Back to GetFilings.com



SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-K

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO
----------- -----------

COMMISSION FILE NUMBER 1-12290

PANAMERICAN BEVERAGES, INC.
(Exact name of registrant as specified in its charter)

REPUBLIC OF PANAMA NOT APPLICABLE
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

C/O PANAMCO, L.L.C.
701 WATERFORD WAY, SUITE 800
MIAMI, FLORIDA 33126
(Address of principal executive offices) (Zip code)

(305) 929-0800
(Registrant's Telephone Number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

NAME OF EACH EXCHANGE
TITLE OF EACH CLASS: ON WHICH REGISTERED:
------------------- ---------------------
Class A Common Stock, $0.01 par value per share 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 (or for such shorter period that the
registrant was required to file such reports), 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 definite 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 voting and non-voting stock common stock
held by non-affiliates of the registrant was $991,889,340 (computed by
reference to the closing price as of March 15, 2002).

The number of shares outstanding of each of the registrant's classes of common
and preferred stock, par value $0.01 per share, as of March 15, 2002 were:

Class A Common Stock: 112,901,012
Class B Common Stock: 8,672,863
Class C Preferred Stock: 2





TABLE OF CONTENTS





PART I

Item 1. Business
Overview.................................................. 1
Corporate Structure....................................... 1
Our Franchise Territories................................. 3
Beverages and Packaging................................... 4
Sales, Distribution and Marketing......................... 6
Raw Materials and Supplies................................ 7
Production................................................ 8
Competition............................................... 9
Employees................................................. 10
Franchise Arrangements.................................... 10
Government Regulation..................................... 10
Political, Economic and Social Conditions
in Latin America......................................... 11
Currency Devaluations and Fluctuations.................... 13
Item 2. Properties........................................................ 13
Item 3. Legal Proceedings................................................. 14
Item 4. Submission of Matters to a Vote of Security Holders............... 15

PART II

Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters............................................... 16
Item 6. Selected Financial Data........................................... 21
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................... 23
Item 7A. Quantitative and Qualitative Disclosures About Market Risk........ 37
Item 8. Financial Statements and Supplementary Data....................... 39
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure............................ 39

PART III

Item 10. Directors and Executive Officers of the Registrant................ 39
Item 11. Executive Compensation............................................ 43
Item 12. Security Ownership of Certain Beneficial Owners and Management.... 48
Item 13. Certain Relationships and Related Transactions.................... 50

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.. 52

SIGNATURES........................................................ 56





PART I

ITEM 1. BUSINESS

OVERVIEW

Panamerican Beverages, Inc. ("Panamco" or the "Company") is the largest
soft drink bottler in Latin America and the third largest bottler of the soft
drink products of The Coca-Cola Company ("The Coca-Cola Company" or
"Coca-Cola"). In 2001, our sales accounted for approximately 5% of the
worldwide unit case volume reported by Coca-Cola, or the equivalent of one
bottle in every case. Our 2001 sales represented approximately 21% of the
Latin American unit case volume reported by Coca-Cola. Sales of products of
Coca-Cola accounted for approximately 87% of our net sales in 2001.

We have a 60-year bottling relationship with Coca-Cola. In 1995,
Coca-Cola designated Panamco an "anchor bottler", making us one of their
strategic partners in Coca-Cola's worldwide bottling system. Coca-Cola has
been a stockholder of our Company since 1993 and today beneficially owns
approximately 25% of our common stock. Coca-Cola has two representatives on
our Board of Directors.

We operate in diverse markets in Latin America. We operate in Mexico (a
substantial part of central Mexico, excluding Mexico City), Brazil (greater
Sao Paulo, Campinas, Santos and part of Mato Grosso do Sul in Brazil),
Colombia (most of the country), Venezuela (all of the country), Costa Rica
(all of the country), Nicaragua (all of the country), and Guatemala (Guatemala
City and surrounding areas).

The territories in which the Company operates have an aggregate
population of approximately 124 million people, or about 24% of the total
population of Latin America. Within these territories, we have the exclusive
right to produce and distribute substantially all of Coca-Cola's soft drink
products. We also produce and distribute a variety of flavored soft drinks and
bottled water products under licensed and proprietary trademarks in certain of
our territories. We distribute Kaiser and Heineken beers in our franchise
territories in Brazil. We also distribute Regional beer in the northeast of
Venezuela.

Our business began in 1941, when Albert H. Staton, Sr. and a group of
investors acquired a core of the franchised bottling operations of Coca-Cola
in Mexico. We were incorporated in Panama in 1945 as successor to a Mexican
company through which the business was initially conducted. By expanding into
other Latin American markets, we have been able to diversify, in part, our
business risk. In 1944 and 1945, we expanded our operations to Colombia and
Brazil, respectively. In 1950, we acquired Coca-Cola's bottling franchise for
the Sao Paulo territory. Since then, our operating units have acquired
additional bottling franchises within their respective countries. We entered
the Costa Rican market in 1995, both the Venezuelan market and the Nicaraguan
market in 1997 and the Guatemalan market in 1998.


CORPORATE STRUCTURE

HOLDING COMPANY STRUCTURE

We are a holding company and conduct our operations through tiers of
subsidiaries. The following chart summarizes our corporate structure and
ownership interest in our country level holding companies and describes their
interests in their bottling subsidiaries as of December 31, 2001:

1










PANAMCO
|
-------------------------------------------------------|-------------------------------------------------------
| | | | | | |
| | | | | | |
98% 50.1%* 72.6%** 100% 98% 97% 100%
Panamco Panamco Panamco Panamco Panamco Panamco Panamco
Mexico Costa Rica Nicaragua Guatemala Brazil Colombia Venezuela
| | | | | | |
| | | | | | |
| | | | | Panamco |
Panamco Mexico Panamco Costa Panamco Panamco Panamco Colombia owns Panamco
owns between Rica owns Nicaragua Guatemala Brazil owns 65% of one and Venezuela
85% and 99% of 100% of its owns 100% of owns 100% of 100% of its 100% of four owns 100% of
its bottling bottling its bottling its bottling bottling of its bottling its bottling
subsidiaries. subsidiary subsidiary. subsidiary. subsidiary. subsidiaries subsidiary.

- -------------------
* Panamco Mexico owns 49.9% of Panamco Costa Rica.
** Panamco Costa Rica owns 27.4% of Panamco Nicaragua.




As a holding company, our ability to pay operating expenses, any debt
service obligations and dividends primarily depends upon receipt of sufficient
funds from our majority-owned subsidiaries, which are in turn dependent upon
receipt of funds from their majority-owned subsidiaries. See "Item 5. --
Market for Registrant's Common Equity and Related Stockholder Matters --
Exchange Controls and Other Limitations Affecting Security Holders" for a
discussion of limitations imposed by exchange control laws on the payment of
dividends. Dividends paid to us and other foreign shareholders by the
subsidiaries are subject to investment registration requirements and
withholding taxes. See "Item 7. -- Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources." The payment of dividends by our subsidiaries is also subject, in
certain instances, to statutory restrictions or restrictive covenants in debt
instruments and is contingent upon the earnings and cash flow of, and
permitted borrowings by, such subsidiaries. These minority shareholders in
less than wholly owned subsidiaries receive a pro-rata portion of all
dividends paid by those subsidiaries.


SUBSIDIARY OPERATIONS

NORTH LATIN AMERICAN DIVISION

Our North Latin American Division ("NOLAD") is comprised of our
operations in Mexico, Costa Rica, Nicaragua and Guatemala.

Mexico. We own approximately 98% of the capital stock of Panamco Mexico,
S.A. de C.V. ("Panamco Mexico"), a Mexican corporation that in turn owns
interests ranging from 86% to 99% in five bottling subsidiaries that own and
operate nine bottling plants (including three water bottling plants) in
Mexico. Panamco Mexico also owns majority and minority interests in companies
that produce materials and equipment used in the production and distribution
of soft drinks. Panamco Mexico and its consolidated subsidiaries are
collectively referred to herein as "Panamco Mexico."

Costa Rica. We own all the capital stock (50.1% directly and 49.9%
indirectly through Panamco Mexico) of Panamco Costa Rica. Panamco Costa Rica
produces, distributes and sells Coca-Cola's products and other soft drink

2





products throughout Costa Rica. Panamco Costa Rica owns and operates one
bottling plant. Panamco Costa Rica also owns a plastics business. We acquired
these operations in 1995 and 1996.

Nicaragua. We own all the capital stock (72.6% directly and 27.4%
indirectly through Panamco Costa Rica) of Panamco de Nicaragua, S.A. ("Panamco
Nicaragua"). Panamco Nicaragua produces, distributes and sells Coca-Cola's
products, and other soft drink products, throughout Nicaragua. We acquired
Panamco Nicaragua in 1997.

Guatemala. In March 1998, we acquired all the capital of Embotelladora
Central, S.A. ("Panamco Guatemala"). Panamco Guatemala produces, distributes
and sells Coca-Cola's products, and other soft drink products in Guatemala
City and surrounding areas.

Panamco Costa Rica, Panamco Nicaragua and Panamco Guatemala are
collectively referred to as "Panamco Central America."

BRAZIL

We indirectly own approximately 98% of the capital stock of Refrescos do
Brazil S.A. ("Panamco Brazil"), a Brazilian holding company that through
subsidiaries owns a bottling subsidiary that, in turn, owns and operates four
bottling plants (including one water bottling plant) in Brazil, including our
state-of-the-art facility in Jundiai. Prior to March 2002, Panamco Brazil held
a 12.1% interest in Cervejarias Kaiser S.A. In March 2002, this interest was
acquired by Molson, Inc. as part of its acquisition of Kaiser. See "Item 7. --
Management's Discussion and Analysis of Financial Condition and Results of
Operations." Panamco Brazil also owns facilities that produce equipment used
in the distribution of soft drinks. In September 1998, we acquired all the
capital stock of the Brazilian bottler, Refrigerantes do Oeste S.A.
("R.O.S.A."). R.O.S.A. produces, distributes and sells Coca-Cola's products in
the western central part of Brazil in the state of Matto Grosso do Sul.
Panamco Brazil and its consolidated subsidiaries are collectively referred to
herein as "Panamco Brazil."

COLOMBIA

We own approximately 97% of the capital stock of Panamco Colombia, S.A.
("Panamco Colombia"), a Colombian corporation that owns interests ranging from
65% to 100% in subsidiaries that own and operate 18 bottling plants (including
one water bottling plant) and own majority and minority interests in
corporations that produce materials and equipment used in the production and
distribution of soft drinks such as Friomix del Cauca, a cold drink equipment
manufacturing company. Panamco Colombia and its consolidated subsidiaries are
collectively referred to herein as "Panamco Colombia."

VENEZUELA

In May 1997, we acquired all the capital stock of Embotelladora Coca-Cola
y Hit de Venezuela S.A. ("Panamco Venezuela") (the "Venezuela Acquisition").
Panamco Venezuela, through its subsidiaries, produces, distributes and sells
products of Coca-Cola and other soft drink products throughout Venezuela.
Panamco Venezuela owns and operates 13 bottling plants (including two water
bottling plants). We also acquired the licensing right to distribute Regional
beer throughout Venezuela, which we began distributing in the northeast of
Venezuela in 1999. Panamco Venezuela and its consolidated subsidiaries are
collectively referred to herein as "Panamco Venezuela."


OUR FRANCHISE TERRITORIES

We have exclusive rights under our bottling agreements with Coca-Cola to
bottle and distribute soft drinks and water in all of the territories in which
we operate. We market all our other soft drink, bottled water, beer products
and other beverages only within our franchise territories. The countries where
we operate and our franchise territories are shown below:

3





[MAP INDICATING FRANCHISE TERRITORIES:

VENEZUELA

-- Country Population: 24.2 million
-- Franchise Area Population: 24.2 million
MEXICO

- -- Country Population: 99.1 million BRAZIL
- -- Franchise Area Population: 19.0 million

-- Country Population: 169.8 million
GUATEMALA -- Franchise Area Population: 25.0 million

- -- Country Population: 12.4 million
- -- Franchise Area Population: 4.7 million

NICARAGUA

- -- Country Population: 5.2 million
- -- Franchise Area Population: 5.2 million

COSTA RICA

-- Country Population: 4.0 million
-- Franchise Area Population: 3.9 million

COLUMBIA

-- Country Population: 43.2 million
-- Franchise Area Population: 41.9 million]


BEVERAGES AND PACKAGING

OUR PRODUCTS

We produce or distribute colas, flavored soft drinks, non-carbonated
drinks, bottled drinking water and beer. We produce and distribute Coca-Cola
products and our own proprietary brands. In 2001, 74% of our unit case volume
were products we sold of Coca-Cola and 26% of our unit case volume were products
of Panamco or other companies. In terms of net sales, Coca-Cola products
accounted for approximately 87% of our 2001 net sales (62% black colas and 25%
other Coca-Cola products), with the remainder of net sales accounted for by
water (7%), beer (3%), other products (2%) and other soft drinks (1%).

During the year 2001, Panamco accelerated its efforts in the introduction
of new products, furthering its objective of becoming a total beverage
company. Our focus on new products has had the effect of broadening the
product portfolio to better meet the needs of more sophisticated consumers
with an increasing variety of tastes. Specifically, we launched twelve new
products during 2001, primarily in the non-carbonated drink segment. Most of
the products introduced are products of Coca-Cola although some are
proprietary Panamco products.

We distribute two types of bottled water products: purified water and
mineral water. Purified water is prepared in a similar manner to the water
utilized in the soft drink manufacturing process. Mineral water is obtained
from springs and wells. We distribute mineral water under our own proprietary
trademarks, which include Risco in Mexico, Manantial in Colombia, Crystal in
Brazil and Shangri-la in Guatemala, and we distribute purified water under the
trademarks Risco in Mexico, Club K, Santa Clara and Soda Clausen in Colombia,
Nevada in Venezuela, Alpina in Costa Rica and Milca Soda in Nicaragua.

In Brazil, we distribute both Kaiser and Heineken beers and in Venezuela
we distribute Regional beer.

4





We produce and distribute flavored soft drinks under our own proprietary
trademarks, including "Club K", "Club Soda" and "Premio" in Colombia and
"Super 12" in Costa Rica. We produce and distribute bottled waters under our
own proprietary trademarks including "Risco" in Mexico, "Crystal" in Brazil,
"Manantial", "Premio", "Soda Clausen" and "Santa Clara" in Colombia, "Alpina"
in Costa Rica and "Shangri-la" in Guatemala.

The beverage products we produce or distribute and that accounted for
nearly all of our sales in the period ending December 31, 2001 are listed
below:






----------------------------------------------------------------------------------------------------------------------------------
PANAMCO PANAMCO PANAMCO PANAMCO PANAMCO PANAMCO PANAMCO
MEXICO BRAZIL COLOMBIA VENEZUELA COSTA RICA NICARAGUA GUATEMALA
----------------------------------------------------------------------------------------------------------------------------------

COCA-COLA SOFT COCA-COLA SOFT COCA-COLA SOFT COCA-COLA SOFT COCA-COLA SOFT COCA-COLA SOFT COCA-COLA SOFT
DRINK PRODUCTS: DRINK PRODUCTS: DRINK PRODUCTS: DRINK PRODUCTS: DRINK PRODUCTS: DRINK PRODUCTS: DRINK PRODUCTS:
Coca-Cola Coca-Cola Coca-Cola Coca-Cola Coca-Cola Coca-Cola Coca-Cola
Coca-Cola Light Coca-Cola Light Coca-Cola Light Coca-Cola Light Coca-Cola Light Coca-Cola Light Coca-Cola Light
Sprite Sprite Sprite Hit Naranja Sprite Sprite Fanta
Sprite Light Diet Sprite Fanta Hit Pina Fanta Fanta Sprite
Fanta Orange Fanta Quatro Hit Uva Fresca Fresca Lift
Fanta Strawberry Diet Fanta Lift Hit Manzana Lift
Fresca Simba Hit Kola Canada Dry BOTTLED WATER: BOTTLED WATER:
Lift Tai OTHER SOFT Hit Parchita Ginger Ale Kinley Soda Shangri-la*
Delaware Punch Diet Tai DRINKS: Grapette Uva Canada Dry
Senzao Kuat Roman** Grapette Kola OTHER SOFT DRINKS: Club Soda OTHER PRODUCTS:
Schweppes Premio* Grapette Naranja Super 12* Alpina* Hi-C
BOTTLED WATER: Tonic Water Club Soda* Grapette Pina Milca Soda** Powerade
Risco* Kinley Club Quatro BOTTLED WATER: OTHER PRODUCTS:
Soda BOTTLED WATER: Frescolita Canada Dry Hi-C
OTHER PRODUCTS: Fanta Uva Manantial* Chinotto Club Soda Kapo
Keloco* Club K* Chinotto Light Canada Dry Powerade
Beat BOTTLED WATER: Soda Clausen* Soda Quinada
Quatro Crystal* Santa Clara* Schweppes Alpina*
Powerade Aguakina
BEER: OTHER PRODUCTS: Schweppes
Kaiser** Powerade OTHER PRODUCTS:
Kaiser Light** Sonfil BOTTLED WATER: Powerade
Kaiser Bock** Nevada Sonfil
Kaiser Gold** Nestea**
Kaiser Summer OTHER PRODUCTS:
Draft** Malta
Heineken** Regional**
Nestea**
OTHER PRODUCTS: Sonfil
Kapo
BEER:
Regional**




___________________
Unless otherwise indicated, products are proprietary to Coca-Cola.
* Proprietary to Panamco
** Products licensed from third parties



5





PACKAGING AND PRESENTATIONS

A majority of our sales are made in glass or plastic bottles. Our
beverages are available in returnable presentations in different package types
including returnable PET bottles and glass bottles. Our nonreturnable
presentations include cans, nonreturnable glass, plastic bottles and plastic
bags.


SALES, DISTRIBUTION AND MARKETING

SALES

By selling our beverage products directly to over one million points of
sale, we believe we have one of the largest operations for the distribution of
consumer goods in Latin America. By country, our points of sales are located
20% in Mexico, 11% in Brazil, 36% in Colombia, 21% in Venezuela, 3% in Costa
Rica, 4% in Nicaragua and 5% in Guatemala. This network serves traditional
small stores (including small grocery stores, "Mom and Pop" stores, kiosks and
roadside stands), supermarkets, restaurants, bars, schools, offices,
businesses and distributors. The mix of sales to these particular types of
outlets varies by country and is a function of the economics, demographics and
other characteristics of each franchise area.

Most of our sales are made to four types of outlets: (i) traditional
small stores, (ii) supermarkets, (iii) restaurants and bars, and (iv) schools,
offices, businesses and distributors. At such outlets, we generally sell our
beverage products for either on-premise or off-premise consumption. A majority
of the products we sell are sold for off-premise consumption. Products we sell
for on-premise consumption at traditional small stores, restaurants, bars,
fast food outlets and similar locations represent the balance of our sales
volume.

While consumers typically prefer soft drinks served cold for on-premise
consumption, in certain cases, particularly in Mexico, consumers also prefer
to purchase cold soft drinks for off-premise consumption. As described below,
in each of our franchise territories we have programs to place our beverage
coolers, post-mix dispensers and vending machines at points of sale for our
products to make chilled products available to the consumer. We loan or sell
and provide financing for such merchandising equipment. Loaned equipment is
intended to be used exclusively for Panamco products.

In addition to bottled presentations, we sell soft drinks in post-mix
form. Soft drinks sold in post-mix form consist of the final carbonated
product in stainless steel and other pressurized canisters for use in
dispensers at retail outlets.

DISTRIBUTION

We have developed extensive product delivery and container retrieval
systems to maintain sales levels at each of our points of sale. By actively
managing our distribution routes, we seek to ensure that deliveries are made
when our clients (retailers) have the space and funds available to purchase
our beverage products. Distribution is also critical in Latin America, because
a significant portion of soft drink products are sold in returnable bottles.
We must regularly collect empty bottles from retailers and return them to our
bottling plants. Distribution is primarily carried out by our employees and is
supplemented by a network of independent distributors.

We have located and designed our production and distribution facilities
based upon local factors including population concentration, topography,
quality of roads and availability and efficiency of communications. In
territories with large, industrial cities, such as greater Sao Paulo, we
operate a smaller number of large distribution centers and often integrate
distribution and bottling capabilities at the same facility. In rural areas,
such as most of Colombia and Venezuela and parts of Mexico, Costa Rica,
Nicaragua and Guatemala, we use a larger number of small bottling plants and
warehouses.

6





We use two principal delivery methods depending upon local conditions:
the traditional route truck system and the pre-sell method. In Mexico, most of
Colombia, Venezuela and Nicaragua, the route truck system is widely used, in
which salesmen drive delivery trucks on pre-established routes and make
immediate sales from inventory available on the route truck. For all sales in
Brazil, most of Costa Rica and in certain cities in Colombia, Mexico,
Guatemala and Venezuela, we utilize the pre-sell system, in which a separate
sales force obtains orders from customers prior to the time of delivery by
route trucks. Use of the pre-sell system enables us to utilize our route
trucks more efficiently, delivering all of their freight capacity and at the
same time providing us real time information about the product and
presentation needs of our clients. The traditional system maximizes sales to
customers with less sophisticated cash management systems. We also employ a
system of bicycles, carts and small trucks for smaller clients to provide
flexible and fast deliveries within urban areas.

In order to more effectively respond to the needs of our clients and to
help us better manage our inventories we have computer systems in place in
each of our franchise territories. We have also equipped most of our sales
force with handheld computers to provide us with real time information about
the product and presentation needs of our clients.

MARKETING

Market segmentation has given rise to preferences on the part of
consumers for a variety of presentations. Income level, substitutes, pricing
and other factors affect consumer preferences. During 2001, we introduced new
presentations at both ends of the size spectrum - 250 ml/8oz and 2.5L - to
better meet these consumer preferences. The smaller presentations have the
objective of capturing consumers for whom the product would otherwise not be
affordable while the larger presentations provide a more cost-effective
alternative for in-home consumption.

In all of our territories, we attempt to adapt our product presentations
and distribution to each market and to the individual clients and consumers
within our territories in terms of the space available for product display,
point-of-sale material, advertising and delivery methods. In order to maximize
sales and per capita consumption of our products, we continually examine sales
data in an effort to develop a mix of product presentations that will best
satisfy consumers and provide our clients with the most effective product mix.
To this effect, we have invested in a sophisticated information system that
allows us to collect detailed, daily data on approximately 70% of our points
of sale. While the investment was made prior to 2001, utilization of this
information system significantly improved throughout last year. We also employ
a variety of marketing techniques in each of our franchise territories to
increase our share of sales, penetration and per capita consumption.


RAW MATERIALS AND SUPPLIES

Soft drinks are produced by mixing water, concentrate and sweetener. We
process the water we use in our soft drinks to eliminate mineral salts and
disinfect it with chlorine. We then filter it to eliminate impurities,
chlorine taste, trace metals and odors. We combine the purified water with
processed sugar or high fructose (or artificial sweeteners in the case of diet
soft drinks) and concentrate. To produce carbonation, we inject carbon dioxide
gas into the mixture. Immediately following carbonation, we bottle the mixture
in pre-washed labeled bottles. We maintain a quality control laboratory at
each production facility where we test raw materials and analyze samples of
soft drink products. All of our sources of supply for raw materials are
subject to the approval of Coca-Cola.

None of the raw materials or supplies for our products are currently in
short supply, although the supply of specific raw materials or supplies could
be adversely affected by government controls, strikes, adverse weather
conditions or other factors beyond our control. Any increase in the price of our
raw materials or supplies will increase our cost of sales and adversely affect
our net earnings to the extent we are unable to pass along the full amount of
such increases to the consumer.

Concentrates. We purchase concentrates from Coca-Cola for all Coca-Cola
products, as well as from other sources for our other products.

7





Water and sugar. We obtain water from various sources, including springs,
wells, rivers and municipal water systems. Sugar is readily available in all
of our territories as each of Mexico, Brazil, Colombia, Costa Rica, Venezuela,
Nicaragua and Guatemala is a producer of sugar. In addition, we are able to
use high fructose sweetener as a sugar substitute for certain of our products.
In 2001, high fructose accounted for approximately 38% of our sweetener use in
Mexico. We purchase our requirements from multiple suppliers in each country.

Carbon dioxide. We purchase all of our supply of carbon dioxide in
Colombia, Costa Rica and Venezuela from Praxair. All of our supply for Brazil
is being produced at one of our bottling plants in Brazil. Panamco Mexico
purchases its supply of carbon dioxide gas from Cryoinfra. Panamco Nicaragua
and Panamco Guatemala purchase their supply of carbon dioxide from Carbox, a
supplier located in Guatemala. Alternate suppliers are available in all the
countries where we operate.

Bottles, caps and other packaging materials. We usually purchase glass
bottles, plastic soft drink containers, plastic bottle caps, cans and general
packaging materials locally in each country from multiple suppliers. Our
supplies of plastic bottles in all of our territories are generally sourced
from single suppliers of such bottles in each country, and there are
alternative suppliers. Panamco Colombia has facilities to produce a small
portion of its own disposable plastic bottles and owns 20% of Comptec, S.A., a
joint venture with a subsidiary of Coca-Cola and other Andean bottlers formed
to produce returnable and disposable plastic bottles. Panamco Costa Rica owns
a plastics business, which supplies plastic bottles for all of Panamco Costa
Rica's requirements and to other customers in Central America, including
Panamco Nicaragua and Panamco Guatemala.

We purchase metal bottle caps primarily from the Zapata group of
companies, which have manufacturing facilities in Mexico and Brazil. In
Colombia, one of the companies in the Zapata group owns 60%, and Panamco
Colombia owns 40%, of Tapon Corona, S.A., a Colombian company that
manufactures bottle caps for Panamco Colombia, Panamco Venezuela and other
customers. Panamco Costa Rica, Panamco Nicaragua and Panamco Guatemala
currently purchase their bottle caps from Alcoa CSI, a third-party supplier.

We have facilities in Mexico, Brazil, Colombia and Costa Rica, which
produce plastic cases for carrying bottles. The Costa Rican facility supplies
Panamco Nicaragua and Panamco Guatemala. Plastic is purchased locally or
imported when necessary. Plastic cases in Venezuela are purchased mainly from
Gaveras Plasticas Venezolanas, C.A., which are produced from 100% recycled
materials. Other local suppliers are also available.

In addition to its bottling operations, Panamco Brazil also has the
capacity to produce cans for canned soft drinks at its Jundiai plant and to
produce plastic bottles at its bottling facility in Matto Grosso do Sul.
Panamco Mexico owns approximately 14.9% of Industria Envasadora de Queretaro,
S.A. de C.V., a canning cooperative for products of Coca-Cola in Mexico.
Panamco Colombia has the capacity to produce cans for canned soft drinks at
one of its Bogota plants. Panamco Venezuela has the capacity to produce cans
for canned soft drinks at three of its plants. Panamco Central America imports
cans from a Coca-Cola bottler in El Salvador, EMBOSALVA S.A.

Panamco Colombia has its own facilities to manufacture post-mix and
pre-mix dispensers (for on-premises preparation of soft drinks). This
operation has expanded to manufacture its own beverage coolers, which it also
sells to our other operating Panamco subsidiaries. In 1999, Panamco Colombia
acquired a minority interest in Ingenio San Carlos, a Colombian sugar
producer. In connection with this acquisition, Panamco Colombia has entered
into a long-term supply agreement with Ingenio San Carlos for sugar.

Panamco Mexico and Panamco Costa Rica manufacture their own racking
systems for their route trucks and freight vehicles.


