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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, 1999
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
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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 21, 2000 (BASED ON THE CLOSING SALE PRICE OF THE REGISTRANT'S COMMON
STOCK AS REPORTED ON THE NEW YORK STOCK EXCHANGE ON FEBRUARY 18, 2000) WAS
$110,590,808,060.
THE NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK AS OF FEBRUARY
21, 2000, WAS 2,472,450,605.
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE COMPANY'S ANNUAL REPORT TO SHARE OWNERS FOR THE YEAR ENDED
DECEMBER 31, 1999, 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 19, 2000, ARE INCORPORATED BY REFERENCE IN PART III.
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PART I
ITEM 1. BUSINESS
The Coca-Cola Company (together with its subsidiaries, the "Company") 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 beverage
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 markets and distributes 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 more than 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.
During the three years ended December 31, 1999, the Company's operating
structure included the following operating segments: the North America Group
(including The Minute Maid Company); the Africa Group; the Greater Europe Group;
the Latin America Group; the Middle & Far East Group; and Corporate. The North
America Group includes the United States and Canada. Effective January 1, 2000,
two of the Company's operating segments were renamed and geographically
reconfigured. The Middle & Far East Group was renamed the Asia Pacific Group,
while the Africa Group became known as the Africa and Middle East Group. At the
same time, the Middle East & North Africa Division (comprising 22 countries in
the Middle East) ceased to be part of the Asia Pacific Group and became part of
the expanded Africa and Middle East Group.
Except to the extent that differences between operating segments are
material to an understanding of the Company's business taken as a whole, the
description of the Company's business in this report is presented on a
consolidated basis.
Of the Company's consolidated net operating revenues and operating income
for each of the past three years, the percentage represented by each operating
segment (excluding Corporate) is as follows:
North Greater Latin Middle &
America Africa Europe America Far East
------- ------ ------- ------- --------
Net Operating Revenues
1999 38% 3% 23% 10% 26%
1998 37% 3% 26% 12% 22%
1997 35% 3% 29% 11% 22%
Operating Income
1999 32% 4% 23% 18% 23%
1998 25% 4% 29% 18% 24%
1997 22% 3% 31% 19% 25%
For additional financial information about the Company's operating segments and
geographic areas, see Notes 1, 14 and 16 to the Consolidated Financial
Statements, set forth on pages 49-50, 59-60 and 60-62, respectively, of the
Company's Annual Report to Share Owners for the year ended December 31, 1999,
incorporated herein by reference.
<PAGE>
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 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
business partners that includes certain Coca-Cola bottlers, juice and
juice-drink products are sold by the Company to retailers and wholesalers in the
United States and numerous other countries.
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, Dasani, Lift, Thums Up, Hit and other products developed for
specific countries, including Georgia brand ready-to-drink coffees, and numerous
other brands. In many countries (excluding the United States, among others) the
Company's beverage products also include Schweppes, Canada Dry, Dr Pepper and
Crush. 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 1999, concentrates and syrups for beverages bearing the trademark
"Coca-Cola" or including the trademark "Coke" accounted for approximately 63% of
the Company's total gallon sales (1).
In 1999, gallon sales in the United States ("U.S. gallon sales")
represented approximately 30% of the Company's worldwide gallon sales. In 1999,
the Company's principal markets outside the United States, based on
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(1) The Company measures sales volume in two ways: (1) gallon sales and (2)
unit cases of finished products. "Gallon sales" represents the primary
business of the Company and means the sum of (a) the volume of concentrates
(converted to their equivalents in gallons of syrup) and syrups sold by the
Company to its bottling partners or customers directly or through wholesalers
and distributors, and (b) the gallon sales equivalent of the juice and juice-
drink products sold by The Minute Maid Company. Historically, Company gallon
sales data excluded item (b) above; however, effective with this report, all
historical gallon sales data in this report reflects the new definition set
forth above. Most of the Company's revenues are based on this measure of
"wholesale" activity. The Company also measures volume in unit cases. 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 means the sum of (i) the number of unit
cases sold by the Coca-Cola bottling system and by the Company to customers,
including fountain syrups sold by the Company to customers directly or through
wholesalers or distributors, and (ii) the volume of juice and juice-drink
products (expressed in equivalent unit cases) sold by The Minute Maid Company.
Item (i) above primarily includes products reported as gallon sales and other
key products owned by Coca-Cola bottling system bottlers. Historically,
Company unit case volume data excluded item (ii) above; however, effective
with this report, all historical unit case volume data in this report reflects
the new definition set forth above. The Company believes unit case volume more
accurately measures the underlying strength of its business system because it
measures trends at the retail level.
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gallon sales, were Mexico, Brazil, Japan and Germany, which together
accounted for approximately 25% of the Company's worldwide gallon sales.
Approximately 59% of the Company's U.S. gallon sales for 1999 was
attributable to sales of beverage concentrates and syrups to approximately 89
authorized bottler ownership groups in approximately 397 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 immediate consumption.
Approximately 33% of 1999 U.S. gallon sales was attributable to fountain syrups
sold to fountain retailers and to approximately 589 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. The remaining approximately 8% of 1999 U.S. gallon
sales was attributable to juice and juice-drink products sold by The Minute Maid
Company. Coca-Cola Enterprises Inc. ("Coca-Cola Enterprises") and its bottling
subsidiaries and divisions accounted for approximately 48% of the Company's U.S.
gallon sales in 1999. At February 15, 2000 the Company held an ownership
interest of approximately 40% 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 provide promotional and marketing services and/or
funds and consultation to its bottlers and to fountain and bottle/can retailers,
usually but not always on a discretionary basis. Also on a discretionary basis,
in most cases, 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 certain 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 Company-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 comprehensive beverage production rights to the bottlers. In such
instances, the Company or its designee typically sells canned (or in some cases
bottled) Company Trademark Beverages to the bottlers for sale and distribution
throughout the designated territory under distribution agreements, often on a
non-exclusive basis. A majority of the Bottler's Agreements in
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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 (but not always) 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 Coca-Cola and other
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 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 589 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 pursuant to a non-exclusive 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 81% of the Company's total United States gallon sales for bottled
and canned beverages, excluding juice and juice-drink products of The Minute
Maid Company, ("U.S. bottle/can gallon sales") in 1999. 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 sales in
1999, 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 18% of U.S.
bottle/can gallon sales in 1999 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 maintains 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
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noncontrolling ownership interest; and (3) bottlers in which the Company has
invested and has a controlling ownership interest. In 1999, independently owned
bottling operations produced and distributed approximately 27% of the Company's
worldwide unit case volume; cost or equity method investee bottlers in which the
Company owns a noncontrolling ownership interest produced and distributed
approximately 58% of such worldwide unit case volume; and controlled and
consolidated bottling and fountain operations including The Minute Maid Company
produced and distributed approximately 15% 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 are intended to result in increases in unit case
volume, net revenues and profits at the bottler level, which in turn generate
increased gallon sales 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.
Historically, in certain situations, the Company has viewed it as advantageous
to acquire a controlling interest in a bottling operation. Owning such a
controlling interest has allowed the Company to compensate for limited local
resources and has enabled the Company to help focus the bottler's sales and
marketing programs and assist in the development of the bottler's business and
information systems and the establishment of appropriate capital structures. In
July 1999, the Company purchased from Fraser and Neave Limited its 75% ownership
interest in F & N Coca-Cola Pte Limited ("F&NCC") in exchange for approximately
57 million shares of Coca-Cola Amatil Limited ("Coca-Cola Amatil") stock and the
assumption of debt, thus giving the Company 100% ownership in F&NCC. F&NCC holds
a majority ownership interest in bottling operations in Brunei, Cambodia, Nepal,
Pakistan, Sri Lanka, Singapore and Vietnam. Also in 1999, as part of the
Company's strategy to achieve an integrated bottling system in India, the
Company purchased 12 independent Indian bottling operations, bringing the total
number purchased by the Company since January 1997 to 31.
In line with its long-term bottling strategy, the Company periodically
considers options for reducing its ownership interest in a bottler. One such
option 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 bottling operation to one of the Company's
equity investee bottlers. In both of these situations, the Company continues
participating in the bottler's results of operations through its share of the
equity investee's earnings or losses.
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 1999 the Company increased its
equity interest in Embotelladora Arica S.A., a bottler headquartered in Chile,
from approximately 17% to approximately 45%.
The Company views certain bottling operations in which the Company has a
noncontrolling ownership interest as key or anchor bottlers due to their level
of responsibility and performance. The strong commitment of both key and anchor
bottlers to their own profitable volume growth helps the Company meet its
strategic goals and furthers the interests of its worldwide production,
distribution and marketing systems. These bottlers tend to be large and
geographically diverse, with strong financial resources for long-term investment
and strong management resources. These bottlers give the Company strategic
business partners on every major continent.
In January 1999, two Japanese bottlers, Kita Kyushu Coca-Cola Bottling
Company, Ltd. and Sanyo Coca-Cola Bottling Company, Ltd., announced plans for a
merger to become a new, publicly traded bottling company, Coca-Cola West Japan
Company, Ltd. The transaction, which was completed in July 1999 and was valued
at approximately $2.2 billion, created Japan's first anchor bottler. As of
December 31, 1999, the Company had an ownership interest of approximately 5% in
the new anchor bottler.
The Company has substantial equity positions in approximately 50
unconsolidated bottling, canning and distribution operations for its products
worldwide, including bottlers representing approximately 55% of the Company's
total U.S. unit case volume in 1999. Of these, significant investee bottlers
accounted for by the equity method include the following:
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COCA-COLA ENTERPRISES INC. The Company's ownership interest in Coca-Cola
Enterprises was approximately 40% at December 31, 1999. Coca-Cola Enterprises is
the world's largest bottler of the Company's beverage products. In 1999, net
sales of concentrates and syrups by the Company to Coca-Cola Enterprises were
approximately $3.3 billion, or approximately 17% 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 46 states, the
District of Columbia, the U.S. Virgin Islands, Canada, Great Britain,
continental France, the Netherlands, Luxembourg, Belgium and Monaco) contain
approximately 69% of the United States population, 96% of the population of
Canada, and 100% of the populations of Great Britain, continental France, the
Netherlands, Luxembourg, Belgium and Monaco.
Excluding products in post-mix (fountain) form, in 1999, approximately 62%
of the unit case volume of Coca-Cola Enterprises was Coca-Cola Trademark
Beverages, approximately 29% of its unit case volume was other Company Trademark
Beverages, and approximately 9% of its unit case volume was beverage products of
other companies. Coca-Cola Enterprises' net sales of beverage products were
approximately $14.4 billion in 1999.
COCA-COLA AMATIL LIMITED. At December 31, 1999, the Company's ownership
interest in Coca-Cola Amatil was approximately 37%. 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, Papua New Guinea, Indonesia, the Philippines and South Korea.
Net concentrate sales by the Company to Coca-Cola Amatil were approximately
U.S.$431 million in 1999. 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, South Korea and the
Philippines, 83% of the population of Papua New Guinea and 97% of the population
of Indonesia.
In 1999, Coca-Cola Amatil's net sales of beverage products were
approximately U.S.$2.4 billion. In 1999, approximately 68% of the unit case
volume of Coca-Cola Amatil was Coca-Cola Trademark Beverages, approximately 22%
of its unit case volume was other Company Trademark Beverages, approximately 5%
of its unit case volume was beverage products of Coca-Cola Amatil and
approximately 5% of its unit case volume was beverage products of other
companies.
PANAMERICAN BEVERAGES, INC. ("PANAMCO"). At December 31, 1999, the Company
owned 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, Santos and Matto
Grosso do Sul, Brazil, central Guatemala, 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, 16% of the population of Brazil, 92% of the population of Colombia, 47%
of the population of Guatemala and 100% of the populations of Costa Rica,
Venezuela and Nicaragua.
In 1999, Panamco's net sales of beverage products were approximately
U.S.$2.4 billion. In 1999, approximately 52% of the unit case volume of Panamco
was Coca-Cola Trademark Beverages, approximately 24% of its unit case volume was
other Company Trademark Beverages and approximately 24% of its unit case volume
was beverage products of Panamco or other companies.
COCA-COLA FEMSA, S.A. DE C.V. ("COCA-COLA FEMSA"). At December 31, 1999,
the Company owned 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 Greater Buenos Aires, Argentina. Coca-Cola
FEMSA estimates that the territories in which it markets beverage products
contain approximately 24% of the population of Mexico and approximately 38%
of the population of Argentina.
In 1999, Coca-Cola FEMSA's net sales of beverage products were
approximately U.S.$1.5 billion. In 1999, approximately 76% of the unit case
volume of Coca-Cola FEMSA was Coca-Cola Trademark Beverages, approximately 23%
of its unit case volume was other Company Trademark Beverages, and approximately
1% of its unit case volume was beverage products of other companies.
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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.
OTHER DEVELOPMENTS
In July 1999, the Company completed the acquisition of Cadbury
Schweppes plc beverage brands in 155 countries for approximately $700 million.
These brands included Schweppes, Canada Dry, Dr Pepper, Crush and certain
regional brands. Among the countries excluded from this transaction were the
United States, South Africa, Norway, Switzerland and the European Union member
nations (other than the United Kingdom, Ireland and Greece). Also, ownership of
the brands in Poland, Hungary and the Czech and Slovak Republics will remain
with the seller for the foreseeable future. In September 1999, the Company
acquired Cadbury Schweppes beverage brands in New Zealand for approximately $20
million. Also in September 1999, in a separate transaction valued at
approximately $250 million, the Company acquired the carbonated soft drink
business of Cadbury Schweppes (South Africa) Limited in South Africa, Botswana,
Namibia, Lesotho and Swaziland. Company acquisitions of Cadbury Schweppes brands
are still pending in several countries, subject to certain conditions including
regulatory review.
In January 2000, the Company announced a major organizational
realignment that will put more responsibility, accountability and resources in
the hands of local business units of the Company located around the world. The
realignment will reduce the Company's workforce while transferring
responsibilities from corporate to revenue-generating operating units. Under the
realignment, approximately 6,000 positions worldwide, consisting of employees of
the Company, open positions and contract labor, will be eliminated. Of these
identified positions, approximately 3,300 are based within the United States and
approximately 2,700 are based outside of the United States. The entire reduction
will take place during calendar year 2000. Following the structural changes,
roles and responsibilities within the Company will be redefined. The Company's
corporate headquarters will retain responsibility for setting policy and
strategy for the Company as a whole, while the Company's revenue-generating
units generally will assume all other responsibilities.
SEASONALITY
Sales of ready-to-drink non-alcoholic beverages 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.
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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 Nutrinova Nutrition Specialties & Food Ingredients GmbH.
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.
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 a specific warning appear on any product
that contains a component listed by the State as having been found to cause
cancer or birth defects. The law exposes all food and beverage producers to the
possibility of having to provide warnings on their products because the law
recognizes no generally applicable quantitative thresholds below which a warning
is not required. Consequently, even trace amounts of listed components can
expose affected products to the prospect of warning labels. Products containing
listed substances that occur naturally in the product or that are contributed to
the product solely by a municipal water supply are generally exempt from the
warning requirement. While no Company beverage products are currently required
to display warnings under this law, the Company is unable to predict whether an
important component of a Company product might be added to the California list
in the future. The Company is also unable to predict whether or to what extent a
warning under this law would have an impact on costs or sales of Company
beverage products.
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Bottlers of the Company's beverage products presently offer
non-refillable, recyclable containers in all areas of the United States and
Canada. Some of these bottlers also offer refillable containers, which are also
recyclable. 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, 1999, the Company employed approximately 37,400
persons, up from approximately 28,600 at the end of 1998 primarily due to
Company acquisitions of bottling operations in India, Vietnam and Russia and
vending operations in Japan. Approximately 10,400 of these employees are located
in the United States. As previously disclosed in this report (see, "Business -
Other Developments"), the Company has announced an intention to reduce its
workforce during the Year 2000.
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.
ITEM 2. PROPERTIES
The Company's worldwide headquarters is located on a 35-acre office
complex in Atlanta, Georgia. The complex includes the approximately 621,000
square foot headquarters building, the approximately 870,000 square foot
Coca-Cola USA building and the approximately 264,000 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 278,000 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 has facilities for administrative operations,
manufacturing, processing, packaging, packing, storage and warehousing
throughout the United States.
The Company owns and operates 32 principal beverage concentrate and/or
syrup manufacturing plants located throughout the world. The Company currently
owns or holds a majority interest in 29 operations with 45 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 seven 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 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, for
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
9
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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 totaled approximately U.S. $302 million as of the
assessment date (based on exchange rates as of February 4, 2000) and accrue
interest from the assessment 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.
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-officio") on the
Federal Revenue Service's behalf to the Taxpayers Council in Brazilia. On
January 25, 2000, based on procedural grounds, the Taxpayers Council returned
the case to the Brazilian Federal Revenue Service for further action that must
occur before any appeal will be considered by the Taxpayers Council. Pending
further action by the Revenue Service, the assessments remain valid;
however, enforceability of the assessments remains suspended pending final
determination of the appeal by the Taxpayers Council.
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 proceeding 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.
ITEM X. EXECUTIVE OFFICERS OF THE COMPANY
The following are the executive officers of the Company:
DOUGLAS N. DAFT, 56, is Chief Executive Officer and Chairman of the
Board of Directors of the Company. In November 1984, Mr. Daft was
appointed President of the Central Pacific Division. In October 1987, he
was appointed Senior Vice President of the Pacific Group of the
International Business Sector. In December 1988, 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
President of the Middle and Far East Group in January 1995 and served in
that capacity until October 1999 when he was given expanded
responsibilities for the Middle and Far East Group, the Africa Group, the
Schweppes Beverages Division and the Japan Division. He was elected
President and Chief Operating Officer and a Director of the Company in
December 1999. Mr. Daft was elected to his current positions in February
2000.
JACK L. STAHL, 46, is President and Chief Operating Officer of the
Company. 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 President of the North
America Group in July 1994 and served in that capacity until October 1999
when he was given management responsibility for the North America Group,
the Latin America Group and The Minute Maid Company. He was elected
Executive Vice President in January 2000 and was elected to his current
positions in February 2000.
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JAMES E. CHESTNUT, 49, is Executive Vice President, Operations
Support 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 Senior
Vice President and Chief Financial Officer in July 1994 and was appointed
Senior Vice President, Operations Support in October 1999. Mr. Chestnut
was elected Executive Vice President in January 2000.
CHARLES S. FRENETTE, 47, is Executive Vice President of the Company
and in January 2000 was appointed President of the Greater Europe Group.
Mr. Frenette joined the Company in 1974. In 1983, he was appointed Vice
President of Coca-Cola USA. In 1986, he was appointed Senior Vice
President and General Manager of Coca-Cola USA Fountain. In 1992, he was
appointed Executive Vice President, Operations, of Coca-Cola USA. He was
elected Vice President of the Company in 1995 and was appointed President
of the Southern Africa Division in 1996. He was elected Senior Vice
President of the Company in April 1998 and became Chief Marketing Officer
in May 1998. Mr. Frenette was elected Executive Vice President in January
2000.
JOSEPH R. GLADDEN, JR., 57, is Executive 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 and
Executive Vice President in January 2000.
CARL WARE, 56, is Executive Vice President of the Company and in
January 2000 was appointed head of the Company's Global Public Affairs and
Administration division. 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. In January 1993 he was
appointed President of the Africa Group. Mr. Ware was elected Executive
Vice President in January 2000.
GARY P. FAYARD, 47, is Senior Vice President and Chief Financial
Officer of the Company. Mr. Fayard joined the Company in April 1994. In
July 1994, he was elected Vice President and Controller. Prior to
joining the Company, Mr. Fayard was a partner with Ernst & Young. Mr.
Fayard was elected to his current position in December 1999.
STEPHEN C. JONES, 44, is Senior Vice President and in January 2000
was appointed Chief Marketing Officer of the Company. Mr. Jones joined
Coca-Cola Canada in 1986 as Brand Manager for Sprite. In 1988, he joined
Coca-Cola USA as Brand Manager for diet Coke and Sprite. Mr. Jones was
named Marketing Manager for Coca-Cola Great Britain in 1990 and was
promoted to Regional Manager, Coca-Cola Great Britain in 1991 and to
Marketing Director, Coca-Cola Great Britain and Ireland Division in
1992. In 1994, he was appointed Senior Vice President, Consumer Marketing
for Coca-Cola (Japan) Co., Ltd. ("CCJC"), and was named Deputy Division
Manager and Executive Vice President of CCJC in 1997. He was appointed
President and Chief Executive Officer of The Minute Maid Company in
October 1999. Mr. Jones was elected to his current position in January
2000.
Mr. Daft is chairman and Messrs. Stahl, Chestnut, Frenette, Gladden and
Ware are members of the Company's Executive Committee. The Executive Committee
is responsible for setting policy and establishing strategic direction for the
Company.
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 31 through 41, "Selected Financial Data" for the years 1998 and 1999
on page 42, "Stock Prices" on page 65 and "Common Stock", "Stock Exchanges"
and "Dividends" under the heading "Share-Owner Information" on page 68 of the
Company's Annual Report to Share Owners for the year ended December 31, 1999
(the "Company's 1999 Annual Report to Share Owners"), are incorporated herein by
reference.
During the fiscal year ended December 31, 1999, no equity securities of the
Company were sold by the Company which were not registered under the Securities
Act of 1933, as amended.
ITEM 6. SELECTED FINANCIAL DATA
"Selected Financial Data" for the years 1995 through 1999, on pages
42 and 43 of the Company's 1999 Annual Report to Share Owners, 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 31 through 41 of the Company's 1999 Annual Report to Share Owners, is
incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
"Financial Risk Management" on pages 33 and 34 of the Company's 1999
Annual Report to Share Owners, is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the Company and its
subsidiaries, included in the Company's 1999 Annual Report to Share Owners, are
incorporated herein by reference:
Consolidated Balance Sheets -- December 31, 1999 and 1998.
Consolidated Statements of Income -- Years ended December 31, 1999,
1998 and 1997.
Consolidated Statements of Cash Flows -- Years ended December 31, 1999,
1998 and 1997.
Consolidated Statements of Share-Owners' Equity -- Years ended December
31, 1999, 1998 and 1997.
Notes to Consolidated Financial Statements.
Report of Independent Auditors.
"Quarterly Data (Unaudited)" on page 65 of the Company's 1999 Annual
Report to Share Owners, 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 Company, the subsection under the
heading "Election of Directors" entitled "Board of Directors" on pages 5
through 9 and under the heading "Section 16(a) Beneficial Ownership Reporting
Compliance" on page 12 of the Company's Proxy Statement for the Annual Meeting
of Share Owners to be held April 19, 2000 (the "Company's 2000 Proxy
Statement"), is incorporated herein by reference. See Item X in Part I hereof
for information regarding executive officers of the Company.
ITEM 11. EXECUTIVE COMPENSATION
The subsection under the heading "Election of Directors" entitled
"Information about Committees, Meetings and Compensation of Directors" on pages
13 and 14, the portion of the section entitled "Executive Compensation" set
forth on pages 16 through 23, the subsection entitled "Compensation
Committee Interlocks and Insider Participation" on page 30 and the subsection
entitled "Other Compensation Matters" on pages 30 and 31 of the Company's
2000 Proxy Statement, 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 10 through 12 and
"Principal Share Owners" on pages 12 and 13, and the subsection under the
heading "Certain Investee Companies" entitled "Ownership of Securities in the
Investee Companies" on pages 32 and 33 of the Company's 2000 Proxy
Statement, are incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The subsections under the heading "Election of Directors" entitled
"Information about Committees, Meetings and Compensation of Directors" and
"Certain Transactions and Relationships" on pages 13 through 15, the
subsection under the heading "Executive Compensation" entitled "Compensation
Committee Interlocks and Insider Participation" on page 30 and the section
under the heading "Certain Investee Companies" on pages 31 through 33 of the
Company's 2000 Proxy Statement, 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 Company's 1999 Annual
Report to Share Owners, are incorporated by reference in Part
II, Item 8:
Consolidated Balance Sheets -- December 31, 1999 and 1998.
Consolidated Statements of Income -- Years ended December 31,
1999, 1998 and 1997.
Consolidated Statements of Cash Flows -- Years ended December
31, 1999, 1998 and 1997.
Consolidated Statements of Share-Owners' Equity -- Years ended
December 31, 1999, 1998 and 1997.
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 regulations 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 Company, including Amendment
of Certificate of Incorporation, effective May 1, 1996 --
incorporated herein by reference to Exhibit 3 of the Company'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 Company, as amended and restated through
February 17, 2000.
4.1 The Company 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 Company and all
of its consolidated subsidiaries and unconsolidated
subsidiaries for which financial statements are required to
be filed with the Securities and Exchange Commission.
14
<PAGE>
EXHIBIT NO.
- ----------
10.1.1 The Key Executive Retirement Plan of the Company, as amended --
incorporated herein by reference to Exhibit 10.2 of the
Company's Form 10-K Annual Report for the year ended December
31, 1995.*
10.1.2 Third Amendment to the Key Executive Retirement Plan of the
Company, dated as of July 9, 1998.*
10.1.3 Fourth Amendment to the Key Executive Retirement Plan of the
Company, dated as of February 16, 1999.*
10.1.4 Fifth Amendment to the Key Executive Retirement Plan of the
Company, dated as of January 25, 2000.*
10.2 Supplemental Disability Plan of the Company, as amended
-- incorporated herein by reference to Exhibit 10.3 of the
Company's Form 10-K Annual Report for the year ended December
31, 1991.*
10.3 Annual Performance Incentive Plan of the Company, as amended
-- incorporated herein by reference to Exhibit 10.4 of the
Company's Form 10-K Annual Report for the year ended December
31, 1995.*
10.4 1987 Stock Option Plan of the Company, as amended and restated
through April 20, 1999 -- incorporated herein by reference to
Exhibit 10.1 of the Company's Form 10-Q Quarterly Report for the
quarter ended March 31, 1999*
10.5 1991 Stock Option Plan of the Company, as amended and restated
through April 20, 1999 -- incorporated herein by reference to
Exhibit 10.2 of the Company's Form 10-Q Quarterly Report for the
quarter ended March 31, 1999.*
10.6 1999 Stock Option Plan of the Company-- incorporated herein
by reference to Exhibit 10.3 of the Company's Form 10-Q
Quarterly Report for the quarter ended March 31, 1999.*
10.7 1983 Restricted Stock Award Plan of the Company, as amended
through February 17, 2000.*
10.8 1989 Restricted Stock Award Plan of the Company, as amended
through February 17, 2000.*
10.9.1 Compensation Deferral & Investment Program of the Company, as
amended, including Amendment Number Four dated November 28, 1995
-- incorporated herein by reference to Exhibit 10.13 of the
Company's Form 10-K Annual Report for the year ended December
31, 1995.*
10.9.2 Amendment Number 5 to the Compensation Deferral & Investment
Program of the Company, effective as of January 1, 1998 --
incorporated herein by reference to Exhibit 10.8.2 of the
Company's Form 10-K Annual Report for the year ended December
31, 1997.*
10.10 Special Medical Insurance Plan of the Company, as amended --
incorporated herein by reference to Exhibit 10.16 of the
Company's Form 10-K Annual Report for the year ended December
31, 1995.*
10.11.1 Supplemental Benefit Plan of the Company, as amended --
incorporated herein by reference to Exhibit 10.17 of the
Company's Form 10-K Annual Report for the year ended December
31, 1993.*
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<PAGE>
EXHIBIT NO.
- ----------
10.11.2 Amendment Number Five to the Supplemental Benefit Plan of the
Company -- incorporated herein by reference to Exhibit 10.17.2
of the Company's Form 10-K Annual Report for the year ended
December 31, 1996.*
10.11.3 Amendment Number Six to the Supplemental Benefit Plan of the
Company, dated as of July 1, 1998.*
10.11.4 Amendment Number Seven to the Supplemental Benefit Plan of the
Company, dated January 24, 2000.*
10.11.5 Amendment Number Eight to the Supplemental Benefit Plan of the
Company, dated January 25, 2000.*
10.12 Retirement Plan for the Board of Directors of the Company, as
amended-- incorporated herein by reference to Exhibit 10.22
of the Company's Form 10-K Annual Report for the year ended
December 31, 1991.*
10.13 Deferred Compensation Plan for Non-Employee Directors of the
Company, adopted as of October 16, 1997 -- incorporated herein
by reference to Exhibit 10.12 of the Company's Form 10-K Annual
Report for the year ended December 31, 1997.*
10.14 Deferred Compensation Agreement for Officers or Key Executives
of the Company -- incorporated herein by reference to Exhibit
10.20 of the Company's Form 10-K Annual Report for the year
ended December 31, 1993.*
10.15 Long Term Performance Incentive Plan of the Company, as amended
and restated effective April 21, 1999 -- incorporated herein by
reference to Exhibit 10.4 of the Company's Form 10-Q Quarterly
Report for the quarter ended March 31, 1999.*
10.16 Executive Performance Incentive Plan of the Company, as amended
and restated effective April 21, 1999 -- incorporated herein by
reference to Exhibit 10.5 of the Company's Form 10-Q Quarterly
Report for the quarter ended March 31, 1999.*
10.17.1 Letter Agreement, dated December 6, 1999, between the Registrant
and M. Douglas Ivester.*
10.17.2 Letter Agreement, dated December 15, 1999, between the
Registrant and M. Douglas Ivester.*
10.17.3 Letter Agreement, dated February 17, 2000, between the
Registrant and M. Douglas Ivester.*
10.18 Group Long-Term Performance Incentive Plan of the Company, as
amended and restated effective February 17, 2000.*
10.19 Form of United States Master Bottle Contract, as amended,
between the Company 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).
