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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, 1998
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 22, 1999, (BASED
ON THE CLOSING SALE PRICE OF THE REGISTRANT'S COMMON STOCK AS
REPORTED ON THE NEW YORK STOCK EXCHANGE ON SUCH DATE) WAS
$138,062,055,742.
THE NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK
AS OF MARCH 15, 1999, WAS 2,467,005,172.
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE COMPANY'S ANNUAL REPORT TO SHARE OWNERS FOR THE
YEAR ENDED DECEMBER 31, 1998, 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 21, 1999, 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
soft drink products bearing the Company's trademarks, sold in the
United States since 1886, are now sold in nearly 200 countries
and include the leading soft drink products in most of these
countries. The Company also is the world's largest distributor
and marketer of juice and juice-drink products.
The Company is one of numerous competitors in the commercial
beverages market. Of the approximately 48 billion beverage
servings of all types consumed worldwide every day, beverages
bearing the Company's trademarks ("Company Trademark Beverages")
account for 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.
The Company's operating structure includes 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.
Except to the extent that differences between these 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
1998 37% 3% 26% 12% 22%
1997 35% 3% 29% 11% 22%
1996 33% 3% 32% 11% 21%
Operating Income
1998 27% 4% 27% 18% 24%
1997 25% 3% 28% 18% 26%
1996 22% 3% 29% 18% 28%
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
45-46, 56-57 and 57-58, respectively, of the Company's Annual
Report to Share Owners for the year ended December 31, 1998,
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
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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 more than 75
other countries.
The Company's more than 160 beverage products, including
bottled and canned beverages produced by independent and Company-
owned bottling and canning operations, as well as concentrates
and syrups, include Coca-Cola, Coca-Cola classic, caffeine free
Coca-Cola, caffeine free Coca-Cola classic, diet Coke (sold under
the trademark Coca-Cola light in many countries outside the
United States), caffeine free diet Coke, Cherry Coke, diet Cherry
Coke, Fanta brand soft drinks, Sprite, diet Sprite, Mr. PiBB,
Mello Yello, TAB, Fresca, Barq's root beer and other flavors,
Surge, Citra, POWERaDE, Fruitopia, Minute Maid flavors,
Saryusaisai, Aquarius, Bonaqa, Lift, Thums Up, Hit and other
products developed for specific countries, including Georgia
brand ready-to-drink coffees, and numerous other brands. The
Minute Maid Company, with operations primarily in the United
States and Canada, produces, distributes and markets principally
juice and juice-drink products, including Minute Maid brand
products; Five Alive brand refreshment beverages; Bright & Early
brand breakfast beverages; Bacardi brand tropical fruit mixers
(manufactured and marketed under a license from Bacardi & Company
Limited); and Hi-C brand ready-to-serve fruit drinks.
Additionally, Coca-Cola Nestle Refreshments, the Company's joint
venture with Nestle S.A., markets ready-to-drink teas and coffees
in certain countries.
In 1998, concentrates and syrups for beverages bearing the
trademark "Coca-Cola" or including the trademark "Coke" accounted
for approximately 67% of the Company's total gallon sales{1} of
beverage concentrates and syrups. (Physical units of concentrate
have been converted to their equivalents in gallons of syrup in
all cases in this report where reference is made to "gallons" or
"gallon sales" of beverage concentrates and syrups.)
In 1998, gallon sales in the United States ("U.S. gallon
sales") represented approximately 28% of the Company's worldwide
gallon sales of beverage concentrates and syrups. In 1998, the
Company's principal markets outside the United States, based on
gallon sales, were Mexico, Brazil, Japan and Germany, which
together accounted for approximately 26% of the Company's
worldwide gallon sales.
Approximately 65% of the Company's U.S. gallon sales for
1998 was attributable to sales of beverage concentrates and
syrups to approximately 104 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. The remaining 35% of 1998 U.S. gallon
sales was attributable to fountain syrups sold to fountain
retailers and to approximately 700 authorized fountain
wholesalers, some of whom are authorized bottlers. These
fountain wholesalers in turn sell the syrups or deliver them on
the Company's behalf to restaurants and other fountain retailers.
Coca-Cola Enterprises Inc. ("Coca-Cola Enterprises") and its
bottling subsidiaries and divisions accounted for approximately
50% of the Company's U.S. gallon sales in 1998. At March 5, 1999
the Company held an ownership interest of approximately 40% in
Coca-Cola Enterprises, which is the world's largest bottler of
Company Trademark Beverages.
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{1} The Company measures sales volume in two ways: (1) gallon
sales of concentrates and syrups and (2) unit cases of finished
products. "Gallon sales" represents the primary business of the
Company and measures the volume of concentrates and syrups sold
by the Company to its bottling partners or customers. 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,
which refers to the number of unit cases sold by bottlers of
Company Trademark Beverages to customers, includes Company
products (excluding products distributed by The Minute Maid
Company) reported as gallon sales, and certain other key products
owned by such bottlers. The Company believes unit case volume
more accurately measures the underlying strength of its business
system because it measures trends at the retail level. The
Company includes fountain syrups sold directly to its customers
in both measures.
2
In addition to conducting its own independent advertising
and marketing activities, the Company may choose to provide
promotional and marketing services and/or funds and consultation
to its bottlers and to fountain and bottle/can retailers. Also
on a discretionary basis, the Company may develop and introduce
new products, packages and equipment to assist its bottlers,
fountain syrup wholesalers and fountain beverage retailers.
