SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 26, 2000
THE COCA-COLA COMPANY
(Exact name of Registrant as specified in its charter)
Delaware 001-02217 58-0628465
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
One Coca-Cola Plaza
Atlanta, Georgia 30313
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (404)676-2121
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Item 5. Other Events
On January 26, 2000, The Coca-Cola Company (the
"Company") issued a press release announcing its financial
results for the fourth quarter of 1999 and for the full
fiscal year 1999. The press release is filed as Exhibit
99.1 hereto and is incorporated herein by reference.
On January 26, 2000, the Company also issued a press
release announcing a major organizational realignment and
reduction in the Company's workforce. The press release is
filed as Exhibit 99.2 hereto and is incorporated herein by
reference.
Item 7. Financial Statements and Exhibits
(c) Exhibits:
99.1 Press release of The Coca-Cola Company
issued January 26, 2000: The Coca-Cola
Company Announces Fourth Quarter and
Full Year Volume and Earnings Per Share
Results
99.2 Press release of The Coca-Cola Company
issued January 26, 2000: The Coca-Cola
Company Announces Major Organizational
Realignment
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
THE COCA-COLA COMPANY
(REGISTRANT)
Date: January 26, 2000 By:/s/ Gary P. Fayard
----------------------------
Gary P. Fayard
Senior Vice President and
Chief Financial Officer
3
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Exhibit Index
Exhibit No.
-----------
99.1 Press release of The Coca-Cola Company issued
January 26, 2000: The Coca-Cola Company Announces
Fourth Quarter and Full Year Volume and Earnings
Per Share Results
99.2 Press release of The Coca-Cola Company issued
January 26, 2000: The Coca-Cola Company Announces
Major Organizational Realignment
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
CONTACT:
Rob Baskin
(404) 676-2683
THE COCA-COLA COMPANY ANNOUNCES
FOURTH QUARTER AND FULL YEAR
VOLUME AND EARNINGS PER SHARE RESULTS
Fourth-quarter worldwide unit case volume increased 6 percent.
Comparable unit case volume increased 4 percent and approximately 2
points of growth was attributable to brands acquired from Cadbury
Schweppes.
Fourth-quarter diluted earnings per share were $0.31, before
considering non-recurring items. Non-recurring items in the quarter
included certain asset write-downs, the continued impact of the
European product withdrawal, and one-time charges by certain equity
investees.
The Company commented that its 2000 earnings will be impacted by an
organizational realignment and its plans to reduce concentrate
inventory levels at selected bottlers.
ATLANTA, January 26, 2000 -- The Coca-Cola Company reported another year
of record volume with annual worldwide unit case volume exceeding 16 billion
unit cases for the first time in the Company's history. This reflects the 45th
consecutive year that the Company has increased unit case volume.
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"We are currently in a period of economic recovery in many parts of the
world," commented Douglas N. Daft, president and chief operating officer.
"During this year of recovery, our business system will remain focused on
creating long-term value for our customers, our bottling partners, and
The Coca-Cola Company."
"Our management team is performing an on-going assessment of our
worldwide operations to ensure that our organization is appropriately
structured to capture the vast opportunities in front of us. By challenging
how we look at the business, we will be able to ensure we meet consumer and
customer needs at a local level and that we are best able to maximize value
for our share owners and our partners within the Coca-Cola system."
Mr. Daft continued, "Throughout this Company's great history, our success
has been achieved through the magic of our great brands and through our
ability to bring refreshment and enjoyment to consumers all over the world.
Going forward, we plan to continue connecting with consumers and customers at
a local level to ensure we are engrained in the fabric of all communities."
EARNINGS RESULTS
For the fourth quarter, reported diluted loss per share was $0.02. This
amount includes $0.31 per share after tax related to asset write-downs in
certain countries, approximately $0.01 per share after tax related to the
impact of the European product withdrawal, and $0.01 per share after tax
associated with one-time charges by certain equity investees.
For the full year, diluted earnings per share were $0.98. The full year
results include $0.31 per share after tax related to asset write-downs in
certain countries, approximately $0.06 per share after tax related to the
impact of the European product withdrawal, and $0.01 per share after tax
associated with one-time charges by certain equity investees. The overall
impact of the European product withdrawal reflects the loss of sales in
several key markets in Europe, the resulting impact on
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equity income, and incremental marketing expenses associated with maintaining
brand strength in Europe. In 1998, diluted earnings per share were $1.42,
including net $0.02 per share driven primarily by bottling transactions.
