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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.
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.
7
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.
8
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
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.
10
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.
11
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.
12
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.
13
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
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.*
15
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).
16
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
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
* *
- ------------------------------- --------------------------
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
ANNUAL REPORT ON FORM 10-K
ITEM 14(D)
FINANCIAL STATEMENT SCHEDULE
YEAR ENDED DECEMBER 31, 1999
THE COCA-COLA COMPANY AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
THE COCA-COLA COMPANY AND SUBSIDIARIES
YEAR ENDED DECEMBER 31, 1999
(IN MILLIONS)
- ------------------------------------------------------------------------------------------------------------------------------
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
- ----------- ------------ ------------ -------- ---------- ---------
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
===== === == === ====
- ------------------------
Note 1 - The amounts shown in Column D consist of the following:
TRADE MISCELLANEOUS DEFERRED
ACCOUNTS INVESTMENTS TAX
RECEIVABLE AND OTHER ASSETS ASSETS TOTAL
---------- ---------------- -------- -----
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
=== == == ===
F-1
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
THE COCA-COLA COMPANY AND SUBSIDIARIES
YEAR ENDED DECEMBER 31, 1998
(IN MILLIONS)
- ------------------------------------------------------------------------------------------------------------------
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
- ----------- ------------ ------------ -------- ---------- ---------
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
===== === ==== === ===
- ----------------------
Note 1 - The amounts shown in Column D consist of the following:
TRADE MISCELLANEOUS DEFERRED
ACCOUNTS INVESTMENTS TAX
RECEIVABLE AND OTHER ASSETS ASSETS TOTAL
---------- ---------------- -------- -----
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
==== ==== ==== ====
F-2
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
THE COCA-COLA COMPANY AND SUBSIDIARIES
YEAR ENDED DECEMBER 31, 1997
(IN MILLIONS)
- -------------------------------------------------------------------------------------------------------------------
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
- ----------- ------------ ------------ -------- ---------- ---------
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
===== ===== ==== ==== =====
- ----------------
Note 1 - The amounts shown in Column D consist of the following:
TRADE MISCELLANEOUS DEFERRED
ACCOUNTS INVESTMENTS TAX
RECEIVABLE AND OTHER ASSETS ASSETS TOTAL
---------- ---------------- -------- -----
Charge off of uncollectible accounts........ $ 4 $ - $ - $ 4
Write-off of impaired assets................ - 65 - 65
Other transactions.......................... 7 14 - 21
---- ---- ---- ----
$ 11 $ 79 $ - $ 90
==== ==== ==== ====
F-3
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.*
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
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