PRODUCTION

Our subsidiaries own and operate a total of 47 bottling plants, with 9 in
Mexico, 4 in Brazil, 18 in Colombia, 13 in Venezuela, 1 in Costa Rica, 1 in
Nicaragua and 1 in Guatemala. The totals include 3 plants in Mexico, 1 plant
in Brazil, 1 in Colombia and 2 in Venezuela, which we use exclusively to
bottle mineral water at the source. Our plants have over 190 bottling lines
with an installed capacity of over 2 billion unit cases a year (assuming 500

8





production hours per month for 12 months per year). In order to increase
production efficiency and reduce costs we have implemented cost reduction
plans at all of our subsidiaries. We continue to evaluate and monitor the
efficiency of our operations.

Panamco Brazil's Jundiai plant is the largest and one of the most
sophisticated manufacturing complexes in the Coca-Cola system. Our Jundiai
plant has an annual production capacity of 250 million unit cases and has
obtained ISO 9002 and 14001 certificates for quality, productivity and
environmental safety.


COMPETITION

The beverage business in our franchise territories is highly competitive.
Our principal competitors are bottlers of Pepsi products and bottlers and
distributors of nationally and regionally advertised and marketed soft drinks.
Our principal competitors in each of our franchise territories are set forth
below:

NOLAD

Our principal competitors in Mexico are bottlers of Pepsi products, whose
territories overlap, but do not precisely match ours. We compete with Geupec,
Group Regordosa and Pepsi-Gemex for share of sales in our territory. In Costa
Rica, Embotelladora Centroamericana S.A. (Pepsi bottler) is our principal
competitor. In Nicaragua and Guatemala, The Central American Bottling
Corporation (Pepsi bottler) is our principal competitor.

BRAZIL

In Brazil our main competitor is AmBev. We also compete with "B" brands
or "tubainas", which are small, local, lower cost producers of flavored soft
drinks. Tubainas are local shops that produce "no frills" flavored soft drinks
in 2-liter presentations for at home consumption. They market their products
primarily in supermarkets. Tubainas have lower overhead and we believe that
they often do not comply with local tax laws, which enables them to offer
lower cost products.

COLOMBIA

In Colombia our principal competitor is Postobon, a well-established
bottler of both nationally advertised flavored soft drink products and Pepsi.
The owners of Postobon hold other significant commercial interests in
Colombia.

VENEZUELA

A joint venture formed between Pepsi and Empresas Polar S.A., the leading
beer distributor in Venezuela named Pepsi-Cola Venezuela, S.A., is our
principal competitor in Venezuela. Since December 1999, we also compete with
the producers of Kola Real, a "B" brand, in the central part of the country.

In addition to competition from other soft drink producers, carbonated
soft drink products compete with other major commercial beverages, such as
coffee, tea, milk, beer and wine, as well as noncarbonated soft drinks, citrus
and noncitrus fruit juices and drinks and other beverages.

Soft drink bottlers also compete for share of sales through distribution
and availability of products, pricing, service provided to retail outlets
(including merchandising equipment, maintenance of bottle inventories at
appropriate levels and frequency of visits), product packaging presentations
and consumer promotions. In recent years, price discounting by our competitors
has been a means of obtaining sales share in Brazil, Colombia and, Venezuela.

Our consumer promotions are guided primarily by Coca-Cola and take the
form of contests, television, radio and billboard advertising, displays,
merchandising and sampling.

9





EMPLOYEES

At December 31, 2001, we employed approximately 26,000 people (including
temporary workers, but excluding independent distributors). Approximately 35%
of our employees are members of labor unions, most of whom are in Mexico. Most
of the employees in Colombia are covered by non-union collective bargaining
agreements. The collective bargaining agreements for both unionized and
non-unionized employees are negotiated separately for each bottling
subsidiary, or in some instances, for each plant. In Mexico, collective
bargaining agreements are renegotiated annually with respect to wages and
biannually with respect to benefits. In Colombia and Venezuela, all collective
bargaining agreements are negotiated biannually.

In accordance with local labor laws, Panamco Mexico pays employees
amounts usually equal to 10% of its taxable income. The Mexican government
also requires employers to set aside a percentage of employee wages in
retirement accounts. In addition, both employers and employees in Mexico must
contribute amounts to the national health care system and a workers' housing
fund. In Colombia, Brazil, Costa Rica and Nicaragua, employers and employees
contribute to employee retirement accounts and to their national health care
systems. A profit-sharing program has been implemented in Venezuela pursuant
to which employees are entitled to receive an additional payment equal to at
least 15 days' wages (but not more than four months' wages), and a
profit-sharing program was established in Brazil in 1997. In Mexico and
Nicaragua, employees are entitled to a mandatory Christmas bonus in an amount
equal to 15 days and one month's salary, respectively. If an employee has
worked for a company less than one year, that employee's bonus is reduced in
proportion to the amount of time such employee was not employed. In Guatemala,
employees receive a mandatory bonus in the form of a three-month payment based
upon the salary paid during the preceding six months. We have voluntarily
instituted and maintained popular benefits for our employees including housing
loans.

We believe that our relationship with our employees is good in general.
In 2001, five employees and a union representing approximately 400 of our
employees in Colombia instituted a legal action against us and others claiming
human rights violations. See "Item 3. -- Legal Proceedings."

The labor laws in each of the seven countries in which we operate require
certain severance payments upon involuntary termination of employment.


FRANCHISE ARRANGEMENTS

Coca-Cola. We have the right to sell Coca-Cola's products, certain other
soft drinks and certain bottled water products pursuant to bottling or other
similar agreements described in "Item 13. -- Certain Relationships and Related
Transactions" for a discussion of our bottling agreements with Coca-Cola.

Other Brands. Panamco Colombia has agreements with companies other
than Coca-Cola for the sale of locally recognized soft drink products and
mineral water. These agreements contain provisions governing the production,
marketing and sale of the beverages that are, in most instances, less
stringent than the requirements contained in our bottling agreements with
Coca-Cola. Panamco Venezuela has an agreement for the sale and distribution of
beer under the Regional trademark. Panamco Brazil has an agreement to
distribute both Kaiser and Heineken beers.


GOVERNMENT REGULATION

Controls on Pricing and Promotions. Although there are none currently in
effect, in the last ten years the governments of Mexico, Brazil and Colombia
have imposed formal price controls on soft drinks. Currently in Mexico and
Colombia, for soft drinks and for other goods, price increases proposed by
manufacturers are subject to the informal approval of the respective
governments. In the past, the Mexican government also limited the types of
presentations for soft drinks. In Brazil, the government is recommending that
manufacturers maintain price levels

10





in line with a trailing four-month average of their historic price increases.
Each of the governments of the countries in which we operate regulates some of
our promotional activities such as cash prize contests and certain other
promotions.

Taxation of Soft Drinks. All the countries in which we operate impose a
value-added tax ("VAT") on the sale of soft drinks, with a rate of 18% in
Brazil, 16% in Colombia, 13% in Costa Rica, 12% in Guatemala, 15% in Mexico,
15% in Nicaragua and 14.5% in Venezuela. In addition, several of the countries
in which we operate impose excise or other taxes on soft drinks. In Guatemala,
there is an excise tax of US $0.18 per liter. Costa Rica imposes specific
taxes on soft drinks that together with its VAT results in an average
effective tax rate of approximately 25%. Brazil imposes an excise tax of 12.5%
and a consumption tax of 6.7%. Nicaragua also imposes an 11.5% consumption tax
plus US $0.11 surcharge per unit case. In 2002, Mexico introduced an excise
tax of 20% on fructose-based soft drinks and on water. In March 2002, this
excise tax was suspended until September 30, 2002. The reinstatement of this
tax, or any increase in the excise or other taxes on the sale of our products,
will adversely affect our sales volumes and profitability to the extent that
we are unable to pass the full amount of any such increase to consumers.

Environmental Regulation. We spent $2.0 million and $12.0 million in 2001
and 2000, respectively, on plant upgrades designed to meet environmental
objectives. We must comply with local permit requirements for constructing and
expanding facilities, drilling wells, drawing water from rivers and
discharging effluent.

Intellectual Property. The intellectual property laws of the countries in
which we operate require a proprietary owner of trademarks used in the
operation of franchises in the countries to make certain filings with the
government to protect the trademark. We have made all necessary filings to
protect our proprietary trademarks. To the best of our knowledge, Coca-Cola
and the owners of the other trademarks we use have made the necessary filings
to protect their respective trademarks.

See also "Item 5. -- Market for Registrant's Common Equity and Related
Stockholder Matters -- Exchange Controls and Other Limitations Affecting
Security Holders."


POLITICAL, ECONOMIC AND SOCIAL CONDITIONS IN LATIN AMERICA

In addition to the governmental regulations that have been imposed on our
operations, the Latin American markets in which we operate are characterized
by volatile, and frequently unfavorable, political, economic and social
conditions. High inflation and, with it, high interest rates are common. In
2001, the annual inflation rates were approximately 4% in Mexico, 10% in
Brazil, 8% in Colombia, 12% in Venezuela, 11% in Costa Rica, 5% in Nicaragua
and 9% in Guatemala. The governments in these countries have often responded
to high inflation by imposing price and wage controls or similar measures,
although currently there are no formal soft drink price controls in any of the
countries. These countries have also experienced significant currency
fluctuations. See "Item 1. -- Currency Devaluations and Fluctuations."

We can be adversely impacted by inflation in many ways. In particular,
when wages rise more slowly than prices, inflation can erode consumer
purchasing power and thereby adversely affect sales. Margins are diminished if
product prices fail to keep pace with increases in supply and material costs.
While we have been able in most recent years to increase prices in local
currency terms overall at least as much as inflation, net sales in local
currency terms may nevertheless remain flat or decrease if, among other
things, inflation or high unemployment diminishes consumer purchasing power,
as has been the case recently in Brazil, Colombia and Venezuela. Although we
expect that prices will generally keep pace with inflation in the near term,
sales volume may decline and supply and material costs may rise more rapidly
than prices in the future. See "Item 7. -- Management's Discussion and
Analysis of Financial Condition and Results of Operations." See also the
discussion under "Item 1. -- Currency Devaluations and Fluctuations" regarding
the impact of devaluations on net sales in dollars.

The governments in the countries in which we operate have historically
exercised substantial influence over many aspects of their respective
economies. In recent years, these governments have implemented important
measures

11





to improve their economies. The current political climate in these countries
may create significant uncertainty as to future economic, fiscal and tax
policies.

MEXICO

In July 2000, the "Institutional Revolutionary Party", which has ruled
Mexico since 1929, lost the presidential election and transferred the
presidential powers to President Vicente Fox, the leader of the opposition
party "Partido de Accion Nacional." During 2001, the economy of Mexico was
impacted by the slowdown of the economy in the United States its principal
trade partner, and gross domestic product ("GDP") contracted 0.3%.

BRAZIL

Since January 1999, the Brazilian government decided to modify its
exchange policy, discontinuing its band system and allowing the real to trade
freely. As a result, the real has experienced extreme volatility. Although the
modification of the exchange policy did not significantly exacerbate inflation
during 1999, unemployment has increased and wages in real terms fell. Lower
wages in real terms reduced consumer purchasing power in Brazil, which is
reflected in our lower sales for 2001.

COLOMBIA

Violence resulting from guerilla movements and traffic in narcotics
continued to affect our operation during 2001. Many businesses, including
ours, have been the victims of such violence on occasion. During 2000, the
Colombian government received an assistance package from the United States of
America in order to fight illegal drug traffic under a plan referred to as "Plan
Colombia." This plan, among other things, included programs to assist farmers
and the population in rural areas.

VENEZUELA

The year 2001 was characterized by growing uncertainties in the economic
and political arenas mainly due to a significant decrease in oil export
revenues, especially in the second half of the year. During the second half of
2001, the Central Bank defended the currency using part of the country's
international reserves, due to an increase in capital flight. In February
2002, the Central Bank decided to modify its exchange policy, allowing the
bolivar to trade freely. Since then, the bolivar has experienced extreme
volatility and has depreciated approximately 22% since December 31, 2001. See
"Item 7. -- Management's Discussion and Analysis of Financial Condition and
Results of Operations."

COSTA RICA

Presidential elections were held in February 2002 and a second-round
runoff will be held in April between Mr. Abel Pacheco of the "Partido Unidad
Social Cristiano" and Mr. Rolando Araya of the "Partido de Liberacion
Nacional." The Costa Rican economy had a very limited growth during 2001. The
minimum wage increased in real terms, although unemployment rose. Export
revenues fell 14% during 2001 and the banana and coffee growers have asked the
government for support to restructure part of their debt obligations.

NICARAGUA

President Enrique Bolanos took office in January 2002, and has presented
a package of bills to the National Assembly aiming to improve transparency on
public administration and curb corruption. Since his inauguration, President
Bolanos has received pledges of economic support from the United States and
multilateral organizations including the International Monetary Fund and the
Interamerican Development Bank. During 2001, export revenues fell due to a
decrease in volumes and falling prices.

12





GUATEMALA


Confrontation between the government of President Alfonso Portillo and
the opposition and business groups has continued to offset political stability
and attempts by civic groups to set up a national dialogue have been
unsuccessful. The controversy has centered on the government's management of
the public finances and allegations of corruption in high office. This
situation has created certain divisions within the ruling party as they start
to prepare for the presidential elections in November of 2003. Pursuant to
figures from the Central Bank, the economy grew 2.3% in 2001. A rise in the
VAT rate in August 2001 pushed inflation up to 9% for the year, well above the
4% to 6% target range. Coffee volumes have fallen and the sector has been
adversely affected as international prices have fallen to 30-year lows. Gains
in sugar and banana output have only partly offset the shortfall.


CURRENCY DEVALUATIONS AND FLUCTUATIONS

As a general matter, because our consolidated cash flow from operations
is generated exclusively in the currencies of Mexico, Brazil, Colombia,
Venezuela, Costa Rica, Nicaragua and Guatemala, we are subject to the effects
of fluctuations in the value of these currencies. See "Item 7. -- Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Each of these countries has historically experienced significant currency
devaluations relative to the U.S. dollar. Such devaluations alone have
generally not adversely affected the profitability of our subsidiaries,
measured in local currencies, as substantially all costs of sales and expenses
are incurred in local currencies. However, in general, such devaluations are
accompanied by high inflation and declining purchasing power, which can
adversely affect our sales as well as income. Because our financial statements
are prepared in U.S. dollars, net sales (and other financial statement
accounts, including net income) tend to increase when the rate of inflation in
each country exceeds the rate of devaluation of such country's currency
against the U.S. dollar. Alternatively, net sales (and other financial
statement accounts, including net income) generally are adversely affected if
and to the extent that the rate of devaluation of each country's currency
against the U.S. dollar exceeds the rate of inflation in such country in any
period. When dividends are distributed to us by our foreign subsidiaries, the
payments are converted from local currencies to U.S. dollars, and any future
devaluations of local currencies relative to the U.S. dollar could result in a
loss of dividend income. For a discussion of devaluation rates in Mexico,
Brazil, Colombia, Venezuela, Costa Rica, Nicaragua and Guatemala, see "Item
7.-- Management's Discussion and Analysis of Financial Condition and Results
of Operations--Inflation."

In periods of high inflation and high interest rates, borrowings
denominated in local currencies are more costly, while borrowings indexed to
the U.S. dollar or other foreign currencies place the risk of devaluation on
the borrower. We could be adversely affected by a devaluation of the countries
where we operate.


ITEM 2. PROPERTIES

PROPERTIES

Our properties consist primarily of bottling, distribution and office
facilities in Mexico, Brazil, Colombia, Venezuela, Costa Rica, Nicaragua and
Guatemala. Panamco Mexico, Panamco Brazil, Panamco Colombia, Panamco
Venezuela, Panamco Costa Rica, Panamco Nicaragua and Panamco Guatemala
currently own and operate 9, 4, 18, 13, 1, 1 and 1 bottling plants,
respectively. As of December 31, 2001, the Company owned or leased over 292
warehouse distribution centers in its territories. See "Item 1. -- Business --
Production" for additional information regarding our properties.

As of December 31, 2001, the consolidated net book value of all land,
buildings, machinery and equipment owned by the Company was approximately
$1,043.9 million. These assets were subject to liens and mortgages securing
lines of credit and other indebtedness. The aggregate amount of such
indebtedness outstanding was approximately $11.1 million as of December 31,
2001. The total annual rent paid by the Company in 2001 for its leased
distribution and office facilities was approximately $9.7 million.

13





ITEM 3. LEGAL PROCEEDINGS

NOLAD

Mexico - Antitrust Matters. During May 2000, the Comision Federal de
Competencia (the Mexican Antitrust Commission, the "Commission") pursuant to a
compliant filed by PepsiCo, Inc. and certain of its bottlers in Mexico,
initiated an investigation of the sales practices of Coca-Cola and its
bottlers. In November 2000, in a preliminary decision and in February 2002,
through a final resolution, the Mexican Antitrust Commission held that
Coca-Cola and its bottlers engaged in monopolistic practices with respect to
exclusivity arrangements with certain retailers. The Mexican Antitrust
Commission did not impose any fines, but ordered Coca-Cola and its bottlers,
including certain Mexican subsidiaries of Panamco, to abstain from entering
into any exclusivity arrangement with retailers. Panamco plans to appeal this
decision. Although no assurances can be given, we do not believe that the
outcome of this matter, even if determined against us, will have a material
adverse effect on our financial condition or results of operations. See "Item
7. -- Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Forward-Looking Statements."

Costa Rica - Antitrust Matters. During August 2001, the Comision para
Promover la Competencia (the "Costa Rican Antitrust Commission") pursuant to a
similar complaint filed by PepsiCo, Inc. and its bottler in Costa Rica
initiated an investigation on the sales practices of Coca-Cola and Panamco
Costa Rica for alleged monopolistic practices in the retail distribution
channel including the gain of share of sales through exclusivity arrangements.
The Costa Rican Antitrust Commission is currently investigating the matter. We
believe that the complaint is without merit and we intend to vigorously defend
ourselves in this matter. Although no assurances can be given, we do not
believe that the outcome of this matter, even if determined against us, will
have a material adverse effect on our financial condition or results of
operations. See "Item 7. -- Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Forward-Looking Statements."

VENEZUELA

Tax. In connection with the Venezuela Acquisition, in 1999 we received
notice of certain tax claims asserted by the Venezuelan taxing authorities,
which mostly relate to fiscal periods prior to the Venezuela Acquisition. The
claims are in preliminary stages and currently total to approximately $48.2
million. We have certain rights to indemnification from Venbottling (a company
owned by the Cisneros family) and Coca-Cola for a substantial portion of such
claims. Based on the information currently available, we do not believe that
the ultimate disposition of these cases will have a material adverse affect on
us. See "Item 7. -- Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Forward-Looking Statements."

Distribution. During 1999, a group of independent distributors of Panamco
Venezuela commenced a proceeding to incorporate a union of distributors. As a
result, these distributors may, among other things, individually demand
certain labor and severance rights against Panamco Venezuela.

Since the incorporation process began, Panamco Venezuela has vigorously
opposed its formation through all available legal channels. In February 2000,
Panamco Venezuela presented a nullity recourse against the union incorporation
solicitation, as well as an injunction request before the Venezuelan Supreme
Court. On September 20, 2001, the Venezuelan Supreme Court rendered its
opinion confirming the incorporation of the union, but withheld granting any
specific labor rights to the members of the union other than the right to be
unionized. In order to obtain specific labor rights, the union (or its
members) will have to request and obtain from a court of law a determination
that the members of such union are considered workers pursuant to Venezuelan
labor laws, and thereafter claim against Panamco Venezuela the payment of such
benefits and rights including retroactive payments. To our knowledge, neither
the union nor any of its individual members have initiated any process with
the objective of obtaining such a court decision, although certain members of
the union have threatened such action. We intend to vigorously

14





defend our rights should this action be filed.

In February 2002, the union filed a petition before the Venezuelan
administrative agency in charge of labor matters attempting to obligate
Panamco Venezuela to negotiate a collective bargaining agreement. In response,
Panamco Venezuela filed a nullity recourse before the competent tribunal (the
"Court") along with an injunction requesting the Court to suspend the
collective bargaining negotiations until the nullity recourse is resolved. The
Court granted the injunction in favor of Panamco Venezuela and admitted the
nullity recourse. This injunction and nullity recourse was extended to a
subsequent request by the union to have the Venezuelan administrative agency
mediate the matter.

In March 2002, a subcommittee of the Venezuelan congress conducted a
hearing with representatives of the union as well as representatives of
Panamco Venezuela. The subcommittee is currently reviewing the matter and a
final recommendation from this political body is pending. We strongly believe
that this matter should be resolved by the court system in Venezuela and
intend to vigorously defend any attempts to politicize the matter.

BRAZIL

Panamco Brazil is the subject of administrative proceedings in the
Federal Revenue Office brought by Brazilian tax authorities seeking income
taxes, interest with respect to credits taken in current periods and fines in
an amount equivalent to $3.7 million as of December 31, 2000. Issues raised by
the tax authorities include the deductibility of certain investment losses.
The Brazilian tax authorities prevailed at the initial administrative
proceeding in 1991 and at the appellate administrative level in June 1993.
Panamco Brazil has appealed the decision. In April 1998, the Brazilian
Taxpayers' Council ruled unanimously in favor of Panamco Brazil. The amount in
question represents approximately $1.8 million. This ruling is not subject to
appeal. The Brazilian Taxpayers' Council, however, issued a ruling against a
former subsidiary of Panamco Brazil. The amount in question represents
approximately $1.9 million. Panamco Brazil has appealed this ruling. See Note
15 of "Notes to Consolidated Financial Statements."

COLOMBIA

In July 2001, a labor union and several individuals from the Republic of
Colombia filed a lawsuit in the U.S. District Court for the Southern District
of Florida against us (and certain of our subsidiaries) and Coca-Cola (and
certain of its subsidiaries). In the complaint, the plaintiffs alleged that we
engaged in wrongful acts against the labor union and its members in Colombia,
including kidnapping, torture, death threats and intimidation. The complaint
alleges claims under the Alien Tort Claims Act, the Torture Victim Protection
Act, RICO and state tort law and seeks injunctive and declaratory relief and
damages of more than $500 million, including treble and punitive damages and
the cost of the suit, including attorney fees. We have filed a motion to
dismiss the complaint for lack of subject matter and personal jurisdiction. A
ruling on our motion to dismiss the lawsuit is expected in the second quarter
of 2002. We believe this lawsuit is without merit and intend to vigorously
defend ourselves in this matter.

Other legal proceedings are pending against or involve the Company and
its subsidiaries, which are incidental to the conduct of their businesses. We
believe that the ultimate disposition of such other proceedings will not have
a material adverse effect on our consolidated financial condition.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of stockholders, through the
solicitation of proxies or otherwise, during the fourth quarter of fiscal year
2001.

15





PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS
MATTERS

NATURE OF TRADING MARKET

As of March 15, 2002, we had approximately 1,368 holders of record of an
aggregate 112,901,012 shares of Class A Common Stock outstanding. As of
March 15, 2002, there were an estimated 1,111 holders of record of the Class B
Common Stock. We estimate that there are more than 9,000 beneficial
shareholders (as opposed to holders of record) of the Company's stock. As of
March 15, 2002, to our knowledge approximately 91% of the total outstanding
Common Stock was held of record by persons in the United States.

The Class A Common Stock has been listed and traded on the NYSE under the
symbol "PB" since September 21, 1993. The following table sets forth the range
of high and low closing sale prices of the Class A Common Stock as reported on
the NYSE during the periods shown:

High Low

2002:
First Quarter (through March 15) $17.96 $14.60

2001:
First Quarter $18.95 $13.56
Second Quarter $21.17 $17.62
Third Quarter $20.67 $16.52
Fourth Quarter $16.50 $13.95

2000:
First Quarter $20.50 $16.06
Second Quarter $17.69 $14.94
Third Quarter $20.13 $15.06
Fourth Quarter $17.50 $13.14

On March 15, 2002, the closing sale price of the Class A Common Stock on
the NYSE was $17.45 per share.

We declared quarterly cash dividends of $0.06 per share of common stock
during each of the years ended December 31, 2001 and 2000.

16





Certain Restrictions on Transfer. Our Articles of Incorporation prohibit
the transfer of shares of Class A Common Stock if the proposed transferee would
become the beneficial owner of 10% or more of the Class A Common Stock, unless
such transfer is approved by the Board of Directors or the holders of at least
80% of the shares entitled to vote. Such restriction also applies to any
transfer of shares of Class B Common Stock, which are then converted into Class
A Common Stock.

Our Articles of Incorporation also provide that shares of Class B Common
Stock automatically convert into a like number of shares of Class A Common Stock
if transferred to any person who is not a Qualifying Transferee, or an
Additional Qualifying Transferee, as defined therein.

We are registered with the Panamanian National Securities Commission and
are subject to a Panamanian statute, which prohibits acquisitions of 5% or more
of the outstanding voting securities of a Panama corporation without Board of
Directors' review or shareholder approval.

EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

None of the countries in which we operate currently restricts the
remittance of dividends paid by subsidiaries to us, although Brazil has laws in
effect that impose limitations on the exchange of local currency for foreign
currency at official rates of exchange. Panama does not restrict the payment of
dividends by us to our shareholders. Mexico, Brazil, Colombia, Venezuela, Costa
Rica, Nicaragua and Guatemala have imposed more restrictive exchange controls in
the past, and no assurance can be given that more restrictive exchange control
policies, which could affect the ability of the subsidiaries to pay dividends to
Panamco, will not be imposed in the future. The payment of dividends by such
subsidiaries is also in certain instances subject to statutory restrictions and
is contingent upon the earnings and cash flow of and permitted borrowings by
such subsidiaries. Payment of dividends by majority-owned subsidiaries
necessitates pro rata dividends to minority shareholders.

The Mexican Government has not restricted the conversion of the peso into
other currencies to pay dividends except during brief periods. However, other
types of transactions have been subject to exchange controls and less favorable
official rates of exchange as recently as 1991.

Brazil currently restricts the ability of nationals and foreigners to
convert the local currency into dollars or other currencies other than in
connection with certain authorized transactions, which include, among others,
payment of dividends in compliance with foreign investment registration
regulations. In Brazil, all foreign investments must be registered with the
Central Bank, which issues a certificate of registration of the foreign currency
value of such investment. Without such registration, no remittances of dividends
or profits may be made abroad, nor may any part of the original investment be
repatriated in foreign currency. The Central Bank has issued certificates to the
Company and its subsidiaries with respect to its investment in Panamco Brazil.
We must obtain an amendment to our Certificate of Registration from the Central
Bank upon any change in our investment in Brazil.

In Colombia, there are no restrictions on the remittance of profits to
foreign investors as long as the investment is registered with the Colombian
Central Bank and the proper tax has been withheld. The Central Bank has
registered the Company as a foreign investor in each of the directly owned
Colombian subsidiaries, and these registrations allow Panamco to remit all
dividends received from its Colombian subsidiaries, subject to payment of
applicable taxes. However, under current Colombian law, whenever foreign reserve
levels fall below the equivalent of three months of imports, repatriation and
remittance rights may be temporarily modified.

In April 1994, the Venezuelan government imposed controls on foreign
exchange transactions. These controls were lifted in April 1996; however, there
can be no assurance that such controls or regulations will not be reimposed.

Since 1996, no substantial restrictions on the foreign exchange system
remain in force in Nicaragua. Although the 1991 Foreign Investment Law, which
was created to guarantee foreign investors the right to remit 100% of profits
through the official exchange market, is still formally in effect, it no longer
has any practical application. Since it is not mandatory, most foreign investors
do not seek registration under the 1991 Foreign Investment Law. Investors,

17





whether registered under the 1991 Foreign Investment Law or not, can freely
repatriate their profits through the banking system. Profit repatriation has not
been a problem in Nicaragua in recent years.

In Guatemala, there are no restrictions on the remittance of profits to
foreign investors. There is no obligation for foreign investors to register
their investments with any governmental office or to solicit any authorization
to participate in local businesses. In February 1998, the Guatemalan Congress
enacted the Foreign Investment Law, which amended or, in some cases, eliminated,
restrictions created in the past that affected foreign investment. Since that
date, the Guatemalan government treats national and foreign investment under the
same rules and conditions. There can be no assurance that prior restrictions
will not be reimposed in the future.