VOLUME RESULTS
For the full year, reported worldwide unit case volume grew nearly 2
percent and comparable worldwide unit case volume increased 1 percent. In the
fourth quarter, reported worldwide unit case volume grew 6 percent. Of this
amount, comparable worldwide unit case volume increased 4 percent and
approximately 2 points of growth were attributable to brands acquired from
Cadbury Schweppes. Reported worldwide gallon shipments for the full year were
even with the prior year and increased 8 percent in the fourth quarter.
(References to "comparable" changes in unit case volume are computed based on
the exclusion of brands acquired from Cadbury Schweppes during the third
quarter of 1999.)
In the NORTH AMERICA GROUP, full-year unit case volume advanced 1 percent
including growth of 1 percent in the United States. Throughout the year, unit
case growth in the industry was below historic growth levels as bottlers were
focused on improving retail soft drink prices in order to increase the overall
returns for the entire value chain. As consumers are adjusting to these
slightly higher price points, unit case volume demonstrated improving trends
in the second half of the year. In addition, non-carbonated beverages continued
to exhibit strong double-digit growth led by Dasani, Fruitopia, POWERaDE and
Nestea products.
Fourth-quarter unit case volume increased 3 percent in North America and
3 percent in the United States. North America gallon shipments of concentrates
and syrups grew 1 percent in 1999 and increased 5 percent in the fourth
quarter versus the prior year.
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In the LATIN AMERICA GROUP, unit case volume increased 3 percent and
gallon shipments declined 1 percent for the year on a reported basis. On a
comparable basis, full year unit case volume increased 2 percent for the
Group, with growth of 6 percent in Mexico, 2 percent in Argentina, 4 percent
in the Central America and Caribbean division and 1 percent in Brazil. These
results reflect the difficult economic environments that the Company faced in
many parts of Latin America throughout the year. As the year progressed, the
Company continued to see increasing levels of economic stabilization in most
countries, while a few areas such as Venezuela and Colombia continue to be
extremely challenging. In markets not impacted by the economic challenges, the
Company continued to see solid growth.
Fourth-quarter unit case volume in the Latin America Group grew 8 percent
on a reported basis and 6 percent on a comparable basis. Reported gallon
shipments in the fourth quarter increased 8 percent.
In the MIDDLE AND FAR EAST GROUP, unit case volume increased 1 percent
and gallon shipments declined 1 percent in 1999 on a reported basis. For the
year, comparable unit case volume grew 1 percent for the Group, with gains of
6 percent in Japan, 2 percent in China, 9 percent in India and 4 percent in
the Middle East and North Africa division. Japan achieved its third straight
quarter of strong unit case growth and the overall business environment is
showing improving trends. While many Asian markets are improving economically,
the Company is continuing to see difficult conditions in markets such as the
Philippines. During the year, extensive flooding, negative American sentiment
and slightly slower economic trends hampered growth in China.
In the fourth quarter in the Middle and Far East Group, unit case volume
increased 4 percent on a reported basis and 2 percent on a comparable basis.
Reported gallon shipments increased 6 percent in the fourth quarter. Beginning
in
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2000, this Group will no longer include the Middle East and North Africa
Division and will be known as the Asia Pacific Group.
In the GREATER EUROPE GROUP, reported unit case volume was even with the
prior year and gallon shipments declined 1 percent in 1999. For the year,
comparable unit case volume declined 1 percent for the Group with increases of
9 percent in Spain, 4 percent in CCE Europe territories, 2 percent in Germany
and a decline of 16 percent in the Nordic and North Eurasia division. Full
year results for the group were negatively impacted by difficult economic
conditions in Russia and parts of Eastern Europe, the European product
withdrawal, and events such as the earthquakes in Turkey and the war in
Kosovo. Countries such as Spain that were not impacted by these factors
delivered solid growth for the year.
Fourth-quarter unit case volume in the Greater Europe Group grew 6 percent
on a reported basis and 3 percent on a comparable basis. Reported gallon
shipments in the fourth quarter increased 11 percent.
In the AFRICA GROUP, full-year unit case volume increased 5 percent and
gallon shipments increased 2 percent on a reported basis. Comparable full-year
unit case volume increased by 1 percent for the Group with a 2 percent
increase in the Northern Africa Division and flat volume in the Southern
Africa Division. Growth continued to be hampered throughout the year by
difficult economic conditions in Southern Africa and political instability in
Northern Africa.