The profitability of the Company's business outside the
United States is subject to many factors, including governmental
trade regulations and monetary policies, economic and political
conditions in the countries in which such business is conducted
and the risk of changes in currency exchange rates and
regulations.
BOTTLER'S AGREEMENTS AND DISTRIBUTION AGREEMENTS
Separate contracts ("Bottler's Agreements") between the
Company and each of its bottlers regarding the manufacture and
sale of soft drinks, subject to specified terms and conditions
and minor variations, generally authorize the bottler to prepare
particular designated Company Trademark Beverages, to package the
same in particular authorized containers, and to distribute and
sell the same in (but generally only in) an identified territory.
The bottler is obligated to purchase its entire requirement of
concentrates or syrups for the designated Company Trademark
Beverages from the Company or 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 canned beverage production rights to the
bottlers. In such instances, the Company or its designee
typically sells canned Company Trademark Beverages to the
bottlers for sale and distribution throughout the designated
territory under can distribution agreements, often on a non-
exclusive basis. A majority of the Bottler's Agreements in force
between the Company and bottlers outside the United States
authorize the bottler to manufacture and distribute fountain
syrups, usually on a non-exclusive basis.
The Company generally has complete flexibility to determine
the price and other terms of sale of concentrates and syrups to
bottlers outside the United States and, although in its
discretion it may determine to do so, the Company typically has
no obligation under such Bottler's Agreements to provide
marketing support to the bottlers.
WITHIN THE UNITED STATES. In the United States, with
certain very limited exceptions, the Company's Bottler's
Agreements for 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
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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
700 authorized fountain wholesalers (including certain authorized
bottlers) and some fountain retailers. The wholesalers in turn
sell the syrups or deliver them on the Company's behalf to
restaurants and other retailers. The wholesaler typically acts
as such pursuant to a non-exclusive 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 78% of the Company's total
United States gallon sales for bottled and canned beverages ("U.S.
bottle/can gallon sales") in 1998. 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 1998,
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 21% of U.S. bottle/can gallon sales in 1998 have
contracts for certain Coca-Cola Trademark Beverages with pricing
formulas generally providing for a baseline price that may be
adjusted periodically by the Company, up to a maximum indexed
ceiling price, and that is adjusted quarterly based upon changes
in certain sugar or sweetener prices, as applicable.
Standard contracts with bottlers in the United States for
the sale of concentrates and syrups for non-cola-flavored soft
drinks in bottles and cans permit flexible pricing by the Company.
Under the 1987 Contract, the Company has no obligation to
participate with bottlers in expenditures for advertising and
marketing, but may, at its discretion, contribute toward such
expenditures and undertake independent or cooperative advertising
and marketing activities. Some U.S. Bottler's Agreements that
pre-date the 1987 Contract impose certain marketing obligations
on the Company with respect to certain Company Trademark
Beverages.
SIGNIFICANT EQUITY INVESTMENTS AND COMPANY BOTTLING OPERATIONS
The Company has business relationships with three types of
bottlers: (1) independently owned bottlers, in which the Company
has no ownership interest; (2) bottlers in which the Company has
invested and has a noncontrolling ownership interest; and (3)
bottlers in which the Company has invested and has a controlling
ownership interest. In 1998, independently owned bottling
operations produced and distributed approximately 34% 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 55% of
such worldwide unit case volume; and controlled and consolidated
bottling and fountain operations produced and distributed
approximately 11% of such worldwide unit case volume.
The Company makes equity investments in selected bottling
operations with the intention of maximizing the strength and
efficiency of the Coca-Cola business system's production,
distribution and marketing systems around the world. These
investments often result in increases in unit case volume, net
revenues and profits at the bottler level, which in turn generate
increased gallon 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. In certain situations, it can
further the Company's business interests to acquire a controlling
interest in a bottling operation. Although not the Company's
primary long-term business strategy, owning a controlling
interest and providing resources may compensate for limited local
resources, help
4
focus the bottler's sales and marketing programs, assist in the
development of the bottler's business and information systems,
and assist in the establishment of appropriate capital structures.
In 1998, the Company purchased additional Russian bottling
operations from Inchcape plc and affiliated companies. Also in
1998, as part of the Company's strategy to achieve an integrated
bottling system in India, the Company purchased 16 independent
Indian bottling operations, bringing the total number purchased
since January 1997 to 18. By providing capital and marketing
expertise to newly acquired bottlers, the Company seeks to
strengthen their ability to deliver Company Trademark Beverages
to customers and consumers.
In line with its long-term bottling strategy, the Company
periodically considers options for reducing its ownership
interest in a consolidated bottler. One 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
consolidated bottling operation to one of the Company's
noncontrolled equity investee bottlers. In both of these
situations, the Company continues participating in the previously
consolidated bottler's earnings through its portion of the equity
investee's income. In 1998, the Company contributed its wholly
owned bottling interests in Norway and Finland to Coca-Cola
Nordic Beverages ("CCNB"), an anchor bottler which also has
bottling operations in Denmark and Sweden. The Company has an
ownership interest in CCNB of 49%.
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.