TAXATION

Introduction

The following discussion summarizes the principal U.S. Federal income tax
consequences of acquiring, holding and disposing of the Company's Class A Common
Stock. The following discussion is not intended to be exhaustive and does not
consider the specific circumstances of any owner of Class A Common Stock.

The discussion is based on currently existing provisions of the United
States Internal Revenue Code of 1986, as amended (the "Code"), existing and
proposed Treasury Regulations thereunder, and current administrative rulings and
court decisions, all of which are subject to change (which change could be
retroactive). The discussion is limited to United States Federal income tax
matters and does not address other U.S. Federal taxes (such as estate taxes) or
the state, local or foreign tax aspects of acquiring, holding and disposing of
Class A Common Stock.

The discussion is limited to holders of Class A Common Stock that do not
currently own and have not owned any stock in the Company (or any of its
subsidiaries) other than Class A Common Stock and that hold such shares as a
capital asset (within the meaning of Section 1221 of the Code).

There is no reciprocal tax treaty between Panama and the United States
regarding withholding taxes.

Certain U.S. Federal Income Tax Consequences to U.S. Holders

The following discussion applies to a holder of Class A Common Stock who is
an individual citizen or resident of the United States, a corporation created or
organized in the United States or any other person subject to U.S. Federal
income taxation on its worldwide income and gain ("U.S. Holders").

Distributions by the Company. Distributions by the Company with respect to
Class A Common Stock will be taxable to U.S. Holders as ordinary dividend income
to the extent of the Company's current and accumulated earnings and profits.
Distributions, if any, in excess of the Company's current and accumulated
earnings and profits will constitute a nontaxable return of capital to a U.S.
Holder to the extent of the U.S. Holder's adjusted tax basis in the Class A
Common Stock and will be applied against and reduce the U.S. Holder's tax basis
in such Class A Common Stock. To the extent that such distributions are in
excess of the U.S. Holder's tax basis in its Class A Common Stock, the
distributions will constitute capital gain. Distributions with respect to Class
A Common Stock generally will not be eligible for the dividends-received
deduction.

Foreign Personal Holding Company. The Company and several of its
subsidiaries may be "foreign personal holding companies" ("FPHC"). A foreign
corporation is classified as an FPHC for a taxable year during which at least
60% of its gross income for the taxable year is "FPHC income" and more than 50%
of the voting power or value of all stock in such corporation is owned, directly
or indirectly (including shares owned through attribution), by five or fewer
individuals who are United States persons. FPHC income generally includes
royalties, annuities, proceeds from the sale of stock or securities, gains from
futures transactions in any commodities, rents, income from personal services,
dividends and interest (other than certain dividends and interest paid by a
qualifying related company that is incorporated in the same country as the
recipient corporation). After its initial year as an FPHC, a corporation may
remain an FPHC even if only 50% of its gross income is FPHC income.

18





All United States Holders that are shareholders of an FPHC are required
to include in their taxable income a deemed dividend equal to their share of
the corporation's "undistributed FPHC income." In general, a corporation's
undistributed FPHC income is the corporation's total taxable income (which is
gross income minus allowable deductions such as ordinary and necessary
business expenses), with certain adjustments, less dividends paid by the
corporation. Such a deemed dividend is recognized by all U.S. Holders that are
shareholders of an FPHC with undistributed FPHC income, regardless of their
percentage ownership in the corporation, and regardless of whether they
actually receive a dividend from the FPHC.

Because the Company intends to distribute sufficient dividends and to
cause each of its FPHC subsidiaries to distribute sufficient dividends so that
no FPHC will have undistributed FPHC income, it is not expected that U.S.
Holders will receive deemed dividend income as a result of the FPHC rules.
Nevertheless, if the Company or certain of its FPHC subsidiaries have
undistributed FPHC income, U.S. Holders will recognize deemed dividend income
regardless of whether they receive cash distributions from the Company.

Controlled Foreign Corporation. Panamco and its subsidiaries may be
"controlled foreign corporations" ("CFC"). A corporation is a CFC if more than
50% of the shares of the corporation, by vote or value, are owned, directly or
indirectly (including shares owned through attribution, which requires
treating warrants and securities convertible into shares actually or
constructively owned by a U.S. Holder as exercised or converted), by "10% CFC
Shareholders." The term CFC Shareholder means a U.S. person (including
citizens and residents of the United States, corporations, partnerships,
associations, trusts, and estates created or organized in the United States)
who owns, or is considered as owning through attribution, 10% or more of the
total combined voting power of all classes of stock entitled to vote of such
foreign corporation. Each 10% CFC Shareholder in a CFC is required to include
in its gross income for a taxable year its pro rata share of the CFC's
earnings and profits for that year attributable to certain types of income or
investments. Income recognized by a 10% CFC Shareholder under the CFC rules
would not also be recognized as undistributed FPHC income.

A U.S. Holder will not be a "10% CFC Shareholder" and will not be subject
to the CFC rules unless in the case of the Company the U.S. Holder owns 10% of
the Class B Common Stock or in the case of any CFC Subsidiary of the Company,
at least 10% of the value of the Company's outstanding shares or at least 10%
of the voting stock in one or more of the Company's CFC subsidiaries), in each
case directly or indirectly (including shares owned through attribution).

Passive Foreign Investment Company. A "passive foreign investment
company" ("PFIC") is defined as any foreign corporation at least 75% of whose
consolidated gross income for the taxable year is passive income, or at least
50% of the value of whose consolidated assets is attributable to assets that
produce or are held for the production of passive income. For this purpose,
passive income generally includes dividends, interest, royalties, rents,
annuities and the excess of gains over losses from the disposition of assets
which produce passive income. However, a corporation that is a CFC will not
be treated as a PFIC with respect to a shareholder who is a 10% CFC
shareholder.

Neither Panamco nor any of its subsidiaries has been or is a PFIC,
and the Company intends to conduct its affairs so as to avoid the
classification of the Company and its subsidiaries as PFICs. However, if ever
applied to the Company, the PFIC rules could produce significant adverse tax
consequences for a U.S. Holder, including the imposition of the highest tax
rate on income or gains allocated to prior PFIC years and an interest charge
on U.S. Federal income taxes deemed to have been deferred.

Foreign Tax Credits. Dividends received from the Company generally will
be characterized as passive income, and any U.S. tax imposed on these
dividends cannot be offset by excess foreign tax credits that a U.S. Holder
may have from foreign-source income not qualifying as passive income.

Dispositions of Stock. In general, any gain or loss on the sale or
exchange of Class A Common Stock by a U.S. Holder will be capital gain or loss
and will be long-term capital gain or loss if the U.S. Holder has held the
Class A Common Stock for more than 12 months. For noncorporate U.S. Holders,
long-term capital gain generally will be subject to U.S. Federal income tax at
a maximum rate of 20% if the underlying Class A Common Stock has been held

19





for more than 12 months. There are limits on the deductibility of capital
losses.

Information Reporting and Backup Withholding Requirements with Respect to
U.S. Holders. United States information reporting requirements may apply with
respect to the payment of dividends on the Class A Common Stock. Under current
Regulations, effective as of January 1, 2001, noncorporate U.S. Holders may be
subject to backup withholding at the rate of 31% on dividend payments made
after December 31, 2000 and prior to July 1, 2001 and 30.5% on payments made
after June 30, 2001 when a U.S. Holder (i) fails to furnish or certify a
correct taxpayer identification number to the payor in the manner required,
(ii) is notified by the IRS that it has failed to report payments of interest
or dividends properly or (iii) fails, under certain circumstances, to certify
that it has not been notified by the Internal Revenue Service that it is
subject to backup withholding for failure to report interest and dividend
payments.

Form 5471 Reporting Requirements. U.S. Holders may be required to file
IRS Form 5471 under certain circumstances. A United States person required to
file a Form 5471 to report its ownership of Class A Common Stock may also be
required to file one or more Forms 5471 for various subsidiaries of the
Company. As long as the reporting requirements above have been met, no U.S.
Income Withholding Tax is required on dividends paid.

Failure to provide the information required by Form 5471 may result in
substantial civil and criminal penalties. Each prospective shareholder should
consult its own tax advisor with respect to the specific requirements for
filing Forms 5471.

Certain U.S. Federal Income Tax Consequences to Non-U.S. Holders

The following discussion summarizes the U.S. Federal income tax
consequences of acquiring, holding and disposing of Class A Common Stock by a
holder of Class A Common Stock that is not a U.S. Holder (a "Foreign Holder"),
is not engaged in the conduct of a trade or business in the United States and
is not present in the United States for 183 days or more during the taxable
year.

Distributions. Distributions by the Company to a Foreign Holder would be
subject to withholding of U.S. Federal income tax only if 25% or more of the
gross income of the Company (from all sources for the three-year period ending
with the close of the taxable year preceding the declaration of the dividend)
was effectively connected with the conduct of a trade or business in the
United States by the Company. The Company anticipates that it will recognize
income that is effectively connected with the conduct of a trade or business
in the United States. However, if the Company is subject to a branch profits
tax on the income effectively connected with the conduct of a trade or
business in the United States, dividends paid by the Company would not be
subject to a second-level withholding of U.S. Federal income tax as mentioned
above. As a Panamanian corporation not entitled to treaty benefits, the
Company would be subject to the branch profits tax. Therefore, there should be
no withholding on distributions to foreign shareholders.

Dispositions of Shares. A Foreign Holder generally will not be subject to
United States Federal income or withholding tax with respect to a gain
recognized on the disposition of Class A Common Stock.

Information Reporting and Backup Withholding Requirements with Respect to
Foreign Holders. Foreign Holders may be required to comply with certification
and identification procedures to prove their exemption from information
reporting and backup withholding requirements. Any amounts withheld under the
backup withholding rules from a payment to a Foreign Holder will be allowed as
a refund or a credit against such Foreign Holder's United States Federal
income tax, provided that the required information is furnished to the IRS. As
long as the reporting requirements above have been met, no U.S. Income
Withholding Tax is required on dividends paid.

Certain Panamanian Taxation Matters

The principal Panamanian tax consequences of ownership of Shares are as
follows:

20




General. Panama's income tax is exclusively territorial. Only income
actually earned from sources within Panama is subject to taxation. Income earned
by Panamanian corporations from offshore operations is not taxable in Panama.
The territorial principle of taxation has been in force throughout the history
of the country and is supported by legislation, administrative regulations and
court decisions.

The Company is not subject to taxes in Panama because almost all of its
income arises from the activities of its subsidiaries, which are conducted
entirely offshore from Panama. This is the case even though the Company
maintains its registered office and permanently employs administrative personnel
in Panama.

Taxation of Capital Gains. There are no taxes on capital gains realized by
an individual or corporation regardless of its nationality or residency on the
sale or other disposition of Shares on the basis of the already mentioned
principles of territorial taxation, inasmuch as the value of such Shares is
ultimately determined upon assets and activities which are held or conducted
almost entirely outside of Panama.

Taxation of Distributions. Dividends and similar distributions paid by the
Company with respect to Shares are also exempted from dividend taxes, otherwise
payable by withholding at source on such income, under the aforementioned
territorial principles of taxation since Panamanian dividend taxes do not arise
on dividends and similar distributions of non-Panamanian source income or on
income which is exempt from Panama's income tax.

The preceding summary of certain Panamanian tax matters is based upon the
tax laws of Panama and regulations thereunder currently in effect and is subject
to any subsequent change in Panamanian laws and regulations which may come into
effect.


ITEM 6. SELECTED FINANCIAL DATA

SELECTED CONSOLIDATED FINANCIAL DATA (1)
(Table stated in thousands, except per share amounts)

The following table sets forth selected consolidated financial and
operating data for the Company. The selected financial data have been derived
from the consolidated financial statements of the Company. The audited
consolidated financial statements of the Company for the three years ended
December 31, 2001, are included elsewhere herein and have been audited by Arthur
Andersen LLP, independent certified public accountants, whose audit report is
also included herein. All of the consolidated financial statements referred to
above have been prepared in accordance with U.S. generally accepted accounting
principles ("GAAP") and are stated in U.S. dollars. The selected consolidated
financial and operating data should be read in conjunction with "Item 7. --
Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and notes thereto included
elsewhere herein.



Year Ended December 31, (1)
-------------------------------------------------------------------------------
2001 2000 1999 1998 (8) 1997 (7)
---- ---- ---- ------- -------

STATEMENT OF OPERATIONS DATA:
Net sales.................................. $ 2,650,872 $ 2,599,411 $ 2,415,817 $ 2,773,276 $ 2,510,210
Cost of sales, excluding depreciation and
amortization............................. 1,296,307 1,243,485 1,191,883 1,425,246 1,327,443
----------- ----------- ----------- ----------- -----------
Gross profit.......................... 1,354,565 1,355,926 1,223,934 1,348,030 1,182,767
Operating expenses:
Selling and distribution................. 629,387 636,739 572,038 657,138 563,917
General and administrative............... 204,897 244,551 251,450 222,327 193,437
Depreciation and amortization (2)(4)..... 210,667 274,046 214,539 253,112 159,371
Amortization of goodwill................. 26,416 35,819 36,284 35,739 20,121
Facilities reorganization charges (9).... - 503,659 35,172 - -
----------- ----------- ----------- --------- ---------
Total operating expenses.............. 1,071,367 1,694,814 1,109,483 1,168,316 936,846
----------- ----------- ----------- --------- ---------
Operating income (loss).................... 283,198 (338,888) 114,451 179,714 245,921


21







YEAR ENDED DECEMBER 31, (1)
-----------------------------------------------------------------------------
2001 2000 1999 1998 (8) 1997 (7)
---- ---- ---- ------- -------


Interest income ........................... 21,341 31,933 28,962 12,817 22,006
Interest expense........................... (119,390) (142,299) (129,072) (98,152) (60,889)
Other income (expense), net (3)............ (10,891) (31,662) (39,296) 22,136 44,033
Nonrecurring income, net (4)............... - - - 60,486 -
---------- ----------- ----------- ---------- -------------
Income (loss) before income taxes.......... 174,258 (480,916) (24,955) 177,001 251,071
Provision for income taxes (4)............. 50,369 21,800 31,254 51,374 57,302
---------- ----------- ----------- ---------- -------------
Income (loss) before minority interest..... 123,889 (502,716) (56,209) 125,627 193,769
Minority interest in earnings of subsidiaries 5,865 1,944 3,695 5,305 19,934
---------- ----------- ----------- ---------- -------------
Net income (loss)..................... $ 118,024 $ (504,660) $ (59,905) $ 120,322 $ 173,835
========== =========== =========== ========== ===========
Basic earnings (loss) per share (5)........ $ 0.94 $ (3.92) $ (0.46) $ 0.93 $ 1.44
========== =========== =========== ========== ===========
Diluted earnings (loss) per share (5)...... $ 0.93 $ (3.92) $ (0.46) $ 0.92 $ 1.43
========== =========== =========== ========== ===========

OTHER DATA:
Total product unit case volume............. 1,242,200 1,222,500 1,163,117 1,174,035 1,010,960
Dividends per share (5).................... $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.21
Weighted average shares outstanding (basic) (5) 125,559 128,833 129,683 129,538 120,841
Weighted average shares outstanding (diluted)
(5)...................................... 126,655 128,833 129,683 130,792 121,969
Capital expenditures (6)................... $ 83,121 $ 123,897 $ 163,203 $ 302,215 $ 208,669
Cash operating profit (10)................. $ 518,266 $ 386,064 $ 385,544 $ 468,565 $ 425,413

AT DECEMBER 31, (1)
-----------------------------------------------------------------------------
2001 2000 1999 1998 (8) 1997 (7)
---- ---- ---- -------- --------
BALANCE SHEET DATA (END OF PERIOD):
Cash and equivalents....................... $ 133,666 $ 191,773 $ 152,648 $ 131,152 $ 332,995
Property, plant and equipment, net ........ 1,043,870 1,125,719 1,218,383 1,307,590 1,119,515
Total assets .............................. 2,693,026 3,026,321 3,613,122 3,647,690 3,587,069
Total long-term liabilities................ 1,022,375 1,192,981 1,437,834 964,525 897,056
Minority interest.......................... 28,541 27,805 27,974 26,243 26,783
Shareholders' equity....................... 1,072,445 1,167,311 1,751,896 1,978,234 1,937,770

-------------------

(1) The results of the Colombian and Venezuelan subsidiaries for all periods, the Mexican subsidiaries for 1997 and 1998 and
the Brazilian subsidiaries for 1997, have been remeasured in U.S. dollars, the reporting and functional currency, in
accordance with Statement of Financial Accounting Standards No. 52, "Foreign Currency Translation," as it applies to highly
inflationary economies such as those in which the subsidiaries operate. See Note 1 of "Notes to Consolidated Financial
Statements."

(2) Includes breakage of bottles and cases and amortization expense related to new introductions. See Note 1 of "Notes to
Consolidated Financial Statements."

(3) See Note 20 of "Notes to Consolidated Financial Statements."

(4) During 1998, Panamco Brazil conducted a study to evaluate the expected future utilization of returnable product
presentations in the Brazilian market, having observed accelerated demand for, and utilization of, nonreturnable
presentations in the marketplace. The results of this study show that the use of nonreturnable presentations will continue
to increase in the Brazilian market. Therefore, the Company has adjusted the carrying value of bottles and cases to reflect
their estimated use in the marketplace by charging $36.5 million to the 1998 operating results, increasing total
depreciation and amortization expense, and reducing the 1998 tax provision by $12.1 million.

Panamco Brazil reversed a contingency allowance recorded in prior years for excise tax credits taken on purchases of
concentrate between February 1991 and February 1994. The Company had previously accrued this allowance in the full amount of
such credits. Panamco Brazil reversed this allowance in 1998 because during 1998 the Brazilian Supreme Court resolved similar
claims of other bottlers in favor of the bottlers.

The reversal of the excise tax allowance amounted to $60.5 million and was credited to nonrecurring income, in the
statement of operations. Income tax credits recorded in this allowance, amounting to $20.0 million, were also reversed and
charged directly to income in the provision for income taxes in 1998.

(5) Dividends per share reflect the amounts declared and paid during the applicable period. Earnings per share, dividends per
share and shares outstanding for all periods have been adjusted to give effect to the two-for-one stock split effected on
March 31, 1997.

(6) Does not include purchases of bottles and cases.

(7) Includes eight months of net sales and net income of $349.5 million and $49.5 million, respectively, from Panamco
Venezuela, and five months of net sales and net income of $18.6 million and $0.7 million, respectively, from Panamco
Nicaragua.

(8) Includes nine months of net sales and net income of $45.1 million and $2.1 million, respectively, from Panamco Guatemala,
and four months of net sales and net income of $4.2 million and $0.9 million, respectively, from R.O.S.A.

(9) Facilities reorganization charges in 2000 are related to goodwill impairment of $350.0 million in Venezuela, write-off of
obsolete property, plant, equipment, bottles and cases, charges related to plant closings and disposal of property, plant
and equipment, job terminations and severance payments, and nonrecurring charges related to legal contingencies. Facilities
reorganization charges in 1999 are related to job terminations and severance payments and write-off of obsolete property,
plant, and equipment. See Note 2 of "Notes to Consolidated Financial Statements."

(10) Cash operating profit ("COP") means operating income plus depreciation, amortization, including amortization of goodwill,
and noncash facilities reorganization charges.


22



ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS


GENERAL

The following discussion addresses the financial condition and results of
operations of Panamco and its consolidated subsidiaries. This discussion
should be read in conjunction with our audited consolidated financial
statements, including the notes to the consolidated financial statements (the
"Financial Statements"), as of December 31, 2001 and 2000 and for each of the
three years in the period ended December 31, 2001 and the notes thereto
included elsewhere herein.

In 1998, the "Panamco Central America" group was created, which consists
of Panamco Costa Rica, Panamco Nicaragua and Panamco Guatemala. Prior to the
second quarter of 2001, the financial condition and results of operations of
these three companies were previously reported together in the financial
statements entitled Panamco Central America. In February 1999, the North Latin
American Division ("NOLAD") was created, which consists of Panamco Mexico and
Panamco Central America. The results of operations of Panamco Mexico and
Panamco Central America are reported together as Panamco NOLAD.

Unit case means 192 ounces of finished beverage product (24 eight-ounce
servings). Average sales prices per unit case means net sales in U.S. dollars
for the period divided by the number of unit cases sold during the same
period. Cash operating profit means operating income plus depreciation,
amortization, including amortization of goodwill, and noncash facilities
reorganization charges.


CRITICAL ACCOUNTING POLICIES

We have identified the following critical accounting policies that
underlie the Financial Statements. These critical accounting policies and how
we have applied them in the preparation of the Financial Statements are
discussed in Note 1 of "Notes to Consolidated Financial Statements."


ACCOUNTING POLICY
-------------------------------------------------------------

Basis for Translation
Property, Plant and Equipment
Bottles and Cases
Impairment
Franchisor Incentives
Derivative Instruments


INFLATION

EFFECT OF INFLATION ON FINANCIAL INFORMATION

Our net sales, and almost all operating costs, in each of Mexico, Brazil,
Colombia, Venezuela, Costa Rica, Nicaragua and Guatemala, are denominated in
the currency of such country. In accordance with Statement of Financial
Accounting Standards No. 52, "Foreign Currency Translation" ("SFAS 52"), the
financial statements of our subsidiaries are remeasured or translated into
U.S. dollars for purposes of the preparation of the consolidated financial
statements. See Note 1 of "Notes to Consolidated Financial Statements."
Borrowings and purchases of machinery and equipment are often made in U.S.
dollars. During any period when the rate of inflation in a particular country
exceeds the rate of devaluation of the local currency against the U.S. dollar,
all amounts recorded in the statement of operations tend to be higher when
translated into U.S. dollars than would be the case in the absence of such an
excess. Conversely, if devaluation exceeds inflation, amounts recorded in the
statement of operations tend to be lower when translated into U.S. dollars.

23





The following table compares the rate of inflation, as measured by
certain national consumer price indices in the seven countries, with the rate
of devaluation (revaluation) for the periods shown:

Year Ended December 31, (1)
-----------------------------
2001 2000 1999
-------- ------- --------
Mexico
Inflation..................................... 4% 9% 12%
Currency devaluation (revaluation) ........... (5%) 1% (4%)

Brazil
Inflation..................................... 10% 10% 8%
Currency devaluation.......................... 19% 9% 48%

Colombia
Inflation..................................... 8% 9% 10%
Currency devaluation.......................... 3% 19% 22%

Venezuela
Inflation..................................... 12% 12% 20%
Currency devaluation.......................... 8% 9% 15%

Costa Rica
Inflation..................................... 11% 10% 10%
Currency devaluation.......................... 7% 7% 10%

Nicaragua
Inflation..................................... 5% 10% 7%
Currency devaluation.......................... 6% 6% 10%

Guatemala
Inflation..................................... 9% 5% 5%
Currency devaluation.......................... 4% (1%) 15%
___________________

(1) Inflation figures are based on the applicable Consumer Price Index
obtained from official local sources from each respective country and
currency devaluation (revaluation) figures are based on official U.S.
dollar exchange rates at year-end.

The level of inflation has a direct impact on the method used to
translate the financial statements from the local currency to the reporting
currency. SFAS 52 provides that, in a highly inflationary economy (defined as
having cumulative inflation for the three-year period preceding the balance
sheet date of approximately 100% or more), the effect of exchange rate
fluctuations on the translation is included in the determination of net income
for the period and is reflected as gains or losses in the related statement of
operations accounts. Such gains and losses do not affect the statement of
operations of companies operating in economies, which are not considered highly
inflationary but are instead included as part of accumulated other
comprehensive income (loss), a component of shareholders' equity.

Mexico, Brazil, Costa Rica, Nicaragua and Guatemala are not classified as
highly inflationary economies and the functional currencies for financial
reporting purposes under accounting principles generally accepted in the
United States are the Mexican peso, Brazilian real, Costa Rican colon,
Nicaraguan cordoba and Guatemalan quetzal, respectively.

Colombia and Venezuela were classified as highly inflationary economies
and accordingly their financial statements have been remeasured into U.S.
dollars in accordance with SFAS 52.

Effective December 31, 2001, we discontinued classifying Colombia as a
highly inflationary economy, and, accordingly, the functional currency of our
Colombian operations was changed from the U.S. dollar to the Colombian peso.
The effect of the change represented a decrease in both the deferred income
tax balance and shareholders' equity of $30.1 million in 2001. As a result of
this change and going forward, the financial statements of our Colombian
subsidiary will be translated from the Colombian peso to the U.S. dollar,
whereby translation adjustments (gains or losses) will not be reported in the
statement of operations but will be reported separately and included in

24





accumulated other comprehensive income (loss), which is a component of
shareholders' equity.

EFFECT OF INFLATION AND CHANGING PRICES ON OPERATIONS

In addition to high inflation, our operations are carried out in
countries which in the past experienced, and may in the future experience,
government price controls. While price controls have been a limiting factor,
we have been generally effective in the recent past in increasing prices in
local currency terms at least at the rate of inflation. All of our costs are
affected by inflation rates in the countries in which we operate. In general,
transactions in these countries are effectively tied to inflation either
through pricing, contract indexing, statute or informal practice.

Although currently there are no formal price controls on soft drinks in
our franchise territories, price and wage controls remain in effect in Mexico
and Brazil for certain other products and services, and price increases for
soft drinks in Mexico and Colombia are subject to the informal approval of the
respective governments.

Our sales also have been, and may in the future be, adversely affected
when wages rise more slowly than the rate of inflation, resulting in a loss of
consumer purchasing power. This has been the case in Brazil, Venezuela and
Colombia recently.

In Mexico, Brazil, Colombia, Venezuela, Costa Rica and Nicaragua, income
taxes are indexed to reflect the effects of inflation; however, the effects of
inflation are calculated differently for purposes of local taxation and
financial reporting.


SEASONALITY

All product sales are generally higher during the December holidays and
during the hottest and driest periods (with rainfall varying from year to
year). For this reason, we typically experience our best results of operations
in the second and fourth quarters. However, the seasonality effect is tempered
in our case because of the difference in the timing of the summer months in
the countries in which we operate. In Brazil, summer occurs during November,
December and January, while summer occurs in Mexico, Colombia, Venezuela,
Costa Rica, Guatemala and Nicaragua during the months of June, July and
August.


FORWARD-LOOKING STATEMENTS

The nature of our operations and the environment in which we operate
subject us to changing economic, competitive, regulatory and technological
conditions, risks and uncertainties. In connection with the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995, we note
the following facts that, among others, could cause future results to differ
materially from the forward-looking statements, expectations and assumptions
expressed or implied in this document:

Forward-looking statements, contained in this document include the amount
of future capital expenditures and the possible uses of proceeds from any
future borrowings. The words believes, intends, expects, anticipates,
projects, estimates, predicts, and similar expressions are also intended to
identify forward-looking statements. Such statements, estimates, and
projections reflect various assumptions by our management, concerning
anticipated results and are subject to significant business, economic and
competitive uncertainties and contingencies, many of which are beyond

25





our control. Factors that could cause results to differ include, but are not
limited to, changes in the soft drink business environment (including actions
of competitors and changes in consumer preference), changes in governmental
laws and regulations (including income and excise taxes), market demand for
new and existing products, raw material prices and devaluation of local
currencies against the U.S. dollar. A discussion of certain of the factors
that could cause actual results to differ is set forth in our Registration
Statement on Form S-8, dated July 23, 2001 (File no. 333-65652). These and
other factors are also discussed in this document, particularly in "Item 1. --
Business" and "Item 7. -- Management's Discussion and Analysis of Financial
Condition and Results of Operations." We cannot assure you that such
statements, estimates and projections will be realized. The forecasts and
actual results will likely vary and those variations may be material. We make
no representation or warranty as to the accuracy or completeness of such
statements, estimates or projections contained in this document or that any
forecast contained herein will be achieved. We caution readers not to place
undue reliance on these forward-looking statements. These statements speak
only as of their dates, and we undertake no obligations to update or revise
any of them, whether as a result of new information, future events or
otherwise.


