common stock for treasury was $1.3 billion
in 1997 versus $1.5 billion in 1996.
Commercial paper is our primary source of short-term financing.
On December 31, 1997, we had $2.6 billion outstanding in
commercial paper borrowings. In addition, we had $.9 billion in
lines of credit and other short-term credit facilities available,
$.1 billion of which was outstanding. The 1997 reduction in
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FINANCIAL REVIEW INCORPORATING THE COCA-COLA COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS AND SUBSIDIARIES
- ------------------------------------------------------------------------
loans and notes payable was funded by proceeds received from
the sale of certain bottling interests, as discussed
previously.
EXCHANGE - Our international operations are subject to
certain opportunities and risks, including currency
fluctuations and government actions. We closely monitor our
operations in each country so we can quickly and decisively
respond to changing economic and political environments and
to fluctuations in foreign currencies and interest rates.
We use approximately 50 functional currencies. Due to our
global operations, weaknesses in some of these currencies are
often offset by strengths in others. In 1997, 1996 and 1995,
the weighted-average exchange rates for a basket of selected
foreign currencies, and certain individual currencies,
strengthened (weakened) against the U.S. dollar as follows:
Year Ended December 31, 1997 1996 1995
- -------------------------------------------------------------
Basket of currencies (10)% (8)% Even
- -------------------------------------------------------------
Australian dollar (7)% 6% 1%
British pound 4% Even 3%
Canadian dollar (1)% Even Even
French franc (12)% (4)% 13%
German mark (13)% (6)% 13%
Japanese yen (10)% (15)% 9%
=============================================================
These percentages do not include the effects of our hedging
activities and, therefore, do not reflect the actual impact
of fluctuations in exchange on our operating results. Our
foreign currency management program mitigates over time a
portion of our exchange risks.
The change in our foreign currency translation adjustment
in 1997 and 1996 was primarily due to the revaluation of net
assets located in countries where the local currency
significantly weakened against the U.S. dollar. Exchange
gains (losses)-net amounted to $(56) million in 1997, $3
million in 1996 and $(21) million in 1995, and were recorded
in other income-net. Exchange gains (losses)-net includes the
remeasurement of certain currencies into functional
currencies and the costs of hedging certain of our balance
sheet exposures.
Additional information concerning our hedging activities is
presented on pages 53 through 55.
FINANCIAL POSITION
The carrying value of our investment in Coca-Cola Enterprises
decreased in 1997 as a result of deferred gains related to
the sales of our interests in Coca-Cola & Schweppes Beverages
Ltd., Coca-Cola Beverages Ltd. of Canada and The Coca-Cola
Bottling Company of New York, Inc. to Coca-Cola Enterprises.
The deferred gains result from our approximate 44 percent
ownership in Coca-Cola Enterprises. The carrying value of our
investment in Coca-Cola Amatil increased in 1997 due to
Coca-Cola Amatil issuing shares to San Miguel Corporation at
a value per share greater than the carrying value per share
of our interest in Coca-Cola Amatil. Our equity method
investments also increased in 1997 due to our change from the
cost method to the equity method in accounting for Panamco
and Grupo Continental, S.A., and due to increased investments
in other bottling operations. Our cost method investments
declined due to the change in accounting for Panamco
and Grupo Continental, S.A., partially offset by additional
investments in Embotelladoras Polar S.A. and Embotelladora
Andina S.A. Unrealized gain on available-for-sale securities,
a component of share-owners' equity, is comprised of
adjustments to report our marketable cost method investments
at fair value. During 1997, unrealized gain on securities
decreased $98 million due primarily to the change in
accounting for Panamco and Grupo Continental, S.A.
The 1996 decrease in our accounts receivable, inventories,
property, plant and equipment, goodwill, and accounts payable
and accrued expenses was primarily due to the disposition of
our previously consolidated bottling and canning operations
in France and Belgium and the deconsolidation of our
previously consolidated east German bottler. In 1996, our
equity method investments increased primarily due to our
investments in CCEAG and Coca-Cola y Hit. The 1996 increase
in cost method investments included our investment in
Embotelladoras Polar S.A., Embotelladora Andina S.A., Panamco
and noncash adjustments that increased our investments to
fair value. The decrease in accrued income taxes was directly
attributable to our 1996 settlement with the IRS, whereby
$320 million of previously accrued income tax liabilities was
reversed as a reduction of income tax expense.
IMPACT OF INFLATION AND CHANGING PRICES
Inflation is a factor that affects the way we operate in many
markets around the world. In general, we are able to increase
prices to counteract the effects of increasing costs and to
generate sufficient cash flows to maintain our productive
capability.
YEAR 2000
In prior years, certain computer programs were written using
two digits rather than four to define the applicable year.
These programs were written without considering the impact of
the upcoming change in the century and may experience
problems handling dates beyond the year 1999. This could
cause computer applications to fail or to create erroneous
results unless corrective measures are taken. Incomplete or
untimely resolution of the Year 2000 issue could have a
material adverse impact on our Company's business, operations
or financial condition in the future.
Our Company has been assessing the impact that the Year
2000 issue will have on our computer systems since 1995. In
response to these assessments, which are ongoing, our Company
has developed a plan to inventory critical systems and develop
solutions to those systems that are found to have date-related
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FINANCIAL REVIEW INCORPORATING THE COCA-COLA COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS AND SUBSIDIARIES
- ------------------------------------------------------------------------
deficiencies. Project plans call for the completion of the
solution implementation phase and testing of those solutions
prior to any anticipated impact on our systems. Our Company
is also surveying critical suppliers and customers to
determine the status of their Year 2000 compliance programs.
Based on our work to date, and assuming that our project
plans, which continue to evolve, can be implemented as
planned, we believe future costs relating to the Year 2000
issue will not have a material impact on our Company's
consolidated financial position, results of operations or
cash flows.
OUTLOOK
While we cannot predict future performance, we believe
considerable opportunities exist for sustained, profitable
growth, not only in the developing population centers of the
world but also in our most established markets, including the
United States.
We firmly believe the strength of our brands, our
unparalleled distribution system, our global presence, our
strong financial condition and the skills of our people give
us the flexibility to capitalize on these growth
opportunities as we continue to pursue our goal of increasing
share-owner value.
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 (the
Act) provides a safe harbor for forward-looking statements
made by or on behalf of our Company. Our Company and its
representatives may from time to time make written or verbal
forward-looking statements, including statements contained in
our Company's filings with the Securities and Exchange
Commission and in our reports to share owners. All
statements which 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 or statements
expressing general optimism about future operating results,
are forward-looking statements within the meaning of the Act.
The forward-looking statements are and will be based on
management's then current views and assumptions regarding
future events and operating performance.
The following are some of the factors that could cause
actual results to differ materially from estimates contained
in our Company's forward-looking statements:
- -- The ability to generate sufficient cash flows to support
capital expansion plans, share repurchase programs and
general operating activities.
- -- Competitive product and pricing pressures and the ability
to gain or maintain share of sales in the global market
as a result of actions by competitors. While we believe
our opportunities for sustained, profitable growth are
considerable, unanticipated actions of competitors could
impact our earnings, share of sales and volume growth.
- -- Changes in laws and regulations, including changes in
accounting standards, taxation requirements (including
tax rate changes, new tax laws and revised tax law
interpretations) and environmental laws in domestic or
foreign jurisdictions.
- -- Fluctuations in the cost and availability of raw
materials and the ability to maintain favorable supplier
arrangements and relationships.
- -- The ability to achieve earnings forecasts, which are
generated based on projected volumes and sales of many
product types, some of which are more profitable than
others. There can be no assurance that we will achieve
the projected level or mix of product sales.
- -- Interest rate fluctuations and other capital market
conditions, including foreign currency rate fluctuations.
Most of our exposures to capital markets, including
interest and foreign currency, are managed on a
consolidated basis, which allows us to net certain
exposures and, thus, take natural offsets. We use
derivative financial instruments to reduce our net
exposure to financial risks. There can be no assurance,
however, that our financial risk management program will
be successful in reducing foreign currency exposures.
- -- Economic and political conditions in international
markets, including civil unrest, governmental changes and
restrictions on the ability to transfer capital across
borders.
- -- The ability to penetrate developing and emerging markets,
which also depends on economic and political conditions,
and how well we are able to acquire or form strategic
business alliances with local bottlers and make necessary
infrastructure enhancements to production facilities,
distribution networks, sales equipment and technology.
Moreover, the supply of products in developing markets
must match the customers' demand for those products, and
due to product price and cultural differences, there can
be no assurance of product acceptance in any particular
market.
- -- The effectiveness of our advertising, marketing and
promotional programs.
- -- The uncertainties of litigation, as well as other risks
and uncertainties detailed from time to time in our
Company's Securities and Exchange Commission filings.
- -- Adverse weather conditions, which could reduce demand for
Company products.
- -- Our Company's ability and our customers' and suppliers'
ability to replace, modify or upgrade computer programs
in ways that adequately address the Year 2000 issue.
The foregoing list of important factors is not exclusive.
ADDITIONAL INFORMATION
For additional information about our operations, cash flows,
liquidity and capital resources, please refer to the
information on pages 44 through 62 of this report. Additional
information concerning our operations in specific geographic
areas is presented on page 60.
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<TABLE>
SELECTED FINANCIAL DATA THE COCA-COLA COMPANY AND SUBSIDIARIES
<CAPTION>
Compound
(In millions except per Growth Rates Year Ended December 31,
share data, ratios ----------------- -------------------------------------------------
and growth rates) 5 Years 10 Years 1997 1996 1995 1994{2}
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net operating revenues 7.5% 9.4% $ 18,868 $ 18,673 $18,127 $16,264
Cost of goods sold 3.5% 5.2% 6,015 6,738 6,940 6,168
- -----------------------------------------------------------------------------------------------
Gross profit 9.8% 12.3% 12,853 11,935 11,187 10,096
Selling, administrative
and general expenses 8.1% 11.3% 7,852 8,020 7,161 6,459
- -----------------------------------------------------------------------------------------------
Operating income 12.7% 14.0% 5,001 3,915 4,026 3,637
Interest income 211 238 245 181
Interest expense 258 286 272 199
Equity income 155 211 169 134
Other income (deductions)-net 583 87 86 (25)
Gains on issuances of stock by
equity investees 363 431 74 -
- -----------------------------------------------------------------------------------------------
Income from continuing
operations before income
taxes and changes in
accounting principles 17.1% 16.1% 6,055 4,596 4,328 3,728
Income taxes 17.4% 14.5% 1,926 1,104 1,342 1,174
- -----------------------------------------------------------------------------------------------
Income from continuing
operations before changes
in accounting principles 17.0% 16.9% $ 4,129 $ 3,492 $ 2,986 $ 2,554
===============================================================================================
Net income 19.9% 16.3% $ 4,129 $ 3,492 $ 2,986 $ 2,554
Preferred stock dividends - - - -
- -----------------------------------------------------------------------------------------------
Net income available to
common share owners 19.9% 16.3% $ 4,129 $ 3,492 $ 2,986 $ 2,554
===============================================================================================
Average common shares
outstanding 2,477 2,494 2,525 2,580
Average common shares
outstanding assuming dilution 2,515 2,523 2,549 2,599
PER COMMON SHARE DATA
Income from continuing
operations before
changes in accounting
principles - basic 18.3% 19.1% $ 1.67 $ 1.40 $ 1.18 $ .99
Income from continuing
operations before
changes in accounting
principles - diluted 18.2% 18.9% 1.64 1.38 1.17 .98
Basic net income 21.5% 18.7% 1.67 1.40 1.18 .99
Diluted net income 21.5% 18.5% 1.64 1.38 1.17 .98
Cash dividends 14.9% 14.9% .56 .50 .44 .39
Market price on December 31 26.1% 30.2% 66.69 52.63 37.13 25.75
TOTAL MARKET VALUE OF
COMMON STOCK{1} 24.7% 27.8% $164,766 $130,575 $92,983 $65,711
BALANCE SHEET DATA
Cash, cash equivalents and
current marketable
securities $ 1,843 $ 1,658 $ 1,315 $ 1,531
Property, plant and
equipment-net 3,743 3,550 4,336 4,080
Depreciation 384 442 421 382
Capital expenditures 1,093 990 937 878
Total assets 16,940 16,161 15,041 13,873
Long-term debt 801 1,116 1,141 1,426
Total debt 3,875 4,513 4,064 3,509
Share-owners' equity 7,311 6,156 5,392 5,235
Total capital{1} 11,186 10,669 9,456 8,744
OTHER KEY FINANCIAL MEASURES{1}
Total debt-to-total capital 34.6% 42.3% 43.0% 40.1%
Net debt-to-net capital 21.9% 31.4% 32.2% 25.5%
Return on common equity 61.3% 60.5% 56.2% 52.0%
Return on capital 39.4% 36.7% 34.9% 32.7%
Dividend payout ratio 33.6% 35.7% 37.2% 39.4%
Free cash flow $ 3,533 $ 2,413 $ 2,102 $ 2,146
Economic profit $ 3,325 $ 2,718 $ 2,291 $ 1,896
===============================================================================================
<FN>
{1} See Glossary on page 67.
{2} In 1994, we adopted SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities."
{3} In 1993, we adopted SFAS No. 112, "Employers' Accounting for Postemployment Benefits."
{4} In 1992, we adopted SFAS No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions."