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<PAGE>
EXHIBIT NO.
- ----------
12.1 Computation of Ratios of Earnings to Fixed Charges for the years
ended December 31, 1999, 1998, 1997, 1996 and 1995.
13.1 Portions of the Company's 1999 Annual Report to Share Owners
expressly incorporated by reference herein: Pages 31 through
63, 65, 68 and 69 (definitions of "Dividend Payout Ratio,"
"Economic Profit," "Free Cash Flow," "Interest Coverage Ratio,"
"Net Capital," "Net Debt," "Return on Capital," "Return on
Common Equity," "Total Capital" and "Total Market Value of
Common Stock").
21.1 List of subsidiaries of the Company as of December 31, 1999.
23.1 Consent of Independent Auditors.
24.1 Powers of Attorney of Officers and Directors signing this
report.
27.1 Financial Data Schedule for the year ended December 31, 1999,
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.
During the fourth quarter of 1999, the Company filed a report on Form 8-K
on December 6, 1999.
Item 5. Other Events -- On December 5, 1999, the Company's Board of
Directors accepted the decision of M. Douglas Ivester, the
Company's Chairman of the Board and Chief Executive Officer,
to retire in April 2000; elected Douglas N. Daft President and
Chief Operating Officer, effective immediately; and indicated
that it intends to elect Mr. Daft Chairman of the Board and
Chief Executive Officer upon Mr. Ivester's retirement in
April.
Item 7. Financial Statements and Exhibits -- Exhibit 99: Press
release of the Company issued December 6, 1999.
Also during the fourth quarter of 1999, the Company filed a report on Form
8-K on December 21, 1999.
Item 5. Other Events -- On December 21, 1999, Standard & Poor's
lowered its ratings for The Coca-Cola Company, among other
entities.
Item 7. Financial Statements and Exhibits -- Exhibit 99: Press
release of Standard & Poor's issued December 21, 1999.
(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.
17
<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/ DOUGLAS N. DAFT
--------------------
DOUGLAS N. DAFT
Chairman, Board of Directors, Chief
Executive Officer and a Director
Date: March 9, 2000
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/ DOUGLAS N. DAFT *
- -------------------------------------------- ----------------------------
DOUGLAS N. DAFT CATHLEEN P. BLACK
Chairman, Board of Directors, Chief Director
Executive Officer and a Director
(Principal Executive Officer)
March 9, 2000 March 9, 2000
/s/ GARY P. FAYARD *
- -------------------------------------------- ----------------------------
GARY P. FAYARD WARREN E. BUFFETT
Senior Vice President and Chief Financial Officer Director
(Principal Financial Officer)
March 9, 2000 March 9, 2000
/s/ CONNIE D. MCDANIEL *
- -------------------------------------------- ---------------------------
CONNIE D. MCDANIEL SUSAN B. KING
Vice President and Controller Director
(Principal Accounting Officer)
March 9, 2000 March 9, 2000
* *
- ------------------------------- ---------------------------
HERBERT A. ALLEN DONALD F. MCHENRY
Director Director
March 9, 2000 March 9, 2000
* *
- ------------------------------- ---------------------------
RONALD W. ALLEN SAM NUNN
Director Director
March 9, 2000 March 9, 2000
18
<PAGE>
* *
- ------------------------------- --------------------------
PAUL F. OREFFICE PETER V. UEBERROTH
Director Director
March 9, 2000 March 9, 2000
* *
- ------------------------------- ---------------------------
JAMES D. ROBINSON III JAMES B. WILLIAMS
Director Director
March 9, 2000 March 9, 2000
* By: /s/ CAROL C. HAYES
- -------------------------------
CAROL C. HAYES
Attorney-in-fact
March 9, 2000
19
<PAGE>
ANNUAL REPORT ON FORM 10-K
ITEM 14(D)
FINANCIAL STATEMENT SCHEDULE
YEAR ENDED DECEMBER 31, 1999
THE COCA-COLA COMPANY AND SUBSIDIARIES
<PAGE>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
THE COCA-COLA COMPANY AND SUBSIDIARIES
YEAR ENDED DECEMBER 31, 1999
(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......... $ 10 $ 13 $ 5 $ 2 $ 26
Miscellaneous investments and
other assets.................... 275 43 88 84 322
Deferred tax assets............... 18 443 - 18 443
----- --- ---- -- ---
$ 303 $499 $93 $104 $ 791
===== === == === ====
</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........ $ 3 $ 2 $ - $ 5
Write-off of impaired assets................ - 81 - 81
Other transactions.......................... (1) 1 18 18
---- ---- --- --
$ 2 $ 84 $18 $ 104
=== == == ===
</TABLE>
F-1
<PAGE>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
THE COCA-COLA COMPANY AND SUBSIDIARIES
YEAR ENDED DECEMBER 31, 1998
(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......... $ 23 $ 3 $ - $ 16 $ 10
Miscellaneous investments and
other assets.................... 301 76 - 102 275
Deferred tax assets............... 21 - - 3 18
----- --- --- --- ---
$ 345 $ 79 $ - $121 $303
===== === ==== === ===
</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 $ 23 $ - $ 29
Write-off of impaired assets................ - 70 - 70
Other transactions.......................... 10 9 3 22
---- ---- --- ----
$ 16 $102 $ 3 $121
==== ==== ==== ====
</TABLE>
F-2
<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-3
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT NO. DESCRIPTION
- ---------- -----------
3.1 Certificate of Incorporation of the Company, including Amendment
of Certificate of Incorporation, effective May 1, 1996 --
incorporated herein by reference to Exhibit 3 of the Company'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 Company, as amended and restated through
February 17, 2000.
4.1 The Company 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 Company and all
of its consolidated subsidiaries and unconsolidated
subsidiaries for which financial statements are required to
be filed with the Securities and Exchange Commission.
10.1.1 The Key Executive Retirement Plan of the Company, as amended --
incorporated herein by reference to Exhibit 10.2 of the
Company's Form 10-K Annual Report for the year ended December
31, 1995.*
10.1.2 Third Amendment to the Key Executive Retirement Plan of the
Company, dated as of July 9, 1998.*
10.1.3 Fourth Amendment to the Key Executive Retirement Plan of the
Company, dated as of February 16, 1999.*
10.1.4 Fifth Amendment to the Key Executive Retirement Plan of the
Company, dated as of January 25, 2000.*
10.2 Supplemental Disability Plan of the Company, as amended
-- incorporated herein by reference to Exhibit 10.3 of the
Company's Form 10-K Annual Report for the year ended December
31, 1991.*
10.3 Annual Performance Incentive Plan of the Company, as amended
-- incorporated herein by reference to Exhibit 10.4 of the
Company's Form 10-K Annual Report for the year ended December
31, 1995.*
10.4 1987 Stock Option Plan of the Company, as amended and restated
through April 20, 1999 -- incorporated herein by reference to
Exhibit 10.1 of the Company's Form 10-Q Quarterly Report for the
quarter ended March 31, 1999*
10.5 1991 Stock Option Plan of the Company, as amended and restated
through April 20, 1999 -- incorporated herein by reference to
Exhibit 10.2 of the Company's Form 10-Q Quarterly Report for the
quarter ended March 31, 1999.*
10.6 1999 Stock Option Plan of the Company-- incorporated herein
by reference to Exhibit 10.3 of the Company's Form 10-Q
Quarterly Report for the quarter ended March 31, 1999.*
10.7 1983 Restricted Stock Award Plan of the Company, as amended
through February 17, 2000.*
10.8 1989 Restricted Stock Award Plan of the Company, as amended
through February 17, 2000.*
<PAGE>
EXHIBIT NO. DESCRIPTION
- ---------- -----------
10.9.1 Compensation Deferral & Investment Program of the Company, as
amended, including Amendment Number Four dated November 28, 1995
-- incorporated herein by reference to Exhibit 10.13 of the
Company's Form 10-K Annual Report for the year ended December
31, 1995.*
10.9.2 Amendment Number 5 to the Compensation Deferral & Investment
Program of the Company, effective as of January 1, 1998--
incorporated herein by reference to Exhibit 10.8.2 of the
Company's Form 10-K Annual Report for the year ended December
31, 1997.*
10.10 Special Medical Insurance Plan of the Company, as amended--
incorporated herein by reference to Exhibit 10.16 of the
Company's Form 10-K Annual Report for the year ended December
31, 1995.*
10.11.1 Supplemental Benefit Plan of the Company, as amended --
incorporated herein by reference to Exhibit 10.17 of the
Company's Form 10-K Annual Report for the year ended December
31, 1993.*
10.11.2 Amendment Number Five to the Supplemental Benefit Plan of the
Company -- incorporated herein by reference to Exhibit 10.17.2
of the Company's Form 10-K Annual Report for the year ended
December 31, 1996.*
10.11.3 Amendment Number Six to the Supplemental Benefit Plan of the
Company, dated as of July 1, 1998.*
10.11.4 Amendment Number Seven to the Supplemental Benefit Plan of the
Company, dated January 24, 2000.*
10.11.5 Amendment Number Eight to the Supplemental Benefit Plan of the
Company, dated January 25, 2000.*
10.12 Retirement Plan for the Board of Directors of the Company, as
amended-- incorporated herein by reference to Exhibit 10.22
of the Company's Form 10-K Annual Report for the year ended
December 31, 1991.*
10.13 Deferred Compensation Plan for Non-Employee Directors of the
Company, adopted as of October 16, 1997 -- incorporated herein
by reference to Exhibit 10.12 of the Company's Form 10-K Annual
Report for the year ended December 31, 1997.*
10.14 Deferred Compensation Agreement for Officers or Key Executives
of the Company -- incorporated herein by reference to Exhibit
10.20 of the Company's Form 10-K Annual Report for the year
ended December 31, 1993.*
10.15 Long Term Performance Incentive Plan of the Company, as amended
and restated effective April 21, 1999 -- incorporated herein by
reference to Exhibit 10.4 of the Company's Form 10-Q Quarterly
Report for the quarter ended March 31, 1999.*
10.16 Executive Performance Incentive Plan of the Company, as amended
and restated effective April 21, 1999 -- incorporated herein by
reference to Exhibit 10.5 of the Company's Form 10-Q Quarterly
Report for the quarter ended March 31, 1999.*
10.17.1 Letter Agreement, dated December 6, 1999, between the Registrant
and M. Douglas Ivester.*
10.17.2 Letter Agreement, dated December 15, 1999, between the
Registrant and M. Douglas Ivester.*
10.17.3 Letter Agreement, dated February 17, 2000, between the
Registrant and M. Douglas Ivester.*
2
<PAGE>
EXHIBIT NO. DESCRIPTION
- ---------- -----------
10.18 Group Long-Term Performance Incentive Plan of the Company, as
amended and restated effective February 17, 2000.*
10.19 Form of United States Master Bottle Contract, as amended,
between the Company 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).
12.1 Computation of Ratios of Earnings to Fixed Charges for the years
ended December 31, 1999, 1998, 1997, 1996 and 1995.
13.1 Portions of the Company's 1999 Annual Report to Share Owners
expressly incorporated by reference herein: Pages 31 through
63, 65, 68 and 69 (definitions of "Dividend Payout Ratio,"
"Economic Profit," "Free Cash Flow," "Interest Coverage Ratio,"
"Net Capital," "Net Debt," "Return on Capital," "Return on
Common Equity," "Total Capital" and "Total Market Value of
Common Stock").
21.1 List of subsidiaries of the Company as of December 31, 1999.
23.1 Consent of Independent Auditors.
24.1 Powers of Attorney of Officers and Directors signing this
report.
27.1 Financial Data Schedule for the year ended December 31, 1999,
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.
3
<PAGE>
EXHIBIT 3.2
BY-LAWS
OF
THE COCA-COLA COMPANY
AS AMENDED AND RESTATED THROUGH FEBRUARY 17, 2000
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
Page 1
<PAGE>
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.
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.
Page 2
<PAGE>
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.
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
Page 3
<PAGE>
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.
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 74 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
Page 4
<PAGE>
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.
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
Page 5
<PAGE>
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 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
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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 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
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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.
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
Page 8
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 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.
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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. 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,
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<PAGE>
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.
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
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<PAGE>
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.
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
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<PAGE>
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.
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.
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<PAGE>
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.
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
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<PAGE>
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.
Page 15
EXHIBIT 10.1.2
THIRD AMENDMENT TO
THE COCA-COLA COMPANY
KEY EXECUTIVE RETIREMENT PLAN
AS AMENDED AND RESTATED MARCH 11, 1991,
EFFECTIVE JANUARY 1, 1990
WHEREAS, pursuant to Section 7.5 of The Coca-Cola Company Key
Executive Retirement Plan, as amended and restated effective
January 1, 1990 by indenture dated March 11, 1991, which was last
amended by the Second Amendment (the "Plan"), the Key Executive
Retirement Plan Committee (the "Committee") has the authority to
amend the Plan; and
WHEREAS, the Chief Executive Officer ("CEO") of The Coca-Cola
Company (the "Company") has appointed the same members to the
Plan's Committee and to each committee serving as plan
administrator for eight other Company retirement plans, thereby
effectively consolidating administration of the plans under a
single committee; and
WHEREAS, the Company wishes to incorporate the concept of a
single administrative committee, henceforth to be known as the
Corporate Retirement Plan Administrative Committee, within the
terms of the relevant plans; and
WHEREAS, the Company wishes to transfer authority to appoint and
remove members of said committee from the CEO to the Vice
President of Human Resources; and
WHEREAS, by resolutions duly adopted, the Committee has approved
amendments to the Plan and eight other retirement plans in order
to reflect the renaming of the Committee and the change in the
person authorized to designate membership in the Committee,
subject to ratification of the amendments by the CEO;
NOW, THEREFORE, the Plan is hereby amended, effective July 1,
1998, in the following respects:
1. Sections 2.1(c) and 7.2 of the Plan shall be amended by
deleting the term "Chief Executive Officer" from all places
where the same appears and by substituting therefor "Vice
President of Human Resources."
2. Section 7.2 of the Plan shall be amended further by
deleting "Key Executive Retirement Plan Committee" from the
section heading and by replacing it with "Corporate Retirement
Plan Administrative Committee." In addition, the term "CEO"
shall be deleted wherever the same appears therein and "VPHR"
shall be inserted in lieu thereof.
Except as specifically amended hereby, the Plan shall remain in
full force and effect as prior to this Third Amendment.
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<PAGE>
IN WITNESS WHEREOF, the undersigned duly authorized
representatives of the Committee have executed this Third
Amendment to the Plan, and the CEO has ratified the same, as of
the 9th day of July, 1998.
CORPORATE RETIREMENT PLAN
ADMINISTRATIVE COMMITTEE
(FORMERLY THE KEY EXECUTIVE
RETIREMENT PLAN COMMITTEE)
By: /s/ C. Ron Cheeley
Chairman
ATTEST:
/s/ William J. Wortman
Secretary
RATIFIED BY:
/s/ M. Douglas Ivester
Chief Executive Office
The Coca-Cola Company
2
<PAGE>
EXHIBIT 10.1.3
FOURTH AMENDMENT TO
THE COCA-COLA COMPANY
KEY EXECUTIVE RETIREMENT PLAN
AS AMENDED AND RESTATED MARCH 11, 1991,
EFFECTIVE JANUARY 1, 1990
WHEREAS, pursuant to Section 7.5 of The Coca-Cola Company Key
Executive Retirement Plan, as amended and restated effective January
1, 1990 by indenture dated March 11, 1991, which was last amended
by the Third Amendment (the "Plan"), the Corporate Retirement
Plan Administrative Committee (formerly the Key Executive
Retirement Plan Committee) (the "Committee") has the authority to
amend the Plan; and
WHEREAS, by resolutions duly adopted, the Committee has approved
an amendment to the Plan to clarify the meaning of "Pay" by
correcting a scrivener's error contained in the definition
thereof;
NOW THEREFORE, Section 2.1(1) of the Plan is hereby amended,
effective January 1, 1990, by deleting the words "incentive plan"
from the end of part (c) in the second sentence thereof, so that
the same shall read as follows:
"(c) severance payments made after involuntary termination
under a formal severance pay policy in a form other than a
lump-sum payment, and"
IN WITNESS WHEREOF, the undersigned duly authorized representatives
of the Committee have executed this Fourth Amendment to the Plan as
of the 16th day of February, 1999. Except as specifically amended
hereby, the Plan shall remain in full force and effect as prior to
this Fourth Amendment.
CORPORATE RETIREMENT PLAN
ADMINISTRATIVE COMMITTEE
By: /s/ Peggy Horn
Chairman
ATTEST:
/s/ Barbara S. Gilbreath
Secretary
EXHIBIT 10.1.4
FIFTH AMENDMENT TO
THE COCA-COLA COMPANY
KEY EXECUTIVE RETIREMENT PLAN
AS AMENDED AND RESTATED MARCH 11, 1991
EFFECTIVE JANUARY 1, 1990
WHEREAS, pursuant to Section 7.5 of The Coca-Cola Company Key
Executive Retirement Plan, as amended and restated effective January 1,
1990 by indenture dated March 11, 1991, which was last amended by the
Fourth Amendment (the "Plan"), the Corporate Retirement Plan
Administrative Committee (the "Committee") has the authority to amend
the Plan; and
WHEREAS, the Committee has approved an amendment to the Plan to
incorporate certain changes the Committee deems appropriate in
connection with the Special Retirement Program to be announced by
The Coca-Cola Company (the "Company") on January 26, 2000 as part of
the Company's Strategic Organizational Alignment; and
WHEREAS, the Committee intends that the total benefit payable
under this Plan and the Employee Retirement Plan not be increased as a
result of the Special Retirement Program;
NOW, THEREFORE, the Plan is amended, effective January 25, 2000,
in the following respects:
1. Section 2.1(a) of the Plan shall be amended to read
as follows:
(a) "BENEFIT SERVICE" has the same meaning in
this Plan as is found in the Qualified Pension Plan except
that any additional service credit granted for purposes of
the "Special Retirement Benefit" as defined in Section 5.8(d)
of the Qualified Pension Plan shall be disregarded under
this Plan.
2. The third sentence of Section 2.1(1) of the Plan
shall be amended to read as follows:
Pay will exclude interest accrued on long-term
incentives and any cash payment made by the Company under
the Special Retirement Program announced by the Company on
January 26, 2000 as part of the Company's Strategic
Organizational Alignment.
3. Section 2.1(p) of the Plan shall be amended to read
as follows:
(p) "VESTING SERVICE" has the same meaning in
this Plan as is found in the Qualified Pension Plan except
that any additional service
<PAGE>
credit granted for purposes of the "Special Retirement Benefit"
as defined in Section 5.8(d) of the Qualified Pension Plan shall
be disregarded under this Plan.
4. Section 4.1(b)(2) of the Plan shall be amended to
read as follows:
(2) the monthly normal retirement benefit payable
as a life annuity he would have been entitled to receive at
his Normal Retirement Age (or later retirement) under the
Qualified Pension Plan (as determined without regard to any
additional age or service granted for purposes of the
"Special Retirement Benefit" as defined in Section 5.8(d)
of the Qualified Pension Plan), but for the provisions of
Section 415 and Section 401(a)(17) of the Code;
5. The first sentence of Section 4.1(c) of the Plan
shall be amended to read as follows:
Monthly normal retirement benefit payments in the form of a
life annuity shall commence at the same time as the normal
retirement benefit payable from the Qualified Pension Plan,
as determined without regard to any additional age or
service credit granted for purposes of the "Special
Retirement Benefit" as defined in Section 5.8(d) of the
Qualified Pension Plan.
6. The second sentence of Section 4.2(b) of the Plan
shall be amended to read as follows:
Such amount shall be reduced, using the same reduction
factors as are in use under the Qualified Pension Plan (but
determined without regard to any additional age granted for
purposes of the "Special Retirement Benefit" as defined in
Section 5.8(d) of the Qualified Pension Plan), for each
month by which the Participant's first payment under this
Plan precedes age 62.
7. The first sentence of Section 4.2(c) of the Plan
shall be amended to read as follows:
Monthly early retirement benefit payments in the form of a
life annuity shall commence at the same time as the early
retirement benefit payable from the Employer's Qualified
Pension Plan (as determined without regard to any
additional age or service credit granted for purposes of
the "Special Retirement Benefit" as defined in Section
5.8(d) of the Qualified Pension Plan), except for
Participants not eligible for early retirement under the
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Qualified Pension Plan, in which case early retirement
benefit payments shall commence on the first of the month
following retirement.
IN WITNESS WHEREOF, the undersigned duly authorized representative of
the Committee has executed this Fifth Amendment to the Plan as of the 25th
day of January, 2000. Except as specifically amended hereby, the Plan shall
remain in full force and effect as prior to this Fifth Amendment.
CORPORATE RETIREMENT PLAN
ADMINISTRATIVE COMMITTEE
By: /s/ Peggy F. Horn
Chairman
ATTEST: Date: 1/25/2000
/s/ Barbara S. Gilbreath
Secretary
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EXHIBIT 10.7
THE COCA-COLA COMPANY
1983 RESTRICTED STOCK AWARD PLAN
(As Amended through February 17, 2000)
SECTION 1. PURPOSE
The purpose of the 1983 Restricted Stock Award Plan of The Coca-Cola
Company (the "Plan") is to advance the interest of The Coca-Cola Company
(the "Company") and its Related Companies (as defined in Section 4 hereof),
by encouraging and enabling the acquisition of a financial interest in the
Company by officers and other key employees through grants of restricted
shares of Company Common Stock (the "Awards", or singly, an "Award") and
through reimbursement by the Company of amounts payable by such persons as
a consequence of any such Award (the "Cash Amount"). The Plan is intended
to aid the Company and its Related Companies in retaining officers and key
employees, to stimulate the efforts of such employees and to strengthen their
desire to remain in the employ of the Company and its Related Companies. In
addition, the Plan may also aid in attracting officers and key employees who
will become eligible to participate in the Plan after a reasonable period
of employment by the Company or its Related Companies.
SECTION 2. ADMINISTRATION
The Plan shall be administered by a committee (the "Committee")
appointed by the Board of Directors of the Company (the "Board") from among
its members and shall be comprised of not less than three (3) members of the
Board. Unless and until its members are not qualified to serve on the
Committee pursuant to the provisions of the Plan, the Compensation Committee
of the Board shall function as the Committee. Members of the Committee shall
be members of the Board who are not eligible to participate under the Plan and
who have not been eligible to participate in the Plan for at least one year
prior to the time they become members of the Committee. The Committee shall
determine the officers and key employees of the Company and its Related
Companies (including officers, whether or not they are directors) to whom, and
the time or times at which, Awards will be granted, the number of shares to be
awarded, the time or times within which the Awards may be subject to
forfeiture, and all other conditions of the Award. The provisions of the
Awards need not be the same with respect to each recipient.
The Committee is authorized, subject to the provisions of the Plan, to
establish such rules and regulations as it deems necessary or advisable for the
proper administration of the Plan and to take such other action in connection
with or in relation to the Plan as it deems necessary or advisable. Each
action made or taken pursuant to the Plan, including interpretation of the Plan
and the Awards granted hereunder by the Committee, shall be final and conclusive
for all purposes and upon all persons, including but without limitation, the
Company and its Related Companies, the Committee, the Board, the officers and
the affected employees of the Company and/or its Related Companies and their
respective successors in interest.
<PAGE>
SECTION 3. STOCK
The stock to be issued under the Plan pursuant to Awards shall be
shares of Common Stock, $.25 par value, of the Company (the "Stock"). The
Stock shall be made available from treasury or authorized and unissued shares
of Common Stock of the Company. The total number of shares of Stock that may
be issued pursuant to Awards under the Plan, including those already issued,
may not exceed 24,000,000 shares (which number reflects stock splits
subsequent to adoption of the Plan). Such numbers of shares shall be subject
to adjustment in accordance with Section 8. Shares of Stock previously
granted pursuant to Awards, but which are forfeited pursuant to Section 5,
below, shall be available for future Awards.
SECTION 4. ELIGIBILITY
Awards may be granted to officers and key employees of the Company and
its Related Companies who have been employed by the Company or a Related
Company (but only if the Related Company is one in which the Company owns on
the grant date, directly or indirectly, either (i) 50% or more of the voting
stock or capital where such entity is not publicly held, or (ii) an interest
which causes the Related Company's financial results to be consolidated with
the Company's financial results for financial reporting purposes) for a
reasonable period of time determined by the Committee. The term "Related
Company" shall mean any corporation or other business organization in which
the Company owns, directly or indirectly, 20 percent or more of the voting
stock or capital at the applicable time. No employee shall acquire pursuant
to Awards granted under the Plan more than twenty (20) percent of the aggregate
number of shares of Stock issuable pursuant to Awards under the Plan.
SECTION 5. AWARDS
Except as otherwise specifically provided in the grant of an Award,
Awards shall be granted solely for services rendered to the Company or any
Related Company by the employee prior to the date of the grant and shall be
subject to the following terms and conditions:
(a) The Stock subject to an Award shall be forfeited to the
Company if the employment of the employee by the Company or a Related
Company terminates for any reason (including, but not limited to,
termination by the Company, with or without cause) other than death,
"Retirement", as hereinafter defined, provided that such Retirement occurs
at least five (5) years from the date of grant of an Award and also provided
that the employee has attained the age of 62, or disability (within the
meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended),
prior to a "Change in Control" of the Company as hereinafter defined.
"Retirement", as used herein, shall mean an employee's voluntarily leaving
the employ of the Company or a Related Company on a date which is on or after
the earliest date on which such employee would be eligible for an immediately
payable benefit pursuant to (i) for those employees eligible for participation
in the Company's Supplemental Retirement Plan, the terms of that Plan and
(ii) for all other employees, the terms of the Employees Retirement Plan (the
"ERP") assuming such employees were eligible to participate in the ERP.
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<PAGE>
(b) If at any time the recipient Retires on a date which is at
least five (5) years from the date of grant of an Award and on or after the
date on which the employee has attained the age of 62, dies or becomes
disabled, or in the event of a "Change in Control" of the Company, as
hereinafter defined, prior to such Retirement, death or disability, such
recipient shall be entitled to retain the number of shares subject to the
Award. A "Change in Control" shall mean a change in control of a nature
that would be required to be reported in response to Item 6(e) of Schedule
14A of Regulation 14A promulgated under the Securities Exchange Act of 1934
(the "Exchange Act") as in effect on November 15, 1988, provided that such a
change in control shall be deemed to have occurred at such time as (i) any
"person" (as that term is used in Sections 13(d) and 14(d)(2) of the
Exchange Act), is or becomes the beneficial owner (as defined in Rule 13d-3
under the Exchange Act) directly or indirectly, of securities representing
20% or more of the combined voting power for election of directors of the
then outstanding securities of the Company or any successor of the Company;
(ii) during any period of two consecutive years or less, individuals who at
the beginning of such period constituted the Board of Directors of the
Company cease, for any reason, to constitute at least a majority of the
Board of Directors, unless the election or nomination for election of each
new director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period;
(iii) the shareholders of the Company approve any merger or consolidation
as a result of which the Stock shall be changed, converted or exchanged
(other than a merger with a wholly-owned subsidiary of the Company) or any
liquidation of the Company or any sale or other disposition of 50% or more
of the assets or earning power of the Company; or (iv) the shareholders of
the Company approve any merger or consolidation to which the Company is a
party as a result of which the persons who were shareholders of the Company
immediately prior to the effective date of the merger or consolidation
shall have beneficial ownership of less than 50% of the combined voting
power for election of directors of the surviving corporation following the
effective date of such merger or consolidation; provided, however, that no
Change in Control shall be deemed to have occurred if, prior to such time
as a Change in Control would otherwise be deemed to have occurred, the Board
of Directors determines otherwise.
(c) Within sixty (60) days of the date of death, disability or
Retirement on a date which is at least five (5) years from the date of grant
of an Award and on or after the date on which the employee has attained the
age of 62, and immediately upon a "Change in Control" as described in
subparagraphs (a) and (b) of this Section 5, the Company shall pay to the
recipient of an Award an amount equal to the Cash Amount less any amounts
required by law to be withheld with respect to the Award and the Cash Amount,
such Cash Amount not to exceed the federal, state and local taxes such
recipient must pay as a result of the fair market value of the Award being
included in income for federal, state and local income tax purposes. For
purposes of this subparagraph 5(c) the fair market value of an Award shall be
the average of the high and low market prices at which a share of Stock
shall have been sold on the date of death, disability, such Retirement or
a Change in Control, or on the next preceding trading day, if such date is
not a trading day, as reported on the New York Stock Exchange--Composite
Transactions listing or as otherwise determined by the Committee.
(d) Awards may contain such other provisions, not inconsistent
with the provisions of the Plan, as the Committee shall determine appropriate
from time to time.