MINORITY INTERESTS IN RESULTS OF OPERATIONS

We conduct our operations through tiers of subsidiaries in which, in some
cases, minority shareholders hold interests. See "Item 1. -- Business --
Corporate Structure -- Holding Company Structure" for further discussion on
ownership interest in our subsidiaries.

Because we have varying percentage ownership interests in our
approximately 60 consolidated subsidiaries, the amount of the minority
interest in income or loss before minority interest during a period depends
upon the revenues and expenses of each of the consolidated subsidiaries and
the percentage of each of such subsidiary's capital stock owned by minority
shareholders during that period.


CERTAIN SUBSIDIARY FINANCIAL INFORMATION

Income statement and balance sheet data for Panamco NOLAD (Panamco Mexico
and Panamco Central America, which consists of Costa Rica, Nicaragua and
Guatemala), Panamco Brazil, Panamco Colombia, and Panamco Venezuela, are
presented on the following pages. The data presented as of and for each of the
three years in the period ended December 31, 2001 have been derived from the
audited combined financial statements of Panamco Mexico and Panamco Central
America (Costa Rica, Nicaragua and Guatemala), the audited consolidated
financial statements of Panamco Colombia and Panamco Venezuela and the audited
combined financial statements of Panamco Brazil, as the case may be, which
financial statements are not included herein. As set forth in such income
statement and balance sheet data, minority interest in the Panamco Mexico
(part of Panamco NOLAD), Panamco Brazil and Panamco Colombia subsidiaries and
net income attributable to the Panamco Mexico, Panamco Brazil and Panamco
Colombia holding companies give effect to minority shareholdings below the
country holding company level. Minority interest in the Panamco Mexico,
Panamco Brazil and Panamco Colombia holding companies refers to the aggregate
minority interest in the net income of the respective country level holding
company. Net income attributable to Panamco gives effect to the deduction from
net income of the minority interests at both the country level holding company
and the subsidiary levels.

26





PANAMCO NOLAD
(Stated in thousands of U.S. dollars)




YEAR ENDED DECEMBER 31,
---------------------------------------------
2001 2000 1999
---------- ---------- ----------

STATEMENTS OF OPERATIONS DATA:
Net sales $1,289,004 $1,200,350 $1,006,886
Cost of sales, excluding depreciation and amortization 568,515 534,207 475,287
Operating expenses, including depreciation
and amortization of goodwill 493,517 486,403 371,379
Facilities reorganization charges 1,144 37,052 -
---------- ---------- ----------
Operating income 225,828 142,688 160,220
Interest expense, net (12,165) (13,090) (13,692)
Other income (expense), net (694) (1,628) 1,897
---------- ---------- ----------
Income before provision for income taxes 212,969 127,970 148,425
Provision for income taxes 66,310 45,148 47,317
---------- ---------- ----------
Income before minority interest 146,659 82,822 101,108
Minority interest in Panamco Mexico subsidiaries 4,605 2,528 3,288
---------- ---------- ----------
Net income attributable to Panamco NOLAD 142,054 80,294 97,820
Minority interest in Panamco Mexico
holding company 2,139 1,202 1,556
---------- ---------- ----------
Net income attributable to Panamco $ 139,915 $ 79,092 $ 96,264
========== ========== ==========

UNIT CASE SALES DATA (IN THOUSANDS):
Soft drinks 351,528 355,939 339,632
Water 170,994 166,897 140,069
Other products 5,046 3,277 2,842

OTHER DATA:
Depreciation and amortization $ 79,634 $ 88,988 $ 58,346
Capital expenditures $ 59,044 $ 74,659 $ 79,058
Cash operating profit $ 305,462 $ 244,453 $ 218,566


AT DECEMBER 31,
---------------------------------------------
2001 2000 1999
---------- ---------- ----------
BALANCE SHEET DATA:
Cash and equivalents $ 60,305 $ 74,136 $ 47,433
Property, plant and equipment, net 439,119 425,421 404,334
Total assets 881,118 809,909 753,614
Total debt 249,577 134,220 123,717
Total liabilities 521,895 371,703 310,949
Minority interest in Panamco Mexico subsidiaries 11,519 6,682 5,217
Shareholders' equity 347,704 431,524 437,448



(Continued)


27




PANAMCO NOLAD
(STATED IN THOUSANDS OF U.S. DOLLARS)

(CONTINUED)




YEAR ENDED DECEMBER 31,
-------------------------------------------
2001 2000 1999
---------- -------- --------

STATEMENTS OF OPERATIONS DATA:
Net sales:
Mexico $1,054,074 $974,846 $794,812
Central America 234,930 225,504 212,074

UNIT CASE SALES DATA (IN THOUSANDS):
Mexico:
Soft drinks 280,091 285,771 269,967
Water 167,656 164,187 136,450
Other products 3,473 2,651 2,274

Central America:
Soft drinks 71,437 70,168 69,665
Water 3,338 2,710 3,619
Other products 1,573 626 568




28





PANAMCO BRAZIL
(Stated in thousands of U.S. dollars)




YEAR ENDED DECEMBER 31,
---------------------------------------------
2001 2000 1999
---------- ---------- ----------

STATEMENT OF OPERATIONS DATA:
Net sales $ 419,926 $ 496,488 $ 500,683
Cost of sales, excluding depreciation and amortization 273,877 305,967 305,935
Operating expenses, including depreciation
and amortization of goodwill 134,099 169,711 187,099
Facilities reorganization charges 23,651 5,142
---------- --------- ----------
Operating income (loss) 11,950 (2,841) 2,507
Interest expense, net (7,679) (12,238) (14,743)
Other expense, net (3,282) (16,565) (36,570)
---------- --------- ----------
Income (loss) before benefit for income taxes 989 (31,644) (48,806)
Benefit from income taxes (2,178) (15,020) (31,765)
---------- --------- ----------
Income (loss) before minority interest 3,167 (16,624) (17,041)
Minority interest in Panamco Brazil holding company 15 (202) (299)
---------- --------- ----------
Net income (loss) attributable to Panamco $ 3,152 $ (16,422) $ (16,742)
========== ========= ==========
UNIT CASE SALES DATA (IN THOUSANDS):
Soft drinks 241,825 236,922 235,949
Water 17,353 14,535 12,706
Beer 72,058 67,499 63,278
Other products 451 - -

OTHER DATA:
Depreciation and amortization $ 19,913 $ 30,246 $ 32,763
Capital expenditures $ 5,965 $ 7,596 $ 22,686
Cash operating profit $ 31,863 $ 42,243 $ 35,270



AT DECEMBER 31,
---------------------------------------------
2001 2000 1999
---------- ---------- ----------
BALANCE SHEET DATA:
Cash and equivalents $ 11,838 $ 6,323 $ 8,563
Property, plant and equipment, net 110,474 149,110 195,387
Total assets 352,598 424,806 487,374
Total debt 2,249 58,586 79,279
Total liabilities 99,467 178,547 188,663
Minority interest in Panamco Brazil subsidiaries 2,300 2,711 3,167
Shareholders' equity 250,831 243,548 295,544


29





PANAMCO COLOMBIA
(Stated in thousands of U.S. dollars)




YEAR ENDED DECEMBER 31,
----------------------------------------------
2001 2000 1999
----------- ---------- ----------

STATEMENT OF OPERATIONS DATA:
Net sales $ 384,668 $ 386,720 $ 397,014
Cost of sales, excluding depreciation and amortization 180,638 166,110 175,522
Operating expenses, including depreciation
and amortization of goodwill 180,192 201,040 207,032
Facilities reorganization charges (benefit) (1,000) 40,114 1,370
----------- ---------- ----------
Operating income (loss) 24,838 (20,544) 13,090
Interest expense, net (10,797) (4,486) (6,753)
Other income (expense), net 1,410 (10,852) 2,824
----------- ----------- ----------
Income (loss) before provision (benefit) for income taxes 15,451 (35,882) 9,161
Provision (benefit) for income taxes 4,776 (8,277) 966
----------- ----------- ----------
Income (loss) before minority interest 10,675 (27,605) 8,195

Minority interest in Panamco Colombia
subsidiaries holding company 183 187 107
----------- ----------- ----------
Net income (loss) attributable to Panamco
Colombia holding company 10,492 (27,792) 8,088
Minority interest in Panamco Colombia 205 (764) 223
----------- ----------- ----------
Net income (loss) attributable to Panamco $ 10,287 $ (27,028) $ 7,865
=========== =========== ==========

UNIT CASE SALES DATA (IN THOUSANDS):
Soft drinks 156,217 155,688 153,928
Water 35,167 34,455 37,238
Other 576 - -

OTHER DATA:
Depreciation and amortization $ 56,404 $ 64,597 $ 60,548
Capital expenditures $ 8,274 $ 9,104 $ 28,276
Cash operating profit $ 81,242 $ 56,688 $ 73,638

AT DECEMBER 31,
---------------------------------------------
2001 2000 1999
---------- --------- ---------
BALANCE SHEET DATA:
Cash and equivalents $ 7,207 $ 42,456 $ 7,396
Property, plant and equipment, net 237,050 259,889 292,915
Total assets 484,326 459,409 516,327
Total debt 80,416 53,816 87,145
Total liabilities 186,534 135,249 154,852
Minority interest in Panamco Colombia subsidiaries 1,731 1,668 1,568
Shareholders' equity 296,061 322,492 359,907




30





PANAMCO VENEZUELA
(Stated in thousands of U.S. dollars)




YEAR ENDED DECEMBER 31,
----------------------------------------------
2001 2000 1999
----------- ----------- -----------

STATEMENT OF OPERATIONS DATA:
Net sales $ 557,274 $ 515,853 $ 512,292
Cost of sales, excluding depreciation and amortization 277,746 240,204 236,197
Operating expenses, including depreciation
and amortization of goodwill 246,772 292,239 267,691

Facilities reorganization charges (benefit) (4,515) 49,483 28,660
----------- ---------- ----------

Operating income (loss) 37,271 (66,073) (20,256)
Interest expense, net (17,426) (24,816) (18,028)

Other income (expense), net 6,317 1,002 (3,337)
----------- ---------- ----------
Income (loss) before provision (benefit) for income taxes 26,162 (89,887) (41,621)
Provision (benefit) for income taxes (21,384) (8,173) 8,353
----------- ---------- ----------
Net income (loss) attributable to Panamco $ 47,546 $ (81,714) $ (49,974)
=========== ========== ==========

UNIT CASES SALES DATA (IN MILLIONS):
Soft drinks 156,001 156,540 151,706
Water 24,258 22,559 18,442
Beer 4,035 1,914 499
Other products 6,691 6,275 6,833

OTHER DATA:
Depreciation and amortization $ 61,184 $ 96,804 $ 71,156
Capital expenditures $ 9,808 $ 30,408 $ 33,183
Cash operating profit $ 96,440 $ 53,568 $ 69,800


AT DECEMBER 31,
----------------------------------------------
2001 2000 1999
---------- ---------- -----------
BALANCE SHEET DATA:
Cash and equivalents $ 27,657 $ 21,575 $ 35,872
Property, plant and equipment, net 266,444 305,017 339,417
Total assets 428,717 469,278 566,371
Total debt 58,000 182,137 188,000
Total liabilities 266,020 354,129 364,259
Shareholders' equity 162,697 115,149 202,112



31





2001 COMPARED TO 2000

CONSOLIDATED RESULTS OF OPERATIONS

Net sales increased 2.0% to $2.65 billion in 2001 from $2.60 billion in
2000. Net sales growth was driven by an increase of 1.6% in consolidated unit
case sales volume, to 1,242.2 million unit cases from 1,222.5 million unit
cases in the year 2000, and a 0.4% increase in average dollar prices, to $2.13
per unit case. Soft drink sales volume for the year increased by 0.1%,
reflecting increases of 2.1% in Brazil and 0.3% in Colombia, offset by
decreases of 1.2% in the NOLAD region and 0.3% in Venezuela. Unit case sales
volume of bottled water increased 3.9% to 247.8 million, and beer, sold in
Brazil and Venezuela, increased 9.6% to 76.1 million unit cases. Volume and
net sales growth during the year were positively impacted by Panamco's
continued effort in introducing new products. During the year, we introduced
twelve new products including flavored waters, juice based products and energy
drinks. These products have had the effect of broadening our portfolio to
better meet consumer needs. We have also been active in introducing new
presentations at both ends of the size spectrum. The smaller presentations are
designed to capture consumers for whom the product would otherwise not be
affordable while the larger presentations provide a more attractive
alternative for in-home consumption.

The cost of sales as a percentage of net sales increased to 48.9% in
2001, from 47.8% in 2000, mainly due to an increase in the cost of raw
materials and packaging throughout most operations as well as a change in
product mix towards non-returnables. During the fourth quarter of 2001, the
price of sugar in Mexico increased approximately 12%.

The following comparison of Panamco's 2001 and 2000 consolidated results of
operations, excludes the effect of facilities reorganization charges, asset
write-downs presented as part of depreciation and amortization, and
nonoperating charges during 2000 totaling $494.2 million, net of the related
tax benefit of $46.5 million. See "2000 Compared to 1999 -- Facilities
reorganization charges" for further discussion on Panamco's facilities
reorganization charges.

Operating expenses as a percentage of net sales decreased to 40.4% in
2001 from 44.6% in 2000, mainly as a result of a 5.3% decrease in selling,
general and administrative expenses, the result of the benefits associated
with our reorganization programs, and a 15.0% decrease in depreciation and
amortization, mainly the result of lower property and equipment balances and a
lower goodwill cost basis. See "2000 Compared to 1999 -- Facilities
reorganization charges" for further discussion on Panamco's facilities
reorganization charges.

The two facilities reorganization programs announced in 2000 have
resulted in estimated combined savings of $145 million to date, of which
approximately $100 million was achieved during 2001. Approximately 7,700
employees have been terminated by Panamco as of December 31, 2001 under
these programs. During the fourth quarter of 2001, we reevaluated our original
estimated headcount reduction of approximately 10,000 employees and determined
that the headcount reduction would now approximate 8,200 employees. In the
fourth quarter of 2001, we made the following additional adjustments to the
reorganization programs: (i) we reversed into income $5.5 million of charges
related to the sale of property in Venezuela that we have decided not to sell;
and (ii) we increased the restructuring allowance by $5.5 million related to job
terminations and severance payments primarily at our corporate headquarters in
Miami, Florida.

Operating income increased 44.6% to $283.2 million from $195.9 million in
2000, primarily as a result of the benefits of the reorganization programs
initiated in 2000 and 1999. Cash operating profit increased 9.6% to $520.3
million in 2001 from $474.6 million in 2000. Venezuela and the NOLAD region
reported the highest rate of COP improvement compared to 2000, to 17.1% and
14.1%, respectively. In February 2002, the Venezuelan government abandoned the
trading band for its currency, the Venezuelan bolivar, which had the effect of
quickly depreciating the currency. From January 1, 2002 to March 15, 2002, the
bolivar devalued 22% relative to the U.S. dollar. The devaluaton of the
bolivar is expected to increase the relative price of dollar-denominated raw
materials of Panamco Venezuela and to decrease its U.S. dollar-reported net
sales (and other financial statement accounts, including net income). Unit
case volumes may be adversely affected to the extent of a slowdown in the
Venezuelan economy. Additional effects of the devaluation in Venezuela will
depend on, among other things, the rate of inflation in Venezuela in
comparison to the rate of devaluation. See "Item 1. Business -- Currency
Devaluation and Fluctuations."

Net interest expense decreased to $98.0 million in 2001 from $110.4
million in 2000, due primarily to a 22.6% gross debt reduction to $970.2
million at the end of the year, from $1,253.8 million at the end of 2000.
Total net debt (gross debt minus cash and equivalents) decreased 21.2% to
$836.6 million at December 31, 2001, from $1,062.0 million at December 31,
2000.

Other expense, net decreased 57.6% to $10.9 million in 2001 from $25.7
million in 2000, primarily caused by a $7.9 million decrease in the provision
for contingencies, a $5.7 million increase in gains on sale of property and
equipment and investments, a $1.7 million increase in equity earnings of
unconsolidated companies, and a $0.8 million increase in capital expenditure
incentives from Coca-Cola, offset by a $1.1 million increase in foreign
exchange losses primarily in Brazil due to a 18.7% devaluation of the
Brazilian real during 2001. The decrease in the remaining other expense, net
was primarily offset by a $12.2 million charge, derived from the
reclassification of unrealized losses related to a floating-to-fixed interest
rate swap, from accumulated other comprehensive income to other expense, net.
See Note 11 of "Notes to Consolidated Financial Statements."

The consolidated effective income tax rate decreased to 28.9% from 114.2%
in 2000. The lower effective income tax rate of 28.9% in 2001 was largely
impacted by a benefit for income taxes of $21.4 million in our

32




Venezuelan operations, the result of a $28.7 million reversal of valuation
allowance against tax loss carryforwards. The effective income tax rate of
114.2% in the 2000 period is considered unusual and resulted from the relative
low income during 2000 and non-deductibility of significant expenses such as
amortization of goodwill.

As a result of the foregoing, Panamco recorded net income in 2001 of
$118.0 million, or $0.94 per basic share ($0.93 on a diluted basis), compared
to a net loss of $10.5 million, or $0.08 per share (basic and diluted), during
2000.


2000 COMPARED TO 1999

CONSOLIDATED RESULTS OF OPERATIONS

Net sales increased 7.6% to $2.6 billion in 2000 from $2.4 billion in
1999, mainly due to an increase of 5.1% in consolidated unit case sales
volume. Total unit cases sales increased to 1,222.5 million cases from 1,163.1
million unit cases in the 1999. Soft drink sales volume for the period
increased by 2.7%, reflecting increases of 5.9% in Mexico, 3.2% in Venezuela,
0.7% in the Central American Region, 1.1% in Colombia and 0.4% in Brazil. Unit
case sales volume of bottled water increased 14.4% to 238.4 million, and beer,
sold in Brazil and Venezuela, increased 8.8% to 69.4 million unit cases.

The cost of sales as a percentage of net sales decreased to 47.8% in
2000, from 49.3% in 1999. This decrease resulted primarily from cost savings
in raw materials and packaging in several countries due to improved
procurement contracts.

The following discussion reflects the consolidated results of operations
excluding the recording of facilities reorganization charges, asset
write-downs presented as part of depreciation, and nonoperating charges
totaling $494.2 million ($27.7 million in 1999), net of the related tax
benefit of $46.5 million ($11.9 million in 1999).

Operating expenses as a percentage of net sales increased slightly to
44.6% in 2000 from 44.5% in 1999, mainly as a result of the corporate office
move to Miami and a charge of $4.0 million related to senior management
changes.

Operating income increased 30.9% to $195.9 million from $149.6 million in
1999, primarily as a result of the initial benefits of the reorganization
program. Cash operating profit increased 18.5% to $474.6 million in 2000 from
$400.4 million in 1999.

Net interest expense increased to $110.4 million in 2000 from $100.1
million in 1999, due primarily to an increase in the average variable London
Inter-Bank Offered Rate ("LIBOR") interest rate. Total net debt decreased to
$1,062.0 million at December 31, 2000 from $1,195.5 million at December 31,
1999.

Other expense, net decreased to $25.7 million in 2000 from $34.9 million
in 1999, primarily caused by a $22.5 decrease in foreign exchange losses in
Brazil due to a 48.0% devaluation of the Brazilian real during 1999,

33





partially offset by a loss in sale of investments of $4.8 million, a $4.7
million decrease in operating income from non-bottling subsidiaries, and a
$3.2 million decrease in capital expenditure incentives from Coca-Cola.

The consolidated effective income tax rate decreased to 114.2% in 2000
from 295.2% in 1999, as a result of the effect of the asset tax (minimum tax)
in Venezuela and our decision to establish a valuation allowance on benefits
of tax loss carry-forwards from prior years in Venezuela because of the
uncertainty that we would have sufficient taxable income in the near term to
offset against such benefits in 1999.

As a result of the foregoing, Panamco had a net loss in 2000 of $10.5
million, or $0.08 per share (basic and diluted), compared to a net loss of
$32.2 million, or $0.25 per share (basic and diluted), during 1999.

Facilities reorganization charges

During the first quarter of 2000, Panamco began a company-wide reorganization
program designed to improve productivity and strengthen the Company's
competitive position in the beverage industry. The program includes
productivity initiatives to streamline Panamco's manufacturing infrastructure,
consolidation of distribution centers and warehouses, and the termination of
approximately 10,000 jobs across all levels of the Company.

During the fourth quarter of 2000, Panamco performed an analysis of the
Company's growth opportunities, cost structure and asset valuation. This
resulted in several new steps to further position the Company for improved
financial performance and future growth. These steps include additional
restructuring of the distribution system in Brazil and Venezuela, plant
closings and related disposal of property, plant and equipment, write-down of
goodwill in the Venezuelan operating unit, write-off of obsolete property and
equipment, bottles and cases, and asset write-downs related to coolers.

During the year ended December 31, 2000, Panamco recorded charges of $540.7
million, which was comprised of $503.6 million of facilities reorganization
charges, $31.1 million of asset write-downs presented as part of depreciation
and amortization expenses, and $6.0 million of charges related to the disposal
of nonoperating assets presented in other income (expense). The following is a
detail of the aforementioned items:

I. Facilities reorganization charges of $503.6 million consist of:

(1) Restructuring charges totaling $111.5 million consist of:

o Cash restructuring charges totaling approximately $86.7
million, which include $77.3 million related to job
terminations and $9.4 million related to the restructuring of
our distribution system in Brazil and Venezuela; and
o Noncash restructuring charges totaling approximately $24.8
million, which result from plant closings and the related
disposal of property, plant and equipment.

(2) Asset write-offs totaling $383.5 million consist of:

o $350 million write-down of goodwill reflecting the recognition
of impairment of the cost in excess of net assets acquired in
the Venezuelan operating unit;
o $23.8 million of obsolete property, plant and equipment in all
operating units;
o $7.8 million of obsolete bottles and cases, mainly in the
Venezuelan unit's water jug business; and
o $1.9 million of cash charges related to the disposal of
property, plant and equipment.

(3) Nonrecurring charges totaling $8.6 million related to legal
contingencies mostly pertaining to tax matters.

II. Asset write-downs totaling $31.1 million presented as part of depreciation
and amortization expenses consist of:

o $11.0 million from an increase in provision related to changing the
useful lives of coolers; and
o $20.1 million resulting from the write-down of bottles and cases due
to loss in market value.

34





III. Nonoperating asset charges totaling $6.0 million related to the disposal
of nonoperating assets, including the sale of affiliated companies and
land in some of the operating units.

As a result of the above, Panamco's income for the year 2000 was impacted
by facilities reorganization charges, asset write-downs and nonoperating
charges totaling $494.2 million, net of the related tax benefit of
approximately $46.5 million, compared to facilities reorganization charges
totaling $27.7 million, net of the related tax benefit of $11.9 million in
1999.

The following table shows a summary of the net charges and benefits
recorded in the consolidated statements of operations for the year ended
December 31, 2000:






2000 1999
------------------------------------------ --------------
FOURTH FIRST
TOTAL QUARTER QUARTER TOTAL
------------------------------------------ --------------


Depreciation and amortization, excluding goodwill:
Asset write-downs $ 31,079 $ 31,079 $ - $ -
-------- -------- -------- --------

Facilities reorganization charges:
Cash 88,572 48,226 40,346 14,902
Noncash 415,087 375,555 39,532 20,270
-------- -------- -------- --------
503,659 423,781 79,878 35,172
-------- -------- -------- --------
Other income (expense), net:
Nonoperating charges 5,976 590 5,386 4,391
-------- -------- -------- --------
Gross charges 540,714 455,450 85,264 39,563
Tax benefit (46,516) (23,111) (23,405) (11,869)
-------- -------- -------- --------
Net charges $494,198 $432,339 $ 61,859 $ 27,694
======== ======== ======== ========




CAPITAL EXPENDITURES

Total capital expenditures were $83.1 million, $123.9 million and $163.2
million in 2001, 2000 and 1999, respectively. During 2001, approximately 71%,
7%, 10% and 12% of such expenditures were made by Panamco NOLAD, Panamco
Brazil, Panamco Colombia and Panamco Venezuela, respectively. Total purchases
for bottles and cases were $47.8 million, $73.7 million and $74.6 million in
2001, 2000 and 1999, respectively. During 2001, approximately 42%, 0%, 34% and
24% of such expenditures were made by Panamco NOLAD, Panamco Brazil, Panamco
Colombia and Panamco Venezuela, respectively.

Our Board of Directors has established various criteria for the
allocation of capital resources. The factors that management reviews in
proposing three-year capital budgets include anticipated internal rates of
return, pay-back periods and EVA(R) ("Economic Value Added") analysis from
various investments, corresponding plans of Coca-Cola and anticipated levels
of earnings and debt in the country in which such expenditures are proposed to
be made. During 2002, we estimate that we will have aggregate capital
expenditures of approximately $98.2 million. Estimates of capital expenditures
are based on our current expectations and are subject to change. Actual costs
may exceed estimates or we may reallocate or alter our capital budget. We
intend to fund our capital expenditure program with cash on hand, consolidated
cash flow from operations and borrowings at the holding and subsidiary level.

Coca-Cola from time to time provides incentives for its bottlers to make
particular types of capital expenditures. During 2001, 2000 and 1999, such
incentives consisted of grants, which are included as other income in "Other
income (expense)" in the consolidated financial statements, and loans included
in the indebtedness referred to above. During the second quarter of 1999,
Coca-Cola changed its cold equipment capital participation program to ensure
that any funds received by us during 1999 and future years will be recognized
as income in installments over a 60-month period. Our ability to include such
amounts as income will also depend on whether we meet certain conditions in
the future. Prior to the change, such amounts were included as income upon
receipt, as no future conditions were required to be met, without regard to
our earnings. See Note 20 of "Notes to Consolidated Financial

35




Statements." Coca-Cola also provides cooperative advertising support to us.


LIQUIDITY AND CAPITAL RESOURCES

Cash flow provided by operations amounted to $357.4 million in 2001, a
$60.0 million increase from 2000. Cash provided by investing activities amounted
to $26.5 million and included the release of investments in bank deposits for
$125.0 million, which guaranteed bank loans obtained by subsidiaries and were
therefore previously classified as noncurrent investments as well as $34.5
million proceeds from the sale of property, plant and equipment. Cash generated
from operations and from investing activities was primarily used to pay down
$145.0 million of our syndicated loan, to prepay $100.0 million of the remaining
outstanding debt with Coca-Cola, to help reduce our Venezuelan and Brazilian
debt, and to repurchase $133.2 million of our shares. Other uses of cash
included capital expenditures, bottling and packaging expenditures and payment
of shareholder dividends. At December 31, 2001, we had consolidated cash and
cash equivalents of $133.7 million, a decrease of 30.3% compared to $191.8
million as of December 31, 2000. At December 31, 2001, we had negative working
capital of $168.9 million, a slight improvement compared to a negative working
capital of $172.3 million as of December 31, 2000. A working capital deficit is
not unusual for us and does not indicate a lack of liquidity. We continue to
maintain adequate current assets to satisfy current liabilities when they are
due and have sufficient liquidity and financial resources to manage our
day-to-day cash needs.