</FN>
</TABLE>
- 42 -
<PAGE>
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA THE COCA-COLA COMPANY AND SUBSIDIARIES
<CAPTION>
(In millions except per Year Ended December 31,
share data, ratios ----------------------------------------------------------------------------------------
and growth rates) 1993{3} 1992{4,5} 1991{5} 1990{5} 1989{5} 1988 1987
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net operating revenues $14,030 $13,119 $11,599 $10,261 $ 8,637 $ 8,076 $ 7,667
Cost of goods sold 5,160 5,055 4,649 4,208 3,548 3,429 3,633
- ---------------------------------------------------------------------------------------------------------------------
Gross profit 8,870 8,064 6,950 6,053 5,089 4,637 4,034
Selling, administrative and
general expenses 5,771 5,317 4,641 4,103 3,342 3,044 2,682
- ---------------------------------------------------------------------------------------------------------------------
Operating income 3,099 2,747 2,309 1,950 1,747 1,603 1,352
Interest income 144 164 175 170 205 199 232
Interest expense 168 171 192 231 308 230 297
Equity income 91 65 40 110 75 92 64
Other income (deductions)-net 7 (59) 51 15 45 (38) (28)
Gains on issuances of stock by
equity investees 12 - - - - - 40
- ---------------------------------------------------------------------------------------------------------------------
Income from continuing
operations before income
taxes and changes in
accounting principles 3,185 2,746 2,383 2,014 1,764 1,626 1,363
Income taxes 997 863 765 632 553 537 496
- ---------------------------------------------------------------------------------------------------------------------
Income from continuing
operations before changes
in accounting principles $ 2,188 $ 1,883 $ 1,618 $ 1,382 $ 1,211 $ 1,089 $ 867
=====================================================================================================================
Net income $ 2,176 $ 1,664 $ 1,618 $ 1,382 $ 1,537 $ 1,045 $ 916
Preferred stock dividends - - 1 18 21 7 -
- ---------------------------------------------------------------------------------------------------------------------
Net income available to
common share owners $ 2,176 $ 1,664 $ 1,617 $ 1,364 $ 1,516{6} $ 1,038 $ 916
=====================================================================================================================
Average common shares
outstanding 2,603 2,634 2,666 2,674 2,768 2,917 3,019
Average common shares
outstanding assuming dilution 2,626 2,668 2,695 2,706 2,789 2,929 3,037
PER COMMON SHARE DATA
Income from continuing
operations before
changes in accounting
principles - basic $ .84 $ .72 $ .61 $ .51 $ .43 $ .37 $ .29
Income from continuing
operations before
changes in accounting
principles - diluted .83 .71 .60 .50 .43 .37 .29
Basic net income .84 .63 .61 .51 .55{6} .36 .30
Diluted net income .83 .62 .60 .50 .54 .35 .30
Cash dividends .34 .28 .24 .20 .17 .15 .14
Market price on December 31 22.31 20.94 20.06 11.63 9.66 5.58 4.77
TOTAL MARKET VALUE OF
COMMON STOCK{1} $57,905 $54,728 $53,325 $31,073 $26,034 $15,834 $14,198
BALANCE SHEET DATA
Cash, cash equivalents and
current marketable
securities $ 1,078 $ 1,063 $ 1,117 $ 1,492 $ 1,182 $ 1,231 $ 1,489
Property, plant and
equipment-net 3,729 3,526 2,890 2,386 2,021 1,759 1,602
Depreciation 333 310 254 236 181 167 152
Capital expenditures 800 1,083 792 593 462 387 304
Total assets 12,021 11,052 10,189 9,245 8,249 7,451 8,606
Long-term debt 1,428 1,120 985 536 549 761 909
Total debt 3,100 3,207 2,288 2,537 1,980 2,124 2,995
Share-owners' equity 4,584 3,888 4,239 3,662 3,299 3,345 3,187
Total capital{1} 7,684 7,095 6,527 6,199 5,279 5,469 6,182
OTHER KEY FINANCIAL MEASURES{1}
Total debt-to-total capital 40.3% 45.2% 35.1% 40.9% 37.5% 38.8% 48.4%
Net debt-to-net capital 29.0% 33.1% 24.1% 24.6% 15.6% 21.1% 21.1%
Return on common equity 51.7% 46.4% 41.3% 41.4% 39.4% 34.7% 26.0%
Return on capital 31.2% 29.4% 27.5% 26.8% 26.5% 21.3% 18.3%
Dividend payout ratio 40.6% 44.3% 39.5% 39.2% 31.0%{6} 42.1% 46.0%
Free cash flow $ 1,623 $ 873 $ 960 $ 844 $ 1,664 $ 1,517 $ 1,023
Economic profit $ 1,549 $ 1,300 $ 1,073 $ 920 $ 859 $ 717 $ 530
=====================================================================================================================
<FN>
{5} In 1992, we adopted SFAS No. 109, "Accounting for Income Taxes," by restating financial statements
beginning in 1989.
{6} Net income available to common share owners in 1989 included after-tax gains of $604 million
($.22 per common share, basic and diluted) from the sales of our equity interest in Columbia Pictures
Entertainment, Inc. and our bottled water business, and the transition effect of $265 million related
to the change in accounting for income taxes. Excluding these nonrecurring items, our dividend payout
ratio in 1989 was 39.9 percent.
</FN>
</TABLE>
- 43 -
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS THE COCA-COLA COMPANY AND SUBSIDIARIES
<CAPTION>
December 31, 1997 1996
- ------------------------------------------------------------------------------------
(In millions except share data)
ASSETS
<S> <C> <C>
CURRENT
Cash and cash equivalents $ 1,737 $ 1,433
Marketable securities 106 225
- ------------------------------------------------------------------------------------
1,843 1,658
Trade accounts receivable, less allowances
of $23 in 1997 and $30 in 1996 1,639 1,641
Inventories 959 952
Prepaid expenses and other assets 1,528 1,659
- ------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 5,969 5,910
- ------------------------------------------------------------------------------------
INVESTMENTS AND OTHER ASSETS
Equity method investments
Coca-Cola Enterprises Inc. 184 547
Coca-Cola Amatil Limited 1,204 881
Other, principally bottling companies 3,049 2,004
Cost method investments, principally
bottling companies 457 737
Marketable securities and other assets 1,607 1,779
- ------------------------------------------------------------------------------------
6,501 5,948
- ------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT
Land 183 204
Buildings and improvements 1,535 1,528
Machinery and equipment 3,896 3,649
Containers 157 200
- ------------------------------------------------------------------------------------
5,771 5,581
Less allowances for depreciation 2,028 2,031
- ------------------------------------------------------------------------------------
3,743 3,550
- ------------------------------------------------------------------------------------
GOODWILL AND OTHER INTANGIBLE ASSETS 727 753
- ------------------------------------------------------------------------------------
$ 16,940 $ 16,161
====================================================================================
See Notes to Consolidated Financial Statements.
</TABLE>
- 44 -
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS THE COCA-COLA COMPANY AND SUBSIDIARIES
<CAPTION>
December 31, 1997 1996
- ------------------------------------------------------------------------------------
(In millions except share data)
LIABILITIES AND SHARE-OWNERS' EQUITY
<S> <C> <C>
CURRENT
Accounts payable and accrued expenses $ 3,249 $ 2,972
Loans and notes payable 2,677 3,388
Current maturities of long-term debt 397 9
Accrued income taxes 1,056 1,037
- ------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 7,379 7,406
- ------------------------------------------------------------------------------------
LONG-TERM DEBT 801 1,116
- ------------------------------------------------------------------------------------
OTHER LIABILITIES 1,001 1,182
- ------------------------------------------------------------------------------------
DEFERRED INCOME TAXES 448 301
- ------------------------------------------------------------------------------------
SHARE-OWNERS' EQUITY
Common stock, $.25 par value
Authorized: 5,600,000,000 shares
Issued: 3,443,441,902 shares in 1997;
3,432,956,518 shares in 1996 861 858
Capital surplus 1,527 1,058
Reinvested earnings 17,869 15,127
Unearned compensation related to outstanding
restricted stock (50) (61)
Foreign currency translation adjustment (1,372) (662)
Unrealized gain on securities available for sale 58 156
- ------------------------------------------------------------------------------------
18,893 16,476
Less treasury stock, at cost
(972,812,731 shares in 1997;
951,963,574 shares in 1996) 11,582 10,320
- ------------------------------------------------------------------------------------
7,311 6,156
- ------------------------------------------------------------------------------------
$ 16,940 $ 16,161
====================================================================================
See Notes to Consolidated Financial Statements.
</TABLE>
- 45 -
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME THE COCA-COLA COMPANY AND SUBSIDIARIES
<CAPTION>
Year Ended December 31, 1997 1996 1995
- ------------------------------------------------------------------------------------
(In millions except per share data)
<S> <C> <C> <C>
NET OPERATING REVENUES $ 18,868 $ 18,673 $ 18,127
Cost of goods sold 6,015 6,738 6,940
- ------------------------------------------------------------------------------------
GROSS PROFIT 12,853 11,935 11,187
Selling, administrative and general expenses 7,852 8,020 7,161
- ------------------------------------------------------------------------------------
OPERATING INCOME 5,001 3,915 4,026
Interest income 211 238 245
Interest expense 258 286 272
Equity income 155 211 169
Other income-net 583 87 86
Gains on issuances of stock by equity investees 363 431 74
- ------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 6,055 4,596 4,328
Income taxes 1,926 1,104 1,342
- ------------------------------------------------------------------------------------
NET INCOME $ 4,129 $ 3,492 $ 2,986
====================================================================================
BASIC NET INCOME PER SHARE $ 1.67 $ 1.40 $ 1.18
DILUTED NET INCOME PER SHARE $ 1.64 $ 1.38 $ 1.17
====================================================================================
AVERAGE SHARES OUTSTANDING 2,477 2,494 2,525
Dilutive effect of stock options 38 29 24
- ------------------------------------------------------------------------------------
AVERAGE SHARES OUTSTANDING ASSUMING DILUTION 2,515 2,523 2,549
====================================================================================
See Notes to Consolidated Financial Statements.
</TABLE>
- 46 -
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS THE COCA-COLA COMPANY AND SUBSIDIARIES
Year Ended December 31, 1997 1996 1995
- ------------------------------------------------------------------------------------
(In millions)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 4,129 $ 3,492 $ 2,986
Depreciation and amortization 626 633 562
Deferred income taxes 380 (145) 157
Equity income, net of dividends (108) (89) (25)
Foreign currency adjustments 37 (60) (23)
Gains on issuances of stock by equity investees (363) (431) (74)
Gains on sales of assets, including
bottling interests (639) (135) (16)
Other items 18 316 60
Net change in operating assets and liabilities (47) (118) (299)
- ------------------------------------------------------------------------------------
Net cash provided by operating activities 4,033 3,463 3,328
- ------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Acquisitions and investments, principally
bottling companies (1,100) (645) (338)
Purchases of investments and other assets (459) (623) (403)
Proceeds from disposals of investments
and other assets 1,999 1,302 580
Purchases of property, plant and equipment (1,093) (990) (937)
Proceeds from disposals of property, plant
and equipment 71 81 44
Other investing activities 82 (175) (172)
- ------------------------------------------------------------------------------------
Net cash used in investing activities (500) (1,050) (1,226)
- ------------------------------------------------------------------------------------
Net cash provided by operations
after reinvestment 3,533 2,413 2,102
- ------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Issuances of debt 155 1,122 754
Payments of debt (751) (580) (212)
Issuances of stock 150 124 86
Purchases of stock for treasury (1,262) (1,521) (1,796)
Dividends (1,387) (1,247) (1,110)
- ------------------------------------------------------------------------------------
Net cash used in financing activities (3,095) (2,102) (2,278)
- ------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (134) (45) (43)
- ------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
Net increase (decrease) during the year 304 266 (219)
Balance at beginning of year 1,433 1,167 1,386
- ------------------------------------------------------------------------------------
Balance at end of year $ 1,737 $ 1,433 $ 1,167
====================================================================================
See Notes to Consolidated Financial Statements.
</TABLE>
- 47 -
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF SHARE-OWNERS' EQUITY THE COCA-COLA COMPANY AND SUBSIDIARIES
<CAPTION>
Number of
Common Outstanding Foreign Unrealized
Three Years Ended Shares Common Capital Reinvested Restricted Currency Gain on Treasury
December 31, 1997 Outstanding Stock Surplus Earnings Stock Translation Securities Stock
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(In millions except per share data) |
|
BALANCE DECEMBER 31, 1994 2,552 | $854 $ 746 $11,006 $(74) $ (272) $48 $(7,073)
Stock issued to employees |
exercising stock options 8 | 2 84 -- -- -- -- --
Tax benefit from employees' |
stock option and |
restricted stock plans -- | -- 26 -- -- -- -- --
Stock issued under |
restricted stock plans, |
less amortization of $12 -- | -- 7 -- 6 -- -- --
Translation adjustments -- | -- -- -- -- (152) -- --
Net change in unrealized |
gain on securities, |
net of deferred taxes -- | -- -- -- -- -- 34 --
Purchases of stock for |
treasury (58){1}| -- -- -- -- -- -- (1,796)
Treasury stock issued |
in connection with |
an acquisition 3 | -- -- -- -- -- -- 70
Net income -- | -- -- 2,986 -- -- -- --
Dividends (per share-$.44) -- | -- -- (1,110) -- -- -- --
- ---------------------------------------|-------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1995 2,505 | 856 863 12,882 (68) (424) 82 (8,799)
Stock issued to employees |
exercising stock options 9 | 2 122 -- -- -- -- --
Tax benefit from employees' |
stock option and |
restricted stock plans -- | -- 63 -- -- -- -- --
Stock issued under |
restricted stock plans, |
less amortization of $15 -- | -- 10 -- 7 -- -- --
Translation adjustments -- | -- -- -- -- (238) -- --
Net change in unrealized |
gain on securities, |
net of deferred taxes -- | -- -- -- -- -- 74 --
Purchases of stock for |
treasury (33){1}| -- -- -- -- -- -- (1,521)
Net income -- | -- -- 3,492 -- -- -- --
Dividends (per share-$.50) -- | -- -- (1,247) -- -- -- --
- ---------------------------------------|-------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1996 2,481 | 858 1,058 15,127 (61) (662) 156 (10,320)
Stock issued to employees |
exercising stock options 10 | 3 147 -- -- -- -- --
Tax benefit from employees' |
stock option and |
restricted stock plans -- | -- 312 -- -- -- -- --
Stock issued under |
restricted stock plans, |
less amortization of $10 -- | -- 10 -- 11 -- -- --
Translation adjustments -- | -- -- -- -- (710) -- --
Net change in unrealized |
gain on securities, |
net of deferred taxes -- | -- -- -- -- -- (98) --
Purchases of stock for |
treasury (20){1}| -- -- -- -- -- -- (1,262)
Net income -- | -- -- 4,129 -- -- -- --
Dividends (per share-$.56) -- | -- -- (1,387) -- -- -- --
- ---------------------------------------|-------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1997 2,471 | $861 $1,527 $17,869 $(50) $(1,372) $ 58 $(11,582)
=======================================================================================================================
{1} Common stock purchased from employees exercising stock options numbered 1.1 million, .9 million
and.6 million shares for the years ending December 31, 1997, 1996 and 1995, respectively.
See Notes to Consolidated Financial Statements.
</TABLE>
- 48 -
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED THE COCA-COLA COMPANY
FINANCIAL STATEMENTS AND SUBSIDIARIES
- --------------------------------------------------------------------
NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
ORGANIZATION - The Coca-Cola Company and subsidiaries (our
Company) is predominantly a manufacturer, marketer and
distributor of soft-drink and noncarbonated beverage
concentrates and syrups. Operating in nearly 200 countries
worldwide, we primarily sell our concentrates and syrups to
bottling and canning operations, fountain wholesalers and
fountain retailers. We have significant markets for our
products in all of the world's geographic regions. We record
revenue when title passes to our customers.