During 1998, the Company increased its interest in Thai Pure
Drinks Limited, a bottler headquartered in Thailand, from
approximately 44% to approximately 49%; increased its interest in
Embotelladoras Coca-Cola Polar S.A., a bottler headquartered in
Chile, from approximately 19% to approximately 29%; and acquired
an initial ownership interest of 20% in Embotelladoras Argos,
S.A., a bottler headquartered in Mexico.
Certain bottling operations in which the Company has a
noncontrolling ownership interest are designated as "anchor
bottlers" due to their level of responsibility and performance.
Anchor bottlers are strongly committed to their own profitable
growth which, in turn, helps the Company meet its strategic goals
and furthers the interests of its worldwide production,
distribution and marketing systems. Anchor bottlers tend to be
large and geographically diverse with strong financial resources
for long-term investment and strong management resources. In
1998, the Company's anchor bottlers produced and distributed
approximately 43% of the Company's worldwide unit case volume.
As of March 15, 1999, ten companies are designated as anchor
bottlers, providing the Company with strong strategic business
partners on every major continent.
Coca-Cola Beverages plc ("CCB"), a publicly traded company
on the London Stock Exchange, was designated as an anchor bottler
in 1998. CCB was formed in 1998 via a spin-off by Coca-Cola
Amatil Limited ("Coca-Cola Amatil") of its European operations.
In June 1998, after the spin-off, the Company sold its bottling
operations in northern and central Italy to CCB in exchange for
consideration (including shares of CCB stock) valued at
approximately U.S.$1 billion. At December 31, 1998, the Company
had an ownership interest in CCB of approximately 50.5%. The
Company's expectation is that its ownership position will reduce
to less than 50% in 1999; therefore, the investment is accounted
for by the equity method of accounting.
The Company has substantial equity positions in
approximately 46 unconsolidated bottling, canning and
distribution operations for its products worldwide, including
bottlers representing approximately 56% of the Company's total
U.S. unit case volume in 1998. Of these, significant investee
bottlers accounted for by the equity method include the
following:
COCA-COLA ENTERPRISES INC. The Company's ownership interest
in Coca-Cola Enterprises was approximately 42% at December 31,
1998 and was approximately 40% as of March 5, 1999. Coca-Cola
Enterprises is the world's largest bottler of the Company's
beverage products. In 1998, net sales of concentrates and syrups
by the Company to Coca-Cola Enterprises were approximately $3.1
billion, or approximately 16% 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, the Netherlands, France, Luxembourg and Belgium)
contain approximately 69% of the United States population, 94% of
the population of Canada, 98% of the population of Great Britain,
100% of the populations of the Netherlands, Luxembourg and
Belgium and 92% of the population of France.
5
In 1998, approximately 63% of the unit case volume of
Coca-Cola Enterprises (excluding products in post-mix (fountain)
form) was Coca-Cola Trademark Beverages, approximately 25% of its
unit case volume was other Company Trademark Beverages, and
approximately 12% of its unit case volume was beverage products
of other companies. Coca-Cola Enterprises' net sales of beverage
products were approximately $13.4 billion in 1998.
COCA-COLA AMATIL LIMITED. In 1998, Coca-Cola Amatil
completed a spin-off of its European operations into a new
publicly traded European bottler, CCB. After the spin-off, the
Company sold its bottling operations in South Korea to Coca-Cola
Amatil in exchange for shares of Coca-Cola Amatil stock. At
December 31, 1998, the Company's ownership interest in Coca-Cola
Amatil was approximately 43%.
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.$546 million
in 1998. 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 1998, Coca-Cola Amatil's net sales of beverage products
were approximately U.S.$2.7 billion. In 1998, approximately 66%
of the unit case volume of Coca-Cola Amatil was Coca-Cola
Trademark Beverages, approximately 25% of its unit case volume
was other Company Trademark Beverages, approximately 4% of its
unit case volume was beverage products of Coca-Cola Amatil and
approximately 5% of its unit case volume was beverage products of
other companies.
PANAMERICAN BEVERAGES, INC. ("PANAMCO"). At December 31,
1998, 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,
15% of the population of Brazil, 98% of the population of
Colombia, 46% of the population of Guatemala and 100% of the
populations of Costa Rica, Venezuela and Nicaragua.
In 1998, Panamco's net sales of beverage products were
approximately U.S.$2.8 billion. In 1998, approximately 55% of
the unit case volume of Panamco was Coca-Cola Trademark
Beverages, approximately 23% of its unit case volume was other
Company Trademark Beverages and approximately 22% 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, 1998, 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 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 35% of
the population of Argentina.
In 1998, Coca-Cola FEMSA's net sales of beverage products
were approximately U.S.$1.3 billion. In 1998, approximately 77%
of the unit case volume of Coca-Cola FEMSA was Coca-Cola
Trademark Beverages, approximately 22% of its unit case volume
was other Company Trademark Beverages, and approximately 1% of
its unit case volume was beverage products of other companies.
OTHER INTERESTS. Under the terms of the Coca-Cola Nestle
Refreshments ("CCNR") joint venture involving the Company, Nestle
S.A. and certain subsidiaries of Nestle S.A., the Company manages
CCNR's ready-to-drink tea business and Nestle S.A. manages CCNR's
ready-to-drink coffee business. The joint venture has sales in
the United States and approximately 33 other countries.