As a holding company, our principal sources of cash are dividends from our
subsidiaries and sales of our securities. The amount of dividends payable by the
subsidiaries to us is subject to general limitations imposed by the corporate
laws of the respective jurisdictions of incorporation of such subsidiaries.
Dividends paid to us and other foreign shareholders by the subsidiaries are
subject to investment registration requirements and withholding taxes.
Withholding tax rates on dividends are 7% in Colombia and 15% in Costa Rica.
There are no withholding taxes on dividends paid by Panamco Brazil to the
Company out of income earned after December 31, 1995, and no withholding taxes
on dividends paid by Panamco Nicaragua and Panamco Guatemala. Effective January
1, 2001, Venezuela imposed a 34% withholding tax and Colombia imposes a 35%
withholding tax on dividends that arise from earnings that have not been subject
to the payment of income tax.

Dividends from earnings generated until 1998 are not subject to income
taxes in Mexico, as long as they are paid from "net taxed income" ("UFIN").
Dividends not paid from UFIN are subject to a 35.0% income tax. If earnings
generated after 1998 for which no corporate tax has been paid are distributed,
the tax must be paid upon distribution of the dividends. Consequently, we must
keep a record of earnings subject to each tax rate.

In the past, we have paid substantially all cash received as dividends from
our subsidiaries, net of holding company expenses, to our shareholders and have
not used such funds to make investments, primarily to avoid having undistributed
foreign personal holding company income, which would be includable in the income
of our shareholders who are United States persons. We may, therefore, be
substantially dependent in the future on sources of financing other than
dividends from subsidiaries, including external sources, to finance holding
company investments such as acquiring minority interests in our subsidiaries or
acquiring additional bottling enterprises.

Total consolidated indebtedness decreased to $970.2 million at the end of
2001, from $1,253.8 million at the end of 2000, consisting of $580.0 million
at the holding company level and $390.2 million of subsidiary indebtedness. Of
the total debt, 88.6% is long-term. Our dollar-denominated debt decreased to
67.5% at the end of 2001 from 87.2% at the end of 2000. The $283.6 million
reduction in gross debt is mainly the result of a combination of a $145.0
million pay down of our syndicated loan, a $100.0 million prepayment of the
remaining outstanding debt with The Coca-Cola Financial Corporation (U.S.), a
$124.1 million reduction in the debt held by our Venezuelan subsidiary and a
$56.3 million reduction in the debt of our Brazilian subsidiary, offset by
issuance of $141.8 million of debt in our other subsidiaries. Approximately
$100.0 million of debt in our Mexican operations carry a Standard & Poor's
rating of MX-AA and approximately $62.0 million of debt in our Colombian
operations carry a Duff & Phelps rating of AAA. Net debt decreased to $836.6
million at the end of 2001 from $1,062.0 million at the end of 2000.

During December 2001, the Company entered into a debt agreement for 930.0
million Mexican pesos (US$ 102.0 million at December 31, 2001), maturing in
2003 with semiannual principal payments and bearing interest at the 28-day
TIIE (interbank equilibrium rate of Mexico) plus 0.75% (8.75% at December 31,
2001).

During February 2001 and August 2001, the Company issued unsecured
marketable bonds denominated in Colombian pesos for a total of Col$80.0
billion (US$34.9 million at December 31, 2001), with five-year maturities and
annual interest rates ranging from DTF (the Colombian borrowing rate) plus
1.9% to DTF plus 2.7% (ranging from 10.7% to 11.5%, respectively, at December
31, 2001).

36




Our contractual obligations as of December 31, 2001 are as follows (See the
Financial Statements):



PAYMENTS DUE BY PERIOD
--------------- --------------- --------------- --------------- --------------
LESS THAN
Total 1 year 1 - 3 years 4 - 5 years After 5 years
--------------- --------------- --------------- --------------- --------------

Bank loans and long-term obligations $ 970,242 $110,623 $ 366,980 $ 177,690 $ 314,949
Capital lease obligations 5,012 1,253 2,506 1,253 -
Operating leases 54,543 11,096 20,735 17,561 5,151
Other contractual obligations 76,196 21,903 39,357 14,936 -



On December 9, 1999, the Board of Directors authorized a $100.0 million
share repurchase program of the Company's Class A Common Stock (the "Share
Repurchase Program") in accordance with the anti-market-manipulation safe harbor
of Rule 10b-18 promulgated under the Securities Exchange Act of 1934. The Share
Repurchase Program was supplemented with $25.0 million increases on each of July
20, 2001 and September 6, 2001. In addition to this $150.0 million authority,
the Share Repurchase Program also provides for repurchases of shares from
independent brokers by Panamco (currently totaling $4.8 million) made in
connection with employees' stock option exercises. Panamco shares may be
purchased in the open market or in privately negotiated transactions, depending
on market conditions and other factors. During 2001, we repurchased 7,283,685
shares amounting to $133.5 (including brokerage commissions). In March 2002, the
Board of Directors increased the Share Repurchase Program by $20 million. From
the Share Repurchase Program's inception on December 9, 1999 to December 31,
2001, we have repurchased 8,437,564 shares for a total amount of $154.8 million
(including brokerage commissions).

On March 18, 2002, Molson, Inc. announced the acquisition of Kaiser, in
which the Company holds a 12.1% ownership interest. The transaction is valued at
$765 million. The Company expects that it will receive gross proceeds of
approximately $78 million from this transaction. A small portion of the proceeds
will be received in Molson shares, with the remaining amount to be received in
cash within the next 90 days. At the present time, we distribute Kaiser products
in our franchise area and the Molson, Inc. acquisition will not impact our
distribution agreement. See Note 23 of "Notes to Consolidated Financial
Statements."


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our business exposes us to many different market risks, such as
fluctuations in interest rates, currency exchange rates and commodity prices.
Consequently, we consider risk management as an essential activity in the
course of our business. We utilize hedging strategies to mitigate those risks.
Our hedging strategies may include the use of derivative instruments, such as
forwards, futures and options, generally with terms not exceeding one year.
While it is not the policy of Panamco to enter into derivative instruments for
speculative purposes, occasionally, Panamco may continue holding a derivative
instrument for speculative purposes if other business goals and strategies are
present at the time.

(1) INTEREST RATE RISK

Our interest rate exposure generally relates to our debt obligations. We
manage our interest rate exposure by using a combination of fixed and floating
rate debt instruments. Therefore, our exposure to an increase in interest rates
results from our floating rate debt and our exposure to a decrease in interest
rates relates to the financing costs associated with our fixed rate debt.

The following table shows our financial instruments that are sensitive to
changes in interest rates. In this table, the fair value of long-term debt shown
is based on the quoted market prices, or, when quoted market prices were not
available, the present value of future cash flows:

37




EXPECTED MATURITY DATE 2001 2000
-------------------------------------------------- ----------------- ------------------

There
2002 2003 2004 2005 2006 after Total F.V. (3) Total F.V. (3)
---- ---- ---- ---- ---- ----- ----- -------- ----- --------
INTEREST RATE RISK
(Amounts in equivalent millions
of U.S. dollars)

Fixed Rate Debt (1)
-------------------
- In U.S. dollars $ 6.8 $150.3 $ - $ - $ - $300.0 $ 457.1 $ 483.6 $ 512.4 $ 513.9
Weighted average interest rate 4.1% 8.1% - - - 7.3%
- In Brazilian reals $ 1.5 $ 0.1 - - - - $ 1.6 $ 1.5 $ 2.3 $ 2.1
Weighted average interest rate 9.0% 10.1% - - - -
- In Guatemalan quetzals $ 2.4 $ 0.7 $ 0.8 $ 0.6 - - $ 4.5 $ 4.4 $ 5.2 $ 5.1
Weighted average interest rate 15.6% 15.0% 15.0% 15.0% - -
- In Colombian pesos $ 17.1 - - - - - $ 17.1 $ 17.1 - -
Weighted average interest rate 12.4% - - - - -
- In Mexican UDIS - - - - $127.0 - $ 127.0 $ 136.3 - -
Weighted average interest rate - - - - 8.6% -

Floating Rate Debt (2)
- ----------------------
- In U.S. dollars (4) $ 30.8 $ 75.4 $ 86.0 $ 1.3 - - $ 193.5 $ 193.5 $ 581.8 $ 583.7
Weighted average interest rate 4.0% 4.7% 2.9% 5.4% - -
- In Colombian pesos (5) - - - $ 28.7 $ 19.6 $ 14.9 $ 63.2 $ 63.2 $ 29.1 $ 29.1
Weighted average interest rate - - - 11.6% 10.7% 11.7%
- In Mexican pesos (5) $ 51.0 $ 51.0 - - - - $ 102.0 $ 102.0 $ 115.2 $ 115.2
Weighted average interest rate 8.0% 8.0% - - - -
- In Brazilian reals (5) - - - - - - - - $ 7.8 $ 7.8
Weighted average interest rate - - - - - -
- In Costa Rican colon (5) $ 1.0 $ 1.2 $ 1.5 $ 0.5 - - $ 4.2 $ 4.2 - -
Weighted average interest rate 17.5% 17.5% 17.5% 17.5% - -

------ ------ ------ ------ ----- ------ ------- -------- -------- --------
Total debt $110.6 $278.7 $ 88.3 $ 31.1 $146.6 $314.9 $ 970.2 $1,005.9 $1,253.8 $1,256.9
======= ======== ======== ========
Less bank loans $ 35.2
------
Total 2002 long-term debt $ 75.4
======
- -------------------

(1) Fixed interest rates are weighted averages as contracted by us.
(2) Floating interest rates are based on market rates as of December 31,
2001, plus the weighted-average spread for us.
(3) F.V. = Fair Value
(4) Market interest rates are based on the U.S. dollar LIBOR curve.
(5) Market rates are based on the country benchmark or LIBOR and assume a
flat yield curve.


Panamco had a floating-to-fixed interest rate swap (the "Swap"), expiring
in November 2002, with a total notional amount outstanding at December 31,
2001 of $250.0 million, which exchanges LIBOR for a fixed interest rate of
6.437%. Upon adoption of Statement of Financial Accounting Standards ("SFAS")
No. 133, Panamco designated the Swap as a cash flow hedge. During 2001,
Panamco determined that it was probable that the original forecasted
transaction would not continue through the expiration of the Swap. Therefore,
Panamco reclassified $12.2 million of unrealized losses related to the Swap
from accumulated other comprehensive income to other expense, net in Panamco's
statement of operations. The fair value of the Swap was $10.4 million as of
December 31, 2001.


(2) Foreign Exchange Risk

Our currency exchange risk is generally related to the potential
devaluation of the U.S. dollar against the Latin American currencies used in the
countries in which we have operations. In each country where we operate, our
sales are in local currencies, while our debt is mostly in U.S. dollars.
Therefore, foreign currency exchange exposure relates primarily to our debt
obligations in U.S. dollars, which are shown in the previous interest rate risk
table.

To mitigate the impact of currency exchange rates fluctuations, we may
enter into foreign exchange forward contracts with financial institutions in
order to lock in the exchange rates for anticipated transactions. On
December 28, 2001, Panamco entered into foreign currency forward purchase
contracts, expiring in 2002, with total notional amounts of approximately
$23.5 million, which exchange Brazilian reales for U.S. dollars. As of
December 31, 2001, the fair value of these foreign currency forward purchase
contracts was zero.

38



(3) Commodity Price Risk

Our largest exposure to commodity price fluctuations is for sugar. As a
risk management practice, we may utilize both futures and options contracts to
hedge against an increase in the price of sugar. As of December 31, 2001,
although we did not hold a material hedging position for sugar, Panamco had
call options outstanding to purchase 4,000 metric tons of sugar for a total
cost of $18 thousand. The fair value of these options was $30 thousand as of
December 31, 2001. Because inventories of sugar are of a short-term nature,
they are not included in this market risk disclosure. See Note 11 of "Notes to
Consolidated Financial Statements."


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Attached hereto beginning at page F-1 and filed as a part of this Form
10-K are the financial statements required by Regulation S-X and the
supplementary data required by Regulation S-K.


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

No disagreements with accountants on any matter of accounting principles
or practices or financial statement disclosure have been reported on a Form
8-K within the twenty-four months prior to the date of the most recent
financial statement.


PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Our Board of Directors presently consists of 12 members, whose terms are
divided into three classes as set forth below. Coca-Cola currently has the
contractual right to designate three nominees for election to the Board and
currently designates Messrs. Fayard and Schimberg to the Board. Venbottling
presently has contractual rights to designate Gustavo A. Cisneros and Oswaldo
J. Cisneros for election to the Board. All directors are elected for
three-year terms.

The following table sets forth at March 15, 2002, the names and country
of citizenship of the members of our Board, their tenure as directors and the
year in which their next term will expire:

Country of Director Term
Name Citizenship Since Expires
- ---- ----------- -------- -------
Gustavo A. Cisneros...................... Venezuela 1997 2003
Oswaldo J. Cisneros...................... Venezuela 1997 2003
William G. Cooling....................... Canada 1994 2004
Gary P. Fayard........................... U.S.A. 2001 2002
Luiz Fernando Furlan..................... Brazil 1994 2003
Craig D. Jung............................ U.S.A. 2002 2004
Wade T. Mitchell......................... U.S.A. 1986 2004
James J. Postl........................... Canada 2000 2002
Henry A. Schimberg....................... U.S.A. 2000 2002
Houston Staton........................... Colombia 1997 2002
Stuart A. Staton......................... U.S.A. 1997 2004
Woods W. Staton Welten................... Colombia 1982 2003

39





The following table sets forth the names, ages and tenures of our
executive officers:





Years with
Name Age Position Since Panamco
- ---- --- -------- ----- ----------

William G. Cooling................ 57 Chairman of the Board and Chief Executive Officer 2000 8
Henry A. Schimberg................ 69 Vice Chairman of the Board 2000 2
Craig D. Jung..................... 47 President and Chief Operating Officer 2002 1
Mario Gonzalez Padilla............ 43 Vice President, Chief Financial Officer, 2002 1
Treasurer and Assistant Secretary

Annette Franqui................... 40 Vice President--Corporate Finance** 2001 1
Carlos Hernandez-Artigas.......... 38 Vice President--Legal and Secretary 1994 8
Ruben Pietropaolo................. 51 Vice President--North Latin American Division 2002 3
(Mexico and Central America, known as NOLAD),
(President of Panamco Mexico and Panamco Central
America)*
Moises Morales.................... 42 Vice President--Venezuelan Operations (President 1999 6
of Panamco Venezuela)
Roberto Ortiz..................... 46 Vice President--Colombian Operations (President of 1998 8
Panamco Colombia)

Paulo Sacchi...................... 55 Vice President--Brazilian Operations (President of 2002 6
Panamco Brazil)
____________________
* The North Latin American Division (NOLAD), created in February 1999, incorporates Mexico, Guatemala, Nicaragua
and Costa Rica operations.
** Not an officer for purposes of Panamanian law.



Officers are elected by our Board of Directors annually, and serve at the
pleasure of the Board of Directors.

The backgrounds of the directors and the executive officers and such
other members of management of the Company are described below:

Mr. Gustavo A. Cisneros was elected a director of the Company in June
1997. Mr. Cisneros is Chairman and Chief Executive Officer of the Cisneros
Group of Companies, an organization that includes more than 50 companies in
Latin America, Europe and the United States. Mr. Cisneros is a founding member
of the International Advisory Board of the Council on Foreign Relations in New
York, a former director of the International Advisory Committee of The Chase
Manhattan Bank and a director of the Chairman's Council of the Americas
Society as well as a member of the International Advisory Council of the
United States Information Agency, the Board of Overseers of the International
Center for Economic Growth, the International Advisory Board of Power
Corporation of Canada and the International Advisory Board of Gulfstream
Aerospace Corporation. Mr. Cisneros sits on the Board of Directors of
Georgetown University, the International Advisory Board of Columbia
University, America Online Latin America, Evenflo Co., Inc., Univision
Communications, Inc., and is a Trustee of The Rockefeller University in New
York. Mr. Cisneros is the cousin of Oswaldo J. Cisneros.

Mr. Oswaldo J. Cisneros was elected a director of the Company in June
1997. Until late 2000, he was President of Telcel Cellular, C.A., the largest
private cellular communications company in Venezuela, a company that he
founded in partnership with Bellsouth International. He was the Chairman of
Panamco Venezuela until May 1997. Mr. Cisneros is President and owner of
Central Azucarero Portuguesa, a modern and productive sugar mill, President of
Puerto Viejo Marina & Yacht Club and Director of Produvisa (Glass
Manufacturing Co.). Mr. Cisneros is the cousin of Gustavo A. Cisneros.

40





Mr. William G. Cooling was elected Chairman of the Board and Chief
Executive Officer in October 2000. Mr. Cooling was first elected as a director
of the Company in January 1994. He was Senior Executive Vice President of The
Colgate-Palmolive Company and Chief of Operations, Specialty Marketing and
International Business Development, from 1992 to 1996. For five years prior to
1992, Mr. Cooling served as Executive Vice President and Chief Technological
Officer of The Colgate-Palmolive Company. Mr. Cooling is a partner in Atlantic
Capital Partners LLC, a venture capital company.

Mr. Gary P. Fayard was elected a director of the Company in February 2001
in replacement of Mr. Timothy J. Haas who resigned in January 2001. Mr. Fayard
is Senior Vice President and Chief Financial Officer of The Coca-Cola Company.
Mr. Fayard joined The Coca-Cola Company in April 1994 as Deputy Controller and
was elected Vice President and Controller in July 1994. He was elected to his
current position in December 1999. Prior to joining The Coca-Cola Company, Mr.
Fayard served 19 years with Ernst & Young LLP, concluding his service there as
a partner. Mr. Fayard is a member of the Board of Directors of Coca-Cola
Enterprises, Inc.

Mr. Luiz Fernando Furlan was elected a director of the Company in May
1994. Mr. Furlan has been Chairman of Sadia S.A., the largest Brazilian food
processing conglomerate, since 1993. For more than five years prior to 1993,
Mr. Furlan served as Executive Vice President, director and secretary of the
board of directors of Sadia S.A. He is also the President of the ABEF
Brazilian Chicken Producers and Exporters Association Companies and Vice
President and head of the foreign trade department of the Federation of
Industries in the State of Sao Paulo.

Mr. Craig D. Jung was elected a director and President and Chief
Operating Officer of the Company in March 2002. From October 2000 to joining
the Company, Mr. Jung was the Chief Executive Officer of eOriginal, Inc., an
e-commerce company. From July 1997 to October 1999, he served as the Chief
Operating Officer of the Pepsi Bottling Group. From October 1996 to June 1997,
Mr. Jung was the General Manager of South America and the Caribbean for the
Pepsi-Cola Company. Mr. Jung also serves on the Board of Directors of J.M.
Huber Corporation.

Mr. Wade T. Mitchell was first elected a director of the Company in June
1986. Mr. Mitchell is retired. Prior to January 1994, he was an Executive Vice
President of SunTrust Bank, Atlanta, Georgia, for more than five years.

Mr. James J. Postl was elected a director of the Company in July 2000.
Mr. Postl is President and Chief Executive Officer of Pennzoil-Quaker State
Company. Mr. Postl joined Pennzoil-Quaker State Company in October 1998 as
President and Chief Operating Officer. He was elected to his current position
in May 2000. Prior to joining Pennzoil-Quaker State Company, Mr. Postl served
as President of Nabisco Biscuit Company from 1996 to 1998. Prior to joining
Nabisco Mr. Postl held a variety management positions with PepsiCo, Inc. over
a 19-year period.

Mr. Henry A. Schimberg was elected a director of the Company in May 2000.
Until the end of 1999, Mr. Schimberg served as President and Chief Executive
Officer of Coca-Cola Enterprises Inc. Mr. Schimberg served as President and a
director of Coca-Cola Enterprises Inc. since December 1991. He served as Chief
Operating Officer from December 1991 until April 1998, when he became Chief
Executive Officer. Mr. Schimberg has served on the board of Coca-Cola
Enterprises as well as the boards of numerous state soft drink associations
and the Canada-United States Fulbright program. Mr. Schimberg serves on the
board of directors of Coca-Cola Amatil Limited and Coca-Cola HBC S.A.

Mr. Houston Staton was elected a director of the Company in 1997. For
more than four years prior to April 1997, he served on the Advisory Board of
Panamco. He has been a director of 3 Points Technology, Inc. since May 1996.
From 1992 through September 1995, Mr. Staton was an owner-operator of
McDonald's in Caracas, Venezuela. He is the brother of Woods W. Staton Welten
and the cousin of Stuart A. Staton.

Mr. Stuart A. Staton was elected a director of the Company in 1997. He
has previously served as Vice President-Investor Relations and Executive
Assistant to the President of the Company. For more than three years prior to
June 1990, Mr. Staton served as Executive Assistant to the President of
Panamco Brazil, and, from 1980 to 1986, he served in various capacities in
Panamco Mexico. He is the cousin of Houston Staton and Woods W. Staton Welten.

41





Mr. Woods W. Staton Welten was first elected a director of the Company in
1982. Mr. Staton Welten was the Vice President of Marketing for Panamco
Colombia from 1980 to 1982 and has been the President of Arcos Dorados S.A.,
the Argentinean joint venture of McDonald's Corporation, since 1984. He is the
brother of Houston Staton and the cousin of Stuart A. Staton.

Mr. Paulo J. Sacchi has been with Panamco for over ten years. He was
appointed Vice President - Brazilian Operations and President of Panamco
Brazil in March 2002. From 1998 to March 2002, he was Panamco's Chief
Financial Officer. He previously served as Vice-President-Operations of
Panamco Brazil, and prior to that as Vice President - Strategic Planning and
Vice President-Operations.

Mr. Mario Gonzalez Padilla was elected Vice President, Chief Financial
Officer and Treasurer in March 2002. From 1998 to 2002, Mr. Gonzalez was Chief
Financial Officer of Transportation Ferroviaria Mexicana, a railroad and
logistics company. From 1995 to 1997, he was corporate comptroller of Grupo
TMM, a maritime and ground transportation company. From 1983 to 1992, he
served in a number of finance positions with Dow Chemical Company.

Ms. Annette Franqui joined the Company as Vice President-Corporate
Finance in March 2001. Prior to joining the Company, Ms. Franqui was the
Co-Founder and President of Obsidiana, an online destination for Spanish and
Portuguese speaking women. From 1994 to 2000 and from 1986 to 1989, Ms.
Franqui served in a number of positions with J.P. Morgan, including Managing
Director in charge of the Latin American Equities Research Group. From 1989 to
1994, Ms. Franqui was a vice-president with Goldman Sachs.

Mr. Carlos Hernandez-Artigas was elected Secretary of the Company in
November 1993 and Vice President-Legal in January 1994. From 1992 to October
1993, he was an associate at the law firm Fried, Frank, Harris, Shriver &
Jacobson in New York City.

Mr. Ruben Pietropaolo was elected Vice President - NOLAD Operations and
President of Panamco NOLAD in February 2002. From March 1998 to January 2001,
Mr. Pietropaolo served as a division head with Citibank in corporate banking
Latin America and then in Global Consumer Banking in Central Asia Pacific.
From May 1995 to February 1998, Mr. Pietropaolo was an executive officer of
Panamco where he was promoted from the President of Panamco Colombia to
President of Panamco's Andean division. Mr. Pietropaolo also has 15 years
experience in a number of officer's positions with PepsiCo International.

Mr. Moises Morales was appointed Vice President-Venezuela Operations and
President of Panamco Venezuela in January 1999. From December 1996 to
September 1998 he was President of Panamco Costa Rica and from September 1998
to January 1999 he was President of Panamco Central America and Vice
President-Central America Operations. He has over 15 years' experience in the
Coca-Cola system in Mexico. He also served as regional manager in the Panamco
Colombia operations.

Mr. Roberto Ortiz was elected Vice President-Colombian Operations and
President of Panamco Colombia in September 1998. From September 1993 until May
1997, he served as Vice President-Operations of Panamco Colombia. Before
joining Panamco Colombia, he served in Coca-Cola de Colombia as Marketing
Operations Manager and Director for more than 15 years.

DIRECTORS FEES

Directors of the Company other than the Chief Operating Officer receive
annual directors' fees of $35,000 and $1,000 per diem for attendance at Board
of Directors and committee meetings. Committee chairmen also receive $3,000
per year.

COMPLIANCE WITH SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING

The Securities Exchange Act of 1934 requires the Company's directors,
executive officers and any person owning more than 10% of the Company's Class
A common stock to file reports with the Securities and Exchange

42





Commission regarding their ownership of the Company's stock and any changes in
such ownership. Based on our review of the copies of these reports and
certifications given to us, we believe that the Company's executive officers,
directors and 10% shareholders complied with their filing requirements for 2001,
with the exception that Mr. Fayard's initial report on Form 3 was not filed on a
timely basis.


ITEM 11. EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

The following table summarizes for the fiscal years ended December 31,
2001, 2000 and 1999, all compensation awarded to, earned by, or paid to (i) the
Chief Executive Officer and (ii) the four most highly compensated executive
officers other than the Chief Executive Officer of the Company who were serving
in executive officer capacities at the end of December 2001.


SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------------- -------------------------------------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING ALL OTHER
COMPEN- STOCK OPTIONS/SAR COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) SATION ($) AWARDS ($) AWARDS SATION ($)
- --------------------------------------------------------------------------------------- -------------------------------------

William G. Cooling 2001 $ - $ - $ - $ - - $ -
Chairman of the Board and 2000 - - - (3) 350,000(4) -
Chief Executive Officer

Henry A. Schimberg 2001 - - - - - -
Vice Chairman of the Board 2000 - - - (3) 250,000(4) -

Paulo J. Sacchi 2001 343,957 208,800 229,135(1) - 65,000 17,475(2)
Senior Vice President, 2000 325,000 27,600 224,600 - 64,320 18,135(2)
Chief Financial Officer and 1999 325,000 76,500 - - 74,400 21,654(2)
Treasurer

Carlos Hernandez-Artigas 2001 256,800 139,200 202,298 - 35,000 11,967(2)
Vice President - Legal and Secretary 2000 228,000 13,600 226,033 - 25,900 12,358(2)
1999 228,000 51,700 - - 25,000 11,762(2)

Annette Franqui 2001 208,095 199,500 - - 80,000 -
Vice President - Corporate Finance
- ------------------

(1) Other Annual Compensation for Mr. Sacchi includes housing allowance of $59,401 in 2001.
(2) All Other Compensation includes a matching pension contribution by the Company to the Company's non-qualified pension plan.
(3) On November 10, 2000, when the closing price of the Class A Common Stock on the New York Stock Exchange was $14.25 per
share, the Company granted 400,000 and 300,000 shares of nonvested stock to the Chairman and Chief Executive Officer and
the Vice Chairman, respectively. By the terms of the restricted stock, one-third of the shares vested in July 2001 as a
result of the share price exceeding the grant date share price by $5.00 for the required period of time. Pursuant to the
restricted stock agreement, as amended, an additional one-third of the shares will vest if the share price exceeds the
grant date share price by $10.00 or more on or before the fifth anniversary of the grant date, and the remaining one-third
will vest in the event that the share price equals or exceeds the grant date share price by $15.00 or more on or before the
sixth anniversary of the grant date. The holders are entitled to dividends on the entire amount of the restricted stock.
Non-vested shares shall be forfeited to the extent that they do not vest by the applicable expiration date. In connection
with the July 2001 vesting of the restricted stock, the Company loaned $776,756 and $801,335 to Mr. Cooling and Mr.
Schimberg, respectively, which is the amount of their tax withholding triggered by the restricted stock vesting. Such loans
bear an annual interest rate of five percent and mature on the earlier of June 2006 or 30 days following termination of
employment.
(4) On November 10, 2000, when the closing price of the Class A Common Stock on the New York Stock Exchange was $14.25 per
share, the Company granted 350,000 and 250,000 options, respectively, to the Chairman and CEO and the Vice Chairman at an
exercise price of $14.25 per share. These options vested 50% upon issuance and 50% one year thereafter.