BASIS OF PRESENTATION - Certain amounts in the prior years'
financial statements have been reclassified to conform to the
current year presentation.
CONSOLIDATION - Our consolidated financial statements include
the accounts of The Coca-Cola Company and all subsidiaries
except where control is temporary or does not rest with our
Company. Our investments in companies in which we have the
ability to exercise significant influence over operating and
financial policies, including certain investments where there
is a temporary majority interest, are accounted for by the
equity method. Accordingly, our Company's share of the net
earnings of these companies is included in consolidated net
income. Our investments in other companies are carried at
cost or fair value, as appropriate. All significant
intercompany accounts and transactions are eliminated upon
consolidation.
ISSUANCES OF STOCK BY EQUITY INVESTEES - When one of our
equity investees issues additional shares to third parties,
our percentage ownership interest in the investee decreases.
In the event the issuance price per share is more or less
than our average carrying amount per share, we recognize a
noncash gain or loss on the issuance. This noncash gain or
loss, net of any deferred taxes, is recognized in our net
income in the period the change of ownership interest occurs.
ADVERTISING COSTS - Our Company expenses production costs of
print, radio and television advertisements as of the first
date the advertisements take place. Advertising expenses
included in selling, administrative and general expenses were
$1,576 million in 1997, $1,441 million in 1996 and $1,292
million in 1995. As of December 31, 1997 and 1996,
advertising costs of approximately $358 million and $247
million, respectively, were recorded primarily in prepaid
expenses and other assets in our accompanying balance sheets.
NET INCOME PER SHARE Basic net income per share is computed
by dividing net income by the weighted-average number of
shares outstanding. Diluted net income per share includes the
dilutive effect of stock options.
CASH EQUIVALENTS - Marketable securities that are highly
liquid and have maturities of three months or less at the date
of purchase are classified as cash equivalents.
INVENTORIES - Inventories consist primarily of raw materials
and supplies and are valued at the lower of cost or market.
In general, cost is determined on the basis of average cost
or first-in, first-out methods.
PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment
are stated at cost and are depreciated principally by the
straight-line method over the estimated useful lives of the
assets.
GOODWILL AND OTHER INTANGIBLE ASSETS - Goodwill and other
intangible assets are stated on the basis of cost and are
amortized, principally on a straight-line basis, over the
estimated future periods to be benefited (not exceeding 40
years). Goodwill and other intangible assets are periodically
reviewed for impairment based on an assessment of future
operations to ensure they are appropriately valued.
Accumulated amortization was approximately $105 million and
$86 million on December 31, 1997 and 1996, respectively.
USE OF ESTIMATES - In conformity with generally accepted
accounting principles, the preparation of our financial
statements requires our management to make estimates and
assumptions that affect the amounts reported in our financial
statements and accompanying notes. Although these estimates
are based on our knowledge of current events and actions we
may undertake in the future, actual results may ultimately
differ from estimates.
NEW ACCOUNTING STANDARDS - In 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting
Standards (SFAS) No. 130, "Reporting Comprehensive Income,"
and SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." These statements, which
are effective for fiscal years beginning after December 15,
1997, expand or modify disclosures and will have no impact on
our consolidated financial position, results of operations or
cash flows.
We adopted SFAS No. 128, "Earnings per Share," in 1997. In
accordance with SFAS No. 128, we have presented both basic
net income per share and diluted net income per share in our
financial statements.
- 49 -
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED THE COCA-COLA COMPANY
FINANCIAL STATEMENTS AND SUBSIDIARIES
- --------------------------------------------------------------------
NOTE 2: BOTTLING INVESTMENTS
COCA-COLA ENTERPRISES INC. - Coca-Cola Enterprises is the
largest soft-drink bottler in the world. Our Company owns
approximately 44 percent of the outstanding common stock of
Coca-Cola Enterprises, and accordingly, we account for our
investment by the equity method of accounting. The excess of
our equity in the underlying net assets of Coca-Cola
Enterprises over our investment is primarily being amortized
on a straight-line basis over 40 years. The balance of this
excess, net of amortization, was approximately $595 million
at December 31, 1997. A summary of financial information for
Coca-Cola Enterprises is as follows (in millions):
December 31, 1997 1996
- --------------------------------------------------------------------
Current assets $ 1,813 $ 1,319
Noncurrent assets 15,674 9,915
- --------------------------------------------------------------------
Total assets $ 17,487 $ 11,234
====================================================================
Current liabilities $ 3,032 $ 1,690
Noncurrent liabilities 12,673 7,994
- --------------------------------------------------------------------
Total liabilities $ 15,705 $ 9,684
====================================================================
Share-owners' equity $ 1,782 $ 1,550
====================================================================
Company equity investment $ 184 $ 547
====================================================================
Year Ended December 31, 1997 1996 1995
- --------------------------------------------------------------------
Net operating revenues $ 11,278 $ 7,921 $ 6,773
Cost of goods sold 7,096 4,896 4,267
- --------------------------------------------------------------------
Gross profit $ 4,182 $ 3,025 $ 2,506
====================================================================
Operating income $ 720 $ 545 $ 468
====================================================================
Cash operating profit{1} $ 1,666 $ 1,172 $ 997
====================================================================
Net income $ 171 $ 114 $ 82
====================================================================
Net income available to
common share owners $ 169 $ 106 $ 80
====================================================================
Company equity income $ 59 $ 53 $ 35
====================================================================
{1} Cash operating profit is defined as operating income plus
depreciation expense, amortization expense and other
noncash operating expenses.
Our net concentrate/syrup sales to Coca-Cola Enterprises
were $2.5 billion in 1997, $1.6 billion in 1996 and $1.3
billion in 1995, comprising approximately 13 percent, 9
percent and 7 percent of our 1997, 1996 and 1995 net
operating revenues. Coca-Cola Enterprises purchases
sweeteners through our Company; however, related collections
from Coca-Cola Enterprises and payments to suppliers are not
included in our consolidated statements of income. These
transactions amounted to $223 million in 1997, $247 million
in 1996 and $242 million in 1995. We also provide certain
administrative and other services to Coca-Cola Enterprises
under negotiated fee arrangements.
Our direct support for certain marketing activities of
Coca-Cola Enterprises and participation with them in
cooperative advertising and other marketing programs amounted
to approximately $604 million in 1997, $448 million in 1996
and $343 million in 1995. Additionally, in 1997 and 1996, we
committed approximately $190 million and $120 million,
respectively, to Coca-Cola Enterprises under a Company
program that encourages bottlers to invest in building and
supporting beverage infrastructure.
If valued at the December 31, 1997, quoted closing price of
publicly traded Coca-Cola Enterprises shares, the calculated
value of our investment in Coca-Cola Enterprises would have
exceeded its carrying value by approximately $5.8 billion.
COCA-COLA AMATIL LIMITED - We own approximately 33 percent of
Coca-Cola Amatil, an Australian-based bottler of our products
that operates in 18 countries. Accordingly, we account for
our investment in Coca-Cola Amatil by the equity method. The
excess of our investment over our equity in the underlying
net assets of Coca-Cola Amatil is being amortized on a
straight-line basis over 40 years. The balance of this
excess, net of amortization, was approximately $64 million at
December 31, 1997. A summary of financial information for
Coca-Cola Amatil is as follows (in millions):
December 31, 1997 1996
- --------------------------------------------------------------------
Current assets $ 1,470 $ 1,847
Noncurrent assets 4,590 2,913
- --------------------------------------------------------------------
Total assets $ 6,060 $ 4,760
====================================================================
Current liabilities $ 1,053 $ 1,247
Noncurrent liabilities 1,552 1,445
- --------------------------------------------------------------------
Total liabilities $ 2,605 $ 2,692
====================================================================
Share-owners' equity $ 3,455 $ 2,068
====================================================================
Company equity investment $ 1,204 $ 881
====================================================================
Year Ended December 31, 1997 1996 1995
- --------------------------------------------------------------------
Net operating revenues $ 3,290 $ 2,905 $ 2,193
Cost of goods sold 1,856 1,737 1,311
- --------------------------------------------------------------------
Gross profit $ 1,434 $ 1,168 $ 882
====================================================================
Operating income $ 276 $ 215 $ 214
====================================================================
Cash operating profit{1} $ 505 $ 384 $ 329
====================================================================
Net income $ 89 $ 80 $ 75
====================================================================
Company equity income $ 27 $ 27 $ 28
====================================================================
{1} Cash operating profit is defined as operating income plus
depreciation expense, amortization expense and other
noncash operating expenses.
Our net concentrate sales to Coca-Cola Amatil were
approximately $588 million in 1997, $450 million in 1996 and
$340 million in 1995. We also participate in various marketing,
promotional and other activities with Coca-Cola Amatil.
If valued at the December 31, 1997, quoted closing price of
publicly traded Coca-Cola Amatil shares, the calculated value
of our investment in Coca-Cola Amatil would have exceeded its
carrying value by approximately $918 million.
- 50 -
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED THE COCA-COLA COMPANY
FINANCIAL STATEMENTS AND SUBSIDIARIES
- --------------------------------------------------------------------
OTHER EQUITY INVESTMENTS - Operating results include our
proportionate share of income from our equity investments
since the respective dates of those investments. A summary of
financial information for our equity investments in the
aggregate, other than Coca-Cola Enterprises and Coca-Cola
Amatil, is as follows (in millions):
December 31, 1997 1996
- -------------------------------------------------------------------
Current assets $ 2,946 $ 2,792
Noncurrent assets 11,371 8,783
- -------------------------------------------------------------------
Total assets $ 14,317 $ 11,575
===================================================================
Current liabilities $ 3,545 $ 2,758
Noncurrent liabilities 4,636 4,849
- -------------------------------------------------------------------
Total liabilities $ 8,181 $ 7,607
===================================================================
Share-owners' equity $ 6,136 $ 3,968
===================================================================
Company equity investment $ 3,049 $ 2,004
===================================================================
Year Ended December 31, 1997 1996 1995
- -------------------------------------------------------------------
Net operating revenues $ 13,688 $ 11,640 $ 9,370
Cost of goods sold 8,645 8,028 6,335
- -------------------------------------------------------------------
Gross profit $ 5,043 $ 3,612 $ 3,035
===================================================================
Operating income $ 869 $ 835 $ 632
===================================================================
Cash operating profit{1} $ 1,794 $ 1,268 $ 1,079
===================================================================
Net income $ 405 $ 366 $ 280
===================================================================
Company equity income $ 69 $ 131 $ 106
===================================================================
Equity investments include certain non-bottling investees.
{1} Cash operating profit is defined as operating income plus
depreciation expense, amortization expense and other
noncash operating expenses.
Net sales to equity investees other than Coca-Cola
Enterprises and Coca-Cola Amatil were $1.5 billion in 1997,
$1.5 billion in 1996 and $1.2 billion in 1995. Our Company
also participates in various marketing, promotional and other
activities with these investees, the majority of which are
located outside the United States.
In February 1997, we sold our 49 percent interest in
Coca-Cola & Schweppes Beverages Ltd. to Coca-Cola Enterprises.
This transaction resulted in proceeds for our Company of
approximately $1 billion and an after-tax gain of
approximately $.08 per share (basic and diluted). In August
1997, we sold our 48 percent interest in Coca-Cola Beverages
Ltd. of Canada and our 49 percent ownership interest in The
Coca-Cola Bottling Company of New York, Inc. to Coca-Cola
Enterprises in exchange for aggregate consideration valued at
approximately $456 million. This sale resulted in an after-
tax gain of approximately $.04 per share (basic and diluted).
In July 1996, we sold our interests in our French and
Belgian bottling and canning operations to Coca-Cola
Enterprises in return for cash consideration of approximately
$936 million. Also in 1996, we contributed cash and our
Venezuelan bottling interests to a new joint venture,
Embotelladora Coca-Cola y Hit de Venezuela, S.A. (Coca-Cola y
Hit), in exchange for a 50 percent ownership interest. In
1997, we sold our interest in Coca-Cola y Hit to Panamerican
Beverages, Inc. (Panamco) in exchange for shares in Panamco.
(See Note 3.)
If valued at the December 31, 1997, quoted closing prices
of shares actively traded on stock markets, the calculated
value of our equity investments in publicly traded bottlers
other than Coca-Cola Enterprises and Coca-Cola Amatil would
have exceeded our carrying value by approximately $1.2 billion.
NOTE 3: ISSUANCES OF STOCK BY EQUITY INVESTEES
In the second quarter of 1997, our Company and San Miguel
Corporation (San Miguel) sold our respective interests in
Coca-Cola Bottlers Philippines, Inc. to Coca-Cola Amatil in
exchange for approximately 293 million shares of Coca-Cola
Amatil stock. In connection with this transaction, Coca-Cola
Amatil issued approximately 210 million shares to San Miguel
valued at approximately $2.4 billion. The issuance to San
Miguel resulted in a one-time noncash pretax gain for our
Company of approximately $343 million. We provided deferred
taxes of approximately $141.5 million on this gain. This
transaction resulted in our Company's 36 percent interest in
Coca-Cola Amatil being diluted to 33 percent.
Also in the second quarter of 1997, our Company and the
Cisneros Group sold our respective interests in Coca-Cola y
Hit to Panamco in exchange for approximately 30.6 million
shares of Panamco stock. In connection with this transaction,
Panamco issued approximately 13.6 million shares to the
Cisneros Group valued at approximately $402 million. The
issuance to the Cisneros Group resulted in a one-time noncash
pretax gain for our Company of approximately $20 million. We
provided deferred taxes of approximately $7.2 million on this
gain. At the completion of this transaction, our ownership in
Panamco was approximately 23 percent.
In the third quarter of 1996, our previously wholly owned
subsidiary, Coca-Cola Erfrischungsgetraenke G.m.b.H. (CCEG),
issued approximately 24.4 million shares of common stock as
part of a merger with three independent German bottlers of
our products. The shares were valued at approximately $925
million, based upon the fair values of the assets of the
three acquired bottling companies. In connection with CCEG's
issuance of shares, a new corporation was established,
Coca-Cola Erfrischungsgetraenke AG (CCEAG), and our ownership
was reduced to 45 percent of the resulting corporation. As a
result, we began accounting for our related investment by the
equity method of accounting prospectively from the
transaction date. This transaction resulted in a noncash
pretax gain of $283 million for our Company. We provided
deferred taxes of approximately $171 million related to this
gain.