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<PAGE>
SECTION 6. NONTRANSFERABILITY OF AWARDS
Shares of Stock subject to Awards shall not be transferable and shall
not be sold, exchanged, transferred, pledged, hypothecated or otherwise
disposed of at any time prior to the first to occur of Retirement on a date
which is at least five (5) years from the date of grant of an Award and on or
after the date on which the employee has attained the age of 62, death or
disability of the recipient of an Award or a Change in Control.
SECTION 7. RIGHTS AS A STOCKHOLDER
An employee who receives an Award shall have rights as a stockholder
with respect to Stock covered by such Award to receive dividends in cash or
other property or other distributions or rights in respect to such Stock and
to vote such Stock as the record owner thereof.
SECTION 8. ADJUSTMENT IN THE NUMBER OF SHARES AWARDED
In the event there is any change in the Stock through the declaration
of stock dividends, through stock splits or through recapitalization or
merger or consolidation or combination of shares or otherwise, the Committee
or the Board shall make such adjustment, if any, as it may deem appropriate
in the number of shares of Stock thereafter available for Awards.
SECTION 9. TAXES
(a) If any employee properly elects, within thirty (30) days of
the date on which Award is granted, to include in gross income for federal
income tax purposes an amount equal to the fair market value (on the date of
grant of the Award) of the Stock subject to the Award, such employee shall
make arrangements satisfactory to the Committee to pay to the Company in the
year of such Award, any federal, state or local taxes required to be withheld
with respect to such shares. If such employee shall fail to make such tax
payments as are required, the Company and its Related Companies shall, to the
extent permitted by law, have the right to deduct from any payment of any
kind otherwise due to the employee any federal, state or local taxes of any
kind required by law to be withheld with respect to the Stock subject to
such Award.
(b) Each employee who does not make the election described in
subparagraph (a) of this Section shall, no later than the date as of which
the restrictions referred to in Section 5 and such other restrictions as may
have been imposed as a condition of the Award, shall lapse, pay to the
Company, or make arrangements satisfactory to the Committee regarding payment
of any federal, state, or local taxes of any kind required by law to be
withheld with respect to the Stock subject to such Award, and the Company and
its Related Companies shall, to the extent permitted by law, have the right
to deduct from any payment of any kind otherwise due to the employee any
federal, state, or local taxes of any kind required by law to be withheld
with respect to the Stock subject to such Award.
(c) The Committee may specify when it grants an Award that the
Award is subject to mandatory share withholding for satisfaction of tax
withholding obligations (not including withholding owed on payment of the
Cash Amount) by employees. For all other Awards, whether granted before or
after this paragraph 9(c) was added to this Plan, tax withholding
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<PAGE>
obligations (not including withholding owed on payment of the Cash
Amount) of an employee may be satisfied by share withholding, if
permitted by applicable law, at the written election of the employee
prior to the date the restrictions on the Award lapse. The shares
withheld will be valued at the average of the high and low market
prices at which a share of Stock was sold on the date the restrictions
lapse (or, if such date is not a trading day, then the next trading day
thereafter), as reported on the New York Stock Exchange--Composite
Transactions listing.
SECTION 10. RESTRICTIVE LEGEND AND STOCK POWER
Each certificate evidencing Stock subject to Awards shall bear
an appropriate legend referring to the terms, conditions and restrictions
applicable to such Award. Any attempt to dispose of Stock in contravention
of such terms, conditions, and restrictions shall be ineffective. The
Committee may adopt rules which provide that the certificates evidencing
such shares may be held in custody by a bank or other institution, or that
the Company may itself hold such shares in custody until the restrictions
thereon shall have lapsed and may require, as a condition of any Award, that
the recipient shall have delivered a stock power endorsed in blank relating
to the Stock covered by such Award.
SECTION 11. AMENDMENTS, MODIFICATIONS AND TERMINATION OF PLAN
The Board or the Committee may terminate the Plan, in whole or in
part, may suspend the Plan, in whole or in part from time to time, and may
amend the Plan from time to time, including the adoption of amendments deemed
necessary or desirable to qualify the Awards under the laws of various states
(including tax laws) and under rules and regulations promulgated by the
Securities and Exchange Commission with respect to employees who are subject
to the provisions of Section 16 of the Securities Exchange Act of 1934, or to
correct any defect or supply an omission or reconcile any inconsistency in the
Plan or in any Award granted thereunder, without the approval of the
stockholders of the Company; provided, however, that no action shall be taken
without the approval of the stockholders of the Company which may increase
the number of shares of Stock available for Awards or withdraw administration
from the Committee, or permit any person while a member of the Committee to be
eligible to receive an Award. No amendment or termination or modification of
the Plan shall in any manner affect Awards therefore granted without the
consent of the employee unless the Committee has made a determination that an
amendment or modification is in the best interest of all persons to whom Awards
have theretofore been granted. The Board or the Committee may modify or
remove restrictions contained in Sections 5 and 6 on an Award or the Awards as
a whole which have been previously granted upon a determination that such action
is in the best interest of the Company. The Plan shall terminate when
(a) all Awards authorized under the Plan have been granted and (b) all shares
of Stock subject to Awards under the Plan have been issued and are no longer
subject to forfeiture under the terms hereof unless earlier terminated by the
Board or the Committee.
SECTION 12. GOVERNING LAW
The Plan and all determinations made and actions taken pursuant
thereto shall be governed by the laws of the State of Georgia and construed in
accordance therewith.
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<PAGE>
EXHIBIT 10.8
THE COCA-COLA COMPANY
1989 RESTRICTED STOCK AWARD PLAN
(As Amended through February 17, 2000)
SECTION 1. PURPOSE
The purpose of the 1989 Restricted Stock Award Plan of The Coca-Cola
Company (the "Plan") is to advance the interest of The Coca-Cola Company (the
"Company") and its Related Companies (as defined in Section 4 hereof), by
encouraging and enabling the acquisition of a financial interest in the Company
by officers and other key employees through grants of restricted shares of
Company Common Stock (the "Awards", or singly, an "Award"). The Plan is intended
to aid the Company and its Related Companies in retaining officers and key
employees, to stimulate the efforts of such employees and to strengthen their
desire to remain in the employ of the Company and its Related Companies. In
addition, the Plan may also aid in attracting officers and key employees who
will become eligible to participate in the Plan after a reasonable period of
employment by the Company or its Related Companies.
SECTION 2. ADMINISTRATION
The Plan shall be administered by a committee (the "Committee")
appointed by the Board of Directors of the Company (the "Board") or in
accordance with Section 7, Article III of the By-Laws of the Company (as amended
through October 17, 1996) from among its members and shall be comprised of not
less than three (3) members of the Board. Unless and until its members are not
qualified to serve on the Committee pursuant to the provisions of the Plan, the
Compensation Committee shall be members of the Board who are not eligible to
participate in the Plan for at least one year prior to the time they become
members of the Committee. Eligibility requirements for members of the Committee
shall comply with Rule 16b-3 promulgated pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act") or any successor rule or regulation.
The Committee shall determine the officers and key employees of the Company and
its Related Companies (including officers, whether or not they are directors) to
whom, and the time or times at which, Awards will be granted, the number of
shares to be awarded, the time or times within which the Awards may be subject
to forfeiture, and all other conditions of the Award. The provisions of the
Awards need not be the same with respect to each recipient.
The Committee is authorized, subject to the provisions of the Plan, to
establish such rules and regulations as it deems necessary or advisable for the
proper administration of the Plan and to take such other action in connection
with or in relation to the Plan as it deems necessary or advisable. Each action
made or taken pursuant to the Plan, including interpretation of the Plan and the
Awards granted hereunder by the Committee, shall be
<PAGE>
final and conclusive for all purposes and upon all persons, including,
without limitation, the Company and its Related Companies, the Committee, the
Board, the Officers and the affected employees of the Company and/or its Related
Companies and their respective successors in interest.
SECTION 3. STOCK
The stock to be issued under the Plan pursuant to Awards shall be
shares of Common Stock, $.25 par value, of the Company (the "Stock"). The Stock
shall be made available from treasury or authorized and unissued shares of
Common Stock of the Company. The total number of shares of Stock that may be
issued pursuant to Awards under the Plan, including those already issued, may
not exceed 40,000,000 shares (subject to adjustment in accordance with Section
8), which number represents the number of shares originally authorized in the
Plan, adjusted for 2-for-1 stock splits which occurred on May 1, 1990, May 1,
1992 and May 1, 1996, less the number of shares already issued pursuant to the
Plan as of October 1, 1996. Shares of Stock previously granted pursuant to
Awards, but which are forfeited pursuant to Section 5, below, shall be available
for future Awards.
SECTION 4. ELIGIBILITY
Awards may be granted to officers and key employees of the Company and
its Related Companies who have been employed by the Company or a Related
[Company] (but only if the Related Company is one in which the Company owns on
the grant date, directly or indirectly, either (i) 50% or more of the voting
stock or capital where such entity is not publicly held, or (ii) an interest
which causes the Related Company's financial results to be consolidated with the
Company's financial results for financial reporting purposes) for a reasonable
period of time determined by the Committee. The term "Related Company" shall
mean any corporation or other business organization in which the Company owns,
directly or indirectly, 20 percent or more of the voting stock or capital at the
applicable time. No employee shall acquire pursuant to Awards granted under the
Plan more than twenty (20) percent of the aggregate number of shares of Stock
issuable pursuant to Awards under the Plan.
SECTION 5. AWARDS
Except as otherwise specifically provided in the grant of an Award,
Awards shall be granted solely for services rendered to the Company or any
Related Company by the employee prior to the date of the grant and shall be
subject to the following terms and conditions:
(a) The Stock subject to an Award shall be forfeited to the Company if
the employment of the employee by the Company or Related Company terminates for
any reason (including, but not limited to, termination by the Company, with or
without cause) other than death, "Retirement", as hereinafter defined, provided
that such Retirement occurs at least five (5) years from the date of grant of an
Award and also provided that the employee has attained the age of 62, or
disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended), prior to a "Change in Control" of the
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<PAGE>
Company as hereinafter defined. "Retirement", as used herein, shall mean an
employee's voluntarily leaving the employ of the Company or a Related Company on
a date which is on or after the earliest date on which such employee would be
eligible for an immediately payable benefit pursuant to (i) for those employees
eligible for participation in the Company's Supplemental Retirement Plan, the
terms of that Plan and (ii) for all other employees, the terms of the Employees
Retirement Plan (the "ERP") assuming such employees were eligible to participate
in the ERP.
(b) If at any time the recipient Retires on a date which is at least
five (5) years from the date of grant of an Award and on or after the date on
which the employee has attained the age of 62, dies or becomes disabled, or in
the event of a "Change in Control" of the Company, as hereinafter defined, prior
to such Retirement, death or disability, such recipient shall be entitled to
retain the number of shares subject to the Award. A "Change in Control" shall
mean a change in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Exchange Act as in effect on November 15, 1988, provided that such a change in
control shall be deemed to have occurred at such time as (i) any "person" (as
that term is used in Sections 13(d) and 14(d)(2) of the Exchange Act), is or
becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act)
directly or indirectly, of securities representing 20% or more of the combined
voting power for election of directors of the then outstanding securities of the
Company or any successor of the Company; (ii) during any period of two
consecutive years or less, individuals who at the beginning of such period
constituted the Board of Directors of the Company cease, for any reason, to
constitute at least a majority of the Board of Directors, unless the election or
nomination for election of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of the period; (iii) the shareholders of the Company approve any
merger or consolidation as a result of which the Common Stock shall be changed,
converted or exchanged (other than a merger with a wholly-owned subsidiary of
the Company) or any liquidation of the Company or any sale or other disposition
of 50% or more of the assets or earning power of the Company; or (iv) the
shareholders of the Company approve any merger or consolidation to which the
Company is a party as a result of which the persons who were shareholders of the
Company immediately prior to the effective date of the merger or consolidation
shall have beneficial ownership of less than 50% of the combined voting power
for election of directors of the surviving corporation following the effective
date of such merger or consolidation; provided, however, that no Change in
Control shall be deemed to have occurred if, prior to such time as a Change in
Control would otherwise be deemed to have occurred, the Board of Directors
determines otherwise.
(c) Awards may contain such other provisions, not inconsistent with the
provisions of the Plan, as the Committee shall determine appropriate from time
to time.
SECTION 6. NONTRANSFERABILITY OF AWARDS
Shares of Stock subject to Awards shall not be transferable and shall
not be sold, exchanged, transferred, pledged, hypothecated or otherwise disposed
of at any time prior to
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<PAGE>
the first to occur of Retirement on a date which is at least five (5) years from
the date of grant of an Award and on or after the date on which the employee has
attained the age of 62, death or disability of the recipient of an Award or a
Change in Control.
SECTION 7. RIGHTS AS A STOCKHOLDER
An employee who receives an Award shall have rights as a stockholder
with respect to Stock covered by such Award to receive dividends in cash or
other property or other distributions or rights in respect to such Stock and to
vote such Stock as the record owner thereof.
SECTION 8. ADJUSTMENT IN THE NUMBER OF SHARES AWARDED
In the event there is any change in the Stock through the declaration
of stock dividends, through stock splits or through recapitalization or merger
or consolidation or combination of shares or otherwise, the Committee or the
Board shall make such adjustment, if any, as it may deem appropriate in the
number of shares of Stock thereafter available for Awards.
SECTION 9. TAXES
(a) If any employee properly elects, within thirty (30) days of the
date on which an Award is granted, to include in gross income for federal income
tax purposes an amount equal to the fair market value (on the date of grant of
the Award) of the Stock subject to the Award, such employee shall make
arrangements satisfactory to the Committee to pay to the Company in the year of
such Award, any federal, state or local taxes required to be withheld with
respect to such shares. If such employee shall fail to make such tax payments as
are required, the Company and its Related Companies shall, to the extent
permitted by law, have the right to deduct from any payment of any kind
otherwise due to the employee any federal, state or local taxes of any kind
required by law to be withheld with respect to the Stock subject to such Award.
(b) Each employee who does not make the election described in paragraph
(a) of this Section shall, no later than the date as of which the restrictions
referred to in Section 5 and such other restrictions as may have been imposed as
a condition of the Award, shall lapse, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of any federal, state or local
taxes of any kind required by law to be withheld with respect to the Stock
subject to such Award, and the Company and its Related Companies shall, to the
extent permitted by law, have the right to deduct from any payment of any kind
otherwise due to the employee any federal, state, or local taxes of any kind
required by law to be withheld with respect to the Stock subject to such Award.
(c) The Committee may specify when it grants an Award that the Award is
subject to mandatory share withholding for satisfaction of tax withholding
obligations by employees. For all other Awards, whether granted before or after
this paragraph 9(c) was added to this Plan, tax withholding obligations of an
employee may be satisfied by share withholding, if permitted by applicable law,
at the written election of the employee prior to the date the restrictions on
the Award lapse. The shares withheld will be valued at the
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average of the high and low market prices at which a share of Stock was sold on
the date the restrictions lapse (or, if such date is not a trading day, then the
next trading day thereafter), as reported on the New York Stock Exchange--
Composite Transactions listing.
SECTION 10. RESTRICTIVE LEGEND AND STOCK POWER
Each certificate evidencing Stock subject to Awards shall bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such award. Any attempt to dispose of Stock in contravention of
such terms, conditions, and restrictions shall be ineffective. The Committee may
adopt rules which provide that the certificates evidencing such shares may be
held in custody by a bank or other institution, or that the Company may itself
hold such shares in custody until the restrictions thereon shall have lapsed and
may require, as a condition of any Award, that the recipient shall have
delivered a stock power endorsed in blank relating to the Stock covered by such
Award.
SECTION 11. AMENDMENTS, MODIFICATIONS AND TERMINATION OF PLAN
The Board or the Committee may terminate the Plan, in whole or in part,
may suspend the Plan, in whole or in part from time to time, and may amend the
Plan from time to time, including the adoption of amendments deemed necessary or
desirable to qualify the Awards under the laws of various states (including tax
laws) and under rules and regulations promulgated by the Securities and Exchange
Commission with respect to employees who are subject to the provisions of
Section 16 of the Exchange Act, or to correct any defect or supply an omission
or reconcile any inconsistency in the Plan or in any Award granted thereunder,
without the approval of the stock holders of the Company; provided, however,
that no action shall be taken without the approval of the stockholders of the
Company which may increase the number of shares of Stock available for Awards or
withdraw administration from the Committee, or permit any person while a member
of the Committee to be eligible to receive an Award. Without limiting the
foregoing, the Board of Directors or the Committee may make amendments
applicable or inapplicable only to participants who are subject to Section 16 of
the Exchange Act. No amendment or termination or modification of the Plan shall
in any manner affect Awards therefore granted without the consent of the
employee unless the Committee has made a determination that an amendment or
modification is in the best interest of all persons to whom Awards have
theretofore been granted. The Board or the Committee may modify or remove
restrictions contained in Sections 5 and 6 on an Award or the Awards as a whole
which have been previously granted upon a determination that such action is in
the best interest of the Company. The Plan shall terminate when (a) all Awards
authorized under the Plan have been granted and (b) all shares of Stock subject
to Awards under the Plan have been issued and are no longer subject to
forfeiture under the terms hereof unless earlier terminated by the Board or the
Committee.
SECTION 12. GOVERNING LAW
The Plan and all determinations made and actions taken pursuant thereto
shall be governed by the laws of the State of Georgia and construed in
accordance therewith.
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EXHIBIT 10.11.3
AMENDMENT NUMBER SIX TO
THE COCA-COLA COMPANY
SUPPLEMENTAL BENEFIT PLAN
AS AMENDED AND RESTATED MARCH 11, 1991,
EFFECTIVE JANUARY 1, 1989
WHEREAS, pursuant to Section 7.5 of The Coca-Cola Company Supplemental
Benefit Plan, as amended and restated effective January 1, 1989 by
indenture dated March 11, 1991, which was last amended by Amendment Number
Five (the "Plan"), the Supplemental Benefit Plan Committee (the "Committee")
has the authority to amend the Plan; and
WHEREAS, the Chief Executive Officer ("CEO") of The Coca-Cola Company (the
"Company") has appointed the same members of the Plan's Committee and to
each committee serving as plan administrator for eight other Company
retirement plans, thereby effectively consolidating administration of the
plans under a single committee; and
WHEREAS, the Company wishes to incorporate the concept of a single
administrative committee, henceforth to be known as the Corporate Retirement
Plan Administrative Committee, within the terms of the relevant plans; and
WHEREAS, the Company wishes to transfer authority to appoint and remove
members of said committee from the CEO to the Vice President of Human
Resources; and
WHEREAS, by resolutions duly adopted, the Committee has approved amendments
to the Plan and eight other retirement plans in order to reflect the renaming
of the Committee and the change in the person authorized to designate
membership in the Committee, subject to ratification of the amendments by the
CEO;
NOW THEREFORE, the Plan is hereby amended, effective July 1, 1998, in the
following respects:
1. Section 7.2 of the Plan shall be amended by deleting "Supplemental
Benefit Plan Committee" from the section heading and by replacing
it with "Corporate Retirement Plan Administrative Committee."
2. Section 7.2 of the Plan shall be amended further by deleting the
terms "Chief Executive Officer" and "CEO" wherever the same appear
therein and by inserting in lieu thereof "Vice President of Human
Resources" and "VPHR," respectively.
Except as specifically amended hereby, the Plan shall remain in full force
and effect as prior to this Amendment Number Six.
<PAGE>
IN WITNESS WHEREOF, the undersigned duly authorized representatives of the
Committee have executed this Amendment Number Six to the Plan, and the CEO
has ratified the same, as of the _______ day of July, 1998.
CORPORATE RETIREMENT PLAN
ADMINISTRATIVE COMMITTEE
(FORMERLY THE SUPPLEMENTAL
BENEFIT PLAN COMMITTEE)
By: /s/ C. Ron Cheeley
----------------------------
Chairman
ATTEST:
/s/ William J. Wortman
- ---------------------------
Secretary
RATIFIED BY:
/s/ M. Douglas Ivester
----------------------------
M. Douglas Ivester
Chief Executive Officer
The Coca-Cola Company
- 2 -
<PAGE>
EXHIBIT 10.11.4
SEVENTH AMENDMENT TO
THE COCA-COLA COMPANY
SUPPLEMENTAL BENEFIT PLAN
WHEREAS, pursuant to Section 7.5 of The Coca-Cola Company Supplemental
Benefit Plan (the "Plan") the Corporate Retirement Plan Administrative
Committee (the "Committee") has the authority to amend the Plan;
WHEREAS, the Committee wishes to amend the Plan for purposes of
clarifying the eligibility of certain employees to participate in the
Plan and making other clarifying changes; and
WHEREAS, the Chairman of the Committee is authorized by resolution of
the Committee to execute such amendment and take all other necessary
actions in connection therewith;
NOW THEREFORE, the Plan hereby is amended as follows:
1.
Effective as of January 1, 1999, Section 5.1(c) of the Plan shall be
deleted and a new section 5.1(c) shall read as follows:
(c) For purposes of this Section 5.1, the Pension Benefit of a
Participant shall be calculated based on the participant's compensation
that is considered under the Employee Retirement Plan of
The Coca-Cola Company in calculating his Retirement Income, without
regard to the limitation of Section 401(a)(17) of the code. If a
Participant was on an Approved Leave of Absence, as defined under the
Employee Retirement Plan of The Coca-Cola Company, for the purpose of
working for another entity within The Coca-Cola system, his Pension
Benefit under this Plan shall be calculated based on compensation paid
as follows: compensation during the Approved Leave of Absence shall be
the greater of i) compensation as determined under the first sentence
of this paragraph 5.1(c) or ii) compensation actually paid to the
Participant by the other entity within The Coca-Cola system during the
Approved Leave of Absence, subject to the same inclusions and
exclusions to "Benefit Compensation" as under the Employee Retirement
Plan of The Coca-Cola Company, but without regard to the limitation of
Section 401(a)(17) of the code. The Committee may require that the
Participant provide satisfactory evidence of such compensation.
2.
Effective as of January 1, 2000, Section 5.2(c) of the Plan shall be
deleted and a new section 5.2(a) shall read as follows:
<PAGE>
5.2 DISTRIBUTION OF PENSION BENEFIT
(a) The Pension Benefit, as determined in accordance with
Section 5.1, shall [be] payable in monthly increments on the
first day of the month concurrently with and in the same manner
as the Participant's Retirement Income under the Qualified
Pension Plan. If the Participant's Pension Benefit is less than
$50 per month, as calculated in the form of a Life Annuity, the
present value of the Pension Benefit may be paid in a lump sum or
the Pension Benefit may be paid in quarterly, semi-annual, or
annual payments, as the Committee may designate. The Beneficiary
of a Participant's Pension Benefit shall be the same as the
beneficiary of the Participant's Retirement Income under the
Qualified Pension Plan unless the Participant designates
otherwise. Such designation is subject to the approval of the
Committee.
Except as specifically amended hereby, the Plan shall remain in full force
and effect as prior to this Sixth Amendment.
CORPORATE RETIREMENT PLAN
ADMINISTRATIVE COMMITTEE
By: /s/ Peggy F. Horn
Chairman
ATTEST: Date: 1/24/2000
/s/ Barbara S. Gilbreath
Secretary
Exhibit 10.11.5
EIGHTH AMENDMENT TO
THE COCA-COLA COMPANY
SUPPLEMENTAL BENEFIT PLAN
WHEREAS, pursuant to Section 7.5 of The Coca-Cola Company
Supplemental Benefit Plan (the "Plan") the Corporate Retirement Plan
Administrative Committee (the "Committee") has the authority to amend
the Plan;
WHEREAS, the Committee has approved an amendment to the Plan to
incorporate certain changes the Committee deems appropriate in connection
with the Special Retirement Program to be announced by The Coca-Cola
Company (the "Company") on January 26, 2000 as part of the Company's
Strategic Organizational Alignment; and
WHEREAS, the Chairman of the Committee is authorized by resolution
of the Committee to execute such amendment and take all other necessary
actions in connection therewith;
NOW THEREFORE, the Plan is hereby amended, effective January 25,
2000, in the following respects:
1. Section 2 of the Plan shall be amended by adding the
following new definition:
"RETIREMENT BENEFIT" shall be the benefit
payable to a Participant under Sections 5.1-5.3, as
applicable, of the Qualified Pension Plan.
2. Section 2.7 of the Plan shall be amended by deleting
it in its entirety and replacing it as follows:
2.7 "EARLY RETIREMENT AGE" shall mean the
first to occur of (1) a Participant's age when he has
both attained his fifty-fifth (but not his sixty-
fifth) birthday and completed at least ten years of
service or (2) age 60 with the approval of the
Employer. For this purpose, a Participant's age and
years of service shall include any additional age and
service credit granted under Section 5.8(d) of the
Qualified Pension Plan to such Participant if he
satisfies the conditions for the Special Retirement
Benefit as described in Section 5.8(d) of the
Qualified Pension Plan.
3. Section 4.2 of the Plan shall be amended by deleting
and replacing the first sentence of such section as follows:
Any salaried employee of the Employer (a) whose
Special Retirement Benefit under the Qualified
Pension Plan of The Coca-Cola Company (as
<PAGE>
defined in Section 5.8(d) of such plan) is limited
by the limitations under Sections 401(a)(4) or 401(1)
of the Code, (b) whose benefits under the Employee
Retirement Plan of The Coca-Cola company are limited
by the limitations of Sections 401(a)(17) or 415 of
the Code, or (c) to whom contributions by the
Employer to the Thrift Plan are limited by the
limitations set forth in Sections 401(a)(17), 401(k),
401(m), 402(g) or 415 of the Code shall be eligible
to participate in the Plan.
4. Section 5.1(a) of the Plan shall be amended by
deleting it and replacing it as follows:
(a) If a Participant has Benefit Service
with respect to the Qualified Pension Plan of his
Employer, he shall be entitled to a Pension Benefit
equal to that portion of his Retirement Benefit under
the Qualified Pension Plan of the Employer which is
not payable under such Qualified Pension Plan as
result of the limitations imposed by Sections
401(a)(17) and 415 of the Code and, to the extent
such portion of his Retirement Benefit is
attributable to his Special Retirement Benefit (as
described in Section 5.8(d) of the Qualified Pension
Plan), the limitations imposed by Sections 401(a)(4)
and 401(1) of the Code.
5. The term "Retirement Income" shall be replaced
with the term "Retirement Benefit" each place Retirement
Income appears in the Plan.
Except as specifically amended hereby, the Plan shall remain in full
force and effect as prior to this Eighth Amendment.
CORPORATE RETIREMENT PLAN
ADMINISTRATIVE COMMITTEE
By: /s/ Peggy F. Horn
Chairman
ATTEST: Date: 1/25/2000
/s/ Barbara S. Gilbreath
Secretary
- 2 -
EXHIBIT 10.17.1
LETTERHEAD OF THE COCA-COLA COMPANY
December 6, 1999
Mr. M. Douglas Ivester
Atlanta, Georgia
Dear Doug:
This letter outlines the terms under which you will separate from The Coca-Cola
Company. You have indicated that you will relinquish your position as Chairman
and Chief Executive Officer of The Coca-Cola Company effective April 19, 2000.
The Board of Directors has accepted your resignation effective April 19, 2000
and the terms and conditions described in this letter have been approved by the
Compensation Committee (or the appropriate Subcommittee) of the Board on
December 5, 1999.
From the date of your separation until the end of the month in which you attain
your 55th birthday, you will receive payments from the Company equal to your
current monthly salary at the rate of $125,000 per month ($1,500,000 per year).
In February of each year from 2000 to 2002, you will receive a payment in lieu
of annual and long-term incentives in the amount of $1,500,000 (total payments
of $4,500,000).
The Compensation Committee has approved the payment of the deferred amounts
you earned in the Long Term Incentive Plan, and payments will be release to you
as follows:
PLAN PAYMENT DATE AMOUNT TO BE PAID
- ---- ------------ -----------------
1995-1997 First Quarter of 2000 $536,428 plus interest
1996-1998 First Quarter of 2001 $351,000 plus interest
You forfeit all other Long-Term Incentive awards for plans in process
(1997-1999, 1998-2000, 1999-2001).
The Restricted Stock Subcommittee has released restrictions on the 1,950,000
shares of restricted stock that have been granted to you previously, and the
shares will be released to you within 60 days. Additionally, you will receive
a cash payment equal to the
<PAGE>
December 5, 1999
Page 2
estimated total of the combined federal, state and local taxes due on the
restricted stock granted under the 1983 Plan, and the calculation of the total
payment shall be consistent with the methodology used to calculate such
payments for all other Plan participants. You are responsible for income taxes
on all amounts received under the terms of this letter.
It is noted that the price of a share of common stock of The Coca-Cola Company
as of Friday, December 3, 1999 was $68.312. Effective immediately, the Stock
Option Subcommittee has waived vesting requirements on the unvested stock
options award granted to you on October 21, 1999. After your separation on
April 19, 2000, you will have 6 months (until October 19, 2000) to exercise
any unexercised option granted to you. Failure to exercise within that
timeframe would result in forfeiture of the options.
Upon attainment of age 55, you will be eligible to begin receiving retirement
benefits from the Employee Retirement Plan as well as any amounts that may be
vested under the Key Executive Retirement Plan. Should you elect to begin
receiving payments immediately upon attainment of age 55, the Company will
supplement such payment so that the amount you receive shall not be less than
$115,000 per month. Should you elect not to immediately begin receiving
payments at age 55, a 3% upward adjustment will be made the $115,000 total
payment for each year that retirement payments are delayed beyond age 55.