The Minute Maid Company and Groupe Danone are partners in a
joint venture which produces, distributes and sells premium
refrigerated ready-to-serve fruit juice products outside the
United States and Canada, with an initial focus in Europe and
Latin America. The Minute Maid Company has a 50% ownership
interest in the joint venture.
6
The joint venture launched Minute Maid Premium juices in France,
Spain, Portugal, Belgium and Luxembourg during 1997 and in
Austria, the United Kingdom and Poland during 1998.
OTHER DEVELOPMENTS
In December 1997, the Company announced its intent to
acquire from beverage company Pernod Ricard its Orangina brands,
three bottling operations and one concentrate plant in France for
approximately 5 billion French francs (approximately U.S.$890
million based on December 1998 exchange rates). This transaction
is subject to approvals from regulatory authorities of the French
government.
In December 1998, the Company signed an agreement with
Cadbury Schweppes plc to purchase beverage brands in countries
around the world (except in the United States, France and South
Africa) and its concentrate plants in Ireland and Spain for
approximately U.S.$1.85 billion. These brands include Schweppes
and Canada Dry mixers, such as tonic water, club soda and ginger
ale; Crush; Dr Pepper; and certain regional brands. These
transactions are subject to certain conditions including
approvals from regulatory authorities in various countries.
In January 1999, Kita Kyushu Coca-Cola Bottling Company, Ltd.
and Sanyo Coca-Cola Bottling Company, Ltd. announced an agreement
to merge. The merger will lead to the creation of Coca-Cola West
Japan Company, Ltd., a publicly traded company in which the
Company plans to hold approximately a 5% ownership interest. The
Company intends to designate the new company as an "anchor
bottler" of the Coca-Cola system. The transaction is subject to
regulatory review and board and share owner approvals.
In February 1999, the Company announced that it plans to
launch its first bottled water brand in North America during the
first half of 1999. The new product, called Dasani, is a
purified, non-carbonated water enhanced with minerals.
Internationally, the Company markets a bottled water brand,
Bonaqa (in some countries, Bonaqua), in about 35 countries.
SEASONALITY
Soft drink and noncarbonated beverage sales are somewhat
seasonal, with the second and third calendar quarters accounting
for the highest sales volumes in the Northern Hemisphere. The
volume of sales in the beverages business may be affected by
weather conditions.
COMPETITION
The Company competes in the nonalcoholic beverages segment
of the commercial beverages industry. That segment is highly
competitive, consisting of numerous firms. These include firms
that compete, like the Company, in multiple geographical areas as
well as firms that are primarily local in operation. Competitive
products include carbonates, packaged water, juices and nectars,
fruit drinks and dilutables (including syrups and powdered
drinks), sports and energy drinks, coffee and tea, still drinks
and other beverages. Nonalcoholic beverages are sold to
consumers in both ready-to-drink and not-ready-to-drink form.
Most of the Company's beverages business currently is in
soft drinks, as that term is defined in this report. The
soft drink business, which is part of the nonalcoholic beverages
segment, is itself highly competitive. The Company is the
leading seller of soft drink concentrates and syrups in the
world. Numerous firms, however, compete in that business. These
consist of a range of firms, from local to international, that
compete against the Company in numerous geographical areas.
In many parts of the world in which the Company does
business, demand for soft drinks is growing at the expense of
other commercial beverages. Competitive factors with respect to
the Company's business include pricing, advertising and sales
promotion programs, product innovation, increased efficiency in
production techniques, the introduction of new packaging, new
vending and dispensing equipment and brand and trademark
development and protection.
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 any person who exposes
another to a carcinogen or a reproductive toxicant must provide a
warning to that effect. Because the law does not broadly define
quantitative thresholds below which a warning is not required,
virtually all food and beverage manufacturers are confronted with
the possibility of having to provide warnings on their food and
beverage products due to the presence of trace amounts of defined
substances. Regulations implementing the law exempt
manufacturers from providing the required warning if it can be
demonstrated that the defined substances occur naturally in the
product or are present in municipal water used to manufacture the
product. The Company has assessed the impact of the law and its
implementing regulations on its products and has concluded that
none currently requires a warning under the law. The Company
cannot predict whether, or to what extent, food and beverage
industry efforts to minimize the law's impact will succeed; nor
can the Company predict what effect, either in terms of direct
costs or diminished sales, imposition of the law will have.
8
Bottlers of the Company's beverage products presently offer
non-refillable, recyclable containers in all areas of the United
States and Canada. Some such bottlers also offer refillable
containers, which are also recyclable, although overall U.S.
sales in refillable containers are relatively limited. Measures
have been enacted in various localities and states which require
that a deposit be charged for certain non-refillable beverage
containers. The precise requirements imposed by these measures
vary. Deposit proposals have been introduced in other states and
localities and in Congress, and the Company anticipates that
similar legislation may be introduced in the future at both the
state and the federal level.
All of the Company's facilities in the United States are
subject to federal, state and local environmental laws and
regulations. Compliance with these provisions has not had, and
the Company does not expect such compliance to have, any material
adverse effect upon the Company's capital expenditures, net
income or competitive position.
EMPLOYEES
As of December 31, 1998, the Company employed approximately
28,600 persons, down from approximately 29,500 in 1997 primarily
due to sales of certain Company-owned bottling operations.
Approximately 10,000 of these employees are located in the United
States. The Company, through its divisions and subsidiaries, has
entered into numerous collective bargaining agreements, and the
Company has no reason to believe it will not be able to
renegotiate any such agreements on satisfactory terms. The
Company believes that its relations with its employees are
generally satisfactory.