Unit case volume in the Africa Group increased 15 percent in the fourth
quarter on a reported basis and 5 percent on a comparable basis. Reported
gallon shipments increased 25 percent in the fourth quarter. Beginning in
2000, this Group will include the Middle East and North Africa Division and
will be known as the Africa and Middle East Group.
At THE MINUTE MAID COMPANY, full-year volume increased 4 percent as a
result of continued strong growth by Minute Maid Premium ready-to-drink orange
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juice, especially calcium-fortified varieties. Minute Maid Premium was the
fastest-growing national brand of ready-to-drink orange juice in U.S.
supermarkets during 1999, with sales up nearly 22 percent. During the quarter,
an alliance with J&J Snack Foods Corp. was announced to increase U.S.
distribution of Minute Maid and Hi-C brand frozen snacks. Total fourth-quarter
volume increased 2 percent for The Minute Maid Company.
GLOBAL MARKETING ACTIONS
The Company continues to focus on increasing the value of its brands to
customers and consumers around the world to ensure long-term brand relevance
and to maximize profitable growth opportunities. The Company recently unveiled
a new marketing campaign for Coca-Cola designed to reconnect every day with
people around the world. Over the next year, many new marketing initiatives
will be introduced throughout the world to take full advantage of the magical
qualities of Coca-Cola and connecting those to the values that people care
most deeply about in their everyday lives.
Mr. Daft commented, "Our strategy is designed to renew the passion for
the world's greatest brand. We sell one drink at a time, to one person at a
time, more than a billion times a day. Our continued success will be based on
our ability to connect our brands in relevant ways to every local community.
Throughout the year, we will remind consumers how Coca-Cola adds a little
magic to the real moments in people's everyday lives."
ASSET WRITE-DOWNS
During the quarter, the Company recorded a charge of $813 million in
selling, administrative and general expenses to primarily reflect the
impairment of certain
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bottling assets and the streamlining of manufacturing facilities in Russia,
the Baltics, Japan and various other countries around the world.
Mr. Daft commented, "Despite these accounting write-downs, we remain
fully committed to growing our business in these countries and believe the
regions offer tremendous opportunity for per capita growth."
The fourth quarter charge associated with the impairment of the Company's
Russian and Baltic bottling operations resulted from the extremely challenging
economic environments the Company has faced in these countries over the last
year and a half. The impairment of certain assets in the Japanese vending
business resulted from a comprehensive review and the strong steps taken by the
Company to streamline these operations to position them for the future.
Nearly all of the asset write-downs recorded in the fourth quarter do not
generate a tax benefit for financial reporting purposes in 1999. As a result,
the Company's effective tax rate increased to 36% for the full year. Looking
forward, the Company expects its effective tax rate on operations to remain
31%.
Over the past several years, the Company acquired numerous local bottling
franchises in India for the purposes of establishing the appropriate
infrastructure for sustainable long-term growth. The Company expects to
complete a comprehensive review of these operations during the first quarter
of this year with the intent of streamlining the business. Based on this
review, as well as the current excise tax levels in India, the Company will be
evaluating the carrying value of these assets.
INCOME STATEMENT REVIEW
Revenues increased 5 percent in 1999 reflecting structural change in the
bottling system and selective price increases, partially offset by the
negative impact of a stronger U.S. dollar. Full year gross margins declined
slightly from the prior
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year as the Company began consolidating bottling operations in India and
Company-owned vending operations in Japan.
On a reported basis, operating income declined 20 percent for the year.
This amount includes the previously disclosed fourth-quarter charges
associated with certain asset write-downs and the estimated impact of the
European product withdrawal. Operating income, excluding unusual items (asset
write-downs and the impact of the European product withdrawal), declined 1
percent for the year reflecting the challenging economic conditions in many
markets throughout the world, structural changes, the negative impact of
foreign currencies, and the continued investment in long-term brand building
activities. The impact of currencies on operating income for the year was an
approximate negative 4 percent.
Equity income for the year was also negatively impacted by global economic
conditions, as well as continued structural change and non-recurring charges
within the global Coca-Cola bottling system. During the fourth quarter, equity
income was impacted by $0.01 per share after tax associated with one-time
charges by our equity investees in countries such as Venezuela and the
Philippines.