In May 2000, you will receive a lump sum distribution of your Supplemental
Thrift Plan and Compensation Deferral and Investment Plan accounts.
Beginning in 2002, the Company will engage you as a consultant for a period
of six years at an annual rate of $675,000. The agreement may be extended at
the end of that period with mutual consent and subject to revision of the terms
of the agreement mutually acceptable to you and to the Company.
The Company will reimburse you for the cost of your COBRA continuation of
benefit coverage, in an amount sufficient to net you full reimbursement after
payment of taxes. Upon the expiration of your COBRA coverage, the Company will
make a payment equal to $300,000 net of taxes to enable you to obtain
continuing medical coverage for yourself and for Kay.
The Company will grant title to you for your Company automobile, mobile
telephones and laptop computer and the like.
<PAGE>
December 5, 1999
Page 3
The Company will make contributions in double the amount of any
contributions you make to organizations which qualify for the
Company's Matching Gifts Program, subject to the normal annual
limit as defined in the Program for the years 2000, 20001 and
2002.
Until May 1, 2001, the Company will provide you with suitable
office space and secretarial services, the existing security
systems at your home will be maintained, and the Company will
reimburse you for all club dues attributable to the periods
prior to that date for existing clubs.
Finally, the Company will reimburse you for any out-of-pocket
expenses authorized by and incurred on behalf of the Company.
In return for the payments, benefits and actions delivered
within this letter, you agree to be available for consulting to
the Company as requested by the Chief Executive Officer of the
Company from time to time. You also agree not to be engaged by
or provide services, information or consultation to any company
which operates commercially in the nonalcoholic beverage
industry, beginning now and ending with the expiration of the
consulting agreement scheduled to end in 2007.
We appreciate you long and loyal service on behalf of
The Coca-Cola Company.
On behalf of the Board
/s/ Herbert A. Allen /s/ Douglas N. Daft
- ------------------------- ------------------------------
Herbert A. Allen Douglas N. Daft
Chairman Compensation President & Chief Operating Officer
Committee The Coca-Cola Company
The Board of Directors of
The Coca-Cola Company
Agreed and accepted this 6th day of December, 1999
/s/ M. Douglas Ivester
- -------------------------
M. Douglas Ivester
<PAGE>
EXHIBIT 10.17.2
LETTERHEAD OF THE COCA-COLA COMPANY
December 15, 1999
Mr. M. Douglas Ivester
Atlanta, Georgia
Dear Doug:
We are writing to clarify the letter we sent to you dated December 6, 1999.
By way of clarification, the release of restrictions on the 1,950,000 shares
of restricted stock will be effective the earlier of the first board meeting
in 2000 or February 4, 2000, as long as you do not voluntarily resign before
that earlier date.
/s/ Herbert A. Allen /s/ Douglas N. Daft
- --------------------------- -------------------------------------
Herbert A. Allen Douglas N. Daft
Chairman, Compensation Committee President and Chief Operating Officer
The Board of Directors of The Coca-Cola Company
The Coca-Cola Company
Agreed and accepted this 15 day of December, 1999.
/s/ M. Douglas Ivester
- ----------------------------
M. Douglas Ivester
EXHIBIT 10.17.3
LETTERHEAD OF THE COCA-COLA COMPANY
February 17, 2000
M. Douglas Ivester
Atlanta, Georgia
Dear Doug:
Much has changed since December 5, 1999. The planned restructuring
and transformation of our business is taking place at a very fast pace. Not
only the speed with which we have been able to form and execute our plans but
the particulars applicable to those who might be eligible for voluntary early
retirement had not been clearly envisioned at that time. Thus, we believe the
purpose behind the Board's desire that you remain until April 19 have been
completely satisfied. We also believe that by offering you the benefits of
the voluntary early retirement program, both you and the Company would benefit.
The Compensation Committee has approved these terms on February 16, 2000.
Accordingly, we propose that our letter of December 6, 1999 be
amended as follows:
1. You would resign as Chairman, Director and Chief Executive
Officer effective February 17, 2000.
2. The payments described in the third paragraph would remain
the same but would be offset by payments from the ERP and
would be deemed to include the lump sum payment payable under
the voluntary retirement program.
3. The exercise period for all unexercised options after your
retirement would be that available to all other retirees under
the terms of the options rather than a six month exercise
period.
4. You would receive a lump sum payment from your Supplemental
Thrift Plan upon your retirement.
5. On the first of March you will begin receiving monthly payments
of $4,331.01 which will continue until March 1, 2027 pursuant
to the terms of the Compensation Deferral and Investment Program.
6. The Company would not reimburse you for medical coverage since
your insurance benefits as a retiree would continue, as would
your spouse's.
<PAGE>
M. Douglas Ivester
February 11, 2000
Page 2
7. You would be eligible for the Matching Gifts program as a retiree.
8. In the event of your death, all payments due under this letter and
the December 6th letter, as amended by this letter, will be made
to your spouse.
We believe this amendment serves us both. Please accept our best wishes
on your retirement.
On behalf of the Company and the Board
/s/ Herbert A. Allen /s/ Douglas N. Daft
- --------------------------------- --------------------------------------
Herbert A. Allen Douglas N. Daft
Chairman, Compensation Committee President and Chief Operating Officer
The Board of Directors The Coca-Cola Company
The Coca-Cola Company
Agreed and accepted this 17th day of February, 2000
/s/ M. Douglas Ivester
- -------------------------------------
M. Douglas Ivester
EXHIBIT 10.18
GROUP LONG-TERM INCENTIVE PLAN THE COCA-COLA COMPANY
- -------------------------------------------------------------------
GROUP LONG-TERM PERFORMANCE INCENTIVE PLAN
OF THE COCA-COLA COMPANY
(AS AMENDED AND RESTATED EFFECTIVE FEBRUARY 17, 2000)
SECTION 1. PURPOSE
The purpose of the Group Long-Term Performance Incentive
Plan of The Coca-Cola Company (the "Plan") is to advance the
interests of The Coca-Cola Company or any entity in which it
owns, directly or indirectly, during the relevant time,
either (i) 50% or more of the voting stock or capital where
such entity is not publicly held, or (ii) an interest which
causes the other entity's financial results to be
consolidated with The Coca-Cola Company's financial results
for financial reporting purposes (the "Company") by
providing a competitive level of incentive for eligible
senior executives which will encourage them to more closely
identify with share-owner interests and to achieve financial
results consistent with the Company's long range business
plans. It will also provide a vehicle to attract and retain
key executives who are responsible for moving the business
forward.
SECTION 2. ADMINISTRATION
The Plan shall be administered by a committee (the
"Committee") composed of the Chairman and Chief Executive
Officer, the President and Chief Operating Officer, the
Executive Vice President, Operations Support, the Senior
Vice President and Chief Financial Officer, the Vice
President, Human Resources, the Group Presidents, and the
Director, Compensation. However, in the case of any
participant who is an elected officer of The Coca-Cola
Company, the Compensation Committee of the Board of
Directors shall constitute the "Committee." The Committee
may delegate any of its duties to any individual or
individuals as it may deem necessary in order to carry out
the intent and provisions of this Plan. The Committee shall
determine which of the eligible key employees of a Division
or Group to whom, and the time or times at which, Long-Term
Incentive Awards ("Awards") will be granted under the Plan,
and the other conditions of the grant of the Awards. The
provisions and conditions of the grants of Awards need not
be the same with respect to each grantee or with respect to
each Award.
The Committee shall, subject to the provisions of the Plan,
establish such rules and regulations as it deems necessary
or advisable for the proper administration of the Plan, and
shall make determinations and shall take such other action
in connection with or in relation to accomplishing the
objectives of the Plan as it deems necessary or advisable.
Each determination or other action made or taken pursuant to
the Plan, including interpretation of the Plan and the
specific conditions and provisions of the Awards granted
hereunder by the Committee shall be final and conclusive for
all purposes and upon all persons including, but without
limitation, the affected employees and their respective
successors in interest.
- -----------------------------------------------------------------
REVISED FEBRUARY 14, 2000 PAGE 1
<PAGE>
GROUP LONG-TERM INCENTIVE PLAN THE COCA-COLA COMPANY
- ------------------------------------------------------------------
SECTION 3. ELIGIBILITY
Group Presidents, Division Presidents and other key senior
executives, as defined by the Group Presidents or the
Committee, may be approved by the Committee from time to
time as eligible to participate in the Plan, but no
individual shall have a right to participate. Persons who
become elected corporate officers of The Coca-Cola Company
while participating in the Plan may continue to participate.
Awards may be granted to such key employees of the Company
as determined in the sole discretion of the Committee.
SECTION 4. GRANTS OF AWARDS
(a) ANNUAL SELECTION BY THE COMMITTEE OF PARTICIPANTS.
Annually, participants shall be selected for
participation by the Committee prior to or shortly
after the beginning of a three-year performance
period ("Performance Period"). Following such
selection by the Committee, the applicable Group
President or the Committee shall advise such key
employees that they are participants in the Plan
for a Performance Period. Each Performance Period
will be of three years duration and shall commence
on the first day of January of the applicable year.
A new three-year Performance Period shall commence
each year.
(b) CALCULATION OF PERFORMANCE INCENTIVE BASE. At the
time a Group President or the Committee advises a
participant of his or her participation, the
participant's Performance Incentive Base shall be
calculated. The Performance Incentive Base shall
be the participant's salary grade midpoint or 50%
of salary range at the time of notification, times
a percentage predicated upon the participant's
relative responsibility level. The percentage
will be progressively higher for correspondingly
higher levels of responsibility. Once the
Performance Incentive Base (i.e., the employee's
salary grade midpoint or 50% of salary range and
the applicable percentage) is determined at
the commencement of each Performance Period, that
Performance Incentive Base will not change for that
Performance Period, unless it is subsequently adjusted
upwards by the Committee in its sole discretion based
on inflation in excess of that which was taken into
account in determining the Performance Incentive Base.
SECTION 5. PERFORMANCE CRITERION
The measures of performance are objective and shall be based
on one or more criteria measured annually over the three-
year Performance Period. The Committee shall specify which
of the following criteria will apply for the Group (or other
business unit as designated by the Committee) during the
Performance Period of the Group (or other business unit as
designated by the Committee) in which the participant is
employed.
(a) GROWTH IN UNIT CASE SALES. The annual compound
"Growth in Unit Case Sales" will mean the growth in
the number of cases of 24 8 oz. (U.S.) servings sold
- -----------------------------------------------------------------
REVISED FEBRUARY 14, 2000 PAGE 2
<PAGE>
GROUP LONG-TERM INCENTIVE PLAN THE COCA-COLA COMPANY
- ------------------------------------------------------------------
during a year compared to the number sold in the
previous year, as determined by the Controller.
(b) OPERATING PROFIT MARGIN. "Operating Profit Margin"
for a calendar year will be determined by the Controller
using the following formula: consolidated operating
profit as a percent of consolidated revenues excluding
Company-owned bottling operations and after adjustment
for deviations from budgeted exchange rates.
(c) SHARE OF SALES. "Share of Sales" will be determined
by the Controller using the following formula: percent
of the total unit case volume for the soft-drink
category (or such other category or categories as the
Committee specifies at the time it selects the criterion
for a Performance Period) of the commercial beverages
industry.
(d) GROWTH IN ECONOMIC PROFIT. "Growth in Economic Profit"
shall be determined for each calendar year in accordance
with the definition of Economic Profit provided by the
Controller and approved by the Committee within 90 days
of the start of the Performance Period in which it would
apply. At such time, the Committee may, but is not
obligated to, specify an independent inflation/deflation
index and/or exchange rate index that will be applied to
the calculation of Economic Profit to eliminate any
effect of inflation and/or exchange rates on the
calculation of Economic Profit.
SECTION 6. AWARD DETERMINATION
Awards will be determined after the close of each Performance
Period from an award matrix, based upon the performance
criteria, which matrix shall be adopted by the Committee at
the inception of each Performance Period. The amount of an
Award will equal the product of the participant's Performance
Incentive Base and the percentage derived from the award
matrix. In no event shall an Award to a participant for any
Performance Period exceed 150% of target, as adjusted, if
necessary, pursuant to Section 4(b). The Committee may, in
its sole discretion, reduce the amount of any Award or
refuse to pay any Award.
SECTION 7. PAYMENT OF AWARDS
(a) CONDITIONS TO PAYMENT OF AWARDS. Prior to the payment
of any Award, the Committee shall certify the appropriate
performance measured against the applicable criteria to
be used in determining the amount of such Award.
(b) AWARDS. Awards shall be paid in cash at the times
provided in Section 7(c) and portions of awards are
subject to forfeiture until paid, as provided below.
(c) THE VESTED CASH AWARD. One-half of the Award will be
paid in cash to each participant within sixty days
after the date on which the Senior Vice President and
- ------------------------------------------------------------------
REVISED FEBRUARY 14, 2000 PAGE 3
GROUP LONG-TERM INCENTIVE PLAN THE COCA-COLA COMPANY
- ------------------------------------------------------------------
Chief Financial Officer of the Company approves the
report on the financial statements of the Group for the
third year of each Performance Period (the
"Vested Cash Award"). The second half of the Award is
referred to herein as the "Contingent Award", and it
shall be paid to each participant in the manner
described in (e) below. The only exception to this
schedule is if the participant transfers from one Group
to another or to a United States division. In that
instance, the Committee, in its sole discretion, may
elect to pay the participant a pro-rated Award payment
as described in Section 8(b) based on the financial
data available at that time. Otherwise, the
participant shall receive a pro-rated Award at the
customary payout date.
(d) RETIREMENT. "Retirement," as used herein, shall mean
an employee's termination of employment on a date which
is on or after the earliest date on which such employee
would be eligible for an immediately payable benefit
pursuant to the terms of the Employee Retirement Plan
(the "ERP") assuming such employee were eligible to
participate in the ERP.
(e) PAYMENT AND FORFEITURE OF CONTINGENT AWARD. The
Contingent Award, plus interest thereon as set forth
below from the date of such Contingent Award as
determined by the Committee, shall be paid in cash to
each participant within sixty days after the expiration
of the second year following the end of the final year
of the related Performance Period, provided that such
Contingent Award has not been forfeited as set forth in
the following sentence. The Contingent Award shall be
forfeited to the Company (unless the Committee in its
sole discretion shall otherwise determine) if, within
two years from the date the Contingent Award is
granted, the participant terminates his or her
employment with the Company (for reasons other than
death, retirement or disability as such disability may
be determined by the Committee).
A Contingent Award shall bear interest from the date
such Contingent Award is granted to the date of
payment, such interest to be calculated pursuant to
rules promulgated by the Committee, but in no event
shall constitute interest which is "above market" as
set forth in Item 402 of Regulation S-K promulgated by
the Securities and Exchange Commission.
(f) RETIREMENT, DEATH OR DISABILITY DURING FORFEITURE
PERIOD. If, within two years after the end of a
Performance Period for which a participant receives a
Contingent Award, the participant retires, dies or
becomes disabled, such participant (or his or her
estate) shall be paid the full Contingent Award.
(g) WITHHOLDING FOR TAXES. The Company shall have the
right to deduct from all Award payments any taxes
required to be withheld with respect to such payments.
(h) PAYMENTS TO ESTATES. Awards and earnings thereon, if
any, to the extent that they are due to a participant
pursuant to the provisions hereof and which remain
unpaid
- ------------------------------------------------------------------
REVISED FEBRUARY 14, 2000 PAGE 4
<PAGE>
GROUP LONG-TERM INCENTIVE PLAN THE COCA-COLA COMPANY
- -------------------------------------------------=----------------
at the time of the participant's death, shall be
paid in full to the executor or administrator of the
participant's estate.
SECTION 8. TERMINATION OF EMPLOYMENT OR TRANSFER
DURING ANY PERFORMANCE PERIOD
(a) TERMINATION FOR REASONS OTHER THAN RETIREMENT, DEATH OR
DISABILITY. If the participant's employment by the
Company or an Affiliate terminates for any reason
(other than retirement, death or disability) during any
Performance Period, that participant shall not be
entitled to any Award for that Performance Period but
may receive a pro-rated portion of the Award calculated
in accordance with Section 8(b) below if the Committee
so determines in its discretion.
(b) DEATH, DISABILITY OR RETIREMENT DURING PERFORMANCE
PERIOD. If a participant retires, dies or becomes
disabled during any Performance Period, the amount of
the Award shall be calculated as provided in Sections
4, 5 and 6 as if the Performance Period ended on the
last day of the year in which the participant retired,
died or became disabled. Such Award will then be paid
all in cash within sixty days after the date on which
the independent public accountants of the Company issue
their report on the financial statements of the Company
for the last year of the redefined Performance Period.
The amount of the Award will be prorated by a fraction,
the numerator of which shall be the number of whole
calendar months in the period commencing with the first
month of the Performance Period and ending with the
whole calendar month immediately preceding the date of
retirement, death or disability, and the denominator of
which will be thirty-six.
(c) TRANSFER FROM GROUP DURING PERFORMANCE PERIOD. If a
participant transfers from one Group of the Company to
another Group of the Company during any Performance
Period, the amount of the Award shall be calculated as
provided in Sections 4, 5 and 6. Such Award will then
be paid all in cash at the normal payout time, as if no
transfer had occurred. The amount of the Award will be
prorated by a fraction, the numerator of which shall be
the number of whole calendar months in the period
commencing with the first month of the Performance
Period and ending with the whole calendar month
immediately preceding the date of transfer, and the
denominator of which will be thirty-six.
SECTION 9. AMENDMENTS, MODIFICATION AND TERMINATION OF
THE PLAN
The Committee may terminate the Plan, in whole or in part, may
suspend the Plan, in whole or in part, and may amend the Plan
from time to time, including the adoption of amendments
deemed necessary or desirable to correct any defect or supply an
omission or reconcile any inconsistency in the Plan or in any
Award granted hereunder. No amendment, termination or
modification of the Plan may in any manner affect Awards
therefore granted without the consent of the participant unless
the Committee has made a
- -----------------------------------------------------------------
REVISED FEBRUARY 14, 2000 PAGE 5
<PAGE>
GROUP LONG-TERM INCENTIVE PLAN THE COCA-COLA COMPANY
- ------------------------------------------------------------------
determination that an amendment or modification is in the best
interest of all persons to whom Awards have therefore been granted,
but in no event may such amendment or modification result in an
increase in the amount of compensation payable pursuant to such
award.
SECTION 10. GOVERNING LAW
The Plan and all determinations made and actions taken pursuant
thereto shall be governed by the laws of the State of Georgia and
construed in accordance therewith.
SECTION 11. EFFECT ON BENEFIT PLANS
Awards will be included in the computation of benefits under the
Employee Retirement Plan, Overseas Retirement Plan and other
retirement plans maintained by the Company under which the
participant may be covered and the Thrift Plans, subject to all
applicable laws and in accordance with the provisions of those
plans.
Awards shall not be included in the computation of benefits
under any Group Life Insurance Plan, Travel Accident Insurance
Plan, Personal Accident Insurance Plan or under Company policies
such as severance pay and payment for accrued vacation, unless
required by applicable laws.
SECTION 12. CHANGE IN CONTROL
If there is a Change in Control (as hereinafter defined) while
the Plan remains in effect, then
(a) each participant's Award accrued through the date of
such Change in Control for each Performance Period then
in effect automatically shall become nonforfeitable on
such date,
(b) the Committee immediately after the date of such Change
in Control shall determine each participant's Award
accrued through the end of the calendar month which
immediately precedes the date of such Change in
Control, and such determination shall be made based on
a formula established by the Committee which computes
such Award using (1) actual performance data for each
full Plan Year in each Performance Period for which
such data is available and (2) projected data for each
other Plan Year, which projection shall be based on a
comparison, as applicable (for the Plan Year which
includes the Change in Control) of the actual
performance versus budgeted performance for Unit Case
Sales for the full calendar months (in such Plan Year)
which immediately precede the Change in Control and the
actual performance versus budgeted performance for
Economic Profit for such period multiplied by (3) a
fraction, the numerator of which shall be the number of
full calendar months in each such Performance
------------------------------------------------------------------
REVISED FEBRUARY 14, 2000 PAGE 6
<PAGE>
GROUP LONG-TERM INCENTIVE PLAN THE COCA-COLA COMPANY
- ------------------------------------------------------------------
Period before the date of the Change in Control and the
denominator of which shall be thirty-six,
(c) each participant's accrued Award (as determined under
Section 12(b) and his or her then unpaid Vested Cash
Award and Contingent Award(s) under Section 7 (computed
with interest at the market weighted prime rate accrued
on such awards under Section 7 through the date of such
Change in Control but in no event constituting an
"above-market" rate of interest as set forth in Item
402 of Regulation S-K promulgated by the Securities and
Exchange Commission) shall be paid to him or her in a
lump sum in cash promptly after the date of such Change
in Control in lieu of any other additional payments
under the Plan for the related Performance Periods, and
(d) any federal golden parachute payment excise tax paid or
payable under Section 4999 of the Code, or any
successor to such Section, by a participant for his or
her taxable year for which he or she reports the
payment made under Section 12(c) on his or her federal
income tax return shall be deemed attributable to such
payment under Section 12(c), and the Company promptly
on written demand from the participant (or, if he or
she is dead, from his or her estate) shall pay to him
or her (or, if he or she is dead, to his or her estate)
an amount equal to such excise tax.
A "Change in Control" for purposes of this Section 12 shall mean
a change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14a of Regulation
14A promulgated under the Securities Exchange Act of 1934 (the
"Exchange Act") as in effect on January 1, 1999, provided that
such a change in control shall be deemed to have occurred at
such time as (i) any "person" (as that term is used in Section
13(d) and 14(d)(2) of the Exchange Act as in effect on
January 1, 1999) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act as in effect on
January 1, 1999) directly or indirectly, of securities
representing 20% or more of the combined voting power for
election of directors of the then outstanding securities of the
Company or any successor of the Company; (ii) during any period
of two consecutive years or less, individuals who at the
beginning of such period constituted the Board of Directors of
the Company cease, for any reason, to constitute at least a
majority of the Board of Directors, unless the election or
nomination for election of each new director was approved by a
vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period;
(iii) the share owners of the Company approve any merger or
consolidation as a result of which its stock shall be changed,
converted or exchanged (other than a merger with a wholly-owned
subsidiary of the Company) or any liquidation of the Company
or any sale or other disposition of 50% or more of the assets
or earning power of the Company; or (iv) the share owners of
the Company approve any merger or consolidation to which the
Company is a party as a result of which the persons who were
share owners of the Company immediately prior to the effective
date of the merger or consolidation shall have beneficial
ownership of less than 50% of the combined voting power for
election of directors of the surviving corporation following
the effective date of such merger or consolidation; provided,
however, that no Change in
- ---------------------------------------------------------------------
REVISED FEBRUARY 14, 2000 Page 7
<PAGE>
GROUP LONG-TERM INCENTIVE PLAN THE COCA-COLA COMPANY
- ------------------------------------------------------------------
Control shall be deemed to have occurred, if, prior to such time
as a Change in Control would otherwise be deemed to have occurred,
the Board of Directors determines otherwise.
- ---------------------------------------------------------------------
REVISED FEBRUARY 14, 2000 Page 8
<PAGE>
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,
----------------------------------------------------------------------
1999 1998 1997 1996 1995
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earnings:
Income from continuing operations
before income taxes and changes
in accounting principles $ 3,819 $ 5,198 $ 6,055 $ 4,596 $ 4,328
Fixed charges 386 320 300 324 318
Less: Capitalized interest, net (18) (17) (17) (7) (9)
Equity income, net of dividends 292 31 (108) (89) (25)
--------------------------------------------------------------------
Adjusted earnings $ 4,479 $ 5,532 $ 6,230 $ 4,824 $ 4,612
====================================================================
Fixed charges:
Gross interest incurred $ 355 $ 294 $ 275 $ 293 $ 281
Interest portion of rent expense 31 26 25 31 37
--------------------------------------------------------------------
Total fixed charges $ 386 $ 320 $ 300 $ 324 $ 318
====================================================================
Ratios of earnings to fixed charges 11.6 17.3 20.8 14.9 14.5
====================================================================
The Company is contingently liable for guarantees of indebtedness owed by third parties in the amount
of $409 million, of which $7 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>
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS KO-ar99-p31
THE COCA-COLA COMPANY AND SUBSIDIARIES
Our mission is to maximize share-owner value over time. In order to achieve
this mission, we must create value for all the constituents we serve, including
our consumers, our customers, our bottlers and our communities. The Coca-Cola
Company and its subsidiaries (our Company) create value by executing a
comprehensive business strategy guided by six key beliefs: (1) consumer demand
drives everything; (2) brand Coca-Cola is the core of our business; (3) we will
serve consumers a broad selection of the nonalcoholic ready-to-drink beverages
they want to drink throughout the day; (4) we will be the best marketers in the
world; (5) we will think and act locally; and (6) we will lead as a model
corporate citizen. The ultimate objectives of our business strategy are to
increase volume, expand our share of worldwide nonalcoholic ready-to-drink
beverage sales, maximize our long-term cash flows and create economic value
added by improving economic profit. We pursue these objectives by strategically
investing in the high-return beverage business and by optimizing our cost of
capital through appropriate financial strategies.
There are nearly 6 billion people in the world who decide every day whether
or not to buy our products. Each of these people represents a potential consumer
of our Company's products. As we increase consumer demand for our portfolio of
brands, we produce growth throughout the Coca-Cola system. This growth typically
comes in the form of increased finished product purchases by our consumers,
increased finished product sales by our customers, increased case sales by our
bottling partners and increased gallon sales by our Company.
The Coca-Cola system has more than 16 million customers around the world
that sell or serve our products directly to consumers. We keenly focus on
enhancing value for these customers and providing solutions to grow their
beverage businesses. Our approach includes understanding each customer's
business and needs, whether that customer is a sophisticated retailer in a
developed market or a kiosk owner in an emerging market.
Ultimately, our success in achieving our Company's mission depends on our
ability to satisfy more of the nonalcoholic ready-to-drink beverage
consumption demands of these 6 billion consumers and our ability to add value
for these customers. This can be achieved when we place the right products in
the right markets at the right time.
INVESTMENTS
With a business system that operates locally in nearly 200 countries and
generates superior cash flows, we consider our Company to be uniquely positioned
to capitalize on profitable investment opportunities. Our criteria for
investment are 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, the beverage business is a
particularly attractive investment for us. In highly developed markets, our
expenditures focus primarily on marketing our Company's brands. In emerging and
developing markets, our objective is to increase the penetration of our
products. In these markets, we allocate most of our investments to enhancing
infrastructure such as production facilities, distribution networks, sales
equipment and technology. We make these investments by forming strategic
business alliances with local bottlers and by matching local expertise with our
experience, resources and focus. Our investment strategy focuses on three
fundamental components of our business: marketing, brands and our bottling
system.
MARKETING
To meet our long-term growth objectives, we make significant investments in
marketing to support our brands. Marketing investments enhance consumer
awareness and increase consumer preference for our brands. This produces
long-term growth in volume, per capita consumption and our share of worldwide
nonalcoholic ready-to-drink beverage sales.
We heighten consumer awareness and product appeal for our brands using
integrated marketing programs. Through our bottling investments and strategic
alliances with other bottlers of our products, we create and implement these
programs locally. In developing a strategy for a Company brand, 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.
BRANDS
We compete in the nonalcoholic ready-to-drink beverage business. Our
offerings in this category include some of the world's most valuable brands, 232
in all. These include soft drinks and noncarbonated beverages such as sports
drinks, juice and juice drinks, water products, teas and coffees. As discussed
earlier, to meet our long-term growth objectives, we make significant
investments to support our brands. This involves investments to support existing
brands and to acquire new brands, when appropriate.
In July 1999, we completed the acquisition of Cadbury Schweppes plc
beverage brands in 155 countries for approximately $700 million. These brands
included Schweppes, Canada Dry, Dr Pepper, Crush and certain regional brands.
Among the countries excluded from this transaction were the United States, South
Africa, Norway, Switzerland and the European Union member nations (other than
the United Kingdom, Ireland and Greece). In September 1999, we completed the
acquisition of Cadbury Schweppes beverage brands in New Zealand for
approximately $20 million. Also in September 1999, in a separate transaction
valued at approximately $250 million, we acquired the carbonated soft drink
business of Cadbury Schweppes (South Africa) Limited in South Africa, Botswana,
Namibia, Lesotho and Swaziland. Our acquisitions of Cadbury Schweppes beverage
brands are still pending in several countries, subject to certain conditions
including regulatory review.
<PAGE>
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS KO-ar99-p32
THE COCA-COLA COMPANY AND SUBSIDIARIES
In December 1997, our Company announced its intent to acquire from beverage
company Pernod Ricard its Orangina brands, three bottling operations and one
concentrate plant in France for approximately 5 billion French francs. The
transaction was rejected by regulatory authorities of the French government in
November 1999.
BOTTLING SYSTEM
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 1999, independently owned bottling operations produced and
distributed approximately 27 percent of our worldwide unit case volume. Bottlers
in which we own a noncontrolling ownership interest produced and distributed
approximately 58 percent of our 1999 worldwide unit case volume. Controlled
bottling and fountain operations produced and distributed approximately 15
percent.