Also in the third quarter of 1996, Coca-Cola Amatil issued
approximately 46 million shares in exchange for approximately
$522 million. This issuance reduced our Company's ownership
percentage in Coca-Cola Amatil from approximately 39 percent to
approximately 36 percent. This transaction resulted in a noncash
- 51 -
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED THE COCA-COLA COMPANY
FINANCIAL STATEMENTS AND SUBSIDIARIES
- --------------------------------------------------------------------
pretax gain of $130 million for our Company. We have provided
deferred taxes of approximately $47 million on this gain.
In 1996, Coca-Cola FEMSA de Buenos Aires, S.A. (CCFBA)
issued approximately 19 million shares to Coca-Cola FEMSA,
S.A. de C.V. This issuance reduced our ownership in CCFBA
from 49 percent to approximately 32 percent. We recognized a
noncash pretax gain of approximately $18 million as a result
of this transaction. In subsequent transactions, we disposed
of our remaining interest in CCFBA.
In the third quarter of 1995, Coca-Cola Amatil completed a
public offering in Australia of approximately 97 million
shares of common stock. In connection with the offering, our
ownership interest in Coca-Cola Amatil was diluted to
approximately 40 percent. This transaction resulted in a
noncash pretax gain of $74 million. We provided deferred
taxes of approximately $27 million on this gain.
NOTE 4: ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following
(in millions):
December 31, 1997 1996
- -------------------------------------------------------------
Accrued marketing $ 615 $ 510
Container deposits 30 64
Accrued compensation 152 169
Sales, payroll and other taxes 173 174
Accounts payable and
other accrued expenses 2,279 2,055
- -------------------------------------------------------------
$ 3,249 $ 2,972
=============================================================
NOTE 5: SHORT-TERM BORROWINGS AND CREDIT ARRANGEMENTS
Loans and notes payable consist primarily of commercial paper
issued in the United States. On December 31, 1997, we had
$2.6 billion outstanding in commercial paper borrowings. In
addition, we had $.9 billion in lines of credit and other
short-term credit facilities available, under which $.1
billion was outstanding. Our weighted-average interest rates
for commercial paper were approximately 5.8 and 5.6 percent
on December 31, 1997 and 1996, respectively.
These facilities are subject to normal banking terms and
conditions. Some of the financial arrangements require
compensating balances, none of which are presently
significant to our Company.
NOTE 6: LONG-TERM DEBT
Long-term debt consists of the following (in millions):
December 31, 1997 1996
- -----------------------------------------------------------------
5-3/4% German mark notes due 1998{1} $ 141 $ 161
7-7/8% U.S. dollar notes due 1998 250 250
6% U.S. dollar notes due 2000 251 251
6-5/8% U.S. dollar notes due 2002 150 150
6% U.S. dollar notes due 2003 150 150
7-3/8% U.S. dollar notes due 2093 116 116
Other, due 1998 to 2013 140 47
- -----------------------------------------------------------------
1,198 1,125
Less current portion 397 9
- -----------------------------------------------------------------
$ 801 $ 1,116
=================================================================
{1} Portions of these notes have been swapped for liabilities
denominated in other currencies.
After giving effect to interest rate management instruments
(see Note 8), the principal amount of our long-term debt that
had fixed and variable interest rates, respectively, was $480
million and $718 million on December 31, 1997, and $261
million and $864 million on December 31, 1996. The weighted-
average interest rate on our Company's long-term debt was 6.2
and 5.9 percent on December 31, 1997 and 1996, respectively.
Interest paid was approximately $264 million, $315 million
and $275 million in 1997, 1996 and 1995, respectively.
Maturities of long-term debt for the five years succeeding
December 31, 1997, are as follows (in millions):
1998 1999 2000 2001 2002
- ------------------------------------------------------------
$ 397 $ 13 $ 309 $ 61 $ 151
============================================================
The above notes include various restrictions, none of which
is presently significant to our Company.
NOTE 7: FINANCIAL INSTRUMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying amounts
reflected in our consolidated balance sheets for cash, cash
equivalents, marketable equity securities, marketable cost
method investments, receivables, loans and notes payable and
long-term debt approximate their respective fair values. Fair
values are based primarily on quoted prices for those or
similar instruments. A comparison of the carrying value and
fair value of our hedging instruments is included in Note 8.
CERTAIN DEBT AND MARKETABLE EQUITY SECURITIES - Investments
in debt and marketable equity securities, other than investments
accounted for by the equity method, are categorized as either
trading, available-for-sale or held-to-maturity. On December 31,
1997 and 1996, we had no trading securities. Securities categorized
as available-for-sale are stated at fair value, with unrealized
gains and losses, net of deferred income taxes, reported in share-
- 52 -
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED THE COCA-COLA COMPANY
FINANCIAL STATEMENTS AND SUBSIDIARIES
- --------------------------------------------------------------------
owners' equity. Debt securities categorized as held-to-maturity are
stated at amortized cost.
On December 31, 1997 and 1996, available-for-sale and held-to-maturity
securities consisted of the following (in millions):
Gross Gross Estimated
Unrealized Unrealized Fair
December 31, Cost Gains Losses Value
- --------------------------------------------------------------------------
1997
Available-for-sale
securities
Equity securities $ 293 $ 93 $ (3) $ 383
Collateralized
mortgage
obligations 132 - (2) 130
Other debt
securities 23 - - 23
- -------------------------------------------------------------------------
$ 448 $ 93 $ (5) $ 536
=========================================================================
Held-to-maturity
securities
Bank and
corporate debt $ 1,569 $ - $ - $ 1,569
Other debt
securities 22 - - 22
- -------------------------------------------------------------------------
$ 1,591 $ - $ - $ 1,591
=========================================================================
Gross Gross Estimated
Unrealized Unrealized Fair
December 31, Cost Gains Losses Value
- --------------------------------------------------------------------------
1996
Available-for-sale
securities
Equity securities $ 377 $ 259 $ (2) $ 634
Collateralized
mortgage
obligations 145 - (5) 140
Other debt
securities 24 - (1) 23
- -------------------------------------------------------------------------
$ 546 $ 259 $ (8) $ 797
=========================================================================
Held-to-maturity
securities
Bank and
corporate debt $ 1,550 $ - $ (9) $ 1,541
Other debt
securities 58 - - 58
- -------------------------------------------------------------------------
$ 1,608 $ - $ (9) $ 1,599
=========================================================================
On December 31, 1997 and 1996, these investments were included in
the following captions on our consolidated balance sheets (in millions):
Available-for-Sale Held-to-Maturity
December 31, Securities Securities
- -------------------------------------------------------------------------
1997
Cash and cash equivalents $ - $ 1,346
Current marketable securities 64 42
Cost method investments,
principally bottling companies 336 -
Marketable securities and
other assets 136 203
- -------------------------------------------------------------------------
$ 536 $ 1,591
=========================================================================
Available-for-Sale Held-to-Maturity
Securities Securities
- -------------------------------------------------------------------------
1996
Cash and cash equivalents $ - $ 1,208
Current marketable securities 68 157
Cost method investments,
principally bottling companies 584 -
Marketable securities and
other assets 145 243
- -------------------------------------------------------------------------
$ 797 $ 1,608
=========================================================================
The contractual maturities of these investments as of December 31, 1997,
were as follows (in millions):
Available-for-Sale Held-to-Maturity
Securities Securities
- ----------------------------------------------------------------------------
Fair Amortized Fair
Cost Value Cost Value
- ----------------------------------------------------------------------------
1998 $ 20 $ 20 $ 1,388 $ 1,388
1999-2002 3 3 203 203
Collateralized
mortgage obligations 132 130 - -
Equity securities 293 383 - -
- ----------------------------------------------------------------------------
$ 448 $ 536 $ 1,591 $ 1,591
============================================================================
For the years ended December 31, 1997 and 1996, gross
realized gains and losses on sales of available-for-sale
securities were not material. The cost of securities sold is
based on the specific identification method.
NOTE 8: HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS
Our Company uses derivative financial instruments primarily to
reduce our exposure to adverse fluctuations in interest rates
and foreign exchange rates, and to a lesser extent, to reduce
our exposure to adverse fluctuations in commodity prices and other
market risks. When entered into, these financial instruments are
designated as hedges of underlying exposures. Because of the high
correlation between the hedging instrument and the underlying
exposure being hedged, fluctuations in the value of the
instruments are generally offset by changes in the value of the
- 53 -
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED THE COCA-COLA COMPANY
FINANCIAL STATEMENTS AND SUBSIDIARIES
- --------------------------------------------------------------------
underlying exposures. Virtually all of our derivatives are
"over-the-counter" instruments. Our Company does not enter
into derivative financial instruments for trading purposes.
The estimated fair values of derivatives used to hedge or
modify our risks fluctuate over time. These fair value
amounts should not be viewed in isolation but rather in
relation to the fair values of the underlying hedged
transactions and investments and to the overall reduction in
our exposure to adverse fluctuations in interest rates,
foreign exchange rates, commodity prices and other market
risks.
The notional amounts of the derivative financial
instruments do not necessarily represent amounts exchanged by
the parties and, therefore, are not a direct measure of our
exposure through our use of derivatives. The amounts
exchanged are calculated by reference to the notional amounts
and by other terms of the derivatives, such as interest
rates, exchange rates or other financial indices.
We have established strict counterparty credit guidelines
and only enter into transactions with financial institutions
of investment grade or better. We monitor counterparty
exposures daily and any downgrade in credit rating receives
immediate review. If a downgrade in the credit rating of a
counterparty were to occur, we have provisions requiring
collateral in the form of U.S. government securities for
substantially all of our transactions. To mitigate pre-
settlement risk, minimum credit standards become more
stringent as the duration of the derivative financial
instrument increases. To minimize the concentration of credit
risk, we enter into derivative transactions with a portfolio
of financial institutions. As a result, we consider the risk
of counterparty default to be minimal.
INTEREST RATE MANAGEMENT - Our Company maintains our
percentage of fixed and variable rate debt within defined
parameters. We enter into interest rate swap agreements that
maintain the fixed/variable mix within these parameters.
These contracts had maturities ranging from one to six years
on December 31, 1997. Variable rates are predominantly linked
to LIBOR (London Interbank Offered Rate). Any differences
paid or received on interest rate swap agreements are
recognized as adjustments to interest expense over the life
of each swap, thereby adjusting the effective interest rate
on the underlying obligation.
FOREIGN CURRENCY MANAGEMENT - The purpose of our foreign
currency hedging activities is to reduce the risk that our
eventual dollar net cash inflows resulting from sales outside
the United States will be adversely affected by changes in
exchange rates.
We enter into forward exchange contracts and purchase
currency options (principally European currencies and
Japanese yen) to hedge firm sale commitments denominated in
foreign currencies. We also purchase currency options
(principally European currencies and Japanese yen) to hedge
certain anticipated sales. Premiums paid and realized gains
and losses, including those on terminated contracts, if any,
are included in prepaid expenses and other assets. These are
recognized in income along with unrealized gains and losses,
in the same period the hedged transactions are realized.
Approximately $52 million of realized gains and $17 million
of realized losses on settled contracts entered into as
hedges of firmly committed transactions that have not yet
occurred were deferred on December 31, 1997 and 1996,
respectively. Deferred gains/losses from hedging anticipated
transactions were not material on December 31, 1997 or 1996.
In the unlikely event that the underlying transaction
terminates or becomes improbable, the deferred gains or
losses on the associated derivative will be recorded in our
income statement.
Gains and losses on derivative financial instruments that
are designated and effective as hedges of net investments in
international operations are included in share-owners' equity
as a foreign currency translation adjustment.
The following table presents the aggregate notional
principal amounts, carrying values, fair values and
maturities of our derivative financial instruments
outstanding on December 31, 1997 and 1996 (in millions):
Notional
Principal Carrying Fair
December 31, Amounts Values Values Maturity
- --------------------------------------------------------------------------
1997
Interest rate
management
Swap agreements
Assets $ 597 $ 4 $ 15 1998-2003
Liabilities 175 (1) (12) 2000-2003
Foreign currency
management
Forward contracts
Assets 1,286 27 93 1998-1999
Liabilities 465 (6) 18 1998-1999
Swap agreements
Assets 178 1 3 1998
Liabilities 1,026 (4) (28) 1998-2002
Purchased options
Assets 1,051 34 109 1998
Other
Assets 470 2 53 1998
Liabilities 68 (2) _ 1998
- --------------------------------------------------------------------------
$ 5,316 $ 55 $ 251
==========================================================================
- 54 -
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED THE COCA-COLA COMPANY
FINANCIAL STATEMENTS AND SUBSIDIARIES
- -----------------------------------------------------------------------
Notional
Principal Carrying Fair
December 31, Amounts Values Values Maturity
- --------------------------------------------------------------------------
1996
Interest rate
management
Swap agreements
Assets $ 893 $ 5 $ 13 1997-2003
Liabilities 25 - 1 2002
Interest rate caps
Assets 400 1 - 1997
Foreign currency
management
Forward contracts
Assets 5 1 (2) 1997
Liabilities 2,541 (53) (42) 1997-1998
Swap agreements
Assets 398 18 12 1997-1998
Liabilities 1,086 (12) (114) 1997-2002
Purchased options
Assets 1,873 42 89 1997
Other
Assets 537 67 33 1997
- --------------------------------------------------------------------------
$ 7,758 $ 69 $ (10)
==========================================================================
Maturities of derivative financial instruments held on
December 31, 1997, are as follows (in millions):
1998 1999 2000 2001-2003
- --------------------------------------------------------------------
$ 4,218 $ 257 $ 426 $ 415
====================================================================
NOTE 9: COMMITMENTS AND CONTINGENCIES
On December 31, 1997, we were contingently liable for guarantees
of indebtedness owed by third parties in the amount of $409 million,
of which $26 million related to independent bottling licensees.
We do not consider it probable that we will be required to
satisfy these guarantees. The fair value of these contingent
liabilities is immaterial to our consolidated financial statements.
We believe our exposure to concentrations of credit risk is
limited, due to the diverse geographic areas covered by our operations.
Additionally, under certain circumstances, we have committed
to make future investments in bottling companies. However, we do
not consider any of these commitments to be individually significant.