43





OPTION GRANTS


The table below sets forth information concerning stock options granted
to the executive officers named in the "Summary Compensation Table" during the
year ended December 31, 2001:





OPTION/SAR GRANTS IN 2001


NUMBER OF SECURITIES % OF TOTAL
UNDERLYING OPTIONS/SARS GRANTED EXERCISE OR GRANT DATE
OPTIONS/SARS GRANTED TO EMPLOYEES IN BASE PRICE PRESENT VALUE
NAME (#) FISCAL YEAR ($/SHARE) EXPIRATION DATE ($)(2)
- --------------------------------------------------------------------------------------------------------------------------------


William G. Cooling 3,619(1) 0.4% $ 16.09 11/08/11 $ 23,379
Henry A. Schimberg 3,619(1) 0.4% 16.09 11/08/11 23,379
Paulo J. Sacchi 65,000(1) 6.5% 16.09 11/08/11 419,900
Carlos Hernandez-Artigas 35,000(1) 3.5% 16.09 11/08/11 226,100
Annette Franqui 40,000(1) 4.0% 16.09 11/08/11 258,400
Annette Franqui 40,000(1) 4.0% 17.84 04/09/11 299,200


- -------------------

(1) These options were made pursuant to the "Employee Stock Option Plan"
under which the options vest over a three-year period. Options expire ten
years from the date of issuance.

(2) The present value of the options is based on the Black-Scholes option
valuation model, whereby the weighted-average fair value at date of grant
for options with an exercise price of $16.09 was $6.46 and the options
with an exercise price of $17.84 was $7.48. The weighted-average
assumptions for stock options granted during 2001 using the Black-Scholes
option valuation model were: (i) risk-free interest rate of 3.90%, (ii)
dividend yield of 1.40%, (iii) expected volatility of 40.5%, and (iv)
expected option term life of 6.4 years.


44





OPTION EXERCISES AND YEAR-END VALUES

The table below sets forth information concerning the exercise of
stock options by the executive officers named in the "Summary Compensation
Table" during the year ended December 31, 2001 and the value of unexercised
options as of December 31, 2001:




AGGREGATE OPTION/SAR EXERCISES IN 2001
AND FY-END OPTION/SAR VALUES

VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY OPTIONS/SARS AT
SHARES UNDERLYING UNEXERCISED FY-END ($) (BASED ON $14.86
ACQUIRED ON VALUE OPTIONS/SARS AT FY-END (#) PER SHARE) EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) EXERCISABLE / UNEXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------------------------------------------------------------------------

William G. Cooling 0 0 355,549 / 4,893 $213,608 / $217
Henry A. Schimberg 0 0 250,636 / 4,893 152,608 / 217
Paulo J. Sacchi 0 0 155,240 / 109,880 18,525 / 7,718
Carlos Hernandez-Artigas 0 0 113,899 / 60,599 6,355 / 2,970
Annette Franqui 0 0 0 / 80,000 0 / 0




INTERNATIONAL PENSION PLAN

The following table sets forth the annual retirement benefits that may be
paid to a total of 24 executives of the Company (including two of the named
executives officers listed in the Summary Compensation Table) that are
participants in the Company's International Pension Plan, a non-qualified
plan. To vest, the executive must have 10 years of service with the Company
and retire after age 55. Benefits are payable at age 65 based on an
executive's average annual salary and bonus for the 3 years preceding
retirement. The Company, at its option, may make a lump sum distribution to an
employee at retirement in lieu of annual benefits described in this table.
Reduced benefits are applicable for early retirement starting at age 55. The
years of credited service for Mr. Sacchi are 16.5 years and for Mr.
Hernandez-Artigas are 8 years.

45







PENSION PLAN TABLE

YEARS OF CREDITED SERVICE WITH THE COMPANY
----------------------------------------------------------------
REMUNERATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
---------------- ------------ ------------ ------------ ------------ ------------


$100,000 $ 12,000 $ 16,000 $ 20,000 $ 24,000 $ 28,000
200,000 24,000 32,000 40,000 48,000 56,000
300,000 36,000 48,000 60,000 72,000 84,000
400,000 48,000 64,000 80,000 96,000 112,000
500,000 60,000 80,000 100,000 120,000 140,000
600,000 72,000 96,000 120,000 144,000 168,000
700,000 84,000 112,000 140,000 168,000 196,000



Cash Bonus Plan. We have adopted a short-term incentive plan (the "Bonus
Plan"), pursuant to which key executives of the Company and subsidiaries may
receive bonus compensation based on Company performance, as determined by the
Compensation Committee of the Board of Directors (the "Committee"). Under the
amended Bonus Plan, effective as of January 1, 2002, each participant is
assigned a target award expressed as a percentage of base salary in varying
amounts (which do not exceed 60% of base salary). The actual award will be based
on Company performance, and will vary from 0% to 300% of the target award, on
the basis of the relationship between actual performance of the participant's
"Economic Unit" (that is, the Company or Panamco Mexico, Panamco Colombia,
Panamco Brazil, Panamco Venezuela, Panamco Costa Rica, Panamco Nicaragua and
Panamco Guatemala) and projected performance. For purposes of evaluating
Economic Unit performance, the Committee will compare actual revenues, cash
operating profit, net income and free cash flow to projected amounts. The target
award for Ms. Franqui and Messrs. Sacchi and Hernandez is 35%, 50% and 40%
respectively. Messrs. Coolilng and Schimberg do not participate in the Bonus
Plan.

The Committee has the authority to select participants and to establish
target awards and performance measures. The Committee may amend, suspend or
terminate the Bonus Plan at any time.

Equity Incentive Plan. We have an Equity Incentive Plan (the "Equity
Incentive Plan"), the purpose of which is to further the growth, development and
financial success of the Company by providing incentives to selected employees.
Pursuant to the Equity Incentive Plan, options (including incentive stock
options) to purchase shares of Class A Common Stock and restricted stock awards
with respect to Class A Common Stock may be granted. A total of 14,200,000
shares of Class A Common Stock (subject to adjustment upon certain events) is
available for grant although no individual may receive options to purchase more
than 200,000 shares of Class A Common Stock within any calendar year. The Equity
Incentive Plan is administered by the Committee. The Committee determines the
terms and conditions of all grants, subject to certain limitations set forth in
the plan. In 2001, we granted options to purchase 1,004,738 shares of Class A
Common Stock under the Equity Incentive Plan and 1,029 shares of restricted
stock.

Stock Option Plan for Nonemployee Directors. We have a Stock Option Plan
for Nonemployee Directors (the "Stock Option Plan for Nonemployee Directors"),
the purpose of which is to attract and retain the services of experienced and
knowledgeable nonemployee directors. The Stock Option Plan for Nonemployee
Directors provides each nonemployee director with an option to purchase a
specified number of shares of Class A Common Stock. A total of 190,000 shares of
Class A Common Stock is available for grant. The Stock Option Plan for
Nonemployee Directors is administered by the Board of Directors or a
subcommittee thereof. The Board of Directors has the discretion to amend,
terminate or suspend the Stock Option Plan for Nonemployee Directors at any
time. All options granted under the Stock Option Plan for Nonemployee Directors
expire 10 years from the date of issuance. In 2001, we granted each nonemployee
director options to purchase 3,619 shares of Class A Common Stock of an exercise
price of $16.09.

As of December 31, 2001, the total number of shares of Class A Common Stock
underlying outstanding options granted under the Equity Incentive Plan and under
the Stock Option Plan for Nonemployee Directors (after giving effect to

46




the two-for-one stock split effected on March 31, 1997) was 7,354,002 shares.


EMPLOYMENT AGREEMENTS

The Company has compensation arrangements or employment agreements with
certain of the executive officers named in the "Summary Compensation Table."

Messrs. Cooling and Schimberg. In November 2000, we entered into
employment agreements with Messrs. Cooling and Schimberg that provide for a
one-year term with automatic renewals for additional six-month terms. Pursuant
to the employment agreements, we granted Messrs. Cooling and Schimberg the
equity awards described in the "Summary Compensation Table" and "Options/SAR
Grants in 2001" table. Commencing in 2002, Messrs. Cooling and Schimberg will
be entitled to receive a cash bonus of up to $1,000,000 and $400,000,
respectively, if certain performance targets are attained.

Mr. Sacchi. In connection with Mr. Sacchi's appointment as the President
of Panamco Brazil and the Company's Vice President--Brazilian operations in
February 2002, we entered into a employment agreement with Mr. Sacchi and
terminated his previous employment agreement with the Company. The new
agreement provides for an annual base salary of $400,000 and expires on
December 31, 2002. If Mr. Sacchi's employment is terminated upon a "change in
control" or "without cause" (as defined in the employment agreement), he will
be entitled to his base salary and bonus through the end of the term of the
employment agreement.

Mr. Hernandez-Artigas. In October 1999, we entered into an employment
agreement with Mr. Hernandez-Artigas that provides for a three-year term with
an automatic one-year renewal. The agreement provides for a minimum annual
salary of $228,000 and participation in any pension, profit-sharing, vacation,
insurance, hospitalization, medical health, disability and other employee
benefit or welfare plan, program or policy that the Company may adopt, subject
to eligibility and participation provisions set forth in the plan or program.
The agreement contains provisions for severance payments and benefits if the
Company terminates the executive's employment for reasons other than cause (as
defined in the agreement), or if the executive terminates his employment for
"good reason" (as defined in the agreement). The agreement also contains
provisions for severance payments and benefits if, after a change in control
of the Company, the executive's employment is terminated other than for cause
or if the executive terminates his employment for good reason. The agreement
has a clause which prohibits the executive, for two years following the
termination of employment other than by the Company without cause or by the
executive for good reason, from competing directly or indirectly with the
Company or disclosing proprietary or confidential information.

OTHER COMPENSATION MATTERS

In connection with Mr. Alejandro Jimenez' December 2001 retirement as
President, Chief Executive Officer and director of the Company, we paid Mr.
Jimenez certain amounts pursuant to his employment agreement and an Employment
Termination and General Release, dated December 28, 2001, including (i) a lump
sum equivalent to two and one-half times his base salary and two and one-half
times his target bonus for the year 2001; and (ii) a pro rata portion of Mr.
Jimenez' incentive compensation for the year 2001. We will continue to provide
the individual benefit programs described in the employment agreement for a
period of 18 months following the end of Mr. Jimenez' employment with the
Company. All stock options granted during the term of Mr. Jimenez' employment
became fully vested. Mr. Jimenez has agreed that, for a two-year period, he
will not directly or indirectly compete with the Company or disclose
proprietary or confidential information.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of the Compensation Committee during 2001 were Mr. Wade T.
Mitchell, Mr. Woods W. Staton Welten, Mr. James Postl, Mr. Gustavo A.
Cisneros, and Mr. Henry Schimberg. There were no relationships with respect to
Compensation Committee interlocks and insider participation in compensation
decisions during 2001.

47



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

GENERAL

We are not directly or indirectly owned or controlled by another
corporation or by any foreign government.

We have two classes of Common Stock and one series of Preferred Stock: the
Class A Common Stock, which currently has no voting rights, the Class B Common
Stock, which is entitled to one vote per share and the Series C Preferred Stock,
par value $0.01 per share (the "Series C Preferred Stock"), which currently has
certain rights as described in detail below. The holders of Class B Common Stock
have the exclusive power to elect the Board of Directors and to determine the
outcome of all matters to be decided by a vote of the shareholders. Class A
Common Stock will not have voting rights unless certain events occur which will
cause all outstanding shares of Class B Common Stock to be converted into shares
of Class A Common Stock, at which point each share of Class A Common Stock will
carry one vote. Such events, which may never occur, are specified in our
Articles of Incorporation. Coca-Cola is the sole holder of the Series C
Preferred Stock.

Members of the Board of Directors and the executive officers of the Company
beneficially own 8,113,949 shares of Class B Common Stock or approximately 93.6%
of the outstanding shares of such class as of March 15, 2002, of which 5,155,052
shares are subject to the Voting Trust (as defined below).

The following table sets forth beneficial ownership of the Class B Common
Stock as of March 15, 2001 with respect to each person known by the Company to
own beneficially more than 5% of the outstanding shares of Class B Common Stock:



SHARES OF CLASS B
OWNER COMMON STOCK PERCENT OF CLASS
----- ------------------- ----------------


Lt. Gen. Donald Colin Mackenzie, Mr. James M. Gwynn,
Mr. Woods W. Staton Welten and Mr. Stuart A. Staton
in the capacities as Voting Trustees under the Voting
Trust Agreement (1) 5,155,052 59.4%

Coca-Cola 2,180,053 25.1%

Venbottling Holdings, Inc. 778,844 9.0%
- -----------------------

(1) Except as otherwise indicated above, each of the persons named in the table has sole voting and investment power with
respect to the shares beneficially owned as set forth opposite such person's name. The address of the voting trustees is
c/o The Bank of Butterfield Executor & Trustee Co. Ltd., P.O. Box HM 195, Hamilton HM GX, Bermuda. For additional
information, see the section entitled "Voting Trust" below.

The following table shows the number of shares of the Company Class A and
Class B Common Stock beneficially owned on March 15, 2002, by the directors,
the individuals named in the "Summary Compensation Table" and all directors
and current executive officers as a group:




STOCK OWNERSHIP TABLE
- -------------------------------------------------------------------------------------------------------------
PERCENT OF SHARES
NAME OF BENEFICIAL OWNER SHARES BENEFICIALLY OWNED (1) OUTSTANDING
- ---------------------------------------------- ----------------------------------- ------------------------

Gustavo A. Cisneros........................ 3,866,500 3.2%
Oswaldo J. Cisneros........................ 3,774,414 3.1%
William G. Cooling......................... 592,311 *
Gary Fayard................................ - *
Luiz Fernando Furlan....................... 32,216 *
Craig D. Jung.............................. - *
Wade T. Mitchell........................... 174,495 *
James J. Postl............................. 2,470 *
Henry A. Schimberg......................... 353,278 *
Houston Staton............................. 4,039,416 3.3%
Stuart A. Staton........................... 228,497 *


48




Woods W. Staton Welten..................... 4,273,796 3.5%
Paulo J. Sacchi............................ 155,250 *
Carlos Hernandez-Artigas................... 114,199 *
Annette Franqui............................ 13,333 *
Directors and Executive Officers
as a Group (19 persons)................. 17,901,337 14.7%
- ----------------------

* Less than 1% of the outstanding shares of Class A and Class B Common
Stock.
(1) The shares shown include the following shares directors and the named executive officers have the right to acquire within
60 days through the exercise of vested stock options: Gustavo Cisneros, 2,893; Oswaldo Cisneros, 2,893; William Cooling,
355,549; Luis Fernando Furlan, 4,913; Wade T. Mitchell, 4,913; James J. Postl, 636; Henry Schimberg, 250,636; Houston
Staton, 5,549; Stuart A. Staton, 5,549; Woods W. Staton Welten, 4,913; Paulo J. Sacchi, 155,240; Carlos Hernandez-Artigas,
113,899; Annette Franqui, 13,333; and for all Directors and Officers as a Group, 1,224,062.



SERIES C PREFERRED STOCK

The holder of the Series C Preferred Stock (the "Holder") is not entitled
to receive any dividends with respect to the Series C Preferred Stock and is
entitled to a preference on the liquidation, dissolution or winding-up of the
Company of $1.00. Pursuant to the Certificate of Designation for the Series C
Preferred Stock, we have agreed not to take certain actions without the approval
of the Holder, including, but not limited to: (i) certain consolidations,
mergers and sales of substantially all of our assets; (ii) any acquisition or
sale of a business (or an equity interest therein) if the purchase price or
sales price thereof, as the case may be, exceeds a material amount (as defined
therein); (iii) entry into any new significant line of business or termination
of any existing significant line of business; (iv) certain capital expenditures
and acquisitions and dispositions of property and equipment; (v) certain
transactions with affiliates (as defined); (vi) certain changes in our policy
with respect to dividends or distributions to shareholders; and (vii) certain
changes to our Articles of Incorporation or By-laws. These rights are subject to
certain exceptions and qualifications and may be suspended or terminated in
certain circumstances.

The Holder has no voting rights except as provided for above and except for
any voting rights provided by law. The Holder is entitled to designate for
election to the Board of Directors a certain number of designees depending on
the percentage of the outstanding capital stock beneficially owned by it.

The Holder of the Series C Preferred Stock has certain rights to purchase
additional shares of common stock issued by the Company to maintain its
proportionate interest, subject to certain exceptions and limitations.

The Series C Preferred Stock may not be transferred to any person other
than Coca-Cola or a corporation 100% of the capital stock of which (other than
directors' qualifying shares or shares held by persons to comply with local law)
is owned, directly or indirectly, by Coca-Cola. Upon any transfer in violation
of such restrictions, the Series C Preferred Stock will convert automatically to
a share of Class A Common Stock.

Pursuant to the investment agreement (the "Investment Agreement") dated
November 1, 1995, between us and Coca-Cola Export Corporation ("Export"), a
wholly owned subsidiary of Coca-Cola, for so long as Export is entitled to
delegate one or more individuals for election to our Board of Directors, in the
event of certain subsequent new issues of Common Stock, Coca-Cola will have the
right to purchase shares of Common Stock from us (on the terms of such new
issue) in order to maintain its economic and voting interest in Panamco. Under
certain circumstances (but not currently), Export has the right to request that
we file a registration statement so as to permit or facilitate the sale or
distribution of shares of Class A Common Stock beneficially owned by Coca-Cola.
In addition, in certain instances (but not currently), when we propose to
register under the Securities Act of 1933 shares of our Common Stock in
connection with an underwritten offer for our own account, we must offer Export
the opportunity to include in such registration statement shares of Common Stock
beneficially owned by Coca-Cola.

VOTING TRUST

The beneficial owners of 5,155,052 shares of Class B Common Stock, who are
no longer the holders of record of such shares, representing approximately 59.4%
of the shares of such class, have entered into a Voting Trust

49



Agreement amended and restated as of April 20, 1993, as amended (the "Voting
Trust"), among such beneficial owners and Lt. Gen. Donald Colin Mackenzie, Mr.
James M. Gwynn, Mr. Woods W. Staton Welten and Mr. Stuart A. Staton, as the
voting trustees (the "Voting Trustees"). The Voting Trust will expire on
January 11, 2013. The Voting Trust may be amended at any time by the holders
of voting trust certificates representing 70% of the shares subject to the
Voting Trust. Under the terms of the Voting Trust, the Voting Trustees may
vote as they, in their sole discretion, deem to be in the best interests of
the holders of the voting trust certificates. However, the Voting Trustees are
not permitted to vote on any proposal for a merger, consolidation or certain
other significant transactions involving the Company, except as directed by
the individual holders of the voting trust certificates (or, if no such
direction is received, in accordance with the recommendation of our Board of
Directors). The Voting Trustees also agreed with Coca-Cola and Export (i) to
vote for Coca-Cola's designees for election to our Board of Directors and (ii)
not to take any action or cause us to take any action the effect of which
would circumvent or adversely affect or be inconsistent with any of the terms
of the Series C Preferred Stock. The Voting Trustees have also agreed with
Venbottling to vote for Venbottling's designees for election to our Board of
Directors. Certain of the Voting Trustees are directors of the Company. See
"Item 10.-- Directors and Officers of the Registrants."

The Voting Trustees will serve for five-year terms, unless earlier
removed by the holders of voting trust certificates representing 70% of the
shares subject to the Voting Trust. The Voting Trustees are not permitted to
transfer the shares of Class B Common Stock or any other voting securities
which may be held in the Voting Trust. The Voting Trust is on file at our
registered office, Dresdner Bank, Seventh Floor, 50th Street, City of Panama,
Republic of Panama, and is available on request of the Secretary.

SHAREHOLDER AGREEMENT WITH VENBOTTLING HOLDINGS, INC.

Pursuant to a Shareholder Agreement (the "Shareholder Agreement"), dated
May 9, 1997, entered by us and Venbottling Holdings, Inc. ("Venbottling")
Gustavo A. Cisneros and Oswaldo J. Cisneros have the right to be appointed to
our board of directors. If Venbottling ownership of the total outstanding
Common Stock of the Company decreases below 7.5%, Venbottling shall cause one
of its representatives to resign from the board of directors and if its
ownership decreases below 5% of the total outstanding Common Stock of the
Company, Venbottling shall cause its representatives to resign from the board
of directors. Venbottling has the right to request that we file a registration
statement so as to permit or facilitate the sale or distribution of shares
beneficially owned by it. Also, in certain circumstances when we propose to
register under the Securities Act of 1933 shares of our Common Stock in
connection with an underwritten offer for our own account we must offer
Venbottling the opportunity to include in such registration statement shares
of Common Stock beneficially owned by it.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CISNEROS FAMILY

Many of the raw materials and supplies used in Venezuela are purchased
from companies owned by or affiliated with members of the Cisneros family, the
former owners of Panamco Venezuela, as follows:



Entity Material Supplied Amount Paid in 2001*
------- ----------------- --------------------


Productos de Vidrio, S.A. Bottles $ 11,935
Central Azucarero Portuguesa, C.A. Sugar 49,622
Proyectos PET C.A. PET 16,031
Gaveras Plasticas Venezolanas, C.A. Plastic cases 608
C.A. Cerverceria Regional Beer 14,355

* Stated in thousands of U.S. dollars


We believe the terms of such arrangements are no less favorable to us
than those that could be obtained from independent third parties.

50





FRANCHISE ARRANGEMENTS

Coca-Cola (or its subsidiaries) has entered into exclusive Bottling
Agreements with each of our Bottlers. The Bottling Agreements expire on
various dates. In 1995, we and Coca-Cola agreed that all bottling agreements
of our Mexican subsidiaries will have a uniform term ending in 2005, renewable
for additional ten-year terms. In general, the Brazilian, Venezuelan,
Nicaraguan, Costa Rican, Guatemalan and Colombian agreements are for five-year
terms, renewable for additional five-year terms.

The Bottling Agreements regulate the preparation, bottling and
distribution of beverages in the applicable franchise territory. The Bottling
Agreements authorize the Bottlers to use the concentrates purchased from
Coca-Cola to bottle, distribute and sell a variety of beverages under certain
brand names and in certain approved presentations and to utilize the
trademarks of Coca-Cola to promote such products.

Coca-Cola reserves the right to market independently or license post-mix
products, although we believe that Coca-Cola will not exercise these rights as
long as we aggressively pursue the marketing of their products in our
territories. The Bottlers must purchase the concentrate from Coca-Cola and
follow Coca-Cola's exact mixing instructions. Each Bottler may purchase only
the quantities of concentrates required in connection with its business and
must use them exclusively for preparation of the beverages and for no other
purpose. The Bottlers may not sell concentrate to third parties without
Coca-Cola's consent.

In the event of a problem with the quality of a beverage, Coca-Cola may
require the Bottler to take all necessary measures to withdraw the beverage
from the market. Coca-Cola must also approve the types of container used in
bottling and controls the design and decoration of the bottles, boxes,
cartons, stamps and other materials used in production. The agreements grant
Coca-Cola the right to inspect the products.

The prices that Coca-Cola may charge us for concentrates are fixed by
Coca-Cola from time to time at its discretion. Coca-Cola currently charges us
a percentage of the weighted average wholesale price (net of taxes) of each
case sold to retailers within each of our franchise territories. At present,
we make payments to Coca-Cola in U.S. dollars for purchases of concentrates by
Panamco Venezuela, Panamco Nicaragua, Panamco Colombia and Panamco Guatemala.
Purchases by Panamco Mexico, Panamco Brazil and Panamco Costa Rica are
generally made in local currency. We pay no additional compensation to
Coca-Cola under the licenses for the use of the associated trade names and
trademarks. Subject to local law, Coca-Cola has the right to limit the
wholesale prices of its products.

As it has in the past, Coca-Cola may, in its discretion, contribute to
our advertising and marketing expenditures as well as undertake independent
advertising and market activities. Coca-Cola has routinely established annual
budgets with us for cooperative advertising and promotion programs. In 2001,
Coca-Cola provided us with $36.5 million in marketing support. See Note 8 to
the "Notes to Consolidated Financial Statements."

The Bottling Agreements require the Bottlers to maintain adequate
production and distribution facilities, quality control standards and sound
financial capacity and to meet certain reporting requirements. The Bottling
Agreements also prohibit the Bottlers from distributing Coca-Cola's products
outside their territories and from producing any other cola beverages. The
Bottling Agreements require us to obtain Coca-Cola's approval before we can
produce or distribute other nonalcoholic beverages.

The Bottlers may not assign, transfer or pledge their Bottling
Agreements, or any interest therein, whether voluntarily, involuntarily or by
operation of law, without the prior consent of Coca-Cola. Moreover, the
Bottlers may not enter into any contract or other arrangement to manage or
participate in the management of any other bottler without the prior consent
of Coca-Cola. We may not sell or otherwise transfer ownership of any of the
Bottlers.

Either party may terminate a Bottling Agreement in the event of a breach
by the other party, which remains uncured after 60 days. If a Bottler fails to
comply with its obligations, Coca-Cola may prohibit the production of
Coca-Cola's products until such noncompliance is corrected.

51




PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K


(a)(1), (2) The Financial Statements and Schedule II--Valuation and
Qualifying Accounts listed on the index on Page F-1 following
are included herein by reference. All other schedules are
omitted, either because they are not applicable or because the
required information is shown in the financial statements or the
notes thereto.

(a)(3) Exhibits:

Exhibit No. Description of Exhibit




3.1 Restatement of Articles of Incorporation of the Company. (incorporated herein by reference to
Exhibit 3.1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2000, File
No. 1-12290).

3.2 Amended and Restated By-laws of the Company. (incorporated herein by reference to Exhibit 3.2 of the
Company's Annual Report on Form 10-K for the year ended December 31, 2000, File No. 1-12290).

4.1 Indenture, dated as of July 11, 1997, by and between the Company and The Chase Manhattan Bank, as
Trustee (incorporated herein by reference to Exhibit 4.1 of the Company's Registration Statement on
Form F-4, File No. 333-7918).

4.2 Registration Rights Agreement, dated as of July 11, 1997, by and between the Company and Lazard
Freres & Co. LLC (incorporated herein by reference to Exhibit 4.2 of the Company's Registration
Statement on Form F-4, File No. 333-7918).

9.1 Voting Trust Agreement as amended and restated as of July 15, 1993 (incorporated herein by reference
to Exhibit 9.1 of the Company's Registration Statement on Form F-1, File No. 33-67978).

10.1 Purchase Agreement, dated July 8, 1997, between the Company and Lazard Freres & Co. LLC
(incorporated herein by reference to Exhibit 10.1 of the Company's Registration Statement on Form
F-4, File No. 333-7918).

10.2 Exchange Agreement, dated as of May 9, 1997, by and among the Company, Venbottling Holdings, Inc.,
Atlantic Industries and Embotelladora Coca-Cola y Hit de Venezuela, S.A. (incorporated herein by
reference to Exhibit 10.2 of the Company's Registration Statement on Form F-4, File No. 333-7918).

10.3 Shareholder Agreement, dated as of May 9, 1997, by and among the Company and Venbottling Holdings,
Inc. (incorporated herein by reference to Exhibit 10.4 of the Company's Registration Statement on
Form F-4, File No. 333-7918).

10.4 Voting Agreement, dated as of May 9, 1997, by and among Venbottling Holdings, Inc., Lt. Gen. Donald
Colin Mackenzie, James M. Gwynn and Woods W. Staton II, in their capacity as voting trustees, and
the Voting Trust created pursuant to the Voting Trust Agreement (incorporated herein by reference to
Exhibit 10.5 of the Company's Registration Statement on Form F-4, File No. 333-7918).

10.5 Voting Agreement, dated August 10, 1993, among The Coca-Cola Company and Lt. Gen. Donald Colin
Mackenzie, James M. Gwynn and Woods W. Staton Welton, in their capacity as voting trustees
(incorporated herein by reference to the Company's Registration Statement on Form F-1, File No.
33-67978).