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 33 principal beverage
concentrate and/or syrup manufacturing plants located throughout
the world. The Company currently owns or holds a majority
interest in 25 operations with 32 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, bottling, warehouse or retail
operations or, in the case of some owned property, is leased to
others.
Management believes that the facilities for the production
of its products are suitable and adequate for the business
conducted therein, that they are being appropriately utilized in
line with past experience and that they have sufficient
production capacity for their present intended purposes. The
extent of utilization of such facilities varies based upon the
seasonal demand for product. While it is not possible to measure
with any degree of certainty or uniformity the productive
capacity and extent of utilization of these facilities,
management believes that additional production can be obtained at
the existing facilities by the addition of personnel and capital
equipment and, in some facilities, the addition of shifts of
personnel or expansion of such facilities. The Company
continuously reviews its anticipated requirements for facilities
and, on the basis of that review, may from time to time acquire
additional facilities and/or dispose of existing facilities.
9
ITEM 3. LEGAL PROCEEDINGS
On January 30, 1997, the Brazilian Federal Revenue Service
issued Notices of Assessment to Recofarma Industrias do Amazonas
Ltda. ("Recofarma"), an indirect wholly owned subsidiary of the
Company, for the period from January 1, 1992 to February 28, 1994.
The assessments allege that Recofarma should have paid a
Brazilian excise tax on intra-company transfers of product
manufactured at its Manaus plant to its warehouse in Rio de
Janeiro. Assessments of tax, interest and penalties total
approximately $530 million as of the assessment date and accrue
interest from such date. The transfer of product from the plant
to the warehouse, which was discontinued in February 1994, was
the subject of a favorable advance ruling issued by the Federal
Revenue Service on September 24, 1990. In the Company's opinion,
the ruling has continuing effect and Recofarma's operations
conformed with the ruling. On March 3, 1997, Recofarma filed
appeals with the Brazilian Federal Revenue Service contesting the
assessments.
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. This
appeal is currently pending.
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:
M. Douglas Ivester, 52, is Chief Executive Officer and
Chairman of the Board of Directors of the Company. In January
1985, Mr. Ivester was elected Senior Vice President and Chief
Financial Officer of the Company and served in that capacity
until June 1989, when he was appointed President of the European
Community Group of the International Business Sector. He was
appointed President of Coca-Cola USA in August 1990, and was
appointed President of the North America Business Sector in
September 1991. He served in the latter capacity until April
1993 when he was elected Executive Vice President of the Company
and Principal Operating Officer/North America. In July 1994, he
was elected President and Chief Operating Officer and a Director
of the Company. Mr. Ivester was elected to his current positions
in October 1997.
James E. Chestnut, 48, is Senior Vice President and Chief
Financial Officer of the Company. Mr. Chestnut joined the Company
in 1972 in London. In 1984, he was named Finance Manager for the
Philippine Region in Manila and, in 1987, Manager of
International Treasury Services, Pacific Group, in Atlanta. He
was named Finance Manager for the North Pacific Division of the
International Business Sector in 1989 before being elected Vice
President and Controller of the Company in 1993. He was elected
to his current position in July 1994.
Jack L. Stahl, 46, is Senior Vice President of the Company and
President of the North America Group. In March 1985, Mr. Stahl
was named Manager, Planning and Business Development and was
appointed Assistant Vice President in April 1985. He was elected
Vice President and Controller in February 1988 and served in that
capacity until he was elected Senior Vice President and Chief
Financial Officer in June 1989. He was appointed to his current
position in July 1994.
Douglas N. Daft, 56, is Senior Vice President of the Company
and President of the Middle and Far East Group. In November 1984,
Mr. Daft was appointed President of Coca-Cola Central Pacific Ltd.
In October
10
1987, he was appointed Senior Vice President of the Pacific Group
of the International Business Sector. In January 1989, he was
named President of Coca-Cola (Japan) Company, Limited and
President of the North Pacific Division of the International
Business Sector. Effective 1991 he was elected Senior Vice
President of the Company and named President of the Pacific Group
of the International Business Sector. He was appointed to his
current position, effective January 1995.
Carl Ware, 55, is Senior Vice President of the Company and
President of the Africa Group. In 1979, Mr. Ware was appointed
Vice President, Special Markets, Coca-Cola USA. In March 1982,
he was appointed Vice President, Urban Affairs, of the Company.
He was elected Senior Vice President and Director, Corporate
External Affairs in 1986 and became Deputy Group President of the
Northeast Europe/Africa Group of the International Business
Sector in July 1991, a position he held until he was named to his
current position, effective January 1993.
Timothy J. Haas, 52, is Senior Vice President of the Company
and President of the Latin America Group. Mr. Haas was appointed
Vice President, Sales, of Coca-Cola Foods in 1983 and Senior Vice
President, Sales, of Coca-Cola Foods in 1985. In March 1991, he
was appointed President and Chief Executive Officer of Coca-Cola
Foods. In April 1991, he was elected Vice President of the
Company. In 1995, he was named Executive Vice President of the
Latin America Group and served in that capacity until he was
appointed President of the Latin America Group, effective
January 1, 1997. He was elected Senior Vice President in February
1997.