NOTE 10: NET CHANGE IN OPERATING ASSETS AND LIABILITIES
The changes in operating assets and liabilities, net of effects
of acquisitions and divestitures of businesses and unrealized
exchange gains/losses, are as follows (in millions):
1997 1996 1995
- --------------------------------------------------------------------------
Increase in trade accounts receivable $ (164) $ (230) $ (255)
Increase in inventories (43) (33) (80)
Increase in prepaid expenses
and other assets (145) (219) (267)
Increase in accounts payable
and accrued expenses 299 361 214
Increase (decrease) in accrued taxes 393 (208) 26
Increase (decrease) in
other liabilities (387) 211 63
- --------------------------------------------------------------------------
$ (47) $ (118) $ (299)
==========================================================================
NOTE 11: RESTRICTED STOCK, STOCK OPTIONS AND OTHER STOCK PLANS
Our Company sponsors restricted stock award plans, stock
option plans, Incentive Unit Agreements and Performance Unit
Agreements. Our Company applies Accounting Principles Board
Opinion No. 25 and related Interpretations in accounting for
our plans. Accordingly, for our stock option plans, no
compensation cost has been recognized. The compensation cost
that has been charged against income for our restricted stock
award plans was $56 million in 1997, $63 million in 1996 and
$45 million in 1995. For our Incentive Unit Agreements and
Performance Unit Agreements, the charge against income was
$31 million in 1997, $90 million in 1996 and $64 million in
1995. Had compensation cost for the stock option plans been
determined based on the fair value at the grant dates for
awards under the plans, consistent with the alternative
method set forth under SFAS No. 123, "Accounting for Stock-
Based Compensation," our Company's net income, basic net
income per share and diluted net income per share would have
been reduced.
The pro forma amounts are indicated below (in millions,
except per share amounts):
Year Ended December 31, 1997 1996 1995
- --------------------------------------------------------------------------
Net income
As reported $ 4,129 $ 3,492 $ 2,986
Pro forma $ 4,026 $ 3,412 $ 2,933
Basic net income per share
As reported $ 1.67 $ 1.40 $ 1.18
Pro forma $ 1.63 $ 1.37 $ 1.16
Diluted net income per share
As reported $ 1.64 $ 1.38 $ 1.17
Pro forma $ 1.60 $ 1.35 $ 1.15
==========================================================================
- 55 -
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED THE COCA-COLA COMPANY
FINANCIAL STATEMENTS AND SUBSIDIARIES
- ----------------------------------------------------------------------
Under the amended 1989 Restricted Stock Award Plan and the
amended 1983 Restricted Stock Award Plan (the Restricted
Stock Award Plans), 40 million and 24 million shares of
restricted common stock, respectively, may be granted to
certain officers and key employees of our Company.
On December 31, 1997, 33 million shares were available for
grant under the Restricted Stock Award Plans. In 1997, 1996
and 1995, 162,000, 210,000 and 190,000 shares of restricted
stock were granted at $59.75, $48.88 and $35.63,
respectively. Participants are entitled to vote and receive
dividends on the shares, and under the 1983 Restricted Stock
Award Plan, participants are reimbursed by our Company for
income taxes imposed on the award, but not for taxes
generated by the reimbursement payment. The shares are
subject to certain transfer restrictions and may be forfeited
if a participant leaves our Company for reasons other than
retirement, disability or death, absent a change in control
of our Company.
Under our 1991 Stock Option Plan (the Option Plan), a
maximum of 120 million shares of our common stock was
approved to be issued or transferred to certain officers and
employees pursuant to stock options and stock appreciation
rights granted under the Option Plan. The stock appreciation
rights permit the holder, upon surrendering all or part of
the related stock option, to receive cash, common stock or a
combination thereof, in an amount up to 100 percent of the
difference between the market price and the option price.
Options to purchase common stock under the Option Plan have
been granted to Company employees at fair market value at the
date of grant. Generally, stock options become exercisable
over a three-year vesting period and expire 10 years from the
date of grant.
The fair value of each option grant is estimated on the
date of grant using the Black-Scholes option-pricing model
with the following weighted-average assumptions used for
grants in 1997, 1996 and 1995, respectively: dividend yields
of 1.0, 1.0 and 1.3 percent; expected volatility of 20.1,
18.3 and 20.1 percent; risk-free interest rates of 6.0, 6.2
and 5.9 percent; and expected lives of four years for all
years. The weighted-average fair value of options granted was
$13.92, $11.43 and $8.13 for the years ended December 31,
1997, 1996 and 1995, respectively.
A summary of stock option activity under all plans is as
follows (shares in millions):
<TABLE>
<CAPTION>
1997 1996 1995
--------------------------- --------------------------- ---------------------------
Weighted-Average Weighted-Average Weighted-Average
Shares Exercise Price Shares Exercise Price Shares Exercise Price
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding on
January 1, 78 $ 26.50 74 $ 20.74 65 $ 15.53
Granted 13 59.79 14 48.86 18 34.88
Exercised (10) 14.46 (9) 13.72 (8) 10.63
Forfeited/Expired (1) 44.85 (1) 31.62 (1) 24.84
- ------------------------------------------------------------------------------------------------------------
Outstanding on
December 31, 80 $ 33.22 78 $ 26.50 74 $ 20.74
============================================================================================================
Exercisable on
December 31, 55 $ 24.62 51 $ 18.69 45 $ 14.22
============================================================================================================
Shares Available
on December 31,
for options that
may be granted 34 46 59
============================================================================================================
</TABLE>
The following table summarizes information about stock
options at December 31, 1997 (shares in millions):
<TABLE>
<CAPTION>
Outstanding Stock Options Exercisable Stock Options
--------------------------------------------- -----------------------------
Weighted-Average
Remaining Weighted-Average Weighted-Average
Range of Exercise Prices Shares Contractual Life Exercise Price Shares Exercise Price
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 4.00 to $ 10.00 11 1.5 years $ 7.33 11 $ 7.33
$ 10.01 to $ 20.00 4 3.5 years $ 14.50 4 $ 14.50
$ 20.01 to $ 30.00 24 6.1 years $ 23.71 24 $ 23.71
$ 30.01 to $ 40.00 15 7.8 years $ 35.63 11 $ 35.63
$ 40.01 to $ 50.00 13 8.8 years $ 48.86 5 $ 48.86
$ 50.01 to $ 71.00 13 9.8 years $ 59.78 _ $ _
=============================================================================================================
$ 4.00 to $ 71.00 80 6.7 years $ 33.22 55 $ 24.62
=============================================================================================================
</TABLE>
- 56 -
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED THE COCA-COLA COMPANY
FINANCIAL STATEMENTS AND SUBSIDIARIES
- --------------------------------------------------------------------
In 1988, our Company entered into Incentive Unit Agreements
whereby, subject to certain conditions, certain officers were
given the right to receive cash awards based on the market
value of 2.4 million shares of our common stock at the
measurement dates. Under the Incentive Unit Agreements, the
employee is reimbursed by our Company for income taxes
imposed when the value of the units is paid, but not for
taxes generated by the reimbursement payment. At December 31,
1996 and 1995, approximately 1.6 million units were
outstanding. In 1997, all outstanding units were paid at a
price of $58.50 per unit.
In 1985, we entered into Performance Unit Agreements,
whereby certain officers were given the right to receive cash
awards based on the difference in the market value of
approximately 4.4 million shares of our common stock at the
measurement dates and the base price of $2.58, the market
value as of January 2, 1985. At December 31, 1996 and 1995,
approximately 2.9 million units were outstanding. In 1997,
all outstanding units were paid based on a market price of
$58.50 per unit.
NOTE 12: PENSION AND OTHER POSTRETIREMENT BENEFITS
Our Company sponsors and/or contributes to pension plans
covering substantially all U.S. employees and certain
employees in international locations. The benefits are
primarily based on years of service and the employees'
compensation for certain periods during the last years of
employment. We generally fund pension costs currently,
subject to regulatory funding limitations. We also sponsor
nonqualified, unfunded defined benefit plans for certain
officers and other employees. In addition, our Company and
its subsidiaries have various pension plans and other forms
of postretirement arrangements outside the United States.
Total pension expense for all benefit plans, including
defined benefit plans, amounted to approximately $77 million
in 1997, $85 million in 1996 and $81 million in 1995. Net
periodic pension cost for our defined benefit plans consists
of the following (in millions):
Year Ended December 31, 1997 1996 1995
- -------------------------------------------------------------------
Service cost-benefits earned
during the period $ 49 $ 48 $ 43
Interest cost on projected
benefit obligation 93 91 89
Actual return on plan assets (172) (169) (211)
Net amortization and deferral 98 103 145
- -------------------------------------------------------------------
Net periodic pension cost $ 68 $ 73 $ 66
====================================================================
The funded status of our defined benefit plans is as follows
(in millions):
Assets Exceed Accumulated
Accumulated Benefits
Benefits Exceed Assets
-------------------- ----------------------
December 31, 1997 1996 1997 1996
- ---------------------------------------------------------------------------
Actuarial present value of
benefit obligations
Vested benefit
obligation $ 804 $ 704 $ 328 $ 343
===========================================================================
Accumulated benefit
obligation $ 872 $ 768 $ 370 $ 384
===========================================================================
Projected benefit
obligation $ 1,016 $ 890 $ 472 $ 485
Plan assets at fair value{1} 1,280 1,126 128 156
- ---------------------------------------------------------------------------
Plan assets in excess of
(less than) projected
benefit obligation 264 236 (344) (329)
Unrecognized net (asset)
liability at transition (30) (39) 28 36
Unrecognized prior service
cost 29 33 12 16
Unrecognized net (gain) loss (211) (191) 113 104
Adjustment required to
recognize minimum liability - - (76) (66)
- ---------------------------------------------------------------------------
Accrued pension asset
(liability) included in the
consolidated balance sheet $ 52 $ 39 $ (267) $ (239)
===========================================================================
{1} Primarily listed stocks, bonds and government securities.
The assumptions used in computing the preceding information
are as follows:
Year Ended December 31, 1997 1996 1995
- -------------------------------------------------------------------
Discount rates 7% 7-1/4% 7%
Rates of increase in
compensation levels 4-3/4% 4-3/4% 4-3/4%
Expected long-term rates of
return on assets 9% 8-1/2% 8-1/2%
===================================================================
Our Company has plans providing postretirement health care
and life insurance benefits to substantially all U.S.
employees and certain employees in international locations
who retire with a minimum of five years of service. Net
periodic cost for our postretirement health care and life
insurance benefits consists of the following (in millions):
Year Ended December 31, 1997 1996 1995
- -------------------------------------------------------------------
Service cost $ 11 $ 12 $ 12
Interest cost 23 20 23
Other (2) (3) (2)
- -------------------------------------------------------------------
$ 32 $ 29 $ 33
===================================================================
- 57 -
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED THE COCA-COLA COMPANY
FINANCIAL STATEMENTS AND SUBSIDIARIES
- -----------------------------------------------------------------------
In addition, we contribute to a Voluntary Employees'
Beneficiary Association trust that will be used to partially
fund health care benefits for future retirees. Generally, we
fund benefits to the extent contributions are tax-deductible,
which under current legislation is limited. In general,
retiree health benefits are paid as covered expenses are
incurred.
The funded status of our postretirement health care and
life insurance plans is as follows (in millions):
December 31, 1997 1996
- -----------------------------------------------------------------------
Accumulated postretirement
benefit obligations:
Retirees $ 154 $ 114
Fully eligible active plan participants 41 35
Other active plan participants 132 130
- -----------------------------------------------------------------------
Total benefit obligation 327 279
Plan assets at fair value{1} 40 41
- -----------------------------------------------------------------------
Plan assets less than benefit obligation (287) (238)
Unrecognized prior service cost 5 5
Unrecognized net gain (27) (57)
- -----------------------------------------------------------------------
Accrued postretirement benefit
liability included in the
consolidated balance sheet $(309) $(290)
=======================================================================
{1} Consists of corporate bonds, government securities and
short-term investments.
The assumptions used in computing the preceding information
are as follows:
Year Ended December 31, 1997 1996 1995
- -------------------------------------------------------------------
Discount rate 7-1/4% 7-3/4% 7-1/4%
Rates of increase in
compensation levels 4-3/4% 5% 4-3/4%
===================================================================
The rate of increase in the per capita costs of covered
health care benefits is assumed to be 7-1/4 percent in 1998,
decreasing gradually to 5 percent by the year 2002.
Increasing the assumed health care cost trend rate by one
percentage point would increase the accumulated
postretirement benefit obligation as of December 31, 1997, by
approximately $39 million and increase the net periodic
postretirement benefit cost by approximately $5 million in 1997.
NOTE 13: INCOME TAXES
Income before income taxes consists of the following (in millions):
Year Ended December 31, 1997 1996 1995
- ---------------------------------------------------------------
United States $ 1,515 $ 1,168 $ 1,270
International 4,540 3,428 3,058
- ---------------------------------------------------------------
$ 6,055 $ 4,596 $ 4,328
===============================================================
Income tax expense (benefit) consists of the following
(in millions):
Year Ended United State &
December 31, States Local International Total
- -----------------------------------------------------------------------
1997
Current $ 240 $ 45 $ 1,261 $ 1,546
Deferred 180 21 179 380
1996
Current $ 256 $ 79 $ 914 $ 1,249
Deferred (264) (29) 148 (145)
1995
Current $ 204 $ 41 $ 940 $ 1,185
Deferred 80 10 67 157
=======================================================================
We made income tax payments of approximately $982 million,
$1,242 million and $1,000 million in 1997, 1996 and 1995, respectively.
A reconciliation of the statutory U.S. federal rate and effective
rates is as follows:
Year Ended December 31, 1997 1996 1995
- -----------------------------------------------------------------------
Statutory U.S. federal rate 35.0% 35.0% 35.0%
State income taxes-net of
federal benefit 1.0 1.0 1.0
Earnings in jurisdictions taxed
at rates different from the
statutory U.S. federal rate (2.6) (3.3) (3.9)
Equity income (.6) (1.7) (1.7)
Tax settlement - (7.0) -
Other-net (1.0) - .6
- -----------------------------------------------------------------------
31.8% 24.0% 31.0%
=======================================================================
Our 31.8 percent 1997 effective tax rate reflects the tax
benefit derived from having significant operations outside
the United States that are taxed at rates lower than the U.S.
statutory rate of 35 percent, partially offset by the tax
impact of certain gains recognized from previously discussed
bottling transactions. These transactions are generally taxed
at rates higher than our Company's effective rate on operations.
In 1996, we reached an agreement in principle with the U.S.