As disclosed during the year, other income includes a foreign currency
gain to reflect the economic benefit received by hedging the Company's
resources in Brazil. As the Brazilian Real depreciated during the year, the
Company entered into financial instruments to protect its resources. From an
economic standpoint, the amount offsets the impact of converting local
Brazilian operating results into U.S. dollars at lower rates.
During 1998, the Company's results included net $0.02 per share of
after-tax gains resulting primarily from bottling transactions in Italy and
Germany.
Over the past year, the Company did not repurchase any of its shares due
to pending brand acquisitions. However, the Company remains committed to its
consistent long-term program of using excess cash to repurchase its shares.
Since
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the initiation of its first share repurchase program in 1984, the Company has
repurchased 32 percent of its common shares then outstanding, or a cumulative
total of over 1 billion shares, at an average cost of approximately $12.46 per
share.
OUTLOOK FOR THE YEAR 2000
The Company commented that year 2000 reported results will be impacted by
the financial effect of the separately announced organizational realignment
and an intent to reduce concentrate inventory levels at selected bottlers.
Throughout the past several months, The Coca-Cola Company has worked with
bottlers around the world to determine the optimum level of bottler inventory
levels. Based on this review, 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 reduction in bottler inventory levels will result in the Company
shipping less concentrate and is therefore expected to reduce the Company's
diluted earnings per share by approximately $0.11 - $0.13 after tax during the
first half of the year 2000.
Mr. Daft commented, "These steps are designed to ensure we have the
strongest and most efficient bottling system in the world. With an even
tighter management of inventory levels, our bottlers will free up additional
working capital as they continue to take steps to increase their returns on
invested capital."
The Coca-Cola system first proactively reduced the worldwide bottler
inventory levels in the third quarter of 1996. At that time, average days of
inventory in the worldwide bottling system exceeded 45 days. This move is
intended to take the average bottler inventories to the optimal worldwide
level of 34 days.
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This news release contains forward-looking statements concerning long-term
volume and EPS objectives and should be read in conjunction with cautionary
statements contained in Exhibit 99.1 in the Company's most recent Form 10-K.
# # #
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THE COCA-COLA COMPANY AND SUBSIDIARIES
(In Millions, except per share data)
<TABLE>
<CAPTION>
Fourth Quarter
--------------------------------
1999 1998 % Change
-------- -------- --------
<S> <C> <C> <C>
NET OPERATING REVENUES $ 4,931 $ 4,458 11
Cost of Goods Sold 1,464 1,299 13
-------- --------
GROSS PROFIT 3,467 3,159 10
Selling, Administrative and General Expenses 2,305 2,222 4
Other Operating Charges -
Primarily Asset Write-downs 813 ---- ----
-------- --------
OPERATING INCOME 349 937 (63)
Interest Income 70 48 46
Interest Expense 93 68 37
Equity Income (Loss) (112) (71) ----
Other Income - Net 16 19 ----
-------- --------
INCOME BEFORE INCOME TAXES 230 865 (73)
Income Taxes 275 268 3
-------- --------
NET INCOME (LOSS) $ (45) $ 597 ----
======== ========
DILUTED NET INCOME (LOSS) PER SHARE* $ (0.02) $ 0.24 ----
======== ========
Average Shares Outstanding - Diluted* 2,487 2,489 ----
======== ========
* For the fourth quarter, "Basic Net Income (Loss) Per Share" was ($0.02) for
1999 and $0.24 for 1998 based on "Average Shares Outstanding - Basic" of 2,471
and 2,465 for 1999 and 1998, respectively.
</TABLE>
<PAGE>
THE COCA-COLA COMPANY AND SUBSIDIARIES
(In Millions, except per share data)
<TABLE>
<CAPTION>
Twelve Months Ended December 31
------------------------------------
1999 1998 % Change
--------- --------- --------
<S> <C> <C> <C>
NET OPERATING REVENUES $ 19,805 $ 18,813 5
Cost of Goods Sold 6,009 5,562 8
--------- ---------
GROSS PROFIT 13,796 13,251 4
Selling, Administrative and
General Expenses 9,001 8,211 10
Other Operating Charges -
Primarily Asset Write-downs 813 73 ----
--------- ---------
OPERATING INCOME 3,982 4,967 (20)
Interest Income 260 219 19
Interest Expense 337 277 22
Equity Income (Loss) (184) 32 ----
Other Income - Net 98 257 ----
--------- ---------
INCOME BEFORE INCOME TAXES 3,819 5,198 (27)
Income Taxes 1,388 1,665 (17)
--------- ---------
NET INCOME $ 2,431 $ 3,533 (31)
========= =========
DILUTED NET INCOME PER SHARE* $ 0.98 $ 1.42 (31)
========= =========
Average Shares Outstanding -
Diluted* 2,487 2,496 ----
========= =========
* For the full year, "Basic Net Income Per Share" was $0.98 for 1999 and $1.43
for 1998 based on "Average Shares Outstanding - Basic" of 2,469 and 2,467 for
1999 and 1998, respectively.