We view certain bottling operations in which we have a noncontrolling
ownership interest as key or anchor bottlers due to their level of
responsibility and performance. The strong commitment of both key and anchor
bottlers to their own profitable volume growth helps us meet our strategic goals
and furthers the interests of our worldwide production, distribution and
marketing systems. These bottlers tend to be large and geographically diverse,
with strong financial resources for long-term investment and strong management
resources. These bottlers give us strategic business partners on every major
continent.
Consistent with our strategy, in January 1999, two Japanese bottlers,
Kita Kyushu Coca-Cola Bottling Company Ltd. and Sanyo Coca-Cola Bottling Company
Ltd., announced plans for a merger to become a new, publicly traded bottling
company, Coca-Cola West Japan Company Ltd. The transaction, which was completed
in July 1999 and was valued at approximately $2.2 billion, created our first
anchor bottler in Japan. As of December 31, 1999, we owned approximately 5
percent of this new anchor bottler.
In 1998, Coca-Cola Amatil Ltd. (Coca-Cola Amatil) completed a spin-off of
its European operations into a new publicly traded European anchor bottler,
Coca-Cola Beverages plc (Coca-Cola Beverages). On December 31, 1999, we owned
approximately 50.5 percent of Coca-Cola Beverages. Our expectation is that we
will reduce our ownership position to less than 50 percent in 2000; therefore,
we are accounting for the investment by the equity method of accounting.
Historically, in certain situations, we have viewed it to be advantageous
for our Company to acquire a controlling interest in a bottling operation.
Owning such a controlling interest allowed us to compensate for limited local
resources and enabled us to help focus the bottler's sales and marketing
programs, assist in developing its business and information systems and
establish appropriate capital structures.
In July 1999, our Company acquired from Fraser and Neave Limited its 75
percent ownership interest in F&N Coca-Cola Pte Limited (F&N Coca-Cola). Prior
to the acquisition, our Company held a 25 percent equity interest in F&N
Coca-Cola. Acquisition of Fraser and Neave Limited's 75 percent stake gave our
Company full ownership of F&N Coca-Cola. F&N Coca-Cola holds a majority
ownership in bottling operations in Brunei, Cambodia, Nepal, Pakistan, Sri
Lanka, Singapore and Vietnam.
In line with our long-term bottling strategy, we periodically consider
options for reducing our ownership interest in a bottler. One option 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
bottling operation to one of our equity investee bottlers. In both of these
situations, we continue participating in the bottler's earnings through our
portion of the equity investee's income.
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 1999, we increased our interest in Embotelladora Arica S.A., a bottler
headquartered in Chile, from approximately 17 percent to approximately 45
percent.
Our bottling investments generally have been profitable over time. Equity
income or loss, included in our consolidated net income, represents our share of
the net earnings or losses of our investee companies. In 1999, our Company's
share of losses from equity method investments totaled $184 million. For a more
complete discussion of these investments, refer to Note 2 in our Consolidated
Financial Statements.
The following table illustrates the difference in calculated fair values,
based on quoted closing prices of publicly traded shares, and our Company's
carrying values for selected equity method investees (in millions):
Fair Carrying
December 31, Value Value Difference {1}
- --------------------------------------------------------------------------------
1999
Coca-Cola Enterprises Inc. $ 3,400 $ 728 $2,672
Coca-Cola Beverages plc 1,028 788 240
Coca-Cola Amatil Ltd. 1,019 1,133 (114)
Coca-Cola FEMSA,
S.A. de C.V. 751 124 627
Panamerican
Beverages, Inc. 630 714 (84)
Grupo Continental, S.A. 231 123 108
Embotelladora Arica S.A. 217 255 (38)
Coca-Cola Bottling Co.
Consolidated 118 70 48
Embotelladoras Argos S.A. 63 111 (48)
Embotelladoras Polar S.A. 46 55 (9)
- --------------------------------------------------------------------------------
$ 3,402
- --------------------------------------------------------------------------------
{1} In instances where carrying value exceeds fair value, this excess is
considered to be temporary.
<PAGE>
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS KO-ar99-p33
THE COCA-COLA COMPANY AND SUBSIDIARIES
FINANCIAL STRATEGIES
The following strategies allow us to optimize our cost of capital,
increasing our ability to maximize share-owner value.
DEBT FINANCING
Our Company maintains debt levels we consider 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 "A+" from Standard & Poor's and "Aa3" from Moody's, and a credit
rating of "A-1" and "P-1" for our commercial paper programs from Standard &
Poor's and Moody's, respectively.
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.
In managing our use of debt capital, we consider the following financial
measurements and ratios:
Year Ended December 31, 1999 1998 1997
- --------------------------------------------------------------------------------
Net debt (in billions) $ 4.5 $ 3.3 $ 2.0
Net debt-to-net capital 32% 28% 22%
Free cash flow to net debt 52% 57% 144%
Interest coverage 14x 19x 22x
Ratio of earnings to
fixed charges 11.6x 17.3x 20.8x
- --------------------------------------------------------------------------------
SHARE REPURCHASES
In October 1996, our Board of Directors authorized a plan to repurchase up
to 206 million shares of our Company's common stock through the year 2006. In
1999, we did not repurchase any shares under the 1996 plan due primarily to our
utilization of cash for our recent brand and bottler acquisitions.
We do not anticipate the repurchase of any shares under the 1996 plan
during the first half of the year 2000. This is due to our anticipated
utilization of cash for an organizational realignment and the projected impact
on cash from the planned reduction in concentrate inventory levels at selected
bottlers, as discussed under the heading "Recent Developments." We intend to
reevaluate our cash needs during the second half of the year.
Since the inception of our initial share repurchase program in 1984 through
our current program as of December 31, 1999, we have repurchased more than 1
billion shares. This represents 32 percent of the shares outstanding as of
January 1, 1984, at an average price per share of $12.46.
DIVIDEND POLICY
At its February 2000 meeting, our Board of Directors again increased our
quarterly dividend, raising it to $.17 per share. This is equivalent to a
full-year dividend of $.68 in 2000, our 38th consecutive annual increase. Our
annual common stock dividend was $.64 per share, $.60 per share and $.56 per
share in 1999, 1998 and 1997, respectively.
In 1999, our dividend payout ratio was approximately 65 percent of our net
income, reflecting the impact of the other operating charges recorded in the
fourth quarter. A detailed discussion follows under the heading "Other Operating
Charges." To free up additional cash for reinvestment in our high-return
beverage 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, 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 represent 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 70 percent of 1999 operating income generated
outside the United States, weakness in one particular currency is often offset
by strengths in others over time. We use derivative financial instruments to
further reduce our net exposure to currency fluctuations.
<PAGE>
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS KO-ar99-p34
THE COCA-COLA COMPANY AND SUBSIDIARIES
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 any
terminated contracts, are included in prepaid expenses and other assets. These
are recognized in income, along with unrealized gains and losses, in the same
period we realize the hedged transactions. 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, a component of other comprehensive
income.
Our value-at-risk calculation estimates foreign currency risk on our
derivatives and other financial instruments. The average value at risk
represents the simple average of quarterly amounts for the past year. We have
not included in our calculation the effects of currency movements on anticipated
foreign currency denominated sales and other hedged transactions. We performed
calculations to estimate the impact to the fair values of our derivatives and
other financial instruments over a one-week period resulting from an adverse
movement in foreign currency exchange rates. As a result of our calculations, we
estimate with 95 percent confidence that the fair values would decline by less
than $71 million using 1999 average fair values and by less than $56 million
using December 31, 1999, fair values. On December 31, 1998, we estimated the
fair value would decline by less than $60 million. However, we would expect that
any loss in the fair value of our derivatives and other financial instruments
would generally be 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-to-variable mix within these parameters. We recognize any differences
paid or received on interest rate swap agreements as adjustments to interest
expense over the life of each swap.
Our value-at-risk calculation estimates interest rate risk on our
derivatives and other financial instruments. The average value at risk
represents the simple average of quarterly amounts for the past year. According
to our calculations, we estimate with 95 percent confidence that any increase in
our average and in our December 31, 1999, 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 Statements. Our December 31, 1998, estimate also
was not material to our Consolidated Financial Statements.
PERFORMANCE TOOLS
Economic profit provides a framework by which we measure the value of our
actions. We define economic profit as income from continuing operations, after
giving effect to taxes and excluding the effects of interest, in excess of a
computed capital charge for average operating capital employed.
We use value-based management (VBM) as a tool to help improve our
performance in planning and execution. VBM 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. With VBM, we
determine how best to create value in every area of our business. We believe
that by using VBM as a planning and execution tool, and economic profit as a
performance measurement tool, we greatly enhance our ability to build
share-owner value over time.
We seek to maximize economic profit by strategically investing in the
high-return beverage business and by optimizing our cost of capital through
appropriate financial policies.
TOTAL RETURN TO SHARE OWNERS
Our Company has provided share owners with an excellent return on their
investments over the past decade. A $100 investment in our Company's common
stock on December 31, 1989, together with reinvested dividends, grew in pretax
value to approximately $681 on December 31, 1999, an average annual compound
return of 21 percent.
<PAGE>
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS KO-ar99-p35
THE COCA-COLA COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OUR BUSINESS
We are the world's leading manufacturer, marketer and distributor of
nonalcoholic beverage concentrates and syrups. 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. We also market and distribute juice and juice-drink
products. In addition, we have ownership interests in numerous bottling and
canning operations.
VOLUME
We measure our sales volume in two ways: (1) gallon sales and (2) unit
cases of finished products. Gallon sales represent our primary business and
measure the volume of concentrates and syrups we sell to our bottling partners
or customers, plus the gallon sales equivalent of the juice and juice-drink
products sold by The Minute Maid Company. 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 products we and our bottling system sell to
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 in both measures fountain syrups sold by the Company to customers
directly or through wholesalers or distributors. The Company now includes
products sold by The Minute Maid Company in its calculations of unit case volume
and gallon sales. Accordingly, all historical unit case volume data in this
report reflect the inclusion of these products. In all years presented, the
impact on our unit case volume and gallon sales was not material.
Against a challenging economic environment in many of our key markets, our
worldwide unit case volume increased nearly 2 percent in 1999, on top of a 6
percent increase in 1998. Approximately 1 percentage point of the increase in
unit case volume in 1999 was attributable to the Cadbury Schweppes brands
acquired during the second half of 1999, as discussed under the heading
"Brands." Our business system sold 16.5 billion unit cases in 1999.
OPERATIONS
NET OPERATING REVENUES AND GROSS MARGIN
In 1999, on a consolidated basis, our net revenues and our gross profit
grew 5 percent and 4 percent, respectively. The growth in net revenues was
primarily due to price increases in certain markets, the consolidation in 1999
of our recently acquired bottling operations in India and our vending operations
in Japan, partially offset by the impact of a stronger U.S. dollar and the sale
of our previously consolidated bottling and canning operations in Italy in June
1998.
Our gross profit margin decreased slightly to 69.7 percent in 1999,
primarily due to the consolidation in 1999 of our recently acquired bottling
operations in India and our vending operations in Japan. Generally, the
consolidation of bottling and vending operations shifts a greater portion of our
net revenues to the higher revenue, but lower margin, bottling and vending
operations.
In 1998, on a consolidated basis, our net revenues remained even with 1997,
and our gross profit grew 3 percent. Net revenues remained even with 1997,
primarily due to an increase in gallon sales and price increases in certain
markets, offset by the impact of a stronger U.S. dollar and the sale of our
previously consolidated bottling and canning operations in Italy in June 1998.
Our gross profit margin increased to 70.4 percent in 1998 from 68.1 percent in
1997, primarily as a result of the sale in 1997 of previously consolidated
bottling and canning operations.
SELLING, ADMINISTRATIVE AND GENERAL EXPENSES
Selling expenses totaled $7,266 million in 1999, $6,552 million in 1998 and
$6,283 million in 1997. The increase in 1999 was primarily due to the temporary
product withdrawal in Belgium and France and marketing expenditures associated
with brand building activities. The increase in 1998 was primarily due to higher
marketing expenditures in support of our Company's volume growth.
Administrative and general expenses totaled $1,735 million in 1999, $1,659
million in 1998 and $1,509 million in 1997. The increase in 1999 was primarily
related to the consolidation in 1999 of our recently acquired bottling
operations in India and our vending operations in Japan. The increase in 1998
was mainly due to the expansion of our business into emerging markets.
Offsetting this increase was the impact of the sale of our bottling and canning
operations in Italy in June 1998.
Administrative and general expenses, as a percentage of net operating
revenues, totaled approximately 9 percent in 1999, 9 percent in 1998 and 8
percent in 1997.
<PAGE>
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS KO-ar99-p36
THE COCA-COLA COMPANY AND SUBSIDIARIES
OTHER OPERATING CHARGES
In the fourth quarter of 1999, we recorded charges of approximately $813
million. Of this $813 million, approximately $543 million related to the
impairment of certain bottling, manufacturing and intangible assets, primarily
within our Russian and Caribbean bottlers and in the Middle and Far East and
North America. These impairment charges were recorded to reduce the carrying
value of the 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. Where cash flow analyses were used to
estimate fair values, key assumptions employed, consistent with those used in
our internal planning process, included our estimates of future growth in unit
case sales, estimates of gross margins and estimates of the impact of inflation
and foreign currency fluctuations. The charges were primarily the result of our
revised outlook in certain markets due to the prolonged severe economic
downturns. The remaining carrying value of long-lived assets within these
operations as of December 31, 1999, was approximately $140 million.
Of the remainder, approximately $196 million related to charges associated
with the impairment of the distribution and bottling assets of our vending
operations in Japan and our bottling operations in the Baltics. The charges
reduced the carrying value of these assets to their fair value less the cost to
sell. Consistent with our long-term bottling investment strategy, management has
committed to a plan to sell our ownership interest in these operations to one of
our strategic business partners. It is management's intention that this plan
will be completed within approximately the next 12 months. The remaining
carrying value of long-lived assets within these operations and the loss from
operations on an after-tax basis as of and for the 12-month period ending
December 31, 1999, were approximately $152 million and $5 million, respectively.
The remainder of the $813 million charges, approximately $74 million,
primarily related to the change in senior management and charges related to
organizational changes within the Greater Europe, Latin America and Corporate
segments. These charges were incurred during the fourth quarter of 1999.
In the second quarter of 1998, we recorded nonrecurring provisions
primarily related to the impairment of certain assets in North America of $25
million and Corporate of $48 million.
In the second quarter of 1997, we recorded certain nonrecurring provisions
of approximately $60 million related to enhancing manufacturing efficiencies in
North America. Substantially all of the charges required as a result of these
provisions have been realized as of December 31, 1999.
OPERATING INCOME AND OPERATING MARGIN
On a consolidated basis, our operating income declined 20 percent in 1999
to $3,982 million. This follows a decline of less than 1 percent in 1998 to
$4,967 million. The 1999 results reflect the recording of nonrecurring
provisions, as previously discussed under the heading "Other Operating Charges,"
the difficult economic conditions in many markets throughout the world, the
temporary product withdrawal in Belgium and France, the impact of the stronger
U.S. dollar and the consolidation in 1999 of our recently acquired bottling
operations in India and vending operations in Japan.
The 1998 results reflect an increase in gallon sales coupled with an
increase in gross profit margins, offset by the impact of the stronger U.S.
dollar and the sales of previously consolidated bottling operations. Our
consolidated operating margin was 20.1 percent in 1999, 26.4 percent in 1998 and
26.5 percent in 1997.
MARGIN ANALYSIS
- --------------------------------------------------------------------------------
1999 1998 1997
Net Operating Revenues
(in billions) $ 19.8 $ 18.8 $ 18.9
Gross Margin 69.7% 70.4% 68.1%
Operating Margin 20.1% 26.4% 26.5%
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS KO-ar99-p37
THE COCA-COLA COMPANY AND SUBSIDIARIES
INTEREST INCOME AND INTEREST EXPENSE
Our interest income increased 19 percent in 1999 and 4 percent in 1998,
primarily due to cash held in locations outside the United States earning higher
interest rates, on a comparative basis.
Interest expense increased 22 percent in 1999 due to higher total
borrowings throughout the period. Average 1999 debt balances increased from 1998
primarily due to brand and bottler acquisitions during the period. Interest
expense increased 7 percent in 1998 due to higher average commercial paper
borrowings. Average 1998 debt balances increased from 1997 primarily due to
additional investments in bottling operations.
EQUITY INCOME (LOSS)
In 1999, our Company's share of losses from equity method investments
totaled $184 million, reflecting the negative impact of difficult economic
conditions in many worldwide markets, continued structural change in the
bottling system, the impact of the temporary product withdrawal in Belgium and
France, and one-time charges taken by certain equity investees. Our Company's
share of the one-time charges taken by certain equity investees in countries
such as Venezuela and the Philippines was approximately $22 million. Our
Company's share of Coca-Cola Enterprises Inc.'s (Coca-Cola Enterprises)
nonrecurring product recall costs resulting from the product withdrawal was
approximately $28 million.
Equity income decreased approximately 79 percent to $32 million in 1998,
principally due to the weak economic environments around the world, the impact
of a stronger U.S. dollar, continued structural changes and losses in start-up
bottling operations.
OTHER INCOME-NET
In 1999, other income-net decreased 57 percent to $98 million, primarily
reflecting the impact of the gains recorded on the sales of our bottling and
canning operations in Italy in June 1998, partially offset by an increase in
exchange gains in 1999.
In 1998, other income-net decreased 61 percent to $230 million, primarily
reflecting the impact of gains 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., in 1997, partially offset by gains recorded
on the sales of our bottling and canning operations in Italy in June 1998.
GAINS ON ISSUANCES OF STOCK BY EQUITY INVESTEES
At the time an equity investee sells its stock to third parties at a price
in excess of our book value, our Company's equity in the underlying net assets
of that investee increases. We generally record an increase to our investment
account and a corresponding gain in these transactions. No gains on issuances of
stock by equity investees were recorded during 1999.
As a result of sales of stock by certain equity investees, we recorded
pretax gains of approximately $27 million in 1998 and approximately $363 million
in 1997. These gains represent the increase in our Company's equity in the
underlying net assets of the related investee. For a more complete description
of these transactions, refer to Note 3 in our Consolidated Financial Statements.
INCOME TAXES
Our effective tax rates were 36.3 percent in 1999, 32.0 percent in 1998 and
31.8 percent in 1997. The change in our effective tax rate in 1999 was primarily
the result of our inability to realize a tax benefit associated with a majority
of the charge taken in the fourth quarter of 1999, as previously discussed under
the heading "Other Operating Charges." Our effective tax rates reflect 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 tax rate on operations. For a more complete
description of our income taxes, refer to Note 14 in our Consolidated Financial
Statements.
INCOME PER SHARE
Our basic net income per share declined by 31 percent in 1999, compared to
a 14 percent decline in 1998 and a 19 percent increase in 1997. Diluted net
income per share declined 31 percent in 1999, compared to a 13 percent decline
in 1998 and a 19 percent increase in 1997.
<PAGE>
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS KO-ar99-p38
THE COCA-COLA COMPANY AND SUBSIDIARIES
RECENT DEVELOPMENTS
In the second half of 1999, we undertook a detailed review of each of our
business functions. The purpose of this review was to determine the optimal
organizational structure to serve the needs of our customers and consumers at
the local level.
As a result of this review, in January 2000 we announced a major
organizational realignment (the Realignment). The Realignment will reduce our
workforce around the world while transferring responsibilities from our
corporate headquarters to revenue-generating operating units. The intent of the
Realignment is to effectively align our corporate resources, support systems and
business culture to fully leverage the local capabilities of our system. Under
the Realignment, approximately 6,000 positions worldwide, including employees of
the Company, open positions and contract labor, will be eliminated. Of these
identified positions, approximately 3,300 are based within the United States and
approximately 2,700 are based outside of the United States. The entire reduction
will take place during calendar year 2000.
Employees separating from our Company as a result of the Realignment will
be offered severance packages which include both financial and nonfinancial
components. We estimate that as a result of the Realignment, our Company will
take a pretax charge of approximately $800 million during calendar year 2000.
Also, we estimate that the Realignment will yield an annual expense reduction of
approximately $300 million following full implementation of the new
organizational structure.
Effective January 1, 2000, two of our Company's operating segments were
renamed and geographically reconfigured. The Middle and Far East Group was
renamed the Asia Pacific Group, while the Africa Group became known as the
Africa and Middle East Group. At the same time, the Middle East and North Africa
Division ceased to be part of the Asia Pacific Group and became part of the
expanded Africa and Middle East Group.
In January 2000, we announced the intention of the Coca-Cola system to
reduce concentrate inventory levels at selected bottlers. This was based on a
review performed in conjunction with bottlers around the world in order to
determine the optimum level of bottler concentrate inventories. Management of
the Coca-Cola system determined that opportunities exist to reduce the level of
concentrate inventory carried by bottlers in selected regions of the world, such
as Eastern Europe, Japan and Germany. As such, bottlers in these regions have
indicated that they intend to reduce their inventory levels during the first
half of the year 2000. This move is intended to take the average bottler
inventories to the optimal worldwide level of 34 days. This reduction in bottler
inventory levels will result in our Company shipping less concentrate and is
therefore expected to reduce our Company's diluted earnings per share by
approximately $.11-$.13 after tax during the first half of the year 2000.
Also in January 2000, we announced our plans to perform a comprehensive
review of our India bottling franchise investments during the first quarter of
the year 2000 with the intent of streamlining the business. Based on this
review, as well as the current excise tax levels in India, which are presently
under review by the Indian government, we will be evaluating the carrying value
of these assets.
LIQUIDITY AND CAPITAL RESOURCES
We believe our ability to generate cash from operations to reinvest in our
business is one of our fundamental financial strengths. We anticipate that our
operating activities in 2000 will continue to provide us with cash flows to
assist in our business expansion and to meet our financial commitments.
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, make share
repurchases and make acquisitions. The consolidated statements of our cash flows
are summarized as follows (in millions):
Year Ended December 31, 1999 1998 1997
- --------------------------------------------------------------------------------
Cash flows provided by
(used in):
Operations $ 3,883 $ 3,433 $ 4,033
Business reinvestment (1,551) (1,557) (1,082)
- --------------------------------------------------------------------------------
Free Cash Flow {1} 2,332 1,876 2,951
Cash flows (used in)
provided by:
Acquisitions,
net of disposals (1,870) (604) 582
Share repurchases (15) (1,563) (1,262)
Other financing activities (456) 230 (1,833)
Exchange (28) (28) (134)
- --------------------------------------------------------------------------------
Increase (decrease) in cash $ (37) $ (89) $ 304
- --------------------------------------------------------------------------------
{1} All years presented have been restated to exclude net cash flows related to
acquisitions.
Cash provided by operations in 1999 amounted to $3.9 billion, a 13 percent
increase from 1998. In 1998, cash provided by operations amounted to $3.4
billion, a 15 percent decrease from 1997. This change was primarily due to an
increased use of cash for operating assets and liabilities in 1998.
In 1999, net cash used in investing activities increased by $1.3 billion
compared to 1998. The increase was primarily the result of brand and bottler
acquisitions during 1999. For a more complete description of these transactions,
refer to Note 17 in our Consolidated Financial Statements.
In 1998, net cash used in investing activities increased compared to 1997.
During 1998, investing activities included additional investments in
territories, such as India and Latin American countries. Investing activities in
1997 included incremental proceeds of approximately $1 billion from the disposal
of investments and other assets, which included the dispositions of
<PAGE>
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS KO-ar99-p39
THE COCA-COLA COMPANY AND SUBSIDIARIES
our interests in Coca-Cola & Schweppes Beverages Ltd., The Coca-Cola
Bottling Company of New York Inc. and Coca-Cola Beverages Ltd. of Canada,
partially offset by acquisitions and investments, primarily in bottling
operations, including three South Korean bottlers.
Total capital expenditures for property, plant and equipment (including our
investments in information technology) and the percentage distribution by
operating segment for 1999, 1998 and 1997 are as follows (in millions):
Year Ended December 31, 1999 1998 1997
- --------------------------------------------------------------------------------
Capital expenditures $ 1,069 $ 863 $ 1,093
- --------------------------------------------------------------------------------
North America {1} 25% 32% 24%
Africa 2% 2% 2%
Greater Europe 20% 25% 30%
Latin America 6% 8% 7%
Middle & Far East 30% 13% 18%
Corporate 17% 20% 19%
- --------------------------------------------------------------------------------
{1} Includes The Minute Maid Company
FINANCING ACTIVITIES
Our financing activities include net borrowings, dividend payments and
share issuances and repurchases. Net cash used in financing activities totaled
$.5 billion in 1999, $1.3 billion in 1998 and $3.1 billion in 1997. The change
between 1999 and 1998 was primarily due to a decrease in treasury stock
repurchases due to our utilization of cash for our brand and bottler
acquisitions during 1999. The decrease between 1998 and 1997 was due to our net
repayments of debt in 1997 from proceeds of disposals of investments and other
assets.
Cash used to purchase common stock for treasury totaled $15 million in
1999, $1.6 billion in 1998 and $1.3 billion in 1997.
Commercial paper is our primary source of short-term financing. On December
31, 1999, we had $4.9 billion outstanding in commercial paper borrowings
compared to $4.3 billion outstanding at the end of 1998, a $.6 billion increase
in borrowings. The 1999 increase in loans and notes payable was due to
additional commercial paper borrowings used for our brand acquisitions during
1999 and additional investments in bottling operations. The Company's commercial
paper borrowings normally mature less than three months from the date of
issuance. In 1999, as part of our Year 2000 plan, we increased the amount of
commercial paper borrowings with maturity dates greater than three months. The
gross payments and receipts of borrowings greater than three months from the
date of issuance have been included in the consolidated statements of cash
flows. In addition, on December 31, 1999, we had $3.1 billion in lines of credit
and other short-term credit facilities available, of which approximately $167
million was outstanding.
On December 31, 1999, we had $854 million outstanding in long-term debt,
compared to $687 million outstanding at the end of 1998, a $167 million increase
in borrowings. The 1999 increase in long-term debt was primarily due to the
issuance of long-term notes in the European marketplace.
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 and seek to adopt appropriate strategies
that are responsive to changing economic and political environments and to
fluctuations in foreign currencies.
We use approximately 60 functional currencies. Due to our global
operations, weaknesses in some of these currencies are often offset by strengths
in others. In 1999, 1998 and 1997, the weighted-average exchange rates for
foreign currencies, and for certain individual currencies, strengthened
(weakened) against the U.S. dollar as follows:
Year Ended December 31, 1999 1998 1997
- --------------------------------------------------------------------------------
All currencies Even (9)% (10)%
- --------------------------------------------------------------------------------
Australian dollar 3% (16)% (6)%
British pound (2)% 2% 4%
Canadian dollar Even (7)% (1)%
French franc (2)% (3)% (12)%
German mark (2)% (3)% (13)%
Japanese yen 15% (6)% (10)%
- --------------------------------------------------------------------------------
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 the impact of exchange on net income and earnings per share. The
impact of a stronger U.S. dollar reduced our operating income by approximately 4
percent in 1999 and by approximately 9 percent in 1998.
Exchange gains (losses)-net amounted to $87 million in 1999, $(34) million
in 1998 and $(56) million in 1997, 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 exposures of our
balance sheet.
Additional information concerning our hedging activities is presented in
Note 9 in our Consolidated Financial Statements.
FINANCIAL POSITION
The carrying value of our investment in Coca-Cola Enterprises increased in
1999, primarily as a result of Coca-Cola Enterprises' issuance of stock in its
acquisitions of various bottling operations. The carrying value of our
investment in Coca-Cola Amatil decreased, primarily due to the transfer of
approximately 57 million shares of Coca-Cola Amatil to Fraser and Neave Limited
in conjunction with our acquisition of its 75 percent interest in F&N Coca-Cola.
The increase in our property, plant and equipment is primarily due to the
consolidation in 1999 of our recently acquired bottling operations in India and
our vending operations in Japan. The increase in our goodwill and other
intangible assets is primarily due to our brand and bottler acquisitions during
1999.
The carrying value of our investment in Coca-Cola Enterprises increased in
1998 as a result of Coca-Cola Enterprises' issuance of stock in its acquisitions
of various bottling operations. The carrying value of our investment in
Coca-Cola Amatil increased due to
<PAGE>
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS KO-ar99-p40
THE COCA-COLA COMPANY AND SUBSIDIARIES
its acquisition of our bottling operations in South Korea, offset by the
spin-off of Coca-Cola Beverages to its share owners. The increase for Coca-Cola
Beverages in 1998 is primarily a result of our equity participation in its
formation in 1998, as previously discussed under the heading "Bottling System,"
and the sale to Coca-Cola Beverages of our bottling and canning operations in
Italy in June 1998. The increase in prepaid expenses and other assets is
primarily due to increases in receivables from equity method investees,
marketing prepaid expenses and miscellaneous receivables.
YEAR 2000
As previously reported, over the past several years our Company developed
and implemented a plan to address the anticipated impacts of the so-called Year
2000 problem on our information technology (IT) systems and on non-IT systems
involving embedded chip technologies. We also surveyed selected third parties to
determine the status of their Year 2000 compliance programs. In addition, we
developed contingency plans specifying what the Company would do if we or
important third parties experienced disruptions to critical business activities
as a result of the Year 2000 problem.