Internal Revenue Service (IRS) settling certain U.S.-related
income tax matters. The agreement included issues in
litigation involving our operations in Puerto Rico, dating
back to the 1981 tax year and extending through 1995. This
agreement resulted in a one-time reduction of $320 million to
our 1996 income tax expense as a result of reversing
previously accrued contingent income tax liabilities. Our
1996 effective tax rate would have been 31 percent, excluding
the favorable impact of the settlement with the IRS.
- 58 -
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED THE COCA-COLA COMPANY
FINANCIAL STATEMENTS AND SUBSIDIARIES
- --------------------------------------------------------------------
Appropriate U.S. and international taxes have been provided
for earnings of subsidiary companies that are expected to be
remitted to the parent company. Exclusive of amounts that
would result in little or no tax if remitted, the cumulative
amount of unremitted earnings from our international
subsidiaries that is expected to be indefinitely reinvested
was approximately $1,917 million on December 31, 1997. The
taxes that would be paid upon remittance of these
indefinitely reinvested earnings are approximately $671
million, based on current tax laws.
The tax effects of temporary differences and carryforwards
that give rise to deferred tax assets and liabilities consist
of the following (in millions):
December 31, 1997 1996
- -------------------------------------------------------------------
Deferred tax assets:
Benefit plans $ 246 $ 414
Liabilities and reserves 172 164
Net operating loss carryforwards 72 130
Other 89 88
- -------------------------------------------------------------------
Gross deferred tax assets 579 796
Valuation allowance (21) (18)
- -------------------------------------------------------------------
$ 558 $ 778
===================================================================
Deferred tax liabilities:
Property, plant and equipment $ 203 $ 200
Equity investments 107 369
Intangible assets 164 74
Other 288 33
- -------------------------------------------------------------------
$ 762 $ 676
===================================================================
Net deferred tax asset (liability){1} $(204) $ 102
===================================================================
{1} Deferred tax assets of $244 million and $403 million have
been included in the consolidated balance sheet caption
"marketable securities and other assets" at December 31,
1997 and 1996, respectively.
On December 31, 1997, we had $180 million of operating loss
carryforwards available to reduce future taxable income of
certain international subsidiaries. Loss carryforwards of $11
million must be utilized within the next five years; $169
million can be utilized over an indefinite period. A
valuation allowance has been provided for a portion of the
deferred tax assets related to these loss carryforwards.
NOTE 14: NONRECURRING ITEMS
In the second quarter of 1997, we recorded a nonrecurring
charge of $60 million in selling, administrative and general
expenses related to enhancing manufacturing efficiencies in
North America.
In the third quarter of 1996, we recorded provisions of
approximately $276 million in selling, administrative and
general expenses related to our plans for strengthening our
worldwide system. Of this $276 million, approximately $130
million related to streamlining our operations, primarily in
Greater Europe and Latin America. Our management took actions
to consolidate certain manufacturing operations and, as a
result, recorded charges to recognize the impairment of
certain manufacturing assets and estimated losses on the
disposal of other assets.
The remainder of this $276 million provision related to
actions taken by The Minute Maid Company. During the third
quarter of 1996, The Minute Maid Company entered into two
significant agreements with independent parties: (1) a
strategic supply alliance with Sucocitrico Cutrale Ltda., the
world's largest grower and processor of oranges, and (2) a
joint venture agreement with Groupe Danone to produce,
distribute and sell premium refrigerated juices outside the
United States and Canada. With these agreements, we intend to
increase The Minute Maid Company's focus on managing its
brands while seeking arrangements to lower its overall
manufacturing costs. In connection with these actions, we
recorded $146 million in third quarter provisions, composed
primarily of impairment charges to certain production
facilities and reserves for losses on the disposal of other
production facilities.
Also in the third quarter of 1996, we launched a strategic
initiative, Project Infinity, to redesign and enhance our
information systems and communications capabilities. In
connection with this initiative, we recorded an $80 million
impairment charge in administrative and general expenses to
recognize Project Infinity's impact on existing information
systems.
Based on management's commitment to certain strategic
actions during the third quarter of 1996, these impairment
charges were recorded to reduce the carrying value of
identified assets to fair value. Fair values were derived
using a variety of methodologies, including cash flow
analysis, estimates of sales proceeds and independent
appraisals.
Also in the third quarter of 1996, we recorded a $28.5
million charge in administrative and general expenses as a
result of our decision to make a contribution to The Coca-Cola
Foundation, a not-for-profit charitable organization.
During 1995, selling, administrative and general expenses
included provisions of $86 million to increase efficiencies
in our operations in North America and Europe.
- 59 -
<PAGE>
<PAGE>
<TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THE COCA-COLA COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------------------------------
15. OPERATIONS IN GEOGRAPHIC AREAS
Information about the Company's operations by geographic area is as follows (in millions):
<CAPTION>
North Greater Latin Middle &
America Africa Europe America Far East Corporate Consolidated
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1997
Net operating revenues $6,443 $582 $5,395 $2,124 $4,256 $ 68 $18,868
Operating income 1,311{2} 165 1,479 957 1,508 (419) 5,001
Identifiable operating assets 4,429 418 2,410 1,593 1,624 1,572{1} 12,046
Equity income 155 155
Investments (principally
bottling companies) 4,894 4,894
Capital expenditures 261 17 327 78 196 214 1,093
Depreciation and amortization 195 22 123 99 106 81 626
======================================================================================================================
1996
Net operating revenues $6,050 $482 $5,959 $2,040 $4,095 $ 47 $18,673
Operating income 949{3} 118{3} 1,277{3} 815{3} 1,358{3} (602){3} 3,915
Identifiable operating assets 3,814 326 2,896 1,405 1,463 2,088{1} 11,992
Equity income 211 211
Investments (principally
bottling companies) 4,169 4,169
Capital expenditures 261 32 379 79 121 118 990
Depreciation and amortization 188 12 190 83 84 76 633
======================================================================================================================
1995
Net operating revenues $5,513 $603 $6,007 $1,955 $3,994 $ 55 $18,127
Operating income 856{4} 205 1,256{4} 798 1,394 (483) 4,026
Identifiable operating assets 3,478 348 4,301 1,294 1,445 1,461{1} 12,327
Equity income 169 169
Investments (principally
bottling companies) 2,714 2,714
Capital expenditures 286 19 383 87 85 77 937
Depreciation and amortization 156 13 192 64 71 66 562
======================================================================================================================
Intercompany transfers between geographic areas are not material.
North America includes only the United States and Canada.
Certain prior year amounts have been reclassified to conform to the current year presentation.
{1} Corporate identifiable operating assets are composed principally of marketable securities, finance subsidiary
receivables and fixed assets.
{2} Operating income for North America was reduced by $60 million for provisions related to enhancing manufacturing
efficiencies.
{3} Operating income for North America, Africa, Greater Europe, Latin America and the Middle & Far East was reduced
by $153 million, $7 million, $66 million, $32 million and $18 million, respectively, for provisions related to
management's strategic plans to strengthen our worldwide system. Corporate operating income was reduced by
$80 million for Project Infinity's impairment impact to existing systems and by $28.5 million for our decision
to contribute to The Coca-Cola Foundation.
{4} Operating income for North America and Greater Europe was reduced by $61 million and $25 million, respectively,
for provisions to increase efficiencies.
</TABLE>
<TABLE>
<CAPTION>
Compound Growth Rates North Greater Latin Middle &
Ending 1997 America Africa Europe America Far East Consolidated
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net operating revenues
5 years 7% 19% 4% 9% 13% 8%
10 years 6% 17% 13% 14% 9% 9%
=======================================================================================================================
Operating income
5 years 13% 5% 8% 14% 12% 13%
10 years 12% 13% 13% 20% 13% 14%
=======================================================================================================================
</TABLE>
- 60 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
NET OPERATING REVENUES BY GEOGRAPHIC AREA{1}
[bar chart]
Year Ended December 31, 1997 1996 1995
- --------------------------------------------------------------
Middle & Far East 23% 22% 22%
Latin America 11% 11% 11%
Greater Europe 29% 32% 33%
Africa 3% 3% 3%
North America 34% 32% 31%
OPERATING INCOME BY GEOGRAPHIC AREA{1}
[bar chart]
Year Ended December 31, 1997 1996 1995
- -------------------------------------------------------------
Middle & Far East 28% 30% 31%
Latin America 18% 18% 18%
Greater Europe 27% 28% 28%
Africa 3% 3% 4%
North America 24% 21% 19%
{1} Charts and percentages are calculated exclusive of
corporate operations.
REPORT OF INDEPENDENT AUDITORS
BOARD OF DIRECTORS AND SHARE OWNERS
THE COCA-COLA COMPANY
We have audited the accompanying consolidated balance sheets
of The Coca-Cola Company and subsidiaries as of December 31,
1997 and 1996, and the related consolidated statements of
income, share-owners' equity, and cash flows for each of the
three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of The Coca-Cola Company and subsidiaries
at December 31, 1997 and 1996, and the consolidated results
of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Atlanta, Georgia
January 23, 1998
- 61 -
<PAGE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
<TABLE>
QUARTERLY DATA (UNAUDITED)
(In millions except per share data)
<CAPTION>
First Second Third Fourth Full
Year Ended December 31, Quarter Quarter Quarter Quarter Year
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1997
Net operating revenues $4,138 $5,075 $4,954 $4,701 $18,868
Gross profit 2,843 3,466 3,295 3,249 12,853
Net income 987 1,314 1,011 817 4,129
Basic net income per share .40 .53 .41 .33 1.67
Diluted net income per share .39 .52 .40 .33 1.64
=================================================================================
1996
Net operating revenues $4,224 $5,286 $4,687 $4,476 $18,673
Gross profit 2,694 3,380 2,873 2,988 11,935
Net income 713 1,050 967 762 3,492
Basic net income per share .28 .42 .39 .31 1.40
Diluted net income per share .28 .42 .38 .30 1.38
=================================================================================
</TABLE>
The first quarter of 1997 includes a gain of approximately
$352 million ($.08 per share after income taxes, basic and
diluted) on the sale of our 49 percent interest in Coca-Cola
& Schweppes Beverages Ltd. to Coca-Cola Enterprises.
The second quarter of 1997 includes noncash gains on the
issuance of stock by Coca-Cola Amatil of approximately $343
million ($.08 per share after income taxes, basic and diluted).
The second quarter of 1997 also includes provisions related to
enhancing manufacturing efficiencies in North America of $60
million ($.02 per share after income taxes, basic and diluted).
The third quarter of 1997 includes a gain of approximately
$156 million ($.04 per share after income taxes, basic and
diluted) on the sale of our 48 percent interest in Coca-Cola
Beverages Ltd. of Canada and our 49 percent interest in The
Coca-Cola Bottling Company of New York, Inc. to Coca-Cola
Enterprises.
The third quarter of 1996 includes a noncash gain from a tax
settlement with the IRS for $320 million ($.13 per share
after income taxes, basic and diluted), an impairment charge
of $80 million ($.02 per share after income taxes, basic and
diluted) to recognize Project Infinity's impact on existing
information systems, a $28.5 million ($.01 per share after
income taxes, basic and diluted) charge for our decision to
make a contribution to The Coca-Cola Foundation, a not-for-
profit charitable organization and provisions related to
management's strategic plans to strengthen our worldwide
system of $276 million ($.07 per share after income taxes,
basic and diluted). In addition, the third quarter of 1996
includes noncash gains on the issuance of stock by Coca-Cola
Amatil of $130 million ($.03 per share after income taxes,
basic and diluted) and CCEAG of $283 million ($.04 per share
after income taxes, basic and diluted).
STOCK PRICES
Below are the New York Stock Exchange high, low and closing
prices of The Coca-Cola Company's stock for each quarter of
1997 and 1996.
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
1997
High $ 63.25 $72.63 $71.94 $67.19
Low 51.13 52.75 55.06 51.94
Close 55.75 68.00 61.00 66.69
====================================================================
1996
High $ 42.69 $49.50 $53.88 $54.25
Low 36.06 39.13 44.25 46.88
Close 41.38 49.00 50.88 52.63
====================================================================
</TABLE>
- 63 -
<PAGE>
<PAGE>
SHARE-OWNER INFORMATION
COMMON STOCK
Ticker symbol: KO
The Coca-Cola Company is one of 30 companies
in the Dow Jones Industrial Average.
Share owners of record at year end: 366,279
Shares outstanding at year end: 2.47 billion
STOCK EXCHANGES
INSIDE THE UNITED STATES:
Common stock listed and traded: New York Stock Exchange, the
principal market for our common stock.
Common stock traded: Boston, Cincinnati, Chicago, Pacific and
Philadelphia stock exchanges.
OUTSIDE THE UNITED STATES:
Common stock listed and traded: The German exchange in
Frankfurt and the Swiss exchange in Zurich.
DIVIDENDS
At its February 1998 meeting, our Board increased our quarterly
dividend to 15 cents per share, equivalent to an annual dividend of
60 cents per share. The Company has increased dividends each of
the last 36 years.
The Coca-Cola Company normally pays dividends four times a
year, usually on April 1, July 1, October 1 and December 15. The
Company has paid 307 consecutive quarterly dividends, beginning
in 1920.
DIVIDEND AND CASH INVESTMENT PLAN
The Dividend and Cash Investment Plan permits share owners of
record to reinvest dividends from Company stock in shares of The
Coca-Cola Company. The Plan provides a convenient, economical
and systematic method of acquiring additional shares of our common
stock. All share owners of record are eligible to participate.
Share owners also may purchase Company stock through voluntary
cash investments of up to $125,000 per year.
All brokerage commissions associated with purchases made
through the Plan are paid by the Company.
The Plan's administrator, First Chicago Trust Company of New
York, purchases stock for voluntary cash investments beginning
the first business day of each month, except in December when
purchases begin on the 15th; dividend reinvestment purchases
begin on April 1, July 1, October 1 and December 15.
If your shares are held in street name by your broker and you are
interested in participating in the Dividend and Cash Investment
Plan, you may have your broker transfer the shares to First Chicago
Trust Company of New York electronically through the Direct
Registration System.
At year end, 69 percent of the Company's share owners of record
were participants in the Plan. In 1997, share owners invested
$39 million in dividends and $124 million in cash in the Plan.