</TABLE>
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EXHIBIT 99.2
FOR IMMEDIATE RELEASE
CONTACT:
Rob Baskin
(404) 676-2683
THE COCA-COLA COMPANY ANNOUNCES
MAJOR ORGANIZATIONAL REALIGNMENT
Will Result in Annual Expense Reductions of $300 Million; Net Job
Reductions-Voluntary and Involuntary-of approximately 6,000;
Pre-Tax Charge to Earnings of approximately $800 Million During the
Year 2000
Focus on Localization Puts More Responsibility, Accountability and
Resources in Hands of Local Business Units
ATLANTA, January 26, 2000 -- The Coca-Cola Company today announced a
major organizational realignment that will put more responsibility,
accountability and resources in the hands of the local business units in the
more than 200 countries where the Company does business.
Specifically, this realignment will reduce the Company's workforce
around the world while transferring responsibilities from corporate to
revenue-generating operating units, fueling further investment in profit-
driving activities by reducing costs, and enhancing effectiveness by
establishing greater role clarity and accountability between corporate and
field offices.
Said Doug Daft, president and chief operating officer and chairman-elect,
The Coca-Cola Company: "Today's announcement is the culmination of a careful
review during the past six months of each of our business functions. The world
in which we
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operate has changed dramatically, and we must change to succeed. This
realignment will better enable the Company to serve the changing needs of
its customers and consumers at the local level and ensure that Coca-Cola
complements the local culture in every community where it is sold.
"Together with our bottling partners, we've spent years building the
brands, infrastructure and technology needed to be successful at the local
level," said Daft. "The actions we announced today will effectively align our
corporate resources, support systems and business culture to fully leverage
the local capabilities of our system.
"As we enter the 21st century, we need to build on the greatness and
historic strengths of the company and be sure it is optimally positioned for
the changing world. We must also take our business to where our business is.
Now is the time for us to take those steps."
Under the realignment, approximately 6,000 positions will be reduced
during the current year through early retirement, outsourcing or job
eliminations. Of these, approximately 2,500 are located in Atlanta, 800 are
located in U.S. cities outside of Atlanta, and another 2,700 are based
outside the U.S.
"As necessary as this realignment is, it carries with it the most
difficult decision a management team can make: job reductions," Mr. Daft
said. "This is painful both for those within the Company who will be
directly affected and for those responsible for making this decision. But
this management team is committed to doing what is necessary to ensure a
strong future for The Coca-Cola Company.
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"We are equally committed to proceeding with care and sensitivity,"
Mr. Daft continued. "Ensuring that all associates are treated fairly and
with dignity and respect is a top priority for me, personally, and the
Company, and we've put processes in place to ensure that happens."
Employees separating from the Company as a result of the realignment
will be offered severance packages, outplacement and counseling services,
and other assistance to help with the transition.
The Company estimates this initiative will yield annual expense
reductions of $300 million following full implementation of the new
organizational structure. As a result of the realignment, the Company will
take a pre-tax charge of approximately $800 million during the 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; the Company's revenue-generating units will assume all other
responsibilities.
Said Mr. Daft: "No matter where we operate around the world, we're a
local business. Our success depends on our ability to make billions of
individual connections each day in every community around the world. With
the pace of change in global markets increasing every day, we have to
redouble our efforts to remain close to the customers and consumers we serve.
"One thing that won't change is the significant opportunity before us,"
added Mr. Daft. "And we view the future's tremendous growth opportunities
with great
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anticipation and excitement. With our strong new marketing platform for
Coca-Cola, the right people in the right places around the world, and our
intensified focus behind serving customers and consumers at the local level,
we have in place the necessary elements to more fully realize the promise of
this great Company today and for years to come."
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