Our Company's Year 2000 plan was completed in all material respects prior
to the anticipated Year 2000 failure dates. As of February 15, 2000, the Company
has not experienced any materially important business disruptions or system
failures as a result of Year 2000 issues, nor is it aware of any Year 2000
issues that have impacted its bottlers, customers, suppliers or other
significant third parties to an extent significant to the Company. However, Year
2000 compliance has many elements and potential consequences, some of which may
not be foreseeable or may be realized in future periods. Consequently, there can
be no assurance that unforeseen circumstances may not arise, or that the Company
will not in the future identify equipment or systems which are not Year 2000
compliant.
As of December 31, 1999, the Company's total incremental costs (historical
plus estimated future costs) of addressing Year 2000 issues are estimated to be
approximately $131 million, of which approximately $129 million has been
incurred. These costs are being funded through operating cash flow. These
amounts do not include: (i) approximately $4 million in costs associated with
the implementation of contingency plans, or (ii) costs associated with
replacements of computerized systems or equipment in cases where replacement was
not accelerated due to Year 2000 issues.
For further information regarding Year 2000 matters, refer to disclosures
under Forward-Looking Statements on page 41.
EURO CONVERSION
In January 1999, certain member countries of the European Union established
permanent, fixed conversion rates between their existing currencies and the
European Union's common currency (the Euro).
The transition period for the introduction of the Euro is scheduled to
phase in over a period ending January 1, 2002, with the existing currency being
completely removed from circulation on July 1, 2002. Our Company has been
preparing for the introduction of the Euro for several years. The timing of our
phasing out all uses of the existing currencies will comply with the legal
requirements and also be scheduled to facilitate optimal coordination with the
plans of our vendors, distributors and customers. Our work related to the
introduction of the Euro and the phasing out of the other currencies includes
converting information technology systems; recalculating currency risk;
recalibrating derivatives and other financial instruments; evaluating and taking
action, if needed, regarding the continuity of contracts; and modifying our
processes for preparing tax, accounting, payroll and customer records.
Based on our work to date, we believe the Euro replacing the other
currencies will not have a material impact on our operations or our Consolidated
Financial Statements.
IMPACT OF INFLATION AND CHANGING PRICES
Inflation affects the way we operate in many markets around the world. In
general, we are able to increase prices to counteract the inflationary effects
of increasing costs and to generate sufficient cash flows to maintain our
productive capability.
NEW ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133 (SFAS No. 133), "Accounting
for Derivative Instruments and Hedging Activities." The new statement requires
all derivatives to be recorded on the balance sheet at fair value and
establishes new accounting rules for hedging instruments. In June 1999, the FASB
deferred the effective date of SFAS No. 133 for one year until fiscal years
beginning after June 15, 2000. We are assessing the impact that SFAS No. 133
will have on our Consolidated Financial Statements.
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 and Mexico.
We firmly believe that 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 growth
opportunities as we continue to pursue our goal of increasing share-owner
value over time.
<PAGE>
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS KO-ar99-p41
THE COCA-COLA COMPANY AND SUBSIDIARIES
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 this report and
other Company filings with the Securities and Exchange Commission and in our
reports to share owners. Generally, the words "believe," "expect," "intend,"
"estimate," "anticipate," "will" and similar expressions identify
forward-looking statements. 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, statements expressing general optimism about future operating
results and non-historical Year 2000 information -- 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, and speak only as of their dates. The
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
The following are some of the factors that could affect our financial
performance or could cause actual results to differ materially from estimates
contained in or underlying our Company's forward-looking statements:
- -- Our ability to generate sufficient cash flows to support capital
expansion plans, share repurchase programs and general operating
activities.
- -- Competitive product and pricing pressures and our 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.
- -- Our 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 advantage of any 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.
- -- Our 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 ability and the ability of our key business partners and other third
parties to replace, modify or upgrade computer systems in ways that
adequately address the Year 2000 problem. There can be no assurance that
Year 2000 related estimates and anticipated results will be achieved, and
actual results could differ materially. Specific factors that might cause
such material differences include, but are not limited to, the ability to
identify and correct all relevant computer codes and embedded chips and the
ability of third parties to adequately address their own Year 2000 issues.
- -- Our ability to resolve issues relating to introduction of the European
Union's common currency (the Euro) in a timely fashion.
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 64 of
this report. Additional information concerning our operating segments is
presented on pages 60 through 62.
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA KO-ar99-p42
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 1999 1998{2} 1997{2} 1996{2}
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net operating revenues 4.0% 8.7% $ 19,805 $ 18,813 $ 18,868 $ 18,673
Cost of goods sold (.5)% 5.4% 6,009 5,562 6,015 6,738
- -------------------------------------------------------------------------------------------------
Gross profit 6.4% 10.5% 13,796 13,251 12,853 11,935
Selling, administrative
and general expenses 8.7% 11.4% 9,001 8,211 7,792 7,635
Other operating charges 813 73 60 385
- --------------------------------------------------------------------------------------------------
Operating income 1.8% 8.6% 3,982 4,967 5,001 3,915
Interest income 260 219 211 238
Interest expense 337 277 258 286
Equity income (loss) (184) 32 155 211
Other income (deductions)
-net 98 230 583 87
Gains on issuances of
stock by equity investees - 27 363 431
- --------------------------------------------------------------------------------------------------
Income from continuing
operations before income
taxes and changes in
accounting principles .5% 8.0% 3,819 5,198 6,055 4,596
Income taxes 3.4% 9.6% 1,388 1,665 1,926 1,104
- --------------------------------------------------------------------------------------------------
Income from continuing
operations before changes
in accounting principles (1.0)% 7.2% $ 2,431 $ 3,533 $ 4,129 $ 3,492
==================================================================================================
Net income (1.0)% 4.7% $ 2,431 $ 3,533 $ 4,129 $ 3,492
Preferred stock dividends - - - -
- --------------------------------------------------------------------------------------------------
Net income available to
common share owners (1.0)% 4.8% $ 2,431 $ 3,533 $ 4,129 $ 3,492
==================================================================================================
Average common shares
outstanding 2,469 2,467 2,477 2,494
Average common shares
outstanding assuming
dilution 2,487 2,496 2,515 2,523
PER COMMON SHARE DATA
Income from continuing
operations before changes
in accounting principles
-- basic (.2)% 8.6% $ .98 $ 1.43 $ 1.67 $ 1.40
Income from continuing
operations before changes
in accounting principles
-- diluted - 8.6% .98 1.42 1.64 1.38
Basic net income (.2)% 5.9% .98 1.43 1.67 1.40
Diluted net income - 6.1% .98 1.42 1.64 1.38
Cash dividends 10.4% 14.2% .64 .60 .56 .50
Market price on
December 31, 17.7% 19.7% 58.25 67.00 66.69 52.63
TOTAL MARKET VALUE OF
COMMON STOCK {1} 17.0% 18.7% $143,969 $165,190 $164,766 $130,575
BALANCE SHEET DATA
Cash, cash equivalents
and current marketable
securities $ 1,812 $ 1,807 $ 1,843 $ 1,658
Property, plant and
equipment-net 4,267 3,669 3,743 3,550
Depreciation 438 381 384 442
Capital expenditures 1,069 863 1,093 990
Total assets 21,623 19,145 16,881 16,112
Long-term debt 854 687 801 1,116
Total debt 6,227 5,149 3,875 4,513
Share-owners' equity 9,513 8,403 7,274 6,125
Total capital {1} 15,740 13,552 11,149 10,638
OTHER KEY FINANCIAL
MEASURES {1}
Total debt-to-total
capital 39.6% 38.0% 34.8% 42.4%
Net debt-to-net capital 32.2% 28.1% 22.0% 31.6%
Return on common equity 27.1% 45.1% 61.6% 60.8%
Return on capital 18.2% 30.2% 39.5% 36.8%
Dividend payout ratio 65.0% 41.9% 33.6% 35.7%
Free cash flow {8} $ 2,332 $ 1,876 $ 2,951 $ 2,215
Economic profit $ 1,128 $ 2,480 $ 3,325 $ 2,718
===================================================================================================
<FN>
{1} See Glossary on page 69.
{2} In 1998, we adopted SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits."
{3} In 1994, we adopted SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities."
{4} In 1993, we adopted SFAS No. 112, "Employers' Accounting for Postemployment Benefits."
{5} In 1992, we adopted SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions."
</FN>
</TABLE>
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA KO-ar99-p43
THE COCA-COLA COMPANY AND SUBSIDIARIES
<CAPTION>
(In millions except Year Ended December 31,
per share data, ratios -----------------------------------------------------------------------------
and growth rates) 1995{2} 1994{2,3} 1993{2,4} 1992{2,5,6} 1991{2,6} 1990{2,6} 1989{6}
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net operating revenues $ 18,127 $ 16,264 $ 14,030 $ 13,119 $ 11,599 $ 10,261 $ 8,637
Cost of goods sold 6,940 6,168 5,160 5,055 4,649 4,208 3,548
- ----------------------------------------------------------------------------------------------------------------
Gross profit 11,187 10,096 8,870 8,064 6,950 6,053 5,089
Selling, administrative
and general expenses 7,075 6,459 5,721 5,317 4,628 4,054 3,342
Other operating charges 86 - 50 - 13 49 -
- ----------------------------------------------------------------------------------------------------------------
Operating income 4,026 3,637 3,099 2,747 2,309 1,950 1,747
Interest income 245 181 144 164 175 170 205
Interest expense 272 199 168 171 192 231 308
Equity income (loss) 169 134 91 65 40 110 75
Other income (deductions)
-net 86 (25) 7 (59) 51 15 45
Gains on issuances of
stock by equity investees 74 - 12 - - - -
- ----------------------------------------------------------------------------------------------------------------
Income from continuing
operations before income
taxes and changes in
accounting principles 4,328 3,728 3,185 2,746 2,383 2,014 1,764
Income taxes 1,342 1,174 997 863 765 632 553
- ----------------------------------------------------------------------------------------------------------------
Income from continuing
operations before changes
in accounting principles $ 2,986 $ 2,554 $ 2,188 $ 1,883 $ 1,618 $ 1,382 $ 1,211
================================================================================================================
Net income $ 2,986 $ 2,554 $ 2,176 $ 1,664 $ 1,618 $ 1,382 $ 1,537
Preferred stock dividends - - - - 1 18 21
- ----------------------------------------------------------------------------------------------------------------
Net income available to
common share owners $ 2,986 $ 2,554 $ 2,176 $ 1,664 $ 1,617 $ 1,364 $ 1,516{7}
- ----------------------------------------------------------------------------------------------------------------
Average common shares
outstanding 2,525 2,580 2,603 2,634 2,666 2,674 2,768
Average common shares
outstanding assuming
dilution 2,549 2,599 2,626 2,668 2,695 2,706 2,789
PER COMMON SHARE DATA
Income from continuing
operations before changes
in accounting principles
-- basic $ 1.18 $ .99 $ .84 $ .72 $ .61 $ .51 $ .43
Income from continuing
operations before changes
in accounting principles
-- diluted 1.17 .98 .83 .71 .60 .50 .43
Basic net income 1.18 .99 .84 .63 .61 .51 .55{7}
Diluted net income 1.17 .98 .83 .62 .60 .50 .54
Cash dividends .44 .39 .34 .28 .24 .20 .17
Market price on
December 31, 37.13 25.75 22.31 20.94 20.06 11.63 9.66
TOTAL MARKET VALUE OF
COMMON STOCK {1} $ 92,983 $ 65,711 $ 57,905 $ 54,728 $ 53,325 $ 31,073 $ 26,034
BALANCE SHEET DATA
Cash, cash equivalents
and current marketable
securities $ 1,315 $ 1,531 $ 1,078 $ 1,063 $ 1,117 $ 1,492 $ 1,182
Property, plant and
equipment-net 4,336 4,080 3,729 3,526 2,890 2,386 2,021
Depreciation 421 382 333 310 254 236 181
Capital expenditures 937 878 800 1,083 792 593 462
Total assets 15,004 13,863 11,998 11,040 10,185 9,245 8,249
Long-term debt 1,141 1,426 1,428 1,120 985 536 549
Total debt 4,064 3,509 3,100 3,207 2,288 2,537 1,980
Share-owners' equity 5,369 5,228 4,570 3,881 4,236 3,662 3,299
Total capital {1} 9,433 8,737 7,670 7,088 6,524 6,199 5,279
OTHER KEY FINANCIAL
MEASURES {1}
Total debt-to-total
capital 43.1% 40.2% 40.4% 45.2% 35.1% 40.9% 37.5%
Net debt-to-net capital 32.3% 25.5% 29.0% 33.1% 24.2% 24.6% 15.6%
Return on common equity 56.4% 52.1% 51.8% 46.4% 41.3% 41.4% 39.4%
Return on capital 34.9% 32.8% 31.2% 29.4% 27.5% 26.8% 26.5%
Dividend payout ratio 37.2% 39.4% 40.6% 44.3% 39.5% 39.2% 31.0%{7}
Free cash flow {8} $ 2,460 $ 2,356 $ 1,857 $ 875 $ 881 $ 844 $ 843
Economic profit $ 2,291 $ 1,896 $ 1,549 $ 1,300 $ 1,073 $ 920 $ 859
================================================================================================================
<FN>
{6} In 1992, we adopted SFAS No. 109, "Accounting for Income Taxes," by restating financial statements beginning
in 1989.
{7} 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.
{8} All years presented have been restated to exclude net cash flows related to acquisitions.
</FN>
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS KO-ar99-p44
THE COCA-COLA COMPANY AND SUBSIDIARIES
<CAPTION>
December 31 1999 1998
- --------------------------------------------------------------------------------
(In millions except share data)
ASSETS
<C> <C> <C>
CURRENT
Cash and cash equivalents $ 1,611 $ 1,648
Marketable securities 201 159
- --------------------------------------------------------------------------------
1,812 1,807
Trade accounts receivable, less allowances
of $26 in 1999 and $10 in 1998 1,798 1,666
Inventories 1,076 890
Prepaid expenses and other assets 1,794 2,017
- --------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 6,480 6,380
- --------------------------------------------------------------------------------
INVESTMENTS AND OTHER ASSETS
Equity method investments
Coca-Cola Enterprises Inc. 728 584
Coca-Cola Amatil Ltd. 1,133 1,255
Coca-Cola Beverages plc 788 879
Other, principally bottling companies 3,793 3,573
Cost method investments, principally bottling
companies 350 395
Marketable securities and other assets 2,124 1,863
- --------------------------------------------------------------------------------
8,916 8,549
- --------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT
Land 215 199
Buildings and improvements 1,528 1,507
Machinery and equipment 4,527 3,855
Containers 201 124
- --------------------------------------------------------------------------------
6,471 5,685
Less allowances for depreciation 2,204 2,016
- --------------------------------------------------------------------------------
4,267 3,669
- --------------------------------------------------------------------------------
GOODWILL AND OTHER INTANGIBLE ASSETS 1,960 547
- --------------------------------------------------------------------------------
$ 21,623 $ 19,145
================================================================================
</TABLE>
<PAGE>
<TABLE>
KO-ar99-p45
THE COCA-COLA COMPANY AND SUBSIDIARIES
<CAPTION>
December 31 1999 1998
- --------------------------------------------------------------------------------
(In millions except share data)
LIABILITIES AND SHARE-OWNERS' EQUITY
<S> <C> <C>
CURRENT
Accounts payable and accrued expenses $ 3,714 $ 3,141
Loans and notes payable 5,112 4,459
Current maturities of long-term debt 261 3
Accrued income taxes 769 1,037
- --------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 9,856 8,640
- --------------------------------------------------------------------------------
LONG-TERM DEBT 854 687
- --------------------------------------------------------------------------------
OTHER LIABILITIES 902 991
- --------------------------------------------------------------------------------
DEFERRED INCOME TAXES 498 424
- --------------------------------------------------------------------------------
SHARE-OWNERS' EQUITY
Common Stock, $.25 par value
Authorized: 5,600,000,000 shares
Issued: 3,466,371,904 shares in 1999;
3,460,083,686 shares in 1998 867 865
Capital surplus 2,584 2,195
Reinvested earnings 20,773 19,922
Accumulated other comprehensive income and
unearned compensation on restricted stock (1,551) (1,434)
- --------------------------------------------------------------------------------
22,673 21,548
Less treasury stock, at cost
(994,796,786 shares in 1999;
994,566,196 shares in 1998) 13,160 13,145
- --------------------------------------------------------------------------------
9,513 8,403
- --------------------------------------------------------------------------------
$ 21,623 $ 19,145
================================================================================
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME KO-ar99-p46
THE COCA-COLA COMPANY AND SUBSIDIARIES
<CAPTION>
Year Ended December 31, 1999 1998 1997
- ----------------------------------------------------------------------------------------------------
(In millions except per share data)
<S> <C> <C> <C>
NET OPERATING REVENUES $ 19,805 $ 18,813 $ 18,868
Cost of goods sold 6,009 5,562 6,015
- ----------------------------------------------------------------------------------------------------
GROSS PROFIT 13,796 13,251 12,853
Selling, administrative and general expenses 9,001 8,211 7,792
Other Operating Charges 813 73 60
- ----------------------------------------------------------------------------------------------------
OPERATING INCOME 3,982 4,967 5,001
Interest income 260 219 211
Interest expense 337 277 258
Equity income (loss) (184) 32 155
Other income-net 98 230 583
Gains on issuances of stock by equity
investees - 27 363
- ----------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 3,819 5,198 6,055
Income taxes 1,388 1,665 1,926
- ----------------------------------------------------------------------------------------------------
NET INCOME $ 2,431 $ 3,533 $ 4,129
====================================================================================================
BASIC NET INCOME PER SHARE $ .98 $ 1.43 $ 1.67
DILUTED NET INCOME PER SHARE $ .98 $ 1.42 $ 1.64
- ----------------------------------------------------------------------------------------------------
AVERAGE SHARES OUTSTANDING 2,469 2,467 2,477
Dilutive effect of stock options 18 29 38
- ----------------------------------------------------------------------------------------------------
AVERAGE SHARES OUTSTANDING
ASSUMING DILUTION 2,487 2,496 2,515
====================================================================================================
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS KO-ar99-p47
THE COCA-COLA COMPANY AND SUBSIDIARIES
<CAPTION>
Year Ended December 31, 1999 1998 1997
- ----------------------------------------------------------------------------------------------------
(In millions)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 2,431 $ 3,533 $ 4,129
Depreciation and amortization 792 645 626
Deferred income taxes 97 (38) 380
Equity income, net of dividends 292 31 (108)
Foreign currency adjustments (41) 21 37
Gains on issuances of stock by equity
investees - (27) (363)
Gains on sales of assets, including
bottling interests (49) (306) (639)
Other operating charges 799 73 60
Other items 119 51 (42)
Net change in operating assets and
liabilities (557) (550) (47)
- ----------------------------------------------------------------------------------------------------
Net cash provided by operating
activities 3,883 3,433 4,033
- ----------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Acquisitions and investments, principally
trademarks and bottling companies (1,876) (1,428) (1,100)
Purchases of investments and other assets (518) (610) (459)
Proceeds from disposals of investments and
other assets 176 1,036 1,999
Purchases of property, plant and equipment (1,069) (863) (1,093)
Proceeds from disposals of property, plant
and equipment 45 54 71
Other investing activities (179) (350) 82
- ----------------------------------------------------------------------------------------------------
Net cash used in investing activities (3,421) (2,161) (500)
- ----------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Issuances of debt 3,411 1,818 155
Payments of debt (2,455) (410) (751)
Issuances of stock 168 302 150
Purchases of stock for treasury (15) (1,563) (1,262)
Dividends (1,580) (1,480) (1,387)
- ----------------------------------------------------------------------------------------------------
Net cash used in financing activities (471) (1,333) (3,095)
- ----------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS (28) (28) (134)
- ----------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
Net increase (decrease) during the year (37) (89) 304
Balance at beginning of the year 1,648 1,737 1,433
- ----------------------------------------------------------------------------------------------------
Balance at end of year $ 1,611 $ 1,648 $ 1,737
====================================================================================================
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF SHARE-OWNERS' EQUITY KO-ar99-p48
THE COCA-COLA COMPANY AND SUBSIDIARIES
<CAPTION> Number of | Accumulated
Common | Outstanding Other
Three Years Ended Shares | Common Capital Reinvested Restricted Comprehensive Treasury
December 31, 1999 Outstanding | Stock Surplus Earnings Stock Income Stock Total
- -----------------------------------------|----------------------------------------------------------------------------------------
<S> <C> | <C> <C> <C> <C> <C> <C> <C>
(In millions except per share data) |
|
BALANCE DECEMBER 31, 1996 2,481 | $ 858 $ 1,058 $ 15,127 $ (61) $ (537) $ (10,320) $ 6,125
- -----------------------------------------|----------------------------------------------------------------------------------------
COMPREHENSIVE INCOME: |
Net income - | - - 4,129 - - - 4,129
Translation adjustments - | - - - - (710) - (710)
Net change in unrealized |
gain on securities - | - - - - (98) - (98)
Minimum pension liability - | - - - - (6) - (6)
| ---------
COMPREHENSIVE INCOME | 3,315
| ---------
Stock issued to employees |
exercising stock options 10 | 3 147 - - - - 150
Tax benefit from employees' |
stock option & restricted |
stock plans - | - 312 - - - - 312
Stock issued under restricted |
stock plans, less amortization |
of $10 - | - 10 - 11 - - 21
Purchases of stock for treasury (20){1}| - - - - - (1,262) (1,262)
Dividends (per share - $.56) - | - - (1,387) - - - (1,387)
- -----------------------------------------|----------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1997 2,471 | 861 1,527 17,869 (50) (1,351) (11,582) 7,274
- -----------------------------------------|----------------------------------------------------------------------------------------
COMPREHENSIVE INCOME: |
Net income - | - - 3,533 - - - 3,533
Translation adjustments - | - - - - 52 - 52
Net change in unrealized gain |
on securities - | - - - - (47) - (47)
Minimum pension liability - | - - - - (4) - (4)
| ---------
COMPREHENSIVE INCOME | 3,534
| ---------
Stock issued to employees |
exercising stock options 16 | 4 298 - - - - 302
Tax benefit from employees' |
stock option and restricted |
stock plans - | - 97 - - - - 97
Stock issued under restricted stock |
plans, less amortization of $5 1 | - 47 - (34) - - 13
Stock issued by an equity investee - | - 226 - - - - 226
Purchases of stock for treasury (22){1}| - - - - - (1,563) (1,563)
Dividends (per share - $.60) - | - - (1,480) - - - (1,480)
- -----------------------------------------|----------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1998 2,466 | 865 2,195 19,922 (84) (1,350) (13,145) 8,403
- -----------------------------------------|----------------------------------------------------------------------------------------
COMPREHENSIVE INCOME: |
Net income - | - - 2,431 - - - 2,431
Translation adjustments - | - - - - (190) - (190)
Net change in unrealized gain |
on securities - | - - - - 23 - 23
Minimum pension liability - | - - - - 25 - 25
| ---------
COMPREHENSIVE INCOME | 2,289
| ---------
Stock issued to employees |
exercising stock options 6 | 2 166 - - - - 168
Tax benefit from employees' |
stock option and restricted |
stock plans - | - 72 - - - - 72
Stock issued under restricted |
stock plans, less amortization |
of $27 - | - 2 - 25 - - 27
Stock issued by an equity investee - | - 146 - - - - 146
Stock issued under Directors' plan - | - 3 - - - - 3
Purchases of stock for treasury - | - - - - - (15) (15)
Dividends (per share - $.64) - | - - (1,580) - - - (1,580)
- -----------------------------------------| ---------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1999 2,472 | $ 867 $ 2,584 $ 20,773 $ (59) $ (1,492) $(13,160) $ 9,513
- -----------------------------------------|----------------------------------------------------------------------------------------
<FN>
{1} Common stock purchased from employees exercising stock options numbered .3 million, 1.4 million and 1.1 million shares for
the years ended December 31, 1999, 1998 and 1997, respectively.
</FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KO-ar99-p49
THE COCA-COLA COMPANY 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 nonalcoholic 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 also market and distribute juice and
juice-drink products. We have significant markets for our products in all the
world's geographic regions. We record revenue when title passes to our
customers or our bottling partners.
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 generally recognized in
our net income in the period the change of ownership interest occurs.
If gains have been previously recognized on issuances of an equity
investee's stock and shares of the equity investee are subsequently
repurchased by the equity investee, gain recognition does not occur on
issuances subsequent to the date of a repurchase until shares have been issued
in an amount equivalent to the number of repurchased shares. This type of
transaction is reflected as an equity transaction and the net effect is
reflected in the accompanying consolidated balance sheets. For specific
transaction details, refer to Note 3.
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 $1,699
million in 1999, $1,597 million in 1998 and $1,576 million in 1997. As of
December 31, 1999 and 1998, advertising costs of approximately $523 million and
$365 million, respectively, were recorded primarily in pre-paid expenses and
other assets in the accompanying consolidated 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.
OTHER ASSETS
Our Company invests in infrastructure programs with our bottlers which are
directed at strengthening our bottling system and increasing unit case sales.
The costs of these programs are recorded in other assets and are subsequently
amortized over the periods to be directly benefited.
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 to ensure they are appropriately
valued. Conditions which may indicate an impairment issue exists include a
negative economic downturn in a worldwide market or a change in the assessment
of future operations. In the event that a condition is identified which may
indicate an impairment issue exists, an assessment is performed using a variety
of methodologies, including cash flow analysis, estimates of sales proceeds and
independent appraisals. Where applicable, an appropriate interest rate is
utilized, based on location specific economic factors. Accumulated amortization
was approximately $154 million and $119 million on December 31, 1999 and 1998,
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 including our assessment of the carrying
value of our investments in bottling operations. 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.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KO-ar99-p50
THE COCA-COLA COMPANY AND SUBSIDIARIES
NEW ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133 (SFAS No. 133), "Accounting
for Derivative Instruments and Hedging Activities." The statement requires
all derivatives to be recorded on the balance sheet at fair value and
establishes new accounting rules for hedging instruments. In June 1999, the
FASB deferred the effective date of SFAS No. 133 for one year until fiscal
years beginning after June 15, 2000. We are assessing the impact SFAS No. 133
will have on our Consolidated Financial Statements.
We adopted the American Institute of Certified Public Accountants (AICPA)
Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" and SOP 98-5, "Reporting on
the Costs of Start-Up Activities," on January 1, 1999. There was no material
impact on our Consolidated Financial Statements as a result.
NOTE 2: BOTTLING INVESTMENTS
COCA-COLA ENTERPRISES INC.
Coca-Cola Enterprises is the largest soft-drink bottler in the world,
operating in eight countries, and is one of our anchor bottlers. On December 31,
1999, our Company owned approximately 40 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 amortized on a
straight-line basis over 40 years. The balance of this excess, net of
amortization, was approximately $445 million on December 31, 1999. A summary of
financial information for Coca-Cola Enterprises is as follows (in millions):
December 31, 1999 1998
- ------------------------------------------------------------------
Current assets $ 2,557 $ 2,285
Noncurrent assets 20,149 18,847
- ------------------------------------------------------------------
Total assets $ 22,706 $ 21,132
==================================================================
Current liabilities $ 3,590 $ 3,397
Noncurrent liabilities 16,192 15,297
- ------------------------------------------------------------------
Total liabilities $ 19,782 $ 18,694
==================================================================
Share-owners' equity $ 2,924 $ 2,438
==================================================================
Company equity investment $ 728 $ 584
==================================================================
Year Ended December 31, 1999 1998 1997
- ------------------------------------------------------------------
Net operating revenues $ 14,406 $ 13,414 $ 11,278
Cost of goods sold 9,015 8,391 7,096
- ------------------------------------------------------------------
Gross profit $ 5,391 $ 5,023 $ 4,182
==================================================================
Operating income $ 839 $ 869 $ 720
==================================================================
Cash operating profit{1} $ 2,187 $ 1,989 $ 1,666
==================================================================
Net income $ 59 $ 142 $ 171
==================================================================
Net income available
to common share owners $ 56 $ 141 $ 169
==================================================================
{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 $3.3 billion
in 1999, $3.1 billion in 1998 and $2.5 billion in 1997, or approximately 17
percent, 16 percent and 13 percent of our 1999, 1998 and 1997 net operating
revenues, respectively. 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 $308 million in 1999, $252 million in 1998 and $223
million in 1997. 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 $767 million in 1999, $899 million
in 1998 and $604 million in 1997. Pursuant to cooperative advertising and
trade arrangements with Coca-Cola Enterprises, we received $243 million, $173
million and $144 million in 1999, 1998 and 1997, respectively, from Coca-Cola
Enterprises for local media and marketing program expense reimbursements.
Additionally, in 1999 and 1998, we committed approximately $338 million and
$324 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, 1999, 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 $2.7 billion.
COCA-COLA AMATIL LTD.