ANNUAL MEETING OF SHARE OWNERS
April 15, 1998, 9 a.m. local time
The Playhouse Theatre
Du Pont Building
10th and Market Streets
Wilmington, Delaware
CORPORATE OFFICES
The Coca-Cola Company
One Coca-Cola Plaza
Atlanta, Georgia 30313
INSTITUTIONAL INVESTOR INQUIRIES
(404) 676-5766
SHARE-OWNER ACCOUNT ASSISTANCE
For address changes, dividend checks, direct deposit of
dividends, account consolidation, registration changes,
lost stock certificates, stock holdings and the Dividend
and Cash Investment Plan, please contact:
Registrar and Transfer Agent
First Chicago Trust Company of New York
P.O. Box 2500
Jersey City, NJ 07303-2500
Toll-free: (888) COKESHR (265-3747)
For hearing impaired: (201) 222-4955
E-mail: [email protected]
Internet: http://www.fctc.com
INFORMATION RESOURCES
PUBLICATIONS
THE COMPANY'S ANNUAL AND INTERIM REPORTS, PROXY STATEMENT,
FORM 10-K AND FORM 10-Q REPORTS ARE AVAILABLE FREE OF CHARGE
FROM OUR INDUSTRY & CONSUMER AFFAIRS DEPARTMENT
AT THE COMPANY'S CORPORATE ADDRESS, LISTED ABOVE. Also available
is "The Chronicle of Coca-Cola Since 1886."
INTERNET SITE
Our site at http://www.coca-cola.com offers information about
our Company, as well as periodic marketing features.
HOTLINE
The Company's hotline, (800) INVSTKO (468-7856), offers taped
highlights from the most recent quarter and may be used to
request the most recent quarterly results news release.
AUDIO ANNUAL REPORT
An audiocassette version of this report is available without
charge as a service to the visually impaired. To receive a copy,
please contact our Industry & Consumer Affairs Department
at (800) 571-2653.
DUPLICATE MAILINGS
If you are receiving duplicate or unwanted copies of our
publications, please contact the First Chicago Trust Company
of New York at one of the numbers listed above.
- 66 -
<PAGE>
<PAGE>
GLOSSARY
[Following are certain definitions extracted from page 67:]
DIVIDEND PAYOUT RATIO: Calculated by dividing cash dividends on
common stock by net income available to common share owners.
ECONOMIC PROFIT: Income from continuing operations, after taxes,
excluding interest, in excess of a computed capital charge for
average operating capital employed.
FREE CASH FLOW: Cash provided by operations less cash used in
investing activities. The Company uses free cash flow along
with borrowings to pay dividends and make share repurchases.
NET DEBT AND NET CAPITAL: Debt and capital in excess of cash,
cash equivalents and marketable securities not required for
operations and certain temporary bottling investments.
RETURN ON CAPITAL: Calculated by dividing income from
continuing operations - before changes in accounting principles,
adjusted for interest expense - by average total capital.
RETURN ON COMMON EQUITY: Calculated by dividing income from
continuing operations - before changes in accounting principles, less
preferred stock dividends - by average common share-owners' equity.
TOTAL CAPITAL: Equals share-owners' equity plus interest-
bearing debt.
TOTAL MARKET VALUE OF COMMON STOCK: Stock price at year end
multiplied by the number of shares outstanding at year end.
- 67 -
EXHIBIT 21.1
<TABLE>
SUBSIDIARIES OF THE COCA-COLA COMPANY
AS OF DECEMBER 31, 1997
<CAPTION>
Organized Percentages
Under of Voting
Laws of: Power
--------- -----------
<S> <C> <C>
The Coca-Cola Company Delaware
Subsidiaries consolidated, except as noted:
Barq's, Inc. Mississippi 100
Bottling Investments Corporation Delaware 100
ACCBC Holding Company Georgia 100
Caribbean International Sales Corporation, Inc. Nevada 100
Caribbean Refrescos, Inc. Delaware 100
CRI Financial Corporation, Inc. Delaware 100
Carolina Coca-Cola Bottling Investments, Inc. Delaware 100
Coca-Cola Financial Corporation Delaware 100
Coca-Cola Interamerican Corporation Delaware 100
Montevideo Refrescos, S.A. Uruguay 55.53
Coca-Cola South Asia Holdings, Inc. Delaware 100
Coca-Cola (Thailand) Limited Thailand 100
CTI Holdings, Inc. Delaware 100
55th & 5th Avenue Corporation New York 100
The Coca-Cola Export Corporation Delaware 100
Atlantic Industries Cayman Islands 100
Ansan Ankara Gida Mesrubat ve Meyva Sulari
Sanayii ve Ticaret A.S. Turkey 66.63
Coca-Cola Bevande Italia S.r.l. Italy 100
Maksan Manisa Mesrubat Kutulama Sanayi A.S. Turkey 66.66
Shanghai Shen-Mei Beverage and Food Co. Ltd. People's Republic
(Concentrate Division) of China 100
Barlan, Inc. Delaware 100
Varoise de Concentres S.A. France 100
Coca-Cola G.m.b.H Germany 100
Societa Imbottigliamento Bevande Roma-SIBER-S.p.A. Italy 100
Beverage Products, Ltd. Delaware 100
Coca-Cola Canners of Southern Africa (Pty) Limited South Africa 51.55
Coca-Cola de Argentina S.A. Argentina 100
Coca-Cola de Chile S.A. Chile 100
Coca-Cola Ges.m.b.H. Austria 100
Coca-Cola Industrias Ltda. Brazil 100
Recofarma Industria do Amazonas Ltda. Brazil 100
Coca-Cola Ltd. Canada 100
The Minute Maid Company Canada Inc. Canada 100
Coca-Cola (Japan) Company, Limited Japan 100
Coca-Cola Korea Company, Limited Korea 100
Coca-Cola Nigeria Limited Nigeria 100
Coca-Cola Overseas Parent Limited Delaware 100
Coca-Cola Holdings (Overseas) Limited Delaware and 100
Australia
Coca-Cola Southern Africa (Pty) Limited South Africa 100
Conco Limited Cayman Islands 100
</TABLE>
-1-
<PAGE>
<PAGE>
<TABLE>
SUBSIDIARIES OF THE COCA-COLA COMPANY
AS OF DECEMBER 31, 1997
continued from page 1
<CAPTION>
Organized Percentages
Under of Voting
Laws of: Power
--------- -----------
<S> <C> <C>
International Beverages Ireland 100
Coca-Cola Refreshments Moscow Russia 100
Minute Maid SA Switzerland 100
Refreshment Product Services, Inc. Delaware 100
Coca-Cola de Colombia, S.A. Colombia 100
Coca-Cola Holdings (Nederland) B.V. Netherlands 100
Coca-Cola Holdings (United Kingdom) Limited England and 100
Wales
The Inmex Corporation Florida 100
Servicios Integrados de Administracion Mexico 100
y Alta Gerencia, S.A. de C.V.
</TABLE>
Other subsidiaries whose combined size is not significant:
Eleven domestic wholly-owned subsidiaries consolidated
Eighty-eight foreign wholly-owned subsidiaries consolidated
Fourteen foreign majority-owned subsidiaries consolidated
-2-
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual
Report on Form 10-K of The Coca-Cola Company of our report dated
January 23, 1998, included in the 1997 Annual Report to Share
Owners of The Coca-Cola Company.
Our audits also included the financial statement schedule of
The Coca-Cola Company listed in Item 14(a). This schedule is the
responsibility of The Coca-Cola Company's management. Our
responsibility is to express an opinion based on our audits. In
our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements
taken as a whole, presents fairly in all material respects the
information set forth therein.
We also consent to the incorporation by reference in the
registration statements and related prospectuses of The Coca-Cola
Company listed below of our report dated January 23, 1998 with
respect to the consolidated financial statements of The Coca-Cola
Company incorporated herein by reference, and our report included
in the preceding paragraph with respect to the financial statement
schedule included in this Annual Report on Form 10-K for the year
ended December 31, 1997:
1. Registration Statement Number 2-58584 on Form S-8
2. Registration Statement Number 2-79973 on Form S-3
3. Registration Statement Number 2-88085 on Form S-8
4. Registration Statement Number 2-98787 on Form S-3
5. Registration Statement Number 33-21529 on Form S-8
6. Registration Statement Number 33-21530 on Form S-3
7. Registration Statement Number 33-26251 on Form S-8
8. Registration Statement Number 33-39840 on Form S-8
9. Registration Statement Number 33-45763 on Form S-3
10. Registration Statement Number 33-50743 on Form S-3
11. Registration Statement Number 33-61531 on Form S-3
12. Registration Statement Number 333-27607 on Form S-8
ERNST & YOUNG LLP
Atlanta, Georgia
March 6, 1998
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, M. DOUGLAS IVESTER,
Chairman of the Board, Chief Executive Officer and a Director
of The Coca-Cola Company (the "Company"), do hereby appoint
JAMES E. CHESTNUT, Senior Vice President and Chief Financial
Officer of the Company, JOSEPH R. GLADDEN, JR., Senior Vice
President and General Counsel of the Company, SUSAN E. SHAW,
Secretary of the Company, and CAROL C. HAYES, Assistant
Secretary of the Company, or any one of them, my true and
lawful attorneys-in-fact for me and in my name for the
purpose of executing on my behalf in any and all capacities
the Company's Annual Report for the year ended December 31,
1997 on Form 10-K, or any amendment or supplement thereto,
and causing such Annual Report or any such amendment or
supplement to be filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934,
as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
19th day of February 1998.
/s/M. Douglas Ivester
Chairman of the Board,
Chief Executive Officer and Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, JAMES E. CHESTNUT,
Senior Vice President and Chief Financial Officer of
The Coca-Cola Company (the "Company"), do hereby appoint
M. DOUGLAS IVESTER, Chairman of the Board, Chief Executive
Officer and a Director of the Company, JOSEPH R. GLADDEN, JR.,
Senior Vice President and General Counsel of the Company,
SUSAN E. SHAW, Secretary of the Company, and CAROL C. HAYES,
Assistant Secretary of the Company, or any one of them, my true
and lawful attorneys-in-fact for me and in my name for the
purpose of executing on my behalf in any and all capacities
the Company's Annual Report for the year ended December 31,
1997 on Form 10-K, or any amendment or supplement thereto,
and causing such Annual Report or any such amendment or
supplement to be filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934,
as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
19th day of February 1998.
/s/James E. Chestnut
Senior Vice President
and Chief Financial Officer
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, GARY P. FAYARD, Vice
President and Controller of The Coca-Cola Company (the
"Company"), do hereby appoint M. DOUGLAS IVESTER, Chairman of
the Board, Chief Executive Officer and a Director of the
Company, JAMES E. CHESTNUT, Senior Vice President and Chief
Financial Officer of the Company, JOSEPH R. GLADDEN, JR.,
Senior Vice President and General Counsel of the Company,
SUSAN E. SHAW, Secretary of the Company, and CAROL C. HAYES,
Assistant Secretary of the Company, or any one of them, my
true and lawful attorneys-in-fact for me and in my name for
the purpose of executing on my behalf in any and all
capacities the Company's Annual Report for the year ended
December 31, 1997 on Form 10-K, or any amendment or
supplement thereto, and causing such Annual Report or any
such amendment or supplement to be filed with the Securities
and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
19th day of February 1998.
/s/Gary P. Fayard
Vice President and Controller
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, HERBERT A. ALLEN, a
Director of The Coca-Cola Company (the "Company"), do hereby
appoint M. DOUGLAS IVESTER, Chairman of the Board, Chief
Executive Officer and a Director of the Company, JAMES E.
CHESTNUT, Senior Vice President and Chief Financial Officer
of the Company, JOSEPH R. GLADDEN, JR., Senior Vice President
and General Counsel of the Company, SUSAN E. SHAW, Secretary
of the Company, and CAROL C. HAYES, Assistant Secretary of
the Company, or any one of them, my true and lawful attorneys-
in-fact for me and in my name for the purpose of executing on
my behalf in any and all capacities the Company's Annual
Report for the year ended December 31, 1997 on Form 10-K, or
any amendment or supplement thereto, and causing such Annual
Report or any such amendment or supplement to be filed with
the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
19th day of February 1998.
/s/Herbert A. Allen
Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, RONALD W. ALLEN, a
Director of The Coca-Cola Company (the "Company"), do hereby
appoint M. DOUGLAS IVESTER, Chairman of the Board, Chief
Executive Officer and a Director of the Company, JAMES E.
CHESTNUT, Senior Vice President and Chief Financial Officer
of the Company, JOSEPH R. GLADDEN, JR., Senior Vice President
and General Counsel of the Company, SUSAN E. SHAW, Secretary
of the Company, and CAROL C. HAYES, Assistant Secretary of
the Company, or any one of them, my true and lawful attorneys-
in-fact for me and in my name for the purpose of executing on
my behalf in any and all capacities the Company's Annual
Report for the year ended December 31, 1997 on Form 10-K, or
any amendment or supplement thereto, and causing such Annual
Report or any such amendment or supplement to be filed with
the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
19th day of February 1998.
/s/Ronald W. Allen
Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, CATHLEEN P. BLACK, a
Director of The Coca-Cola Company (the "Company"), do hereby
appoint M. DOUGLAS IVESTER, Chairman of the Board, Chief
Executive Officer and a Director of the Company, JAMES E.
CHESTNUT, Senior Vice President and Chief Financial Officer
of the Company, JOSEPH R. GLADDEN, JR., Senior Vice President
and General Counsel of the Company, SUSAN E. SHAW, Secretary
of the Company, and CAROL C. HAYES, Assistant Secretary of
the Company, or any one of them, my true and lawful attorneys-
in-fact for me and in my name for the purpose of executing on
my behalf in any and all capacities the Company's Annual
Report for the year ended December 31, 1997 on Form 10-K, or
any amendment or supplement thereto, and causing such Annual
Report or any such amendment or supplement to be filed with
the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
19th day of February 1998.
/s/Cathleen P. Black
Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, WARREN E. BUFFETT, a
Director of The Coca-Cola Company (the "Company"), do hereby
appoint M. DOUGLAS IVESTER, Chairman of the Board, Chief
Executive Officer and a Director of the Company, JAMES E.
CHESTNUT, Senior Vice President and Chief Financial Officer
of the Company, JOSEPH R. GLADDEN, JR., Senior Vice President
and General Counsel of the Company, SUSAN E. SHAW, Secretary
of the Company, and CAROL C. HAYES, Assistant Secretary of
the Company, or any one of them, my true and lawful attorneys-
in-fact for me and in my name for the purpose of executing on
my behalf in any and all capacities the Company's Annual
Report for the year ended December 31, 1997 on Form 10-K, or
any amendment or supplement thereto, and causing such Annual
Report or any such amendment or supplement to be filed with
the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
19th day of February 1998.
/s/Warren E. Buffett
Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, CHARLES W.