Ralph H. Cooper, 59, is Senior Vice President of the Company
and President and Chief Executive Officer of The Minute Maid
Company, formerly known as Coca-Cola Foods. Mr. Cooper was
appointed Senior Vice President of the Europe and Africa Group in
July 1984 and was named Senior Vice President of Coca-Cola
International and President of the Northwest European Division in
January 1989. He was elected Senior Vice President of the
Company and President of the European Community Group of the
International Soft Drink Business Sector in August 1990. In
January 1995, he was named Executive Vice President of Coca-Cola
Foods and served in that capacity until he was appointed
President and Chief Executive Officer in July 1995.
William P. Casey, 58, is Senior Vice President of the Company
and President of the Greater Europe Group. In 1985, Mr. Casey
was appointed Executive Vice President, Bottler Operations,
Coca-Cola USA. In 1992, he was elected President and Chief
Executive Officer of Coca-Cola Beverages Ltd., a Canadian company
in which the Company held an interest. Mr. Casey was elected to
his current position in February 1998.
Joseph R. Gladden, Jr., 56, is Senior Vice President and
General Counsel of the Company. In October 1985, Mr. Gladden was
elected Vice President. He was named Deputy General Counsel in
October 1987 and served in that capacity until he was elected
Vice President and General Counsel in April 1990. He was elected
Senior Vice President in April 1991.
Charles S. Frenette, 46, is Senior Vice President and Chief
Marketing Officer of the Company. Mr. Frenette joined the
Company in 1974. 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 South Africa Division in 1996. He was
elected Senior Vice President in April 1998 and became Chief
Marketing Officer in May 1998.
Anton Amon, 55, is Senior Vice President of the Company and
Manager of the Company's Product Integrity Division. Dr. Amon
was named Senior Vice President of Coca-Cola USA in 1983. In
1988, he joined Coca-Cola Enterprises as Vice President,
Operations. In September 1989, Dr. Amon returned to the Company
as director, Corporate Quality Assurance. He was elected Vice
President in October 1989. He became Manager, Product Integrity
Division, in January 1992 and was elected to his current position
in July 1992.
George Gourlay, 57, is Senior Vice President of the Company
and Manager of the Technical Operations Division. Mr. Gourlay
was named Manager, Corporate Concentrate Operations in 1986,
named Assistant Vice
11
President in 1988, and was elected Vice President in 1989. Mr.
Gourlay became head of the Technical Operations Division in
January 1992 and was elected to his current position in July 1992.
Michael W. Walters, 52, is Vice President of the Company and
Vice President of Human Resources. Mr. Walters joined the
Company in 1972. In 1985, he was named Assistant Vice President,
Compensation and Benefits. Mr. Walters was elected to his
current position in April 1990.
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.
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 27 through 37, "Selected Financial Data" for
the years 1997 and 1998 on page 38, "Stock Prices" on page 61 and
"Common Stock", "Stock Exchanges" and "Dividends" under the
heading "Share-Owner Information" on page 64 of the Company's
Annual Report to Share Owners for the year ended December 31,
1998 (the "Company's 1998 Annual Report to Share Owners"), are
incorporated herein by reference.
During the fiscal year ended December 31, 1998, 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 1994 through 1998,
on pages 38 and 39 of the Company's 1998 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 27 through 37 of the Company's 1998 Annual
Report to Share Owners, is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
"Financial Risk Management" on page 30 of the Company's 1998
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 1998
Annual Report to Share Owners, are incorporated herein by
reference:
Consolidated Balance Sheets -- December 31, 1998 and 1997.
Consolidated Statements of Income -- Years ended December 31,
1998, 1997 and 1996.
Consolidated Statements of Cash Flows -- Years ended December
31, 1998, 1997 and 1996.
Consolidated Statements of Share-Owners' Equity -- Years
ended December 31, 1998, 1997 and 1996.
Notes to Consolidated Financial Statements.
12
Report of Independent Auditors.
"Quarterly Data (Unaudited)" on page 61 of the Company's
1998 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.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
For information on Directors of the Company, the subsections
under the heading "Election of Directors" entitled "Board of
Directors" and "Recommendation of the Board of Directors
Concerning the Election of Directors" on pages 2 through 5 and
under the heading "Section 16(a) Beneficial Ownership Reporting
Compliance" on page 7 of the Company's Proxy Statement for the
Annual Meeting of Share Owners to be held April 21, 1999 (the
"Company's 1999 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 "Committees of the Board of Directors; Meetings and
Compensation of Directors" on pages 8 through 10 and the portion
of the section entitled "Executive Compensation" set forth on
pages 11 through 15 and under the subsection "Compensation
Committee Interlocks and Insider Participation" on page 21 of the
Company's 1999 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
6 and 7 and "Principal Share Owners" on page 8, and the
subsection under the heading "Certain Investee Companies"
entitled "Ownership of Securities in the Investee Companies" on
page 22 of the Company's 1999 Proxy Statement, are incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The subsections under the heading "Election of Directors"
entitled "Committees of the Board of Directors; Meetings and
Compensation of Directors" and "Certain Transactions" on pages 8
through 10, the subsection under the heading "Executive
Compensation" entitled "Compensation Committee Interlocks and
Insider Participation" on page 21 and the section under the
heading "Certain Investee Companies" on pages 21 and 22 of the
Company's 1999 Proxy Statement, are incorporated herein by
reference.