We own approximately 37 percent of Coca-Cola Amatil, an Australian-based
anchor bottler that operates in seven 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 $261 million at December 31,
1999. A summary of financial information for Coca-Cola Amatil is as follows
(in millions):
December 31, 1999 1998{1}
- -------------------------------------------------------------------
Current assets $ 1,259 $ 1,057
Noncurrent assets 3,912 4,002
- -------------------------------------------------------------------
Total assets $ 5,171 $ 5,059
===================================================================
Current liabilities $ 1,723 $ 1,065
Noncurrent liabilities 1,129 1,552
- -------------------------------------------------------------------
Total liabilities $ 2,852 $ 2,617
===================================================================
Share-owners' equity $ 2,319 $ 2,442
===================================================================
Company equity investment $ 1,133 $ 1,255
===================================================================
Year Ended December 31, 1999 1998{1} 1997
===================================================================
Net operating revenues $ 2,427 $ 2,731 $ 3,290
Cost of goods sold 1,426 1,567 1,856
- -------------------------------------------------------------------
Gross profit $ 1,001 $ 1,164 $ 1,434
===================================================================
Operating income $ 162 $ 237 $ 276
===================================================================
Cash operating profit {2} $ 387 $ 435 $ 505
===================================================================
Net income $ 29 $ 65 $ 89
===================================================================
{1} 1998 reflects the spin-off of Coca-Cola Amatil's European operations.
{2} Cash operating profit is defined as operating income plus
depreciation expense, amortization expense and other noncash operating
expenses.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KO-ar99-p51
THE COCA-COLA COMPANY AND SUBSIDIARIES
Our net concentrate sales to Coca-Cola Amatil were approximately $431
million in 1999, $546 million in 1998 and $588 million in 1997. We also
participate in various marketing, promotional and other activities with
Coca-Cola Amatil.
In July 1999, we acquired from Fraser and Neave Limited its 75 percent
ownership interest in F&N Coca-Cola in exchange for approximately 57 million
shares of Coca-Cola Amatil and the assumption of debt. The transaction reduced
our ownership in Coca-Cola Amatil from approximately 43 percent to
approximately 37 percent. In August 1998, we exchanged our Korean bottling
operations with Coca-Cola Amatil for an additional ownership interest in
Coca-Cola Amatil.
If valued at the December 31, 1999, quoted closing price of publicly traded
Coca-Cola Amatil shares, the calculated value of our investment in Coca-Cola
Amatil would have been below its carrying value by approximately $114 million.
OTHER EQUITY INVESTMENTS
Operating results include our proportionate share of income (loss) from our
equity 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, 1999 1998
- -------------------------------------------------------------------
Current assets $ 5,393 $ 4,453
Noncurrent assets 17,394 16,825
- -------------------------------------------------------------------
Total assets $ 22,787 $ 21,278
===================================================================
Current liabilities $ 4,827 $ 4,968
Noncurrent liabilities 7,007 6,731
- -------------------------------------------------------------------
Total liabilities $ 11,834 $ 11,699
===================================================================
Share-owners' equity $ 10,953 $ 9,579
===================================================================
Company equity investment $ 4,581 $ 4,452
===================================================================
Year Ended December 31, 1999 1998 1997
- -------------------------------------------------------------------
Net operating revenues $ 17,358 $ 15,244 $ 13,688
Cost of goods sold 10,659 9,555 8,645
- -------------------------------------------------------------------
Gross profit $ 6,699 $ 5,689 $ 5,043
===================================================================
Operating income $ 647 $ 668 $ 869
===================================================================
Cash operating profit{1} $ 2,087 $ 1,563 $ 1,794
==================================================================
Net income (loss) $ (163) $ 152 $ 405
===================================================================
Equity investments include certain nonbottling 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 $2.8 billion in 1999, $2.1 billion in 1998 and $1.5
billion in 1997. Our direct support for certain marketing activities with
equity investees other than Coca-Cola Enterprises, the majority of which are
located outside the United States, was approximately $685 million, $640
million and $528 million for 1999, 1998 and 1997, respectively.
In June 1998, we sold our previously consolidated Italian bottling
and canning operations to Coca-Cola Beverages plc (Coca-Cola Beverages).
This transaction resulted in proceeds valued at approximately $1 billion
and an after-tax gain of approximately $.03 per share (basic and diluted).
If valued at the December 31, 1999, 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 $844 million.
NOTE 3: ISSUANCES OF STOCK BY EQUITY INVESTEES
In the first quarter of 1999, Coca-Cola Enterprises completed its
acquisition of various bottlers. These transactions were funded primarily with
shares of Coca-Cola Enterprises common stock. The Coca-Cola Enterprises common
stock issued was valued in an amount greater than the book value per share of
our investment in Coca-Cola Enterprises. As a result of these transactions, our
equity in the underlying net assets of Coca-Cola Enterprises increased, and we
recorded a $241 million increase to our Company's investment basis in Coca-Cola
Enterprises. Due to Coca-Cola Enterprises' share repurchase programs, the
increase in our investment in Coca-Cola Enterprises was recorded as an equity
transaction, and no gain was recognized. We recorded a deferred tax liability
of approximately $95 million on this increase to our investment in Coca-Cola
Enterprises. The transactions reduced our ownership in Coca-Cola Enterprises
from approximately 42 percent to approximately 40 percent.
In December 1998, Coca-Cola Enterprises completed its acquisition of
certain independent bottling operations operating in parts of Texas, New Mexico
and Arizona (collectively known as the Wolslager Group). The transactions were
funded primarily with the issuance of shares of Coca-Cola Enterprises common
stock. The Coca-Cola Enterprises common stock issued in exchange for these
bottlers was valued at an amount greater than the book value per share of our
investment in Coca-Cola Enterprises. As a result of this transaction, our equity
in the underlying net assets of Coca-Cola Enterprises increased, and we recorded
a $116 million increase to our Company's investment basis in Coca-Cola
Enterprises. Due to Coca-Cola Enterprises' share repurchase program, the
increase in our investment in Coca-Cola Enterprises was recorded as an equity
transaction, and no gain was recognized. We recorded a deferred tax liability of
approximately $46 million on this increase to our investment in Coca-Cola
Enterprises. At the completion of this transaction, our ownership in Coca-Cola
Enterprises was approximately 42 percent.
In September 1998, Coca-Cola Erfrischungsgetranke AG (CCEAG), our anchor
bottler in Germany, issued new shares valued at approximately $275 million to
affect a merger with Nordwest Getranke GmbH & Co. KG, another German bottler.
Approximately 7.5 million shares were issued, resulting in a one-time noncash
pretax gain for our Company of approximately $27 million. We provided deferred
taxes of approximately $10 million on this gain. This issuance reduced our
ownership in CCEAG from approximately 45 percent to approximately 40 percent.
In June 1998, Coca-Cola Enterprises completed its acquisition of CCBG
Corporation and Texas Bottling Group, Inc. (collectively known as Coke
Southwest). The transaction was valued at approximately $1.1 billion.
Approximately 55 percent of the transaction was funded with the issuance of
approximately 17.7 million shares
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KO-ar99-p52
THE COCA-COLA COMPANY AND SUBSIDIARIES
of Coca-Cola Enterprises common stock, and the remaining portion was funded
through debt and assumed debt. The Coca-Cola Enterprises common stock issued in
exchange for Coke Southwest was valued at an amount greater than the book
value per share of our investment in Coca-Cola Enterprises. As a result of
this transaction, our equity in the underlying net assets of Coca-Cola
Enterprises increased and we recorded a $257 million increase to our Company's
investment basis in Coca-Cola Enterprises. Due to Coca-Cola Enterprises' share
repurchase program, the increase in our investment in Coca-Cola Enterprises was
recorded as an equity transaction, and no gain was recognized. We recorded a
deferred tax liability of approximately $101 million on this increase to our
investment in Coca-Cola Enterprises. At the completion of this transaction, our
ownership in Coca-Cola Enterprises was approximately 42 percent.
In the second quarter of 1997, our Company and San Miguel Corporation 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 a
dilution of our Company's approximately 36 percent interest in Coca-Cola Amatil
to approximately 33 percent.
Also in the second quarter of 1997, our Company and the Cisneros Group
sold our respective interests in Coca-Cola y Hit de Venezuela, S.A., to
Panamerican Beverages, Inc. (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.
NOTE 4: ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following (in
millions):
December 31, 1999 1998
- ------------------------------------------------------------------
Accrued marketing $ 1,056 $ 967
Container deposits 53 14
Accrued compensation 164 166
Sales, payroll and other taxes 297 183
Accounts payable and
other accrued expenses 2,144 1,811
- -----------------------------------------------------------------
$ 3,714 $ 3,141
=================================================================
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, 1999, we had $4.9 billion outstanding in
commercial paper borrowings. In addition, we had $3.1 billion in lines of credit
and other short-term credit facilities available, of which approximately $167
million was outstanding. Our weighted-average interest rates for commercial
paper outstanding were approximately 6.0 and 5.2 percent at December 31, 1999
and 1998, respectively.
These facilities are subject to normal banking terms and conditions.
Some of the financial arrangements require compensating balances, none of which
is presently significant to our Company.
NOTE 6: LONG-TERM DEBT
Long-term debt consists of the following (in millions):
December 31, 1999 1998
- ------------------------------------------------------------------
6% U.S. dollar notes due 2000 $ 250 $ 251
6 5/8% U.S. dollar notes due 2002 150 150
6% U.S. dollar notes due 2003 150 150
5 3/4% U.S. dollar notes due 2009 399 -
7 3/8% U.S. dollar notes due 2093 116 116
Other, due 2000 to 2013 50 23
- -----------------------------------------------------------------
1,115 690
Less current portion 261 3
- -----------------------------------------------------------------
$ 854 $ 687
=================================================================
After giving effect to interest rate management instruments, the principal
amount of our long-term debt that had fixed and variable interest rates,
respectively, was $690 million and $425 million on December 31, 1999, and $190
million and $500 million on December 31, 1998. The weighted-average interest
rate on our Company's long-term debt was 5.6 percent and 6.2 percent for the
years ended December 31, 1999 and 1998, respectively. Total interest paid was
approximately $314 million, $298 million and $264 million in 1999, 1998 and
1997, respectively. For a more complete discussion of interest rate management,
refer to Note 9.
Maturities of long-term debt for the five years succeeding December 31,
1999, are as follows (in millions):
2000 2001 2002 2003 2004
------------------------------------------------------------------------
$ 261 $ 22 $ 154 $ 153 $ 1
========================================================================
The above notes include various restrictions, none of which is presently
significant to our Company.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KO-ar99-p53
THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTE 7: COMPREHENSIVE INCOME
Accumulated other comprehensive income consists of the following (in
millions):
December 31, 1999 1998
- ------------------------------------------------------------------
Foreign currency
translation adjustment $ (1,510) $ (1,320)
Unrealized gain on
available-for-sale securities 34 11
Minimum pension liability (16) (41)
- -----------------------------------------------------------------
$ (1,492) $ (1,350)
=================================================================
A summary of the components of other comprehensive income for the years
ended December 31, 1999, 1998 and 1997, is as follows (in millions):
Before-Tax Income After-Tax
December 31, Amount Tax Amount
- -----------------------------------------------------------------
1999
Net foreign currency
translation $ (249) $ 59 $ (190)
Net change in unrealized
gain (loss) on available-
for-sale securities 37 (14) 23
Minimum pension liability 38 (13) 25
- -----------------------------------------------------------------
Other comprehensive
income (loss) $ (174) $ 32 $ (142)
=================================================================
Before-Tax Income After-Tax
December 31, Amount Tax Amount
- -----------------------------------------------------------------
1998
Net foreign currency
translation $ 52 $ - $ 52
Net change in unrealized
gain (loss) on available-
for-sale securities (70) 23 (47)
Minimum pension liability (5) 1 (4)
- -----------------------------------------------------------------
Other comprehensive
income (loss) $ (23) $ 24 $ 1
=================================================================
Before-Tax Income After-Tax
December 31, Amount Tax Amount
- -----------------------------------------------------------------
1997
Net foreign currency
translation $ (710) $ - $ (710)
Net change in unrealized
gain (loss) on available-
for-sale securities (163) 65 (98)
Minimum pension liability (10) 4 (6)
- -----------------------------------------------------------------
Other comprehensive
income (loss) $ (883) $ 69 $ (814)
=================================================================
NOTE 8: 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 9.
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, 1999 and 1998,
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 as a component of accumulated other comprehensive income. Debt
securities categorized as held to maturity are stated at amortized cost.
On December 31, 1999 and 1998, 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
- ------------------------------------------------------------------------------
1999
Available-for-sale
securities
Equity securities $ 246 $ 69 $ (13) $ 302
Collateralized
mortgage
obligations 45 - (1) 44
Other debt
securities 8 - - 8
- -------------------------------------------------------------------------------
$ 299 $ 69 $ (14) $ 354
===============================================================================
Held-to-maturity
securities
Bank and
corporate debt $ 1,137 $ - $ - $ 1,137
Other debt
securities 49 - - 49
- -------------------------------------------------------------------------------
$ 1,186 $ - $ - $ 1,186
===============================================================================
Gross Gross Estimated
Unrealized Unrealized Fair
December 31, Cost Gains Losses Value
- -------------------------------------------------------------------------------
1998
Available-for-sale
securities
Equity securities $ 304 $ 67 $ (48) $ 323
Collateralized
mortgage
obligations 89 - (1) 88
Other debt
securities 11 - - 11
- -------------------------------------------------------------------------------
$ 404 $ 67 $ (49) $ 422
===============================================================================
Held-to-maturity
securities
Bank and
corporate debt $ 1,339 $ - $ - $ 1,339
Other debt
securities 92 - - 92
- -------------------------------------------------------------------------------
$ 1,431 $ - $ - $ 1,431
===============================================================================
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KO-ar99-p54
THE COCA-COLA COMPANY AND SUBSIDIARIES
On December 31, 1999 and 1998, these investments were included in the
following captions in our consolidated balance sheets (in millions):
Available-for-Sale Held-to-Maturity
December 31, Securities Securities
- ------------------------------------------------------------------------------
1999
Cash and cash equivalents $ - $ 1,061
Current marketable securities 76 125
Cost method investments,
principally bottling companies 227 -
Marketable securities and
other assets 51 -
- ------------------------------------------------------------------------------
$ 354 $ 1,186
==============================================================================
1998
Cash and cash equivalents $ - $ 1,227
Current marketable securities 79 80
Cost method investments,
principally bottling companies 251 -
Marketable securities and
other assets 92 124
- ------------------------------------------------------------------------------
$ 422 $ 1,431
==============================================================================
The contractual maturities of these investments as of December 31, 1999,
were as follows (in millions):
Available-for-Sale Held-to-Maturity
Securities Securities
------------------ ------------------------
Fair Amortized Fair
Cost Value Cost Value
- -----------------------------------------------------------------------------
2000
$ - $ - $ 1,186 $ 1,186
2001- 2004 8 8 - -
Collateralized
mortgage
obligations 45 44 - -
Equity securities 246 302 - -
- -----------------------------------------------------------------------------
$ 299 $ 354 $ 1,186 $ 1,186
=============================================================================
For the years ended December 31, 1999 and 1998, 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 9: 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 underlying exposures. Virtually all 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 hedging
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 from 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 enter into
transactions only with financial institutions of investment grade or better. We
monitor counterparty exposures daily and review any downgrade in credit rating
immediately. 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 presettlement
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 a 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 four years on December 31, 1999. Variable rates are
predominantly linked to the 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 any terminated contracts, are included in prepaid expenses and other assets.
These are recognized in income, along with unrealized gains and losses in the
same period the hedging transactions
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KO-ar99-p55
THE COCA-COLA COMPANY AND SUBSIDIARIES
are realized. Approximately $85 million and $43 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, 1999 and 1998, respectively.
Deferred gains/losses from hedging anticipated transactions were not material on
December 31, 1999 or 1998. 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,
a component of accumulated other comprehensive income.
The following table presents the aggregate notional principal amounts,
carrying values, fair values and maturities of our derivative financial
instruments outstanding on December 31, 1999 and 1998 (in millions):
Notional
Principal Carrying Fair
December 31, Amounts Values Values Maturity
- -------------------------------------------------------------------------------
1999
Interest rate
management
Swap agreements
Assets $ 250 $ 2 $ 6 2000-2003
Liabilities 200 (1) (8) 2000-2003
Foreign currency
management
Forward contracts
Assets 1,108 57 71 2000-2001
Liabilities 344 (6) (3) 2000-2001
Swap agreements
Assets 102 9 16 2000
Liabilities 412 - (77) 2000-2002
Purchased options
Assets 1,770 47 18 2000
Other
Assets 185 - 2 2000
Liabilities 126 (8) (8) 2000
- -------------------------------------------------------------------------------
$ 4,497 $ 100 $ 17
===============================================================================
Notional
Principal Carrying Fair
December 31, Amounts Values Values Maturity
- -------------------------------------------------------------------------------
1998
Interest rate
management
Swap agreements
Assets $ 325 $ 2 $ 19 1999-2003
Liabilities 200 (2) (13) 2000-2003
Foreign currency
management
Forward contracts
Assets 809 6 (54) 1999-2000
Liabilities 1,325 (6) (73) 1999-2000
Swap agreements
Assets 344 4 6 1999-2000
Liabilities 704 - (51) 1999-2002
Purchased options
Assets 232 5 3 1999
Other
Liabilities 243 (25) (26) 1999-2000
- -------------------------------------------------------------------------------
$ 4,182 $ (16) $ (189)
===============================================================================
Maturities of derivative financial instruments held on December 31, 1999,
are as follows (in millions):
2000 2001 2002 2003
- -----------------------------------------------------
$4,018 $ 268 $ 136 $ 75
=====================================================
NOTE 10: COMMITMENTS AND CONTINGENCIES
On December 31, 1999, we were contingently liable for guarantees of
indebtedness owed by third parties in the amount of $409 million, of which $7
million related to independent bottling licensees. We do not consider it
probable that we will be required to satisfy these guarantees.
We believe our exposure to concentrations of credit risk is limited, due
to the diverse geographic areas covered by our operations.
We have committed to make future marketing expenditures of $760 million,
of which the majority is payable over the next 12 years. 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.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KO-ar99-p56
THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTE 11: 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):
1999 1998 1997
- ----------------------------------------------------------------
Increase in trade accounts
receivable $ (96) $ (237) $ (164)
Increase in inventories (163) (12) (43)
Increase in prepaid expenses
and other assets (547) (318) (145)
Increase (decrease) in
accounts payable
and accrued expenses 281 (70) 299
Increase (decrease) in
accrued taxes (36) 120 393
Increase (decrease) in
other liabilities 4 (33) (387)
- ----------------------------------------------------------------
$ (557) $ (550) $ (47)
================================================================
NOTE 12: RESTRICTED STOCK, STOCK OPTIONS AND OTHER STOCK PLANS
Our Company currently sponsors restricted stock award plans and stock
option plans. Our Company applies Accounting Principles Board Opinion No. 25
and related Interpretations in accounting for our plans. Accordingly, no
compensation cost has been recognized for our stock option plans. The
compensation cost charged against income for our restricted stock award plans
was $39 million in 1999, $14 million in 1998 and $56 million in 1997. For our
Incentive Unit Agreements and Performance Unit Agreements, which were both paid
off in 1997, the charge against income was $31 million in 1997. Had compensation
cost for the stock option plans been determined based on the fair value at the
grant dates for awards under the plans, our Company's net income and net income
per share (basic and diluted) would have been as presented in the following
table.
The pro forma amounts are indicated below (in millions, except per share
amounts):
Year Ended December 31, 1999 1998 1997
- ----------------------------------------------------------------
Net income
As reported $ 2,431 $ 3,533 $ 4,129
Pro forma $ 2,271 $ 3,405 $ 4,026
Basic net income per share
As reported $ .98 $ 1.43 $ 1.67
Pro forma $ .92 $ 1.38 $ 1.63
Diluted net income per share
As reported $ .98 $ 1.42 $ 1.64
Pro forma $ .91 $ 1.36 $ 1.60
================================================================
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, 1999, 33 million shares were available for grant under the
Restricted Stock Award Plans. In 1999, there were 32,100 shares of restricted
stock granted at an average price of $53.86. In 1998, there were 707,300 shares
of restricted stock granted at an average price of $67.03. In 1997, 162,000
shares of restricted stock were granted at $59.75. 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 1991 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 1991 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 1991 Option Plan have been granted to Company
employees at fair market value at the date of grant.
A new stock option plan (the 1999 Option Plan) was approved by share
owners in April of 1999. Following the approval of the 1999 Option Plan, no
grants were made from the 1991 Option Plan and shares available under the 1991
Option Plan were no longer available to be granted. Under the 1999 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
granted under the 1999 Option Plan. Options to purchase common stock under the
1999 Option Plan have been granted to Company employees at fair market value at
the date of grant.
Generally, stock options become exercisable over a four-year vesting period
and expire 15 years from the date of grant. Prior to 1999, generally, stock
options became exercisable over a three-year vesting period and expired 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 1999, 1998 and 1997, respectively: dividend
yields of 1.2, 0.9 and 1.0 percent; expected volatility of 27.1, 24.1 and 20.1
percent; risk-free interest rates of 6.2, 4.0 and 6.0 percent; and expected
lives of four years for all years. The weighted-average fair value of options
granted was $15.77, $15.41 and $13.92 for the years ended December 31, 1999,
1998 and 1997, respectively.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KO-ar99-p57
THE COCA-COLA COMPANY AND SUBSIDIARIES
<TABLE>
A summary of stock option activity under all plans is as follows (shares in
millions):
<CAPTION
1999 1998 1997
------------------------- ------------------------ --------------------------
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, 80 $ 42.77 80 $ 33.22 78 $ 26.50
Granted {1} 28 53.53 17 65.91 13 59.79
Exercised (6) 26.12 (16) 18.93 (10) 14.46
Forfeited/Expired {2} (1) 60.40 (1) 55.48 (1) 44.85
- --------------------------------------------------------------------------------------------------------------------
Outstanding on December 31, 101 $ 46.66 80 $ 42.77 80 $ 33.22
- --------------------------------------------------------------------------------------------------------------------
Exercisable on December 31, 59 $ 39.40 52 $ 32.41 55 $ 24.62
- --------------------------------------------------------------------------------------------------------------------
Shares available on
December 31, for options
that may be granted 92 18 34
====================================================================================================================
<FN>
{1} No grants were made from the 1991 Option Plan during 1999.
{2} Shares Forfeited/Expired relate to the 1991 Option Plan.
</FN>
</TABLE>
The following table summarizes information about stock options at December
31, 1999 (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>
$ 5.00 to $ 10.00 3 0.3 years $ 9.74 3 $ 9.74
$ 10.01 to $ 20.00 3 1.6 years $ 14.78 3 $ 14.78
$ 20.01 to $ 30.00 16 4.0 years $ 23.28 16 $ 23.28
$ 30.01 to $ 40.00 12 5.8 years $ 35.63 12 $ 35.63
$ 40.01 to $ 50.00 11 6.8 years $ 48.86 11 $ 48.86
$ 50.01 to $ 60.00 40 12.8 years $ 55.33 8 $ 59.75
$ 60.01 to $ 86.75 16 8.8 years $ 65.87 6 $ 65.92
- --------------------------------------------------------------------------------------------------------------------
$ 5.00 to $ 86.75 101 8.6 years $ 46.66 59 $ 39.40
====================================================================================================================
</TABLE>
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, an 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. 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. In 1997, all outstanding units were paid based on a market
price of $58.50 per unit.
NOTE 13: PENSION AND OTHER POSTRETIREMENT
BENEFIT PLANS
Our Company sponsors and/or contributes to pension and postretirement
health care and life insurance benefit plans covering substantially all U.S.
employees and certain employees in international locations. We also sponsor
nonqualified, unfunded defined benefit pension 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 expense for all benefit plans, including defined benefit pension
plans and postretirement health care and life insurance benefit plans, amounted
to approximately $108 million in 1999, $119 million in 1998 and $109 million in
1997. Net periodic cost for our pension and other benefit plans consists of the
following (in millions):
Pension Benefits
---------------------------------
Year Ended December 31, 1999 1998 1997
- ----------------------------------------------------------------
Service cost $ 67 $ 56 $ 49
Interest cost 111 105 93
Expected return on
plan assets (119) (105) (95)
Amortization of prior
service cost 6 3 7
Recognized net actuarial loss 7 9 14
- ----------------------------------------------------------------
Net periodic pension cost $ 72 $ 68 $ 68
================================================================
Other Benefits
---------------------------------
Year Ended December 31, 1999 1998 1997
- ----------------------------------------------------------------
Service cost $ 14 $ 14 $ 11
Interest cost 22 25 23
Expected return on plan assets (1) (1) (1)
Recognized net actuarial gain - - (1)
- -----------------------------------------------------------------
Net periodic cost $ 35 $ 38 $ 32
=================================================================
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KO-ar99-p58
THE COCA-COLA COMPANY AND SUBSIDIARIES
The following table sets forth the change in benefit obligation for our
benefit plans (in millions):
Pension Other
Benefits Benefits
--------------- -------------------
December 31, 1999 1998 1999 1998
- -----------------------------------------------------------------------------
Benefit obligation
at beginning of year $ 1,717 $ 1,488 $ 381 $ 327
Service cost 67 56 14 14
Interest cost 111 105 22 25
Foreign currency
exchange rate changes (13) 25 - -
Amendments 4 8 - -
Actuarial (gain) loss (137) 124 (101) 31
Benefits paid (84) (86) (14) (16)
Other 5 (3) 1 -
- ------------------------------------------------------------------------------
Benefit obligation
at end of year $ 1,670 $ 1,717 $ 303 $ 381
==============================================================================
The following table sets forth the change in plan assets for our benefit
plans (in millions):
Pension Other
Benefits Benefits
--------------- -------------------
December 31, 1999 1998 1999 1998
- -----------------------------------------------------------------------------
Fair value of plan assets
at beginning of year {1} $ 1,516 $ 1,408 $ 36 $ 40
Actual return on
plan assets 259 129 1 2
Employer contribution 34 25 5 10
Foreign currency
exchange rate changes (20) 18 - -
Benefits paid (69) (68) (14) (16)
Other 2 4 1 -
- -----------------------------------------------------------------------------
Fair value of plan assets
at end of year {1} $ 1,722 $ 1,516 $ 29 $ 36
=============================================================================
{1} Pension benefit plan assets primarily consist of listed stocks (including
1,584,000 shares of common stock of our Company with a fair value of $92 million
and $106 million as of December 31, 1999 and 1998, respectively), bonds and
government securities. Other benefit plan assets consist of corporate bonds,
government securities and short-term investments.
The projected benefit obligation, accumulated benefit obligation and fair
value of plan assets for the pension plans with accumulated benefit obligations
in excess of plan assets were $556 million, $434 million and $161 million,
respectively, as of December 31, 1999, and $536 million, $418 million and $149
million, respectively, as of December 31, 1998.
The accrued pension and other benefit costs recognized in our accompanying
consolidated balance sheets is computed as follows (in millions):
Pension Other
Benefits Benefits
----------------- -----------------
December 31, 1999 1998 1999 1998
- -----------------------------------------------------------------------------
Funded status $ 52 $ (201) $ (274) $ (345)
Unrecognized net (asset)
liability at transition 4 - - -
Unrecognized prior
service cost 54 43 4 4
Unrecognized net (gain)
loss (285) (10) (91) 10
- -----------------------------------------------------------------------------
Net liability recognized $ (175) $ (168) $ (361) $ (331)
- -----------------------------------------------------------------------------
Prepaid benefit cost $ 73 $ 54 $ - $ -
Accrued benefit liability (305) (303) (361) (331)
Accumulated other
comprehensive income 26 64 - -
Intangible asset 31 17 - -
- -----------------------------------------------------------------------------
Net liability recognized $ (175) $ (168) $ (361) $ (331)
=============================================================================
The weighted-average assumptions used in computing the preceding
information are as follows:
Pension Benefits
-----------------------------
December 31, 1999 1998 1997
- ---------------------------------------------------------------
Discount rates 7% 6 1/2% 7%
Rates of increase in
compensation levels 4 1/2% 4 1/2% 4 3/4%
Expected long-term
rates of return on
assets 8 1/2% 8 3/4% 9%
Other Benefits
-------------------------------
December 31, 1999 1998 1997
- ---------------------------------------------------------------
Discount rates 8% 6 3/4% 7 1/4%
Rates of increase in
compensation levels 5% 4 1/2% 4 3/4%
Expected long-term
rates of return on
assets 3% 3% 3%
The rate of increase in per capita costs of covered health care benefits is
assumed to be 7 1/2 percent in 2000, decreasing gradually to 5 1/4 percent by
the year 2005.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KO-ar99-p59
THE COCA-COLA COMPANY AND SUBSIDIARIES
A one percentage point change in the assumed health care cost trend rate
would have the following effects (in millions):
One Percentage One Percentage
Point Increase Point Decrease
--------------------------------------------
Effect on accumulated
postretirement benefit
obligation as of
December 31, 1999 $ 42 $ (34)
Effect on net periodic
postretirement benefit
cost in 1999 $ 6 $ (5)
NOTE 14: INCOME TAXES
Income before income taxes consists of the following (in millions):
Year Ended December 31, 1999 1998 1997
- ----------------------------------------------------------------
United States $ 1,504 $ 1,979 $ 1,515
International 2,315 3,219 4,540
- ---------------------------------------------------------------
$ 3,819 $ 5,198 $ 6,055
===============================================================
Income tax expense (benefit) consists of the following (in millions):
Year Ended United State &
December 31, States Local International Total
- ------------------------------------------------------------------------------
1999
Current $ 395 $ 67 $ 829 $ 1,291
Deferred 182 11 (96) 97
1998
Current $ 683 $ 91 $ 929 $ 1,703
Deferred (73) 28 7 (38)
1997
Current $ 240 $ 45 $ 1,261 $ 1,546
Deferred 180 21 179 380
==============================================================================
We made income tax payments of approximately $1,404 million, $1,559 million
and $982 million in 1999, 1998 and 1997, respectively.