DUNCAN, JR., a Director of The Coca-Cola Company (the
"Company"), do hereby appoint M. DOUGLAS IVESTER, Chairman of
the Board, Chief Executive Officer and a Director of the
Company, JAMES E. CHESTNUT, Senior Vice President and Chief
Financial Officer of the Company, JOSEPH R. GLADDEN, JR.,
Senior Vice President and General Counsel of the Company,
SUSAN E. SHAW, Secretary of the Company, and CAROL C. HAYES,
Assistant Secretary of the Company, or any one of them, my
true and lawful attorneys-in-fact for me and in my name for
the purpose of executing on my behalf in any and all
capacities the Company's Annual Report for the year ended
December 31, 1997 on Form 10-K, or any amendment or
supplement thereto, and causing such Annual Report or any
such amendment or supplement to be filed with the Securities
and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
19th day of February 1998.
/s/Charles W. Duncan, Jr.
Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, SUSAN B. KING, a
Director of The Coca-Cola Company (the "Company"), do hereby
appoint M. DOUGLAS IVESTER, Chairman of the Board, Chief
Executive Officer and a Director of the Company, JAMES E.
CHESTNUT, Senior Vice President and Chief Financial Officer
of the Company, JOSEPH R. GLADDEN, JR., Senior Vice President
and General Counsel of the Company, SUSAN E. SHAW, Secretary
of the Company, and CAROL C. HAYES, Assistant Secretary of
the Company, or any one of them, my true and lawful attorneys-
in-fact for me and in my name for the purpose of executing on
my behalf in any and all capacities the Company's Annual
Report for the year ended December 31, 1997 on Form 10-K, or
any amendment or supplement thereto, and causing such Annual
Report or any such amendment or supplement to be filed with
the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
19th day of February 1998.
/s/Susan B. King
Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, DONALD F. MCHENRY, a
Director of The Coca-Cola Company (the "Company"), do hereby
appoint M. DOUGLAS IVESTER, Chairman of the Board, Chief
Executive Officer and a Director of the Company, JAMES E.
CHESTNUT, Senior Vice President and Chief Financial Officer
of the Company, JOSEPH R. GLADDEN, JR., Senior Vice President
and General Counsel of the Company, SUSAN E. SHAW, Secretary
of the Company, and CAROL C. HAYES, Assistant Secretary of
the Company, or any one of them, my true and lawful attorneys-
in-fact for me and in my name for the purpose of executing on
my behalf in any and all capacities the Company's Annual
Report for the year ended December 31, 1997 on Form 10-K, or
any amendment or supplement thereto, and causing such Annual
Report or any such amendment or supplement to be filed with
the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
19th day of February 1998.
/s/Donald F. McHenry
Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, SAM NUNN, a Director
of The Coca-Cola Company (the "Company"), do hereby appoint
M. DOUGLAS IVESTER, Chairman of the Board, Chief Executive
Officer and a Director of the Company, JAMES E. CHESTNUT,
Senior Vice President and Chief Financial Officer of the
Company, JOSEPH R. GLADDEN, JR., Senior Vice President and
General Counsel of the Company, SUSAN E. SHAW, Secretary of
the Company, and CAROL C. HAYES, Assistant Secretary of the
Company, or any one of them, my true and lawful attorneys-in-
fact for me and in my name for the purpose of executing on my
behalf in any and all capacities the Company's Annual Report
for the year ended December 31, 1997 on Form 10-K, or any
amendment or supplement thereto, and causing such Annual
Report or any such amendment or supplement to be filed with
the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
19th day of February 1998.
/s/Sam Nunn
Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, PAUL F. OREFFICE, a
Director of The Coca-Cola Company (the "Company"), do hereby
appoint M. DOUGLAS IVESTER, Chairman of the Board, Chief
Executive Officer and a Director of the Company, JAMES E.
CHESTNUT, Senior Vice President and Chief Financial Officer
of the Company, JOSEPH R. GLADDEN, JR., Senior Vice President
and General Counsel of the Company, SUSAN E. SHAW, Secretary
of the Company, and CAROL C. HAYES, Assistant Secretary of
the Company, or any one of them, my true and lawful attorneys-
in-fact for me and in my name for the purpose of executing on
my behalf in any and all capacities the Company's Annual
Report for the year ended December 31, 1997 on Form 10-K, or
any amendment or supplement thereto, and causing such Annual
Report or any such amendment or supplement to be filed with
the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
19th day of February 1998.
/s/Paul F. Oreffice
Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, JAMES D.
ROBINSON III, a Director of The Coca-Cola Company (the
"Company"), do hereby appoint M. DOUGLAS IVESTER, Chairman of
the Board, Chief Executive Officer and a Director of the
Company, JAMES E. CHESTNUT, Senior Vice President and Chief
Financial Officer of the Company, JOSEPH R. GLADDEN, JR.,
Senior Vice President and General Counsel of the Company,
SUSAN E. SHAW, Secretary of the Company, and CAROL C. HAYES,
Assistant Secretary of the Company, or any one of them, my
true and lawful attorneys-in-fact for me and in my name for
the purpose of executing on my behalf in any and all
capacities the Company's Annual Report for the year ended
December 31, 1997 on Form 10-K, or any amendment or
supplement thereto, and causing such Annual Report or any
such amendment or supplement to be filed with the Securities
and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
19th day of February 1998.
/s/James D. Robinson III
Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, PETER V. UEBERROTH, a
Director of The Coca-Cola Company (the "Company"), do hereby
appoint M. DOUGLAS IVESTER, Chairman of the Board, Chief
Executive Officer and a Director of the Company, JAMES E.
CHESTNUT, Senior Vice President and Chief Financial Officer
of the Company, JOSEPH R. GLADDEN, JR., Senior Vice President
and General Counsel of the Company, SUSAN E. SHAW, Secretary
of the Company, and CAROL C. HAYES, Assistant Secretary of
the Company, or any one of them, my true and lawful attorneys-
in-fact for me and in my name for the purpose of executing on
my behalf in any and all capacities the Company's Annual
Report for the year ended December 31, 1997 on Form 10-K, or
any amendment or supplement thereto, and causing such Annual
Report or any such amendment or supplement to be filed with
the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
19th day of February 1998.
/s/Peter V. Ueberroth
Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, JAMES B. WILLIAMS, a
Director of The Coca-Cola Company (the "Company"), do hereby
appoint M. DOUGLAS IVESTER, Chairman of the Board, Chief
Executive Officer and a Director of the Company, JAMES E.
CHESTNUT, Senior Vice President and Chief Financial Officer
of the Company, JOSEPH R. GLADDEN, JR., Senior Vice President
and General Counsel of the Company, SUSAN E. SHAW, Secretary
of the Company, and CAROL C. HAYES, Assistant Secretary of
the Company, or any one of them, my true and lawful attorneys-
in-fact for me and in my name for the purpose of executing on
my behalf in any and all capacities the Company's Annual
Report for the year ended December 31, 1997 on Form 10-K, or
any amendment or supplement thereto, and causing such Annual
Report or any such amendment or supplement to be filed with
the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this
19th day of February 1998.
/s/James B. Williams
Director
The Coca-Cola Company
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE FINANCIAL STATEMENTS OF THE COCA-COLA COMPANY FOR THE YEAR
ENDED DECEMBER 31, 1995, AS SET FORTH IN ITS FORM 10-K FOR SUCH YEAR AND FOR THE
YEARS ENDED DECEMBER 31, 1996 AND DECEMBER 31, 1997, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995<F1>
<CASH> 1,167
<SECURITIES> 148
<RECEIVABLES> 1,729
<ALLOWANCES> 34
<INVENTORY> 1,117
<CURRENT-ASSETS> 5,450
<PP&E> 6,657
<DEPRECIATION> 2,321
<TOTAL-ASSETS> 15,041
<CURRENT-LIABILITIES> 7,348
<BONDS> 1,141
0
0
<COMMON> 856
<OTHER-SE> 4,536
<TOTAL-LIABILITY-AND-EQUITY> 15,041
<SALES> 18,127
<TOTAL-REVENUES> 18,127
<CGS> 6,940
<TOTAL-COSTS> 6,940
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 272
<INCOME-PRETAX> 4,328
<INCOME-TAX> 1,342
<INCOME-CONTINUING> 2,986
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,986
<EPS-PRIMARY> 1.18
<EPS-DILUTED> 1.17
<FN>
<F1>RESTATEMENT REFLECTED HEREIN IS THE RESULT OF RECLASSIFICATIONS TO PRIOR
PERIODS' FINANCIAL STATEMENTS TO CONFORM TO THE CURRENT PERIOD PRESENTATION.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE FINANCIAL STATEMENTS OF THE COCA-COLA COMPANY FOR THE YEAR
ENDED DECEMBER 31, 1996, AS SET FORTH IN ITS FORM 10-K FOR SUCH YEAR AND FOR THE
YEAR ENDED DECEMBER 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996<F1>
<CASH> 1,433
<SECURITIES> 225
<RECEIVABLES> 1,671
<ALLOWANCES> 30
<INVENTORY> 952
<CURRENT-ASSETS> 5,910
<PP&E> 5,581
<DEPRECIATION> 2,031
<TOTAL-ASSETS> 16,161
<CURRENT-LIABILITIES> 7,406
<BONDS> 1,116
0
0
<COMMON> 858
<OTHER-SE> 5,298
<TOTAL-LIABILITY-AND-EQUITY> 16,161
<SALES> 18,673
<TOTAL-REVENUES> 18,673
<CGS> 6,738
<TOTAL-COSTS> 6,738
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 286
<INCOME-PRETAX> 4,596
<INCOME-TAX> 1,104
<INCOME-CONTINUING> 3,492
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,492
<EPS-PRIMARY> 1.40<F2>
<EPS-DILUTED> 1.38<F2>
<FN>
<F1>RESTATEMENT REFLECTED HEREIN IS THE RESULT OF RECLASSIFICATIONS TO PRIOR
PERIODS' FINANCIAL STATEMENTS TO CONFORM TO THE CURRENT PERIOD PRESENTATION.
<F2>A TWO-FOR-ONE STOCK SPLIT WITH RESPECT TO THE COMPANY'S COMMON STOCK,
$.25 PAR VALUE PER SHARE, WAS EFFECTIVE ON MAY 1, 1996. FINANCIAL DATA
SCHEDULES FOR PRIOR YEARS HAVE NOT BEEN RESTATED FOR THIS RECAPITALIZATION.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE FINANCIAL STATEMENTS OF THE COCA-COLA COMPANY FOR
THE YEAR ENDED DECEMBER 31, 1997, AS SET FORTH IN ITS FORM 10-K FOR
SUCH YEAR, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,737
<SECURITIES> 106
<RECEIVABLES> 1,662
<ALLOWANCES> 23
<INVENTORY> 959
<CURRENT-ASSETS> 5,969
<PP&E> 5,771
<DEPRECIATION> 2,028
<TOTAL-ASSETS> 16,940
<CURRENT-LIABILITIES> 7,379
<BONDS> 801
0
0
<COMMON> 861
<OTHER-SE> 6,450
<TOTAL-LIABILITY-AND-EQUITY> 16,940
<SALES> 18,868
<TOTAL-REVENUES> 18,868
<CGS> 6,015
<TOTAL-COSTS> 6,015
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 258
<INCOME-PRETAX> 6,055
<INCOME-TAX> 1,926
<INCOME-CONTINUING> 4,129
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,129
<EPS-PRIMARY> 1.67
<EPS-DILUTED> 1.64
<PAGE>
</TABLE>
EXHIBIT 99.1
CAUTIONARY STATEMENT RELATIVE TO FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 (the
Act) provides a safe harbor for forward-looking statements
made by or on behalf of the Company. The Company and its
representatives may from time to time make written or verbal
forward-looking statements, including statements contained
in the Company's filings with the Securities and Exchange
Commission and in its reports to share owners. All
statements which address operating performance, events or
developments that the Company expects or anticipates will
occur in the future, including statements relating to volume
growth, share of sales and earnings per share growth or
statements expressing general optimism about future
operating results, are forward-looking statements within the
meaning of the Act. The forward-looking statements are and
will be based on management's then current views and
assumptions regarding future events and operating
performance.
The following are some of the factors that could cause
actual results to differ materially from estimates contained
in the Company's forward-looking statements:
- --The ability to generate sufficient cash flows to support
capital expansion plans, share repurchase programs and
general operating activities.
- --Competitive product and pricing pressures and the ability
to gain or maintain share of sales in the global market
as a result of actions by competitors. While the Company
believes its opportunities for sustained, profitable
growth are considerable, unanticipated actions of
competitors could impact its earnings, share of sales and
volume growth.
- --Changes in laws and regulations, including changes in
accounting standards, taxation requirements (including
tax rate changes, new tax laws and revised tax law
interpretations) and environmental laws in domestic or
foreign jurisdictions.
- --Fluctuations in the cost and availability of raw
materials and the ability to maintain favorable supplier
arrangements and relationships.
- --The ability to achieve earnings forecasts, which are
generated based on projected volumes and sales of many
product types, some of which are more profitable than
others. There can be no assurance that the Company will
achieve the projected level or mix of product sales.
- --Interest rate fluctuations and other capital market
conditions, including foreign currency rate fluctuations.
Most of the Company's exposures to capital markets,
including interest and foreign currency, are managed on a
consolidated basis, which
<PAGE>
allows it to net certain exposures and, thus, take
advantage of any natural offsets. The Company uses
derivative financial instruments to reduce its net
exposure to financial risks. There can be no assurance,
however, that the Company's financial risk management
program will be successful in reducing foreign currency
exposures.
- --Economic and political conditions in international
markets, including civil unrest, governmental changes and
restrictions on the ability to transfer capital across
borders.
- --The ability to penetrate developing and emerging markets,
which also depends on economic and political conditions,
and how well the Company is able to acquire or form
strategic business alliances with local bottlers and make
necessary infrastructure enhancements to production
facilities, distribution networks, sales equipment and
technology. Moreover, the supply of products in
developing markets must match the customers' demand for
those products, and due to product price and cultural
differences, there can be no assurance of product
acceptance in any particular market.
- --The effectiveness of the Company's advertising, marketing
and promotional programs.
- --The uncertainties of litigation, as well as other risks
and uncertainties detailed from time to time in the
Company's Securities and Exchange Commission filings.
- --Adverse weather conditions, which could reduce demand for
Company products.
- --The Company's ability and its customers' and suppliers'
ability to replace, modify or upgrade computer programs
in ways that adequately address the Year 2000 issue.
The foregoing list of important factors is not exclusive.
2