10.6 Supplement No. 1, dated as of May 9, 1997, by and among the Company, The Coca-Cola Company and The
Coca-Cola Export Corporation in respect of the Amended and Restated Investment Agreement, dated as
of November 1, 1995, by and among the Company, The Coca-Cola Company and The Coca-Cola Export
Corporation (incorporated herein by reference to Exhibit 10.7 of the Company's Registration
Statement on Form F-4, File No. 333-7918).

10.7 Amended and Restated Investment Agreement, dated as of November 1, 1995, by and among the Company,
The Coca-Cola Company and The Coca-Cola Export Corporation (incorporated herein by reference to
Exhibit 10.8 of the Company's Registration Statement on Form F-4, File No. 333-7918).

10.8 Investment Agreement, dated August 10, 1993, among the Company, The Coca-Cola Company and The
Coca-Cola Export Corporation (incorporated herein by reference to Exhibit 10.7 to the Company's
Registration Statement on Form F-1, File No. 33-67978).





52







10.9 Stock Subscription Agreement, dated August 10, 1993, between the Company and The Coca-Cola Export
Corporation (incorporated herein by reference to Exhibit 10.6 of the Company's Registration
Statement on Form F-1, File No. 33-67978).

10.10 Stock Purchase Agreement, dated June 8, 1993, among the Company and the several shareholders
described therein (incorporated herein by reference to the Company's Registration Statement on Form
F-1, File No. 33-67978).

10.11 Letter Agreement, dated May 9, 1997, among Atlantic Industries, Venbottling Holdings, Inc. and the
Company (incorporated herein by reference to Exhibit 10.12 of the Company's Registration Statement
on Form F-4, File No. 333-7918).

10.12 Letter Agreement, dated May 9, 1997, between The Coca-Cola Company and the Company (incorporated
herein by reference to Exhibit 10.13 of the Company's Registration Statement on Form F-4, File No.
333-7918).

10.13 Letter Agreement, dated May 9, 1997, among Oswaldo Cisneros Fajardo, Gustavo Cisneros Rendiles,
Ricardo Cisneros Rendiles, the Company and The Coca-Cola Company (incorporated herein by reference
to Exhibit 10.14 of the Company's Registration Statement on Form F-4, File No. 333-7918).

10.14 Letter Agreement, dated May 9, 1997, between The Coca-Cola Company and Embotelladora Coca-Cola y Hit
de Venezuela, S.A. (incorporated herein by reference to Exhibit 10.15 of the Company's Registration
Statement on Form F-4, File No. 333-7918).

10.15 Letter Agreement, dated May 9, 1997, among Oswaldo Cisneros Fajardo, Gustavo Cisneros Rendiles,
Ricardo Cisneros Rendiles and the Company (incorporated herein by reference to Exhibit 10.16 of the
Company's Registration Statement on Form F-4, File No. 333-7918).

10.16 Indenture, dated as of March 1, 1996, between the Company and Chemical Bank, as Trustee, in respect
of the Company's 8.125% Senior Notes due 2003 (incorporated herein by reference to Exhibit 10.17 of
the Company's Registration Statement on Form F-4, File No. 333-7918).

10.17 Supplemental Indenture, dated as of March 27, 1996, between the Company and Chemical Bank, as
Trustee, in respect of the Company's 8.125% Senior Notes due 2003 (incorporated herein by reference
to Exhibit 10.18 of the Company's Registration Statement on Form F-4, File No. 333-7918).

10.18 Stock Purchase and Sale Agreement, dated August 14, 1997 among Maria Rosario Lacayo Gil de Graziano,
Maria Gabriela Cardenal Lacayo, Manuel Ignacio Lacayo Gil and the Company (incorporated herein by
reference to Exhibit 10.19 of the Company's Registration Statement on Form F-4, File No. 333-7918).

10.19 Stock Purchase Agreement, dated March 25, 1998, among Interamerican Financial Corporation, the
Company, Charver Incorporated and Carlos Humberto Gonzalez (incorporated herein by reference to
Exhibit 10.21 of the Company's Registration Statement on Form F-4, File No. 333-7918).

10.20 Stock Purchase Agreement for Shares, dated as of September 15, 1998, among Diecity, S.A., Dixer
Distribuidora de Bebidas, S.A. and Refrigerantes Do Oeste, S.A. (incorporated herein by reference to
Exhibit 10.1 of the Company's Form 20-F, File No. 1-12290).

10.21 Escrow Agreement, dated as of September 30, 1998, by and among Dixer Distribuidora de Bebidas, S.A.,
Yetready S.A. and Discount Bank and Trust Company (incorporated herein by reference to Exhibit 10.3
of the Company's Form 20-F, File No. 1-12290).

10.22 Credit Agreement,, dated July 18, 2000, among Panamco de Venezuela, S.A., Panamerican Beverages,
Inc. and Inarco International Bank, N.V. (incorporated herein by reference to Exhibit 10.28 of the
Company's Annual Report on Form 10-K for the year ended December 31, 2000, File No. 1-12290).

10.23 Stock Purchase Agreement, dated December 15, 2000, between Panamerican Beverages, Inc. and Panamco
Mexico S.A. de C.V. (incorporated herein by reference to Exhibit 10.33 of the Company's Annual
Report on Form 10-K for the year ended December 31, 2000, File No. 1-12290).

10.24 Customer's Outsourcing Agreement, dated December 1, 2000, between Administracion S.A. de C.V. and
E.D.S. de Mexico S.A. de C.V. (incorporated herein by reference to Exhibit 10.34 of the Company's
Annual Report on Form 10-K for the year ended December 31, 2000, File No. 1-12290).

10.25 Customer's Outsourcing Agreement, dated December 1, 2000, between Spal Industria Brazilera de
Bebidas, S.A. and Electronic Data Systems do Brazil Ltda. (incorporated herein by reference to
Exhibit 10.35 of the Company's Annual Report on Form 10-K for the year ended December 31, 2000, File
No. 1-12290).

10.26 Customer's Outsourcing Agreement, dated December 1, 2000 between Panamco Colombia, S.A. and
Electronic Data Systems Colombia S.A. (incorporated herein by reference to Exhibit 10.36 of the
Company's Annual Report on Form 10-K for the year ended December 31, 2000, File No. 1-12290).



53







10.27 Customer's Outsourcing Agreement, dated December 1, 2000, between Panamco de Venezuela, S.A. and
Electronic Data Systems de Venezuela "EDS" C.A. (incorporated herein by reference to Exhibit 10.37
of the Company's Annual Report on Form 10-K for the year ended December 31, 2000, File No. 1-12290).

10.28 Customer's Outsourcing Agreement, dated December 1, 2000, between Embotelladora Panamco Tica, S.A.
and Electronic Data Systems (EDS) de Costa Rica S.A. (incorporated herein by reference to Exhibit
10.38 of the Company's Annual Report on Form 10-K for the year ended December 31, 2000, File No.
1-12290).

10.29 Customer's Outsourcing Agreement, dated December 1, 2000, between Panamco de Nicaragua, S.A. and
Electronic Data Systems (EDS) de Nicaragua y Cia. Ltda. (incorporated herein by reference to Exhibit
10.39 of the Company's Annual Report on Form 10-K for the year ended December 31, 2000, File No.
1-12290).

10.30 Customer's Outsourcing Agreement, dated December 1, 2000, between Embotelladora Central, S.A. and
Electronic Data Systems (EDS) de Guatemala S.A. (incorporated herein by reference to Exhibit 10.40
of the Company's Annual Report on Form 10-K for the year ended December 31, 2000, File No. 1-12290).

10.31 Customer's Outsourcing Agreement, dated December 1, 2000, between Panamco L.L.C. Electronic Data
Systems Corporation. (incorporated herein by reference to Exhibit 10.41 of the Company's Annual
Report on Form 10-K for the year ended December 31, 2000, File No. 1-12290).

10.32 Employment Agreement between the Company and Carlos Hernandez-Artigas. (incorporated herein by
reference to Exhibit 10.43 of the Company's Annual Report on Form 10-K for the year ended December
31, 2000, File No. 1-12290).*

10.33 Employment Agreement between the Company and William G. Cooling (incorporated herein by reference to
Exhibit 10.3 of the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001,
File No. 1-12290 ).*

10.34 Employment Agreement between the Company and Henry A. Schimberg (incorporated herein by reference to
Exhibit 10.4 of the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001,
File No. 1-12290).*

10.35 Amendment and Waiver No. 2 to the Credit Agreement, dated as of June 4, 2001, by and among Panamco
de Venezuela, S.A., as borrower, Inarco International Bank, N.A., as lender and the Company as
guarantor (incorporated herein by reference to Exhibit 10.3 of the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2001, File No. 1-12290).

10.36 Guaranteed Promissory Note, dated as of June 5, 2001, by and among Panamco de Venezuela S.A., as
borrower, Banco Santander Hispano, S.A., as lender, and the Company, as guarantor (incorporated
herein by reference to Exhibit 10.4 of the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 2001, File No. 1-12290).

10.37 Financial Lease Agreement, dated as of September 5, 2001, by and among Panamco de Venezuela, S.A.,
as borrower, Citibank, N.A., as lender, and the Company, as guarantor (incorporated herein by
reference to Exhibit 10.2 of the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2001, File No. 1-12290).

10.38 Promissory Note, dated as of September 14, 2001, by and among Panamco de Nicaragua, S.A., as
borrower, Citibank, N.A., as lender, and the Company, as guarantor (incorporated herein by reference
to Exhibit 10.3 of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
2001, File No. 1-12290).

10.39 Credit Agreement by and among the Company as Borrower, ING Bank (Mexico) Institucion de Banca
Multiple, ING Baring Grupo Financiero (Mexico) S.A. de C.V. as the Bank, and Panamco Mexico, S.A. de
C.V. and Panamco Golfo, S.A. de C.V. as the Guarantors, dated as of December 18, 2001.

10.40 Debt Acknowledgement and Obligor Substitution Agreement by the Company as Original Obligor, Panamco
Mexico, S.A de C.V. as Substitute Obligor, Panamco Golfo S.A. de C.V. as Joint Obligor and Guarantor
and ING Bank (Mexico) Institucion de Banca Multiple, ING Baring Grupo Financiero (Mexico) S.A. de
C.V. as the Bank, dated as of December 18, 2001.

10.41 Debt Acknowledgement and Obligor Substitution Agreement by Panamco Mexico, S.A de C.V. as Original
Obligor, Panamco Golfo S.A. de C.V. as Substitute Obligor and ING Bank (Mexico) Institucion de Banca
Multiple, ING Baring Grupo Financiero (Mexico) S.A. de C.V. as the Bank, dated as of December 18,
2001.

10.42 Credit Agreement by and among the Company as Borrower, BBVA Bancomer S.A. Institucion de Banca
Multiple, Grupo Financiero BBVA Bancomer S.A. as the Bank, and Panamco Mexico, S.A. de C.V. and
Panamco Golfo, S.A. de C.V. as the Guarantors, dated as of December 18, 2001.


54






10.43 Debt Acknowledgement and Obligor Substitution Agreement by the Company as Original Obligor, Panamco
Mexico, S.A de C.V. as Substitute Obligor, Panamco Golfo S.A. de C.V. as Joint Obligor and Guarantor
and BBVA Bancomer S.A. Institucion de Banca Multiple, Grupo Financiero BBVA Bancomer S.A. as the
Bank, dated as of December 18, 2001.

10.44 Debt Acknowledgement and Obligor Substitution Agreement by Panamco Mexico, S.A de C.V. as Original
Obligor, Panamco Golfo S.A. de C.V. as Substitute Obligor and BBVA Bancomer S.A. Institucion de
Banca Multiple, Grupo Financiero BBVA Bancomer S.A. as Bank, dated as of December 18, 2001.

10.45 US$ 130 Million Second Amended and Restated Credit Agreement entered by and among the Company as
Borrower, the financial institutions listed therein as Lenders, ING (US) Capital L.L.C. as
Administrative Agent and The Chase Manhattan Bank, as the Syndication Agent, dated as of October 29,
2001.

10.46 Stock Purchase Agreement entered by and among the Company as Seller and Panamco Mexico S.A. de C.V.
as Purchaser, dated as of February 23, 2001.

10.47 Stock Purchase Agreement entered by and among the Company as Seller and Panamco Mexico S.A. de C.V.
as Purchaser, dated as of March 29, 2001.

10.48 Stock Purchase Agreement entered by and among the Company as Seller and Embotelladora Panamco Tica,
S.A. as Purchaser, dated as of January 4, 2001.

10.49 Stock Purchase Agreement entered by and among the Company as Seller and Embotelladora Panamco Tica,
S.A. as the Purchaser, dated as of April 4, 2001.

10.50 Stock Purchase Agreement entered by and among the Company as Seller and Embotelladora Panamco Tica,
S.A. as Purchaser, dated as of May 30, 2001.

10.51 Stock Purchase Agreement entered by and among the Company as Seller and Embotelladora Panamco Tica,
S.A. as Purchaser, dated as of May 14, 2001.

10.52 Stock Purchase Agreement entered by and among the Company as Seller and Embotelladora Panamco Tica,
S.A. as Purchaser, dated as of September 28, 2001.

10.53 Stock Purchase Agreement entered by and among the Company as Seller and Embotelladora Panamco Tica,
S.A. as Purchaser, dated as of December 20, 2001.

10.54 Restricted Stock Agreement, dated as of November 10, 2000, between the Company and William Cooling.*

10.55 Restricted Stock Agreement, dated as of November 10, 2000, between the Company and Henry Schimberg.*

10.56 Stock Option Agreement, dated as of November 10, 2000, between the Company and William Cooling.*

10.57 Stock Option Agreement, dated as of November 10, 2000, between the Company and Henry Schimberg.*

10.58 Promissory Note, dated as of June 21, 2001, from William Cooling to the Company.*

10.59 Promissory Note, dated as of June 21, 2001, from Henry A. Schimberg to the Company.*

10.60 Promissory Note, dated as of August 14, 2001, from Henry A. Schimberg to the Company.*

10.61 Employment Termination Agreement and General Release, dated as of December 28, 2001, between the
Company and Alejando Jimenez.*

10.62 Employment Agreement, dated as of February 15, 2002, between the Company and Mario Gonzalez
Padilla.*

10.63 Employment Agreement, dated as of February 27, 2002, between the Company and Craig Jung.*

21.1 Subsidiaries of the Registrant

23.1 Consent of Independent Certified Public Accountants

99.1 Letter, dated March 28, 2002, from the Company to the Securities and Exchange Commission pursuant to
Temporary Note 3T to Article 3 of Regulation S-X.




* Management contracts and compensatory plans or arrangements required to be
filed as exhibits to this form pursuant to Item 14(c).

(a) During the fourth quarter of 2001, the Company did not file any Current
Reports on Form 8-K.

55




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.


PANAMERICAN BEVERAGES, INC.




Dated: March 28, 2002 By: /s/ Mario Gonzalez Padilla
---------------------------------------
Mario Gonzalez Padilla, Vice President,
Chief Financial Officer and Treasurer

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.




Dated: March 28, 2002 By: /s/ William G. Cooling
---------------------------------------
William G. Cooling, Director, Chairman
of the Board and Chief Executive Officer




Dated: March 28, 2002 By: /s/ Henry A. Schimberg
---------------------------------------
Henry A. Schimberg, Director,
Vice Chairman of the Board




Dated: March 28, 2002 By: /s/ Craig D. Jung
---------------------------------------
Craig D. Jung, Director, President
and Chief Operating Officer




Dated: March 28, 2002 By: /s/ Gustavo A. Cisneros
---------------------------------------
Gustavo A. Cisneros, Director




Dated: By:
---------------------------------------
Oswaldo J. Cisneros, Director




Dated: March 28, 2002 By: /s/ Gary P. Fayard
---------------------------------------
Gary P. Fayard, Director


56





Dated: March 28, 2002 By: /s/ Luis Fernando Furlan
---------------------------------------
Luis Fernando Furlan, Director




Dated: By:
---------------------------------------
Wade T. Mitchell, Director




Dated: March 28, 2002 By: /s/ James J. Postl
---------------------------------------
James J. Postl, Director




Dated: By:
---------------------------------------
Houston Staton, Director




Dated: March 28, 2002 By: /s/ Stuart A. Staton
---------------------------------------
Stuart A. Staton, Director




Dated: March 28, 2002 By: /s/ Woods W. Staton Welten
---------------------------------------
Woods W. Staton Welten, Director

57





INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page



Report of Independent Certified Public Accountants.................. F-2
Consolidated Balance Sheets at December 31, 2001 and 2000........... F-3
Consolidated Statements of Operations for the Years.
Ended December 31, 2001, 2000 and 1999........................... F-5
Consolidated Statements of Shareholders' Equity and Comprehensive
Income for the Years Ended December 31, 2001, 2000 and 1999....... F-6
Consolidated Statements of Cash Flows for the Years
Ended December 31, 2001, 2000 and 1999............................ F-8
Notes to Consolidated Financial Statements........................... F-10
Report of Independent Certified Public Accountants on Schedule....... F-45
Schedule II - Valuation and Qualifying Accounts....................... F-46


F-1





REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS




To Panamerican Beverages, Inc.:

We have audited the accompanying consolidated balance sheets of
Panamerican Beverages, Inc. (a Panamanian corporation) and subsidiaries as of
December 31, 2001 and 2000 and the related consolidated statements of
operations, shareholders' equity and comprehensive income and cash flows for
each of the three years in the period ended December 31, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Panamerican
Beverages, Inc. and subsidiaries as of December 31, 2001 and 2000, and the
results of their operations and their cash flows for each of the three years
in the period ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States.


Arthur Andersen LLP


Miami, Florida,
February 5, 2002 (except with respect to
the matters discussed in Note 23,
as to which the date is March 18, 2002).

F-2







PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(STATED IN THOUSANDS OF UNITED STATES OF AMERICA ("U.S.") DOLLARS,
EXCEPT PER SHARE AMOUNTS)



DECEMBER 31,
--------------------------------------------
2001 2000
---------------- --------------


ASSETS
Current assets:
Cash and equivalents $ 133,666 $ 191,773
Accounts receivable, net 136,614 138,473
Inventories, net 103,040 105,439
Other current assets 27,466 30,268
------------ -----------

Total current assets 400,786 465,953

Investments 28,522 158,006
Long-term receivables 5,521 7,204
Property, plant and equipment, net 1,043,870 1,125,719
Bottles and cases, net 213,908 236,527
Deferred income taxes 94,592 99,165
Cost in excess of net assets acquired, net 869,056 903,683
Other assets 36,771 30,064
----------- -----------

Total assets $ 2,693,026 $ 3,026,321
=========== ===========

LIABILITIES
Current liabilities:
Accounts payable 274,164 171,239
Current portion of long-term obligations 75,439 184,889
Bank loans 35,184 40,295
Income taxes payable 28,973 40,760
Deferred income taxes 28,043 19,258
Sales and other taxes payable 45,881 58,007
Current portion of employee severance payments 3,081 12,335
Employee profit sharing 21,016 16,405
Accrued facility reorganization charges 6,575 47,875
Other accrued liabilities 51,309 47,161
----------- -----------

Total current liabilities 569,665 638,224
----------- -----------

Long-term liabilities:
Long-term obligations, net of current portion 859,619 1,028,575
Pensions and employee severance payments 30,882 17,144
Deferred income taxes 87,291 92,706
Other liabilities 44,583 54,556
----------- -----------

Total long-term liabilities 1,022,375 1,192,981
----------- -----------

Total liabilities 1,592,040 1,831,205
----------- -----------

(Continued)

F-3






PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(STATED IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS)

(Continued)




DECEMBER 31,
--------------------------------------------
2001 2000
--------------------- ---------------------


Commitments and contingencies (Notes 15, 16 and 17)

Minority interest in consolidated subsidiaries 28,541 27,805
----------- -----------

SHAREHOLDERS' EQUITY

Class C preferred stock, $0.01 par value;
50,000,000 shares authorized; 2 shares issued
and outstanding at December 31, 2001 and
2000, respectively - -

Class A common stock, $0.01 par value;
500,000,000 authorized; 136,952,780
and 136,745,820 shares issued and
113,237,031 and 119,742,584 shares
outstanding at December 31, 2001
and 2000, respectively 1,369 1,367

Class B common stock, $0.01 par value;
50,000,000 authorized; 11,059,082
and 11,266,042 shares issued and
8,681,245 and 8,888,435 shares
outstanding at December 31, 2001
and 2000, respectively 111 113

Capital in excess of par value 1,591,827 1,585,498
Retained earnings 138,433 50,632
Accumulated other comprehensive loss (458,341) (399,541)
------------ ------------

1,273,399 1,238,069
Less 26,093,586 and 19,380,843 treasury
shares held at December 31, 2001 and 2000,
respectively, at cost (200,954) (70,758)
------------ ------------

Total shareholders' equity 1,072,445 1,167,311
----------- ------------


Total liabilities and shareholders' equity $ 2,693,026 $ 3,026,321
=========== ============


The accompanying notes are an integral part of these consolidated
financial statements.

F-4






PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Stated in thousands of U.S. dollars, except per share amounts)




YEAR ENDED DECEMBER 31,
-----------------------------------------------
2001 2000 1999
--------------- --------------- -------------



Net sales $ 2,650,872 $ 2,599,411 $ 2,415,817
Cost of sales, excluding depreciation
and amortization 1,296,307 1,243,485 1,191,883
----------- ----------- -----------

Gross profit 1,354,565 1,355,926 1,223,934
----------- ----------- -----------

Operating expenses:
Selling and distribution 629,387 636,739 572,038
General and administrative 204,897 244,551 251,450
Depreciation and amortization 210,667 274,046 214,539
Amortization of goodwill 26,416 35,819 36,284
Facilities reorganization charges - 503,659 35,172
----------- ----------- -----------

1,071,367 1,694,814 1,109,483
----------- ----------- -----------

Operating income (loss) 283,198 (338,888) 114,451
----------- ----------- -----------

Other income (expense):
Interest income 21,341 31,933 28,962
Interest expense (119,390) (142,299) (129,072)
Other expense, net (10,891) (31,662) (39,296)
----------- ----------- -----------

(108,940) (142,028) (139,406)
----------- ----------- -----------

Income (loss) before provision for income taxes 174,258 (480,916) (24,955)
Provision for income taxes 50,369 21,800 31,254
----------- ----------- -----------

Income (loss) before minority interest 123,889 (502,716) (56,209)
Minority interest in earnings of consolidated
subsidiaries 5,865 1,944 3,695
----------- ----------- -----------

Net income (loss) $ 118,024 $ (504,660) $ (59,904)
=========== =========== ===========

Basic earnings (loss) per share $ 0.94 $ (3.92) $ (0.46)
=========== =========== ===========
Basic weighted average shares outstanding 125,559 128,833 129,683
=========== =========== ===========
Diluted earnings (loss) per share $ 0.93 $ (3.92) $ (0.46)
=========== =========== ===========
Diluted weighted average shares outstanding 126,655 128,833 129,683
=========== =========== ===========


The accompanying notes are an integral part of these consolidated
financial statements.

F-5





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
AND COMPREHENSIVE INCOME
(Stated in thousands of U.S. dollars, except per share amounts)




Shares Amounts
------------------------ -------------------------------------------------------------------
Accumu-
lated
Common Other Total
Stock, Capital in Compre- Treasury Share-
Held in $0.01 Excess of Retained hensive Shares, holders'
Issued Treasury Par Value Par Value Earnings Loss At Cost Equity
------------------------ -------------------------------------------------------------------


Balance, December 31, 1998 148,011,864 18,366,623 $ 1,480 $ 1,583,759 $677,229 $(234,290) $(49,944) $1,978,234
Comprehensive loss:
Net loss - - - - (59,904) - - (59,904)
Initial effect on deferred
taxes
relating to the change in
functional currency in the
Mexican subsidiaries - - - - - (4,937) - (4,937)
Translation adjustments
(including $7,005 from taxes) - - - (125,566) - (125,566)

Pension plan - - - - - 1,524 - 1,524
----------
Total comprehensive loss (188,883)
----------
Share repurchase - 368,584 - - - - (7,568) (7,568)
Stock options exercised - (76,500) - 1,029 - - 213 1,242
Dividends declared
($0.24 per share) - - - - (31,129) - - (31,129)
----------- ---------- --------- ----------- -------- --------- --------- ----------

Balance, December 31, 1999 148,011,864 18,658,707 1,480 1,584,788 586,196 (363,269) (57,299) 1,751,896
Comprehensive loss:
Net loss - - - - (504,660) - - (504,660)
Translation adjustments
(including $1,972 from taxes) - - - - - (35,895) - (35,895)

Pension plan - - - - - (377) - (377)
----------
Total comprehensive loss (540,932)
----------
Share repurchase - 785,295 - - - - (13,675) (13,675)
Stock options exercised - (25,000) - 326 - - 79 405
Directors' compensation - (38,159) - 384 - - 137 521
Dividends declared
($0.24 per share) - - - - (30,904) - - (30,904)
----------- ---------- --------- ----------- -------- --------- --------- ----------

Balance, December 31, 2000 148,011,864 19,380,843 $ 1,480 $ 1,585,498 $ 50,632 $(399,541) $ (70,758) $1,167,311


(Continued)

F-6





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
AND COMPREHENSIVE INCOME
(Stated in thousands of U.S. dollars, except per share amounts)

(Continued)





Shares Amounts
------------------------ -------------------------------------------------------------------
Accumu-
lated
Common Other Total
Stock, Capital in Compre- Treasury Share-
Held in $0.01 Excess of Retained hensive Shares, holders'
Issued Treasury Par Value Par Value Earnings Loss At Cost Equity
------------------------ -------------------------------------------------------------------

Balance, December 31, 2000 148,011,864 19,380,843 $ 1,480 $ 1,585,498 $ 50,632 $(399,541) $(70,758) $1,167,311
Comprehensive income:
Net income - - - - 118,024 - - 118,024
Initial effect on deferred
taxes
relating to the change in
functional currency in the
Colombian subsidiaries - - - - - (30,057) - (30,057)
Translation adjustments
(including $(17,308) from
taxes) - - - - - (25,997) - (25,997)

Pension plan - - - - - (2,746) - (2,746)
--------
Total comprehensive income 59,224
--------
Share repurchase - 7,283,685 - - - - (133,198) (133,198)
Stock options exercised - (336,580) - 3,025 - - 1,764 4,789
Restricted stock issued - (234,362) - 3,304 - - 1,238 4,542
Dividends declared
($0.24 per share) - - - - (30,223) - - (30,223)
----------- ---------- --------- ----------- -------- --------- --------- ----------
Balance, December 31, 2001 148,011,864 26,093,586 $ 1,480 $ 1,591,827 $138,433 $(458,341) $(200,954) $1,072,445
=========== ========== ========= =========== ======== ========= ========= ==========



The accompanying notes are an integral part of these consolidated
financial statements.