A reconciliation of the statutory U.S. federal rate and effective rates is
as follows:
Year Ended December 31, 1999 1998 1997
- ---------------------------------------------------------------
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 (6.0) (4.3) (2.6)
Equity income or loss 1.6 - (.6)
Other operating charges 5.3 - -
Other-net (.6) .3 (1.0)
- ---------------------------------------------------------------
36.3% 32.0% 31.8%
===============================================================
Our 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 tax rate on operations.
In 1999, the Company recorded a charge of $813 million, primarily reflecting
the impairment of certain bottling, manufacturing and intangible assets. For
some locations with impaired assets, management concluded that it was more
likely than not that no local tax benefit would be realized. Accordingly, a
valuation allowance was recorded offsetting the future tax benefits for such
locations. This resulted in an increase in our effective tax rate for 1999.
Excluding the impact, the Company's effective tax rate for 1999 would have
been 31.0 percent.
We have provided appropriate U.S. and international taxes 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 $3.4 billion
on December 31, 1999. The taxes that would be paid upon remittance of these
indefinitely reinvested earnings are approximately $1.2 billion, 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, 1999 1998
- ---------------------------------------------------------------
Deferred tax assets:
Benefit plans $ 311 $ 309
Liabilities and reserves 169 166
Net operating loss carryforwards 196 49
Other operating charges 254 -
Other 272 176
- ---------------------------------------------------------------
Gross deferred tax assets 1,202 700
Valuation allowance (443) (18)
- ---------------------------------------------------------------
$ 759 $ 682
===============================================================
Deferred tax liabilities:
Property, plant and equipment $ 320 $ 244
Equity investments 397 219
Intangible assets 197 139
Other 99 320
- ---------------------------------------------------------------
$ 1,013 $ 922
===============================================================
Net deferred tax asset (liability){1} $ (254) $ (240)
- ---------------------------------------------------------------
{1} Deferred tax assets of $244 million and $184 million have been
included in the consolidated balance sheet caption "Marketable
securities and other assets" at December 31, 1999 and 1998, respectively.
On December 31, 1999 and 1998, we had approximately $233 million and $171
million, respectively, of gross deferred tax assets, net of valuation
allowances, located in countries outside the United States.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KO-ar99-p60
THE COCA-COLA COMPANY AND SUBSIDIARIES
On December 31, 1999, we had $608 million of operating loss carryforwards
available to reduce future taxable income of certain international subsidiaries.
Loss carryforwards of $320 million must be utilized within the next five years;
$288 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 15: NONRECURRING ITEMS
In the fourth quarter of 1999, we recorded charges of approximately $813
million. Of this $813 million, approximately $543 million related to the
impairment of certain bottling, manufacturing and intangible assets, primarily
within our Russian and Caribbean bottlers and in the Middle and Far East and
North America. These impairment charges were recorded to reduce the carrying
value of the 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. The charges were primarily the result of
our revised outlook in certain markets due to the prolonged severe economic
downturns. The remaining carrying value of long-lived assets within these
operations as of December 31, 1999, was approximately $140 million.
Of the remainder, approximately $196 million related to charges associated
with the impairment of the distribution and bottling assets of our vending
operations in Japan and our bottling operations in the Baltics. The charges
reduced the carrying value of these assets to their fair value less the cost
to sell. Consistent with our long-term bottling investment strategy, management
has committed to a plan to sell our ownership interest in these operations to
one of our strategic business partners. It is management's intention that this
plan will be completed within approximately the next 12 months. The remaining
carrying value of long-lived assets within these operations and the loss from
operations on an after-tax basis as of and for the 12-month period ending
December 31, 1999, were approximately $152 million and $5 million,
respectively.
The remainder of the $813 million charges, approximately $74 million,
primarily related to the change in senior management and charges related to
organizational changes within the Greater Europe, Latin America and Corporate
segments. These charges were incurred during the fourth quarter of 1999.
In the second quarter of 1998, we recorded a nonrecurring charge primarily
related to the impairment of certain assets in North America of $25 million
and Corporate of $48 million.
In the second quarter of 1997, we recorded a nonrecurring charge of $60
million related to enhancing manufacturing efficiencies in North America.
Substantially all of the charges required as a result of these provisions have
been realized as of December 31, 1999.
NOTE 16: OPERATING SEGMENTS
During the three years ended December 31, 1999, our Company's operating
structure included the following operating segments: the North America Group
(including The Minute Maid Company); the Africa Group; the Greater Europe Group;
the Latin America Group; the Middle & Far East Group; and Corporate. The North
America Group includes the United States and Canada.
SEGMENT PRODUCTS AND SERVICES
The business of our Company is nonalcoholic ready-to-drink beverages,
principally soft drinks, but also a variety of noncarbonated beverages. Our
operating segments derive substantially all their revenues from the manufacture
and sale of beverage concentrates and syrups with the exception of Corporate,
which derives its revenues primarily from the licensing of our brands in
connection with merchandise.
METHOD OF DETERMINING SEGMENT PROFIT OR LOSS
Management evaluates the performance of its operating segments
separately to individually monitor the different factors affecting financial
performance. Segment profit or loss includes substantially all of the
segment's costs of production, distribution and administration. Our
Company manages income taxes on a global basis. Thus, we evaluate segment
performance based on profit or loss before income taxes, exclusive of any
significant gains or losses on the disposition of investments or other
assets. Our Company typically manages and evaluates equity investments and
related income on a segment level. However, we manage certain significant
investments, such as our equity interests in Coca-Cola Enterprises, at the
corporate level. We manage financial costs, such as exchange gains and
losses and interest income and expense, on a global basis at the Corporate
segment.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KO-ar99-p61
THE COCA-COLA COMPANY AND SUBSIDIARIES
<TABLE>
Information about our Company's operations by operating segment 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>
1999
Net operating revenues $ 7,521 $ 595 $ 4,550 $ 1,952 $ 5,027{1} $ 160 $ 19,805
Operating income{2} 1,399 162 1,011 789 1,027 (406) 3,982
Interest income 260 260
Interest expense 337 337
Equity income (loss) (5) 2 (97) (6) (68) (10) (184)
Identifiable operating
assets 4,100 396 2,034 1,937 3,062 3,302{3} 14,831
Investments{4} 138 75 1,870 1,833 2,096 780 6,792
Capital expenditures 269 18 218 67 321 176 1,069
Depreciation and
amortization 263 26 80 96 205 122 792
Income before income
taxes 1,395 149 927 795 946 (393) 3,819
===============================================================================================================
1998
Net operating revenues $ 6,915 $ 603 $ 4,834 $ 2,244 $ 4,040{1} $ 177 $ 18,813
Operating income 1,336{5} 216 1,581 1,008 1,280 (454){5} 4,967
Interest income 219 219
Interest expense 277 277
Equity income (loss) (1) 3 (40) 68 (70) 72 32
Identifiable operating
assets 4,099 381 2,060 1,779 2,041 2,099{3} 12,459
Investments{4} 141 73 2,010 1,629 2,218 615 6,686
Capital expenditures 274 19 216 72 107 175 863
Depreciation and
amortization 231 23 92 93 118 88 645
Income before income
taxes 1,344 209 1,498 1,085 1,214 (152) 5,198
===============================================================================================================
1997
Net operating revenues $ 6,443 $ 582 $ 5,395 $ 2,124 $ 4,110 $ 214 $ 18,868
Operating income 1,195{6} 185 1,742 1,035 1,396 (552) 5,001
Interest income 211 211
Interest expense 258 258
Equity income (loss) (6) 2 (16) 96 22 57 155
Identifiable operating
assets 3,758 418 2,806 1,593 1,578 1,834{3} 11,987
Investments{4} 138 48 1,041 1,461 2,006 200 4,894
Capital expenditures 261 17 327 78 196 214 1,093
Depreciation and
amortization 197 22 123 99 106 79 626
Income before income
taxes 1,193 178 1,725 1,137 1,398 424 6,055
===============================================================================================================
Intercompany transfers between operating segments are not material.
Certain prior year amounts have been reclassified to conform to the
current year presentation.
<FN>
{1} Japan revenues represent approximately 76 percent of total Middle & Far East operating segment revenues
related to 1999 and 1998.
{2} Operating income was reduced by $34 million for North America, $3 million for Africa, $430 million for
Greater Europe, $35 million for Latin America, $252 million for Middle & Far East and $59 million for
Corporate related to the other operating charges recorded in the fourth quarter of 1999.
{3} Corporate identifiable operating assets are composed principally of marketable securities, finance
subsidiary receivables, goodwill and other intangible assets and fixed assets.
{4} Principally equity investments in bottling companies.
{5} Operating income was reduced by $25 million for North America and $48 million for Corporate for provisions
related to the impairment of certain assets.
{6} Operating income for North America was reduced by $60 million for provisions related to enhancing
manufacturing efficiencies.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Compound Growth Rates North Greater Latin Middle &
Ending 1999 America Africa Europe America Far East Consolidated
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net operating revenues
5 years 7.1% 2.5% (2.0)% - 8.2% 4.0%
10 years 6.7% 14.0% 8.1% 11.2% 11.3% 8.7%
- ----------------------------------------------------------------------------------------------------
Operating income
5 years 11.4% (.4)% (3.2)% 1.9% (1.5)% 1.8%
10 years 11.2% 7.2% 4.5% 13.4% 6.5% 8.6%
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS KO-ar99-p62
THE COCA-COLA COMPANY AND SUBSIDIARIES
NET OPERATING REVENUES BY OPERATING SEGMENT {1}
[pie charts]
Year Ended December 31, 1999 1998 1997
- ------------------------------------------------------------------------------
North America 38% 37% 35%
Greater Europe 23% 26% 29%
Latin America 10% 12% 11%
Middle and Far East 26% 22% 22%
Africa 3% 3% 3%
OPERATING INCOME BY OPERATING SEGMENT {1}
Year Ended December 31, 1999 1998 1997
- ------------------------------------------------------------------------------
North America 32% 25% 22%
Greater Europe 23% 29% 31%
Latin America 18% 18% 19%
Middle and Far East 23% 24% 25%
Africa 4% 4% 3%
{1} Charts and percentages are calculated excluding Corporate
[pie charts]
NOTE 17: ACQUISITIONS AND INVESTMENTS
During 1999, the Company's acquisition and investment activity, which
included the acquisition of beverage brands from Cadbury Schweppes plc in more
than 160 countries around the world and investments in the bottling operations
of Embotelladora Arica S.A., F&N Coca-Cola Pte Limited, and Coca-Cola West
Japan Company, Ltd., totaled $1.9 billion. During 1998 and 1997, the Company's
acquisition and investment activity totaled $1.4 billion and $1.1 billion,
respectively. None of the acquisitions and investment activity in 1998 and 1997
was individually significant.
The acquisitions and investments have been accounted for by the purchase
method of accounting and, accordingly, their results have been included in the
consolidated financial statements from their respective dates of acquisition.
Had the results of these businesses been included in operations commencing with
1997, the reported results would not have been materially affected.
NOTE 18: SUBSEQUENT EVENTS
In the second half of 1999, we undertook a detailed review of each of our
business functions. The purpose of this review was to determine the optimal
organizational structure to serve the needs of our customers and consumers at
the local level.
As a result of this review, in January 2000 we announced a major
organizational realignment (the Realignment). The Realignment will reduce our
workforce around the world while transferring responsibilities from our
corporate headquarters to revenue-generating operating units. The intent of the
Realignment is to effectively align our corporate resources, support systems and
business culture to fully leverage the local capabilities of our system. Under
the Realignment, approximately 6,000 positions worldwide, including employees of
the Company, open positions and contract labor, will be eliminated. Of these
identified positions, approximately 3,300 are based within the United States and
approximately 2,700 are based outside of the United States. The entire reduction
will take place during calendar year 2000.
Employees separating from our Company as a result of the Realignment will
be offered severance packages which include both financial and nonfinancial
components. Charges related to the Realignment will be recognized during
calendar year 2000.
<PAGE>
REPORT OF INDEPENDENT AUDITORS KO-ar99-p63
THE COCA-COLA COMPANY AND SUBSIDIARIES
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, 1999 and 1998,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, 1999.
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 auditing standards generally
accepted in the United States. 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, 1999 and 1998, and the consolidated
results of their operations and their cash flows for each of the three years
in the period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States.
/s/ ERNST & YOUNG
Atlanta, Georgia
January 25, 2000
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES KO-ar99-p65
<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>
1999
Net operating revenues $ 4,400 $ 5,335 $ 5,139 $ 4,931 $ 19,805
Gross profit 3,097 3,743 3,489 3,467 13,796
Net income (loss) 747 942 787 (45) 2,431
Basic net income
(loss) per share .30 .38 .32 (.02) .98
Diluted net income
(loss) per share .30 .38 .32 (.02) .98
================================================================================
1998
Net operating revenues $ 4,457 $ 5,151 $ 4,747 $ 4,458 $ 18,813
Gross profit 3,139 3,652 3,301 3,159 13,251
Net income 857 1,191 888 597 3,533
Basic net income per
share .35 .48 .36 .24 1.43
Diluted net income
per share .34 .48 .36 .24 1.42
================================================================================
</TABLE>
The fourth quarter of 1999 includes provisions of $813 million ($.31 per share
after income taxes, basic and diluted) recorded in other operating charges,
primarily relating to the impairment of certain bottling, manufacturing and
intangible assets. For a more complete discussion of these provisions, refer to
Note 15 in our Consolidated Financial Statements.
The second quarter of 1998 includes a gain of approximately $191 million
($.03 per share after income taxes, basic and diluted) on the sale of our
previously consolidated bottling and canning operations in Italy in June
1998. The second quarter of 1998 also includes provisions of $73 million
($.02 per share after income taxes, basic and diluted) related to the
impairment of certain assets in North America and Corporate.
The third quarter of 1998 includes a noncash gain on the issuance of stock by
CCEAG of approximately $27 million ($.01 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 1999 and 1998.
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999
High $ 70.38 $ 70.88 $ 65.50 $ 69.00
Low 59.56 57.63 47.94 47.31
Close 61.38 62.00 48.25 58.25
=============================================================================
1998
High $ 79.31 $ 86.81 $ 88.94 $ 75.44
Low 62.25 71.88 53.63 55.38
Close 77.44 85.50 57.63 67.00
=============================================================================
</TABLE>
<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: 394,603
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, Chicago, Cincinnati, 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 2000 meeting, our Board increased our quarterly
dividend to 17 cents per share, equivalent to an annual dividend
of 68 cents per share. The Company has increased dividends each
of the last 38 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 315 consecutive quarterly dividends, beginning in 1920.
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, a division of EquiServe
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: www.equiserve.com
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.
At year end, 74 percent of the Company's share owners of record
were participants in the Plan. In 1999, share owners invested $40
million in dividends and $78 million in cash in the Plan.
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, a division of EquiServe, electronically through the
Direct Registration System.
For more details on the Dividend and Cash Investment Plan,
please contact the Plan Administrator, First Chicago Trust Company,
a division of EquiServe, or visit the investor section of our
Company's Web site, www.thecoca-colacompany.com, for more information.
SHARE-OWNER INTERNET ACCOUNT ACCESS
Share owners of record may access their accounts via the Internet
to obtain share balance, current market price of shares, historical
stock prices and the toal value of their investment. In addition,
they may sell or request issuance of Dividend and Cash Investment
Plan shares.
For information on how to access this secure site, please call
First Chicago Trust Company, a division of EquiServe, toll-free at
(877) 843-9327. For share owners of record outside North America,
please call (201) 536-8071.
ANNUAL MEETING OF SHARE OWNERS
April 19, 2000 at 9 a.m. local time
The Playhouse Theatre
DuPont 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
INFORMATION RESOURCES
INTERNET SITE
You can find our stock price, news and earnings releases, and more
financial information about our Company on our Web site,
www.thecoca-colacompany.com.
PUBLICATIONS
The Company's Annual Report, Proxy Statement, Form 10-K and Form 10-Q
reports are available free of charge upon request from our Industry &
Consumer Affairs Department at the Company's corporate address, listed
above.
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 First Chicago Trust Company, a division of EquiServe,
at (888) COKESHR (265-3747).
<PAGE>
GLOSSARY
[Following are certain definitions extracted from page 69.]
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 giving effect to
taxes and excluding the effects of interest, in excess of a computed capital
charge for average operating capital employed.
FREE CASH FLOW: Cash provided by operations less cash used in business
reinvestment. The Company uses free cash flow along with borrowings to pay
dividends, make share repurchases and make acquisitions.
INTEREST COVERAGE RATIO: Income before taxes, excluding unusual items, plus
interest expense divided by the sum of interest expense and capitalized
interest.
NET CAPITAL: Calculated by adding share-owners' equity to net debt.
NET DEBT: Calculated by subtracting from debt the sum of cash, cash
equivalents, marketable securities and certain temporary bottling investments,
less the amount of cash determined to be necessary for operations.
RETURN ON CAPITAL: Calculated by dividing income from continuing operations --
before changes in accounting principles, adding back 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.
<PAGE>
EXHIBIT 21.1
<TABLE>
SUBSIDIARIES OF THE COCA-COLA COMPANY
AS OF DECEMBER 31, 1999
<CAPTION>
ORGANIZED PERCENTAGES
UNDER OF VOTING
LAWS OF: POWER
--------- -----------
<S> <C> <C>
The Coca-Cola Company Delaware
Subsidiaries:
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
F&N Coca-Cola PTE Ltd. Singapore 100
Coca-Cola Indochina Pte. Ltd. Singapore 100
Coca-Cola Oasis 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 64.59
Coca-Cola Refreshment Products Ltd. Japan 100
Coca-Cola South Asia Holdings, Inc. Delaware 100
Coca-Cola (China) Beverages Limited China 100
Coca-Cola India Limited India 100
Coca-Cola (Thailand) Limited Thailand 100
Coca-Cola Tea Products Japan 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
Coca-Cola Holdings (Middle East and North
Africa) E.C. Bahrain 100
Coca-Cola National Vending Company,
Limited Japan 100
Schweppes Namibia (Prop) Ltd. Namibia 100
Barlan, Inc. Delaware 100
Varoise de Concentres S.A. France 100
Coca-Cola G.m.b.H. Germany 100
Hindustan Coca-Cola Beverages
Pvt. Ltd. India 100
Hindustan Coca-Cola Holding Pvt. Ltd. India 100
Coca-Cola St. Petersburg Management Russia 100
S.A. Coca-Cola Financial Services N.V. Belgium 99.20
Beverage Brands, S.A. Peru 100
Corporacion Inca Kola Peru 99.99
Beverage Products, Ltd. Delaware 100
Coca-Cola Canners of Southern Africa
(Pty) Limited South Africa 51.55
Coca-Cola China Limited Hong Kong 100
Coca-Cola de Argentina S.A. Argentina 100
Coca-Cola de Chile S.A. Chile 100
Coca-Cola de Colombia, S.A. Colombia 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
</TABLE>
<PAGE>
EXHIBIT 21.1
<TABLE>
SUBSIDIARIES OF THE COCA-COLA COMPANY
AS OF DECEMBER 31, 1999
<CAPTION>
ORGANIZED PERCENTAGES
UNDER OF VOTING
LAWS OF: POWER
--------- -----------
<S> <C> <C>
continued from page 1
- ----------------------
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 & 100
Australia
Coca-Cola Beverages plc Great Britain 50.52
Coca-Cola Southern Africa (Pty) Limited South Africa 100
Conco Limited Cayman Islands 100
Coca-Cola Refreshments Moscow Russia 100
International Beverages Ireland 100
Minute Maid SA Switzerland 100
Refreshment Product Services, Inc. Delaware 100
Coca-Cola Holdings (Nederland) B.V. Netherlands 100
Coca-Cola Holdings (United Kingdom) Limited England and 100
Wales
Beverage Services Ltd. England and 100
Wales
Coca-Cola Italia SRL Italy 100
Coca-Cola Hungary Services, Ltd. Hungary 90
Coca-Cola Norge A/S Norway 100
Coca-Cola NNED Branch - CC Norge Norway 100
Coca-Cola Mesrubat Pazarlama ve
Danismanlik Hizmetleri A.S. Turkey 100
Coca-Cola South Pacific Pty. Limited Australia 100
LLC Star Service Russia 100
Refrescos Envasados S.A. Spain 100
Compania de Servicios de Bebidas
Refrescantes SLR Spain 99.99
The Inmex Corporation Florida 100
Servicios Integrados de Administracion
y Alta Gerencia, S.A. de C.V. Mexico 100
Star Bottling Limited United Kingdom 100
SA Coca-Cola Services NV Belgium 100
</TABLE>
Other subsidiaries whose combined size is not significant:
11 domestic wholly owned subsidiaries consolidated
101 foreign wholly owned subsidiaries consolidated
10 foreign majority-owned subsidiaries consolidated
- 2 -
<PAGE>
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 25, 2000,
included in the 1999 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, with respect to which the date
is January 25, 2000, 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 25, 2000 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, 1999:
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
13. Registration Statement Number 333-78763 on Form S-8
ERNST & YOUNG LLP
Atlanta, Georgia
March 6, 2000
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, DOUGLAS N. DAFT, Chairman of
the Board, Chief Executive Officer and a Director of The Coca-Cola Company
(the "Company"), do hereby appoint JACK L. STAHL, President and Chief
Operating Officer of the Company, GARY P. FAYARD, Senior Vice President
and Chief Financial Officer of the Company, JOSEPH R. GLADDEN, JR.,
Executive 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, 1999 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 17th day of
February 2000.
/s/ Douglas N. Daft
Chairman of the Board,
Chief Executive Officer and Director
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, GARY P. FAYARD, Senior Vice
President and Chief Financial Officer of The Coca-Cola Company (the
"Company"), do hereby appoint DOUGLAS N. DAFT, Chairman of the Board, Chief
Executive Officer and a Director of the Company, JACK L. STAHL, President
and Chief Operating Officer of the Company, JOSEPH R. GLADDEN, JR., Executive
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, 1999 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 17th day of
February 2000.
/s/ Gary P. Fayard
Senior Vice President
and Chief Financial Officer
The Coca-Cola Company
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, CONNIE D. MCDANIEL, Vice
President and Controller of The Coca-Cola Company (the "Company"), do hereby
appoint DOUGLAS N. DAFT, Chairman of the Board, Chief Executive Officer
and a Director of the Company, JACK L. STAHL, President and Chief Operating
Officer of the Company, GARY P. FAYARD, Senior Vice President and Chief
Financial Officer of the Company, JOSEPH R. GLADDEN, JR., Executive 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, 19/99 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 17th day of
February 2000.
/s/ Connie D. McDaniel
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 DOUGLAS N. DAFT,
Chairman of the Board, Chief Executive Officer and a Director of the Company,
JACK L. STAHL, President and Chief Operating Officer of the Company, GARY P.
FAYARD, Senior Vice President and Chief Financial Officer of the Company,
JOSEPH R. GLADDEN, JR., Executive 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, 1999 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 17th day of
February 2000.
/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 DOUGLAS N. DAFT,
Chairman of the Board, Chief Executive Officer and a Director of the Company,
JACK L. STAHL, President and Chief Operating Officer of the Company, GARY P.
FAYARD, Senior Vice President and Chief Financial Officer of the Company,
JOSEPH R. GLADDEN, JR., Executive 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, 1999 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 17th day of
February 2000.
/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 DOUGLAS N. DAFT,
Chairman of the Board, Chief Executive Officer and a Director of the Company,
JACK L. STAHL, President and Chief Operating Officerr of the Company, GARY P.
FAYARD, Senior Vice President and Chief Financial Officer of the Company,
JOSEPH R. GLADDEN, JR., Executive 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, 1999 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 17th day of
February 2000.
/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 DOUGLAS N. DAFT,
Chairman of the Board, Chief Executive Officer and a Director of the Company,
JACK L. STAHL, President and Chief Operating Officer of the Company, GARY P.
FAYARD, Senior Vice President and Chief Financial Officer of the Company,
JOSEPH R. GLADDEN, JR., Executive 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, 1999 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 17th day of
February 2000.
/s/ Warren E. Buffett
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 DOUGLAS N. DAFT,
Chairman of the Board, Chief Executive Officer and a Director of the Company,
JACK L. STAHL, President and Chief Operating Officer of the Company, GARY P.
FAYARD, Senior Vice President and Chief Financial Officer of the Company,
JOSEPH R. GLADDEN, JR., Executive 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, 1999 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 17th day of
February 2000.
/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 DOUGLAS N. DAFT,
Chairman of the Board, Chief Executive Officer and a Director of the Company,
JACK L. STAHL, President and Chief Operating Officer of the Company, GARY P.
FAYARD, Senior Vice President and Chief Financial Officer of the Company,
JOSEPH R. GLADDEN, JR., Executive 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, 1999 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 17th day of
February 2000.
/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 DOUGLAS N. DAFT,
Chairman of the Board, Chief Executive Officer and a Director of the Company,
JACK L. STAHL, President and Chief Operating Officer of the Company, GARY P.
FAYARD, Senior Vice President and Chief Financial Officer of the Company,
JOSEPH R. GLADDEN, JR., Executive 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, 1999 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 17th day of
February 2000.
/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 DOUGLAS N. DAFT,
Chairman of the Board, Chief Executive Officer and a Director of the Company,
JACK L. STAHL, President and Chief Operating Officer of the Company, GARY P.
FAYARD, Senior Vice President and Chief Financial Officer of the Company,
JOSEPH R. GLADDEN, JR., Executive 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, 1999 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 17th day of
February 2000.
/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 DOUGLAS N. DAFT,
Chairman of the Board, Chief Executive Officer and a Director of the Company,
JACK L. STAHL, President and Chief Operating Officer of the Company, GARY P.
FAYARD, Senior Vice President and Chief Financial Officer of the Company,
JOSEPH R. GLADDEN, JR., Executive 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, 1999 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 17th day of
February 2000.
/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 DOUGLAS N. DAFT,
Chairman of the Board, Chief Executive Officer and a Director of the Company,
JACK L. STAHL, President and Chief Operating Officer of the Company, GARY P.
FAYARD, Senior Vice President and Chief Financial Officer of the Company,
JOSEPH R. GLADDEN, JR., Executive 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, 1999 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 17th day of
February 2000.
/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 DOUGLAS N. DAFT,
Chairman of the Board, Chief Executive Officer and a Director of the Company,
JACK L. STAHL, President and Chief Operating Officer of the Company, GARY P.
FAYARD, Senior Vice President and Chief Financial Officer of the Company,
JOSEPH R. GLADDEN, JR., Executive 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, 1999 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 17th day of
February 2000.
/s/ James B. Williams
Director
The Coca-Cola Company
<PAGE>
<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, 1999, 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-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,611
<SECURITIES> 201
<RECEIVABLES> 1,824
<ALLOWANCES> 26
<INVENTORY> 1,076
<CURRENT-ASSETS> 6,480
<PP&E> 6,471
<DEPRECIATION> 2,204
<TOTAL-ASSETS> 21,623
<CURRENT-LIABILITIES> 9,856
<BONDS> 854
0
0
<COMMON> 867
<OTHER-SE> 8,646
<TOTAL-LIABILITY-AND-EQUITY> 21,623
<SALES> 19,805
<TOTAL-REVENUES> 19,805
<CGS> 6,009
<TOTAL-COSTS> 6,009
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 337
<INCOME-PRETAX> 3,819
<INCOME-TAX> 1,388
<INCOME-CONTINUING> 2,431
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,431
<EPS-BASIC> 0.98
<EPS-DILUTED> 0.98
</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. Generally, the words
"believe," "expect," "intend," "estimate," "anticipate," "will" and similar
expressions identify forward-looking statements. 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,
statements expressing general optimism about future operating results and
non-historical Year 2000 information, 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, and speak only as of their dates. The
Company undertakes no obligation to publicly update or revise any forward-
looking statements, whether as a result of new information, future events
or otherwise.
The following are some of the factors that could affect the Company's
financial performance or could cause actual results to differ materially
from estimates contained in or underlying the Company's forward-looking
statements:
- -- The Company's 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
Company's 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 Company's 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 allows the Company 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.
<PAGE>
- -- The Company's 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 the ability of its key business
partners (critically important bottlers, customers,
suppliers, vendors and public entities such as government
regulatory agencies, utilities, financial entities and
others) and other third parties to replace, modify or
upgrade computer systems in ways that adequately address
the Year 2000 problem. Given the numerous and
significant uncertainties involved, there can be no
assurance that Year 2000 related estimates and
anticipated results will be achieved, and actual results
could differ materially. Specific factors that might
cause such material differences include, but are not
limited to, the ability to identify and correct all
relevant computer codes and embedded chips, unanticipated
difficulties or delays in the implementation of Year 2000
project plans and the ability of third parties to
adequately address their own Year 2000 issues.
- -- The Company's ability to resolve issues relating to
introduction of the European Union's common currency (the
Euro) in a timely fashion.
The foregoing list of important factors is not exclusive.
2
<PAGE>