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 1998 Annual Report to Share Owners, are
incorporated by reference in Part II, Item 8:
13
Consolidated Balance Sheets -- December 31, 1998 and 1997.
Consolidated Statements of Income -- Years ended December
31, 1998, 1997 and 1996.
Consolidated Statements of Cash Flows -- Years ended
December 31, 1998, 1997 and 1996.
Consolidated Statements of Share-Owners' Equity -- Years
ended December 31, 1998, 1997 and 1996.
Notes to Consolidated Financial Statements.
Report of Independent Auditors.
2. The following consolidated financial statement schedule
of The Coca-Cola Company and subsidiaries is included in
Item 14(d):
Schedule II -- Valuation and Qualifying Accounts.
All other schedules for which provision is made in the
applicable accounting regulation of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable and, therefore, have been
omitted.
3. Exhibits
EXHIBIT NO.
- ----------
2.1 Amended and Restated Purchase Agreement, dated as of
December 11, 1998, among the Company, Atlantic Industries
and Cadbury Schweppes plc.
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
December 17, 1997 -- incorporated herein by reference to
Exhibit 3.2 of the Company's Form 10-K Annual Report for
the year ended December 31, 1997.
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 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.*
14
EXHIBIT NO.
- -----------
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 through
October 15, 1998 -- incorporated herein by reference to
Exhibit 10.1 of the Company's Form 10-Q Quarterly Report
for the quarter ended September 30, 1998.*
10.5 1991 Stock Option Plan of the Company, as amended through
October 15, 1998 -- incorporated herein by reference to
Exhibit 10.2 of the Company's Form 10-Q Quarterly Report
for the quarter ended September 30, 1998.*
10.6 1983 Restricted Stock Award Plan of the Company, as
amended -- incorporated herein by reference to Exhibit
10.11 of the Company's Form 10-K Annual Report for the
year ended December 31, 1991.*
10.7.1 1989 Restricted Stock Award Plan of the Company, as
amended through October 17, 1996 -- incorporated herein by
reference to Exhibit 10.11.1 of the Company's Form 10-K
Annual Report for the year ended December 31, 1996.*
10.7.2 Resolutions, dated October 17, 1996, adopted by the
Restricted Stock Subcommittee of the Compensation
Committee of the Board of Directors of the Company --
incorporated herein by reference to Exhibit 10.11.2 of
the Company's Form 10-K Annual Report for the year ended
December 31, 1996.*
10.8.1 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.*
10.8.2 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.*
10.9 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.*
10.10.1 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.*
10.10.2 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 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.*
10.12 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.*
15
EXHIBIT NO.
- -----------
10.13 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.*
10.14 Long Term Performance Incentive Plan of the Company,
as amended February 16, 1994 -- incorporated herein by
reference to Exhibit 10.21 of the Company's Form 10-K
Annual Report for the year ended December 31, 1993.*
10.15 Executive Performance Incentive Plan 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, 1994.*
10.16 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, 1998, 1997, 1996, 1995 and
1994.
13.1 Portions of the Company's 1998 Annual Report to Share
Owners expressly incorporated by reference herein:
Pages 27 through 59, 61, 64 and 65 (definitions of
"Dividend Payout Ratio," "Economic Profit," "Free Cash
Flow," "Net Debt and Net Capital," "Return on Capital,"
"Return on Common Equity," "Total Capital" and "Total
Market Value of Common Stock").
21.1 List of subsidiaries of the Company as of December 31,
1998.
23.1 Consent of Independent Auditors.
24.1 Powers of Attorney of Officers and Directors signing this
report.
27.1 Restated Financial Data Schedule for the year ended
December 31, 1996, submitted to the Securities and
Exchange Commission in electronic format.
27.2 Restated Financial Data Schedule for the year ended
December 31, 1997, submitted to the Securities and
Exchange Commission in electronic format.
27.3 Financial Data Schedule for the year ended December 31,
1998, 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.
16
(b) Reports on Form 8-K.
The Company filed a report on Form 8-K on December 15, 1998.
Item 5. Other Events -- On December 11, 1998, the Company and
Cadbury Schweppes plc announced that they signed an
agreement for the Company to acquire beverage brands of
Cadbury Schweppes in countries around the world (except
in the United States, France and South Africa), plus
concentrate plants in Ireland and Spain, for approximately
$1.85 billion.
On December 11, 1998, the Company also announced its
expectations for fourth-quarter worldwide volume and
earnings trends.
Item 7. Financial Statements and Exhibits - Exhibits 99.1
and 99.2: Press releases of the Company issued
December 11, 1998.
(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/ M. DOUGLAS IVESTER
----------------------
M. DOUGLAS IVESTER
Chairman, Board of Directors,
Chief Executive Officer
and a Director
Date: March 29, 1999
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated.
/s/ M. DOUGLAS IVESTER *
- ---------------------- ----------------------
M. DOUGLAS IVESTER CATHLEEN P. BLACK
Chairman, Board of Directors, Director
Chief Executive
Officer and a Director
(Principal Executive Officer)
March 29, 1999 March 29, 1999
/s/ JAMES E. CHESTNUT *
- ---------------------- ----------------------
JAMES E. CHESTNUT WARREN E. BUFFETT
Senior Vice President and Director
Chief Financial Officer
(Principal Financial Officer)
March 29, 1999 March 29, 1999
/s/ GARY P. FAYARD *
- ---------------------- ----------------------
GARY P. FAYARD SUSAN B. KING
Vice President and Controller Director
(Principal Accounting Officer)
March 29, 1999 March 29, 1999
* *
- ---------------------- ----------------------
HERBERT A. ALLEN DONALD F. MCHENRY
Director Director
March 29, 1999 March 29, 1999
* *
- ---------------------- ----------------------
RONALD W. ALLEN SAM NUNN
Director Director
March 29, 1999 March 29, 1999
18
* *
- ---------------------- ----------------------
PAUL F. OREFFICE PETER V. UEBERROTH
Director Director
March 29, 1999 March 29, 1999
* *
- ---------------------- ----------------------
JAMES D. ROBINSON III JAMES B. WILLIAMS
Director Director
March 29, 1999 March 29, 1999
* By: /s/ CAROL C. HAYES
------------------
CAROL C. HAYES
Attorney-in-fact
March 29, 1999
19
ANNUAL REPORT ON FORM 10-K
ITEM 14(d)
FINANCIAL STATEMENT SCHEDULE
YEAR ENDED DECEMBER 31, 1998
THE COCA-COLA COMPANY AND SUBSIDIARIES
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-1
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-2
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
THE COCA-COLA COMPANY AND SUBSIDIARIES
Year ended December 31, 1996
(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.. $ 34 $ 9 $ - $ 13 $ 30
Miscellaneous investments
and other assets........... 55 287 - 3 339
Deferred tax assets........ 42 - - 24 18
---- ---- --- --- ----
$ 131 $ 296 $ - $ 40 $ 387
==== ==== === === ====
- --------------------------
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 $ - $ - $ 6
Foreign exchange adjustments.......... 1 - - 1
Other transactions.................... 6 3 24 33
--- --- --- ---
$ 13 $ 3 $ 24 $ 40
=== === === ===
F-3
EXHIBIT INDEX
DESCRIPTION
EXHIBIT NO.
- -----------
2.1 Amended and Restated Purchase Agreement, dated as of
December 11, 1998, among the Company, Atlantic
Industries and Cadbury Schweppes plc.
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
December 17, 1997 -- incorporated herein by reference to
Exhibit 3.2 of the Company's Form 10-K Annual Report
for the year ended December 31, 1997.
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 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.*
10.2 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
through October 15, 1998 -- incorporated herein by
reference to Exhibit 10.1 of the Company's Form 10-Q
Quarterly Report for the quarter ended September 30,
1998.*
EXHIBIT NO.
- -----------
10.5 1991 Stock Option Plan of the Company, as amended
through October 15, 1998 -- incorporated herein by
reference to Exhibit 10.2 of the Company's Form 10-Q
Quarterly Report for the quarter ended September 30,
1998.*
10.6 1983 Restricted Stock Award Plan of the Company, as
amended -- incorporated herein by reference to Exhibit
10.11 of the Company's Form 10-K Annual Report for the
year ended December 31, 1991.*
10.7.1 1989 Restricted Stock Award Plan of the Company, as
amended through October 17, 1996 -- incorporated herein
by reference to Exhibit 10.11.1 of the Company's
Form 10-K Annual Report for the year ended December 31,
1996.*
10.7.2 Resolutions, dated October 17, 1996, adopted by the
Restricted Stock Subcommittee of the Compensation
Committee of the Board of Directors of the Company --
incorporated herein by reference to Exhibit 10.11.2
of the Company's Form 10-K Annual Report for the year
ended December 31, 1996.*
10.8.1 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.*
10.8.2 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.*
10.9 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.*
10.10.1 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.*
10.10.2 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 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.*
-2-
EXHIBIT NO.
- -----------
10.12 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.*
10.13 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.*
10.14 Long Term Performance Incentive Plan of the Company,
as amended February 16, 1994 -- incorporated herein by
reference to Exhibit 10.21 of the Company's Form 10-K
Annual Report for the year ended December 31, 1993.*
10.15 Executive Performance Incentive Plan 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, 1994.*
10.16 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, 1998, 1997, 1996,
1995 and 1994.
13.1 Portions of the Company's 1998 Annual Report to Share
Owners expressly incorporated by reference herein:
Pages 27 through 59, 61, 64 and 65 (definitions of
"Dividend Payout Ratio," "Economic Profit," "Free
Cash Flow," "Net Debt and Net Capital," "Return on
Capital," "Return on Common Equity," "Total Capital"
and "Total Market Value of Common Stock").
21.1 List of subsidiaries of the Company as of December 31,
1998.
23.1 Consent of Independent Auditors.
24.1 Powers of Attorney of Officers and Directors signing
this report.
27.1 Restated Financial Data Schedule for the year ended
December 31, 1996, submitted to the Securities and
Exchange Commission in electronic format.
27.2 Restated Financial Data Schedule for the year ended
December 31, 1997, submitted to the Securities and
Exchange Commission in electronic format.
-3-
EXHIBIT NO.
- -----------
27.3 Financial Data Schedule for the year ended December
31, 1998, submitted to the Securities and Exchange
Commission in electronic format.
99.1 Cautionary Statement Relative to Forward-Looking
Statements.
- -------------------
* Management contracts and compensatory plans and arrangements
required to be filed as exhibits pursuant to Item 14(c) of
this report.
-4-