F-7






PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in thousands of U.S. dollars)




YEAR ENDED DECEMBER 31,
-------------------------------------
2001 2000 1999

Cash flows from operating activities:
Net income (loss) $ 118,024 $ (504,660) $ (59,904)
---------- ---------- ---------
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 237,083 309,865 250,823
Gain on foreign currency translation (5,541) (11,664) (14,785)
Minority interest in earnings of
consolidated subsidiaries 5,865 1,944 3,695
Deferred income tax benefit and change in
valuation allowance (40,145) (75,681) (39,401)
Provision for (benefit from) legal contingencies 137 5,166 2,295
Pensions and other employees benefits 17,945 6,890 5,760
Loss (gain) on property, plant and equipment
and investment disposals (2,047) 3,642 (2,760)
Equity in losses (gains) of unconsolidated companies,
net of cash dividends received (516) 1,189 4,371
Noncash facilities reorganization charges (benefits) (2,015) 415,088 20,270
Nonoperating charges 874 5,977 4,391
Other 6,867 5,433 9,558
Changes in operating assets and liabilities:
Accounts receivable (10,857) (14,393) 55,441
Inventories 278 15,025 24,135
Other current assets 999 6,506 11,283
Long-term receivables 1,006 4,562 (1,370)
Accounts payable and accrued expenses 98,030 64,133 (26,848)
Employee severance payments (13,103) (2,835) (3,962)
Other assets and liabilities (55,489) 61,252 (16,846)
---------- ---------- ---------
Total adjustments 239,371 802,099 286,050
---------- ---------- ---------
Net cash provided by operating activities 357,395 297,439 226,146
---------- ---------- ---------
Cash flows from investing activities:
Capital expenditures (83,121) (123,897) (163,203)
Purchases of bottles and cases (47,826) (73,746) (74,591)
Purchases of investments (1,463) (4,982) (190,409)
Proceeds from sale of investments 127,718 54,959 -
Proceeds from sale of property, plant and equipment 34,465 18,164 2,760
Acquisition of minority interest in consolidated subsidiaries - (965) -
Other (3,306) - (1,739)
---------- ---------- ---------
Net cash provided by (used in) investing activities 26,467 (130,467) (427,182)
---------- ---------- ---------


(Continued)

F-8





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in thousands of U.S. dollars)

(Continued)




YEAR ENDED DECEMBER 31,
-------------------------------------
2001 2000 1999

Cash flows from financing activities:
Payment of bank loans and other $ (529,145) $ (302,596) (395,836)
Proceeds from bank loans and other long-term obligations 241,807 223,109 633,706
Issuance of capital and treasury stock 9,331 926 1,242
Share repurchase (133,198) (13,675) (7,568)
Payment of dividends to minority interest (3,201) (980) (499)
Payment of dividends to shareholders (30,223) (30,904) (31,129)
Other - - (1,657)
---------- ---------- ---------
Net cash (used in) provided by financing activities (444,629) (124,120) 198,259
---------- ---------- ---------

Effect of exchange rate changes on cash and cash equivalents 2,660 (3,727) 24,273
---------- ---------- ---------
Net (decrease) increase in cash and equivalents (58,107) 39,125 21,496
Cash and equivalents at beginning of year 191,773 152,648 131,152
---------- ---------- ---------
Cash and equivalents at end of year $ 133,666 $ 191,773 $ 152,648
========== ========== =========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid during the year for:
Interest (net of capitalized interest) $ 109,078 $ 126,566 $ 109,371
========== ========== =========

Income taxes $ 83,602 $ 69,200 $ 36,880
========== ========== =========

NONCASH ACTIVITIES:
Write-off of property, plant and equipment against
accrued facilities reorganization charges $ (2,015) $ 54,451 $ 20,270
========== ========== =========
Write-off of costs in excess of net assets acquired against
accrued facilities reorganization charges $ - $ 350,000 $ -
========== ========== =========

The accompanying notes are an integral part of these consolidated
financial statements.




F-9





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)

(1) OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Operations

The primary activity of Panamerican Beverages, Inc., a Panamanian
corporation, and subsidiaries (collectively, the "Company"), is the
production and sale of The Coca-Cola Company ("Coca-Cola") products and
other beverages. The Company operates in Mexico, Brazil, Colombia,
Venezuela and Central America (Costa Rica, Nicaragua and Guatemala). In
1998, "Panamco Central America" group was created, which consists of
Panamco Costa Rica, Panamco Nicaragua and Panamco Guatemala. Prior to the
second quarter of 2001, the financial condition and results of operations
of these three companies were previously reported together in the
financial statements entitled Panamco Central America. In February 1999,
North Latin American Division ("NOLAD") was created, which consists of
Panamco Mexico and Panamco Central America. The results of operations of
Panamco Mexico and Panamco Central America are reported together in the
financial statements entitled Panamco NOLAD.

Approximately 87% of the Company's 2001 net sales were derived from the
distribution of Coca-Cola products. Coca-Cola may be able to exercise
influence over the conduct of the Company's business through rights
maintained under bottler agreements with the Company and otherwise.

On November 1, 1995, Coca-Cola, the Coca-Cola Export Corporation
("Export"), a wholly owned subsidiary of Coca-Cola, and the Company
entered into an Amended and Restated Investment Agreement (the
"Agreement") pursuant to which Coca-Cola designated the Company as an
anchor bottler and agreed to increase its equity interest in the Company.
Coca-Cola also acquired the right to approve certain major corporate
actions taken by the Company. Subject to satisfaction of certain
conditions, the Agreement calls for Coca-Cola to purchase Company capital
stock in amounts equal to the purchase price of bottling acquisitions to
be made by the Company from time to time, up to a maximum voting interest
of 25%. The price per share in any such acquisition of additional capital
stock will be the average closing price on the New York Stock Exchange
during a period preceding the announcement of the related bottling
acquisition. The Agreement does not obligate the Company to finance an
acquisition by selling stock to Export.

The designation of the Company as an anchor bottler means that the
Company is one of Coca-Cola's strategic partners in the worldwide
Coca-Cola bottling system. Although the designation does not guarantee
that the Company will be able to acquire any particular franchise or
renew existing bottler agreements, the Company believes it is looked upon
favorably and that Coca-Cola will provide the Company with favorable
treatment relating to these opportunities.

As of December 31, 2001 and 2000, Coca-Cola beneficially owned 30,625,692
shares representing approximately 25% and 24%, respectively, of the
Company's outstanding shares.

The significant accounting policies of the Company and its subsidiaries
are as follows:

Basis of Consolidation

The consolidated financial statements include the accounts and operations
of the Company and its subsidiaries in Mexico, Brazil, Colombia,
Venezuela and Central America. All material intercompany accounts and
transactions have been eliminated in consolidation. Minority interest in
majority-owned subsidiaries has been recorded in the Company's
consolidated financial statements representing the minority interests
owners' share of subsidiary earnings.

F-10





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)

(1) OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Basis for Translation

The accounts of the Company are maintained in United States of America
("U.S.") dollars. The accounts of the subsidiaries are maintained in the
currencies of the respective countries.

The financial statements of the Colombian and Venezuelan subsidiaries for
all periods have been remeasured into U.S. dollars. The Company's
reporting and functional currency, in accordance with the Financial
Accounting Standards Board ("FASB") Statement of Financial Accounting
Standards ("SFAS") No. 52, "Foreign Currency Translation," applicable to
highly inflationary economies, such as those in which the subsidiaries
operate, is as follows:

a. Quoted year-end rates of exchange are used to remeasure monetary
assets and liabilities.

b. All other consolidated balance sheet items are remeasured at the
rates of exchange in effect at the time the items were originally
recorded.

c. Revenues and expenses are remeasured on a monthly basis at the
average rates of exchange in effect during the period, except for
depreciation, amortization and materials consumed from inventories,
which are translated at the rates of exchange in effect when the
respective assets were acquired.

d. Translation gains and losses arising from the remeasurement are
included in the determination of net income (loss) in the period
such gains and losses arise and have been recorded in the related
statement of operations accounts.

Foreign currency translation gains (losses) on monetary assets and
liabilities for Colombia and Venezuela have been included in the
statement of operations accounts to which such items relate as shown
below:

YEAR ENDED DECEMBER 31,
-------------------------------------
2001 2000 1999
------------ ------------ -----------
Net sales $ 403 $ (92) $ (313)
Cost of sales and operating expenses 2,517 7,959 12,152
Interest and other income (expense) 2,666 2,406 1,446
Provision (benefit) for income taxes (45) 1,391 1,500
-------- -------- --------
Net translation gain $ 5,541 $ 11,664 $ 14,785
======== ======== ========

The translation gains (losses) allocated to net sales attributable to
translation gains (losses) on accounts receivable. The translation gains
(losses) allocated to cost of sales and operating expenses are
attributable to translation gains (losses) on accounts payable and
certain accrued liabilities. The translation gains (losses) allocated to
interest and other income (expense) are attributable primarily to accrued
excise taxes and certain other accrued liabilities.

As of December 31, 2001, the Company discontinued classifying Colombia as
a highly inflationary economy, and, acordingly, the functional currency
of the Colombian operations was changed from the U.S. dollar to the
Colombian peso. The effect of the change represented a decrease in both
the deferred income tax balance and shareholders' equity of $30.1 million
in 2001. Beginning in 1999, the Company discontinued classifying Mexico
as a highly inflationary economy, and, accordingly, the functional
currency of the Mexican operations was changed from the U.S. dolar to the
Mexican peso. The effect of the change represented a decrease in both the
deferred income tax balance and shareholders' equity of $4.9 million in
1999.

F-11





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)

(1) OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The current rate translation method is used for the Mexican, Brazilian,
Costa Rican, Nicaraguan and Guatemalan subsidiaries, where the functional
currency is the Mexican peso, the Brazilian real, the Costa Rican colon,
the Nicaraguan cordoba and the Guatemalan quetzal, respectively. Under
this method all assets and liabilities (except minority interests) are
translated on a monthly basis using the quoted month-end exchange rate,
and all revenues and expenses are translated on a monthly basis at the
average rate of exchange in effect during the period. The resulting
translation adjustments are included in accumulated other comprehensive
loss, which is a component of shareholders' equity. Foreign currency
gains and losses resulting from transactions denominated in foreign
currencies, including intercompany transactions, except for intercompany
loans of a long-term investment nature, are included in results of
operations.

Latin America

The Latin American markets in which the Company operates are
characterized by volatile and frequently unfavorable economic, political
and social conditions. High inflation and high interest rates are common.
The governments in the countries where the Company operates have
responded in the past to high inflation by imposing price and wage
controls or similar measures, although formal soft drink price controls
in each country have been lifted or phased out. Certain countries in
Latin America have also experienced significant currency fluctuations.
Since the Company's consolidated cash flows from operations are generated
exclusively in the currencies of the subsidiaries, the Company is subject
to the effect of fluctuations in the value of those currencies.

During January 1999, the Brazilian Government changed its local currency
exchange policy in relation to the U.S. dollar, allowing the exchange
rate to be determined by market conditions without the establishment of a
trading band. During 2001 and 2000, the local currency decreased in value
in relation to the U.S. dollar by 18.7% and 9.3%, respectively, and the
related exchange loss amounted to $8.6 million and $5.4 million,
respectively, which was recorded in other income (expense). As of
December 31, 2001 and 2000, the Brazilian subsidiaries have liabilities
denominated in U.S. dollars subject to translation exchange gains or
losses in the amount of $5.5 million and $68.7 million, respectively, and
assets subject to translation effect in the amount of $1.3 million and
$1.8 million, respectively.

Reclassifications

Certain amounts in the prior year consolidated financial statements have
been reclassified to conform to the current year presentation.

Use of Estimates

The preparation of consolidated financial statements in conformity with
generally accepted accounting principles in the U.S. requires management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results in subsequent periods could differ from those estimates.
The most significant estimates with regard to these consolidated
financial statements are related to the estimation of facilities
reorganization charges, realization of accounts receivable and
inventories, useful life of bottles and cases, estimated periods to be
benefited from the cost in excess of net assets of acquired businesses
and the settlement of taxes and pensions.

F-12





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)

(1) OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition

Revenues from sales are recorded at the time products are delivered to
trade customers. Net sales reflect units delivered at selling list prices
reduced by promotion allowances.

Adjustments to Conform with Generally Accepted Accounting Principles in
the U.S.

Certain accounting policies applied by the subsidiaries in their accounts
(and in their financial statements prepared for use in their respective
countries) conform with generally accepted accounting principles in their
respective countries but do not conform with generally accepted
accounting principles in the U.S. The accompanying consolidated financial
statements have been prepared for use primarily in the U.S. and reflect
certain adjustments required to conform to generally accepted accounting
principles in the U.S.

Other Comprehensive Income

Comprehensive income (loss) consists of net income, foreign currency
translation adjustments and pension liability adjustments, and is
presented in the accompanying Consolidated Statements of Shareholders'
Equity and Comprehensive Income.

Cash and Equivalents

Cash and equivalents include cash on hand and in banks and certificates
of deposit stated at cost plus income accrued up to the balance sheet
date. Cash and equivalents have an original maturity of three months or
less at the date of acquisition.

Inventories

Inventories are stated at the lower of average cost, determined using the
first-in, first-out ("FIFO") method, or market. Components of inventory
cost include bottled beverages, raw materials, and spare parts and
supplies. Provision, when necessary, has been made to reduce obsolete and
slow-moving inventories to net realizable value.

Investments

The Company uses the cost method to account for certain equity
investments in which it has a minority interest and does not exercise
significant influence.

Investments in other companies in which the Company holds at least 20% of
the outstanding shares, but less than 50%, are accounted for using the
equity method, wherein the Company's participation in the earnings of
those subsidiaries are recorded in income as earned, and dividends
received in cash are applied to reduce the related investment.

The Company's equity in earnings and the changes in the Company's equity
of subsidiaries that are acquired or sold during the period are included
in the consolidated financial statements from or until the date of the
transaction.

F-13





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)

(1) OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property, Plant and Equipment

Property, plant and equipment includes the cost of land, buildings,
equipment and significant improvements to existing property. Additions,
improvements and expenditures for repairs and maintenance that
significantly add to the productive capacity or extend the life of an
asset are capitalized; other expenditures for repairs and maintenance are
charged to operating results as incurred. Leasehold improvements are
amortized over the shorter of the asset's life or the remaining
contractual lease term.

Interest incurred with respect to long-term capital projects is
capitalized and reflected as a reduction of interest expense. No interest
was capitalized during 2001 and 2000. Capitalized interest amounted to
$0.1 million in 1999.


When an asset is sold or retired, the cost and related accumulated
depreciation are removed from the respective accounts and any gain or
loss is included in results of operations for that year. Depreciation
expense is calculated under the straight-line method for all subsidiaries
over the estimated remaining useful lives of the assets. Included in
depreciation expense is a provision to cover losses related to coolers
that are placed with customers under rent-free agreements. This provision
is adjusted, as necessary, to account for the physical loss of coolers.

Bottles and Cases

The Company utilizes the lower of the first-in, first-out ("FIFO") cost
or market method for valuing bottles and cases on hand. Breakage of
bottles and cases on hand is included in depreciation expense. For the
years ended December 31, 2001, 2000 and 1999, breakage expense amounted
to $37.7 million, $60.9 million and $37.4 million, respectively.

Bottles and cases, include the cost of bottles and cases on hand and the
unamortized portion of the capitalized cost of new introductions, net of
any amounts collected for bottles and cases. The cost of new
introductions is amortized over estimated useful lives ranging from three
to six years for bottles and six to ten years for cases, and amortization
expense of $40.3 million, $58.5 million and $57.2 million was recorded in
2001, 2000 and 1999, respectively, and is included within depreciation
and amortization expense in the consolidated statements of operations.
Accumulated amortization at December 31, 2001 and 2000 amounted to $207.9
million and $243.3 million, respectively.

A certain number of bottles and cases are always in circulation in the
marketplace. The Company's practice is to accept returnable bottles and
cases in lieu of deposits on new sales. In practice, the Company's
customers generally do not return bottles and cases for refunds.
Accordingly, funds received by the Company from customers for bottles and
cases are netted against the Company's cost of acquiring bottles and
cases.

Cost in Excess of Net Assets of Acquired Businesses

The cost in excess of net assets of acquired businesses ("goodwill")
represents the residual purchase price after allocation to all
identifiable net assets. The Company recognizes that substantially all
the goodwill recorded relates to franchise intangible assets for
distribution rights of the products of Coca-Cola. Franchise agreements
contain performance requirements and convey to the franchisee the right
to distribute and sell products of the franchisor within specified
territories. The Company's franchise agreements with Coca-Cola are
renewed regularly, reflecting a long and ongoing relationship with
Coca-Cola. The Company believes these agreements will continue to be
renewed at each expiration date and, therefore, are essentially
perpetual.

Goodwill is being amortized on a straight-line basis over the estimated
periods to be benefited, not to exceed 40 years. Accumulated amortization
at December 31, 2001 and 2000 amounted to $164.3 million and $137.9
million, respectively.

F-14





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)


(1) OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Impairment

The Company accounts for possible impairments of long-lived assets in
accordance with SFAS No. 121, "Accounting for Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of." SFAS No. 121
requires that long-lived assets to be held and used by the Company be
reviewed for possible impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. If changes in circumstances indicate that the carrying
amount of an asset that an entity expects to hold and use may not be
recoverable, future cash flows expected to result from the use of the
asset and its disposition must be estimated. If the undiscounted value of
the future cash flows is less than the carrying amount of the asset, an
impairment will be recognized.

The Company conducts assessments of the carrying amount of goodwill on a
regular basis. The Company uses an estimate of undiscounted cash flows
without interest charges to determine if any impairment has occurred. If
the goodwill is determined to be impaired, such assets are reduced to
management's estimate of fair value.

Accounting for Internal Use Software

The Company follows the guidance provided in Statement of Position
("SOP") No. 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use," which specifies software costs
that are required to be capitalized.

Marketing and Advertising Expense

The Company expenses broadcast advertising costs when invoiced, which
generally coincides with the broadcast of the related advertisement.
Other marketing and advertising costs are expensed as incurred. Marketing
expense, net of Coca-Cola reimbursements in 2001, 2000 and 1999 was $52.8
million, $60.9 million and $90.2 million, respectively, and is included
within selling and distribution expense in the consolidated statements of
operations. The Company's practice is to reduce marketing expenses by the
amount of reimbursements received from Coca-Cola that relate to marketing
support at the date such amounts are received in cash.

Franchisor Incentives

Coca-Cola, at its sole discretion, provides the Company with various
benefits and incentives, including capital expenditure incentives,
promotional programs and advertising support. In 1999, Coca-Cola modified
the terms and conditions of its franchisor incentive arrangements. As a
result, reimbursements are now based on meeting certain conditions as
stipulated in the Capabilities and Performance Program ("CAPRS")
agreement. Until 1998, there were no conditions required for franchisor
incentives.

Prior to 1999, capital expenditure incentives were recorded as other
income when Coca-Cola confirmed its commitment to the related incentive.
Beginning in 1999, capital expenditure incentives have been recorded as
liabilities when received and have been amortized to other income on a
straight-line basis over 60 months beginning the next month after
Coca-Cola confirms its commitment to the related incentive (see Note 20).
Incentive payments that are related to the increase in volume of
Coca-Cola products that result from such expenditures and are viewed by
the Company as an offset against the costs of concentrates paid by the
Company to Coca-Cola. As described above, advertising and promotional
incentives are treated as reductions of marketing expense.

F-15





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)

(1) OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Pensions and Other Employee Benefits

Pension plan assets, liabilities and provisions, and related disclosures
are presented in accordance with SFAS No. 87, "Employers' Accounting for
Pensions" determined under the projected unit credit method. All of the
Company's subsidiaries, including the Company's servicing company, namely
Panamco LLC, but excluding the Company's Venezuelan subsidiary, have
pension plans, which cover all their employees except for the Mexican
plan, which covers only nonunion employees.

The Mexican, Brazilian and Costa Rican pension plans are funded and the
contributions are based on actuarial valuations. In 2001, 2000 and 1999
the contributions amounted to $3.3 million, $3.2 million and $0.6
million, respectively. The Colombian plan is unfunded and shared with a
government agency. The Nicaraguan and Guatemalan plans are unfunded.

The labor laws in each of the countries in which the Company operates
require severance payments upon involuntary termination. The Company
accrues for such costs when the amounts can be estimated.

The Company has no material post-retirement or post-employment benefits,
which would require adjustment under SFAS No. 106, "Employers' Accounting
for Post-retirement Benefits Other Than Pensions," or SFAS No. 112,
"Employers' Accounting for Post-employment Benefits - an Amendment of
FASB Statements No. 5 and 43."

Income Taxes

Deferred tax assets and liabilities are determined based on differences
between financial reporting and tax bases of assets and liabilities and
are measured using the enacted tax rates and laws that are expected to be
in effect when the differences are expected to reverse. Deferred income
tax provisions and benefits are based on the changes to the asset or
liability from period to period. A valuation allowance is recognized to
reduce net deferred tax assets to amounts that management believes are
more likely than not to be realized.

At December 31, 2001, accumulated undistributed retained earnings subject
to withholding taxes of foreign subsidiaries in Mexico, Colombia and
Costa Rica, amounted to approximately $61.3 million, $28.0 million and
$45.3 million, respectively. No provision for withholding tax is made on
foreign earnings because they are considered by management to be
permanently invested in those subsidiaries and, under current tax laws,
are not subject to such taxes until distributed as dividends. If the
earnings were not considered permanently invested, approximately $4.7
million, $2.0 million and $6.8 million of deferred taxes would have been
provided for subsidiaries in Mexico, Colombia and Costa Rica,
respectively, at December 31, 2001. The tax amounts were calculated using
the current withholding tax rate of 7.6925% for Mexico, 7% for Colombia
and 15% for Costa Rica. Dividends paid for distribution of earnings in
Mexico were not subject to withholding taxes until December 31, 1998.
Effective January 1, 2002, dividends are subject to withholding taxes in
Venezuela. No withholding taxes are generally paid for distribution of
earnings in Nicaragua, Guatemala or Venezuela (until December 31, 2001).

F-16





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)

(1) OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Effective since 1997, the Brazilian subsidiaries elected to replace
partially, or in total, the payment of dividends for paying returns to
shareholders with the payment of interest on shareholders' equity.
According to Brazilian legislation, companies may pay to their
shareholders a calculated interest amount based on the companies'
shareholders' equity and the Brazilian long-term interest rate. This
interest is limited to half of the companies' net income for the year or
half of the companies' retained earnings, whichever is higher. The
payment of such amounts allows companies the benefit of interest
deductibility in the calculation of Brazilian income taxes. The tax
benefits due to the deductibility of this interest for purposes of the
computation of the income taxes, amounting to $1.0 million, were credited
to income taxes, in the consolidated statements of operations in 1999.
There were no amounts credited for the year ended December 31, 2001 and
2000.

Financial Instruments

The Company's financial instrument counterparties are high quality
investment or commercial banks with significant experience with such
instruments. The Company manages exposure to counterparty credit risk
through specific minimum credit standards and diversification of
counterparties. The Company has procedures to monitor the credit exposure
amounts.

The fair value of a financial instrument represents the amount at which
the instrument could be exchanged in a current transaction between
willing parties, other than in a forced sale or liquidation. Fair value
estimates are made at a specific point in time, based on relevant market
information about the financial instrument. These estimates are
subjective in nature and involve uncertainties and matters of significant
judgment, and therefore cannot be determined with precision. The
assumptions used have a significant effect on the estimated amounts
reported. Due to the short-term nature of these accounts (i.e. usually
less than 3 months), the carrying amount of cash and equivalents,
accounts receivable, accounts payable and bank loans approximate fair
value as of December 31, 2001, and 2000.

The Company has considered the disclosure provisions of SFAS No. 107,
"Disclosures about Fair Value of Financial Instruments," as amended.

The carrying amounts and fair values of the Company's financial
instruments as of December 31, 2001 and 2000 are summarized as follows:




2001 2000
------------------------------------------------------------
Carrying Carrying
Amount Fair Value Amount Fair Value
------ ---------- ------ ----------

Long-term bank investments and
marketable bonds $ 3,133 $ 3,058 $ 129,823 $ 130,904
========= ========== ========== ==========
Bank loans and long-term obligations
(including current portion) $ 970,242 $1,005,878 $1,253,759 $1,256,977
========= ========== ========== ==========



The fair values of long-term bank investments are estimated based on
quoted market prices. For investments for which there are no quoted
market prices, fair values are derived from estimated yields for
investments of similar characteristics. The fair values of bank loans and
long-term obligations are based on quoted market prices or, where quoted
market prices are not available, on the present value of future cash
flows discounted at estimated yields on instruments with similar
characteristics.

F-17





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)

(1) OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The long-term investments listed on the consolidated balance sheets
include cost and equity investments not included in the fair value
calculation.

Derivative Instruments

The Company enters into derivative transactions to mitigate the risk
associated with interest rates, foreign currency exchange rates, price
fluctuations of goods used in the normal course of business and other
similar hedging strategies. Derivative instruments are recorded on the
balance sheet at fair value. Depending on the accounting treatment for
which the Company qualifies, the changes in fair value are recorded in
the statement of operations or, if the derivative instrument is
designated as a cash flow hedge, the effective portion of the hedging
relationship is recorded in accumulated other comprehensive income and
the ineffective portion of the hedging relationship is recorded in the
statement of operations. The policy of the Company is to classify any
gains or losses, realized or unrealized, in the same account caption in
the consolidated statements of operations as the item being hedged. While
it is not the policy of the Company to enter into derivatives for
speculative purposes, occasionally, the Company may continue holding a
derivative instrument for speculative purposes if other business goals
and strategies are present at the time.

Earnings per Share

In accordance with SFAS No. 128, "Earnings per Share," basic earnings per
common share calculations are determined by dividing earnings available
to common shareholders by the weighted average number of shares of common
stock. Diluted earnings per share are determined by dividing earnings
available to common shareholders by the weighted average number of shares
of common stock and dilutive common stock equivalents outstanding,
related to outstanding stock options.

Following is a reconciliation of the weighted average number of shares
outstanding with the number of shares used in the computation of diluted
earnings (loss) per share:




December 31,
----------------------------------------
2001 2000 1999

Numerator:
Net income (loss) $ 118,024 $ (504,660) $ (59,904)
========= ========== =========
Denominator (in thousands):
Denominator for basic earnings (loss) per share 125,559 128,833 129,683
Effect of dilutive securities:


Options to purchase common stock 1,096 - -
--------- ---------- ---------
Denominator for diluted earnings (loss) per share 126,655 128,833 129,683
========= ========== =========
Earnings (loss) per share:
Basic $ 0.94 $ (3.92) $ (0.46)
========= ========== =========
Diluted $ 0.93 $ (3.92) $ (0.46)
========= ========== =========
Anti-dilutive securities not included in the diluted
earnings (loss) per share calculation:
Options to purchase common stock
(in thousands) 2,115 7,003 5,463
Nonvested stock (in thousands) - 700 -
Exercise prices: $ 17.84 $ 13.75 $ 13.75
to to to
$ 29.94 $ 29.94 $ 29.94



F-18





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)

(1) OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

New Pronouncements

In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144 supersedes
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed Of" and Accounting Principles Board
Opinion ("APB") No. 30, "Reporting the Results of Operations - Reporting
the Effects of the Disposal of a Segment Business and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions." SFAS No. 144
establishes a single accounting model for assets to be disposed of by
sale whether previously held and used or newly acquired. SFAS No. 144
retains the provisions of APB No. 30 for presentation of discontinued
operations in the income statement, but broadens the presentation to
include a component of an entity. SFAS No. 144 is effective for fiscal
years beginning after December 15, 2001 and the interim periods within.
The Company does not believe that the adoption of SFAS No. 144 will have
a material impact on its consolidated results of operations.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." SFAS No. 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. SFAS No. 143
applies to legal obligations associated with the retirement of long-lived
assets that result from the acquisition, construction, development, or
normal use of the asset. As used in SFAS No. 143, a legal obligation
results from existing law, statute, ordinance, written or oral contract,
or by legal construction of a contract under the doctrine of promissory
estoppel. SFAS No. 143 is effective for fiscal years beginning after June
15, 2002. The Company does not believe that the adoption of SFAS No. 143
will have a material impact on its consolidated results of operations.

In June 2001, the FASB issued SFAS No. 141, "Business Combinations" and
SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141
requires business combinations initiated after June 30, 2001 to be
accounted for using the purchase method of accounting and the
pooling-of-interests method will be prohibited. The remaining provisions
of SFAS No. 141 will be effective for transactions accounted for using
the purchase method that are completed after June 30, 2001. Under SFAS
No. 142, goodwill and certain intangible assets are no longer subject to
amortization over its estimated useful life, but instead will be subject
to an impairment test to be performed at least annually. The Company will
adopt SFAS No. 142 in the first quarter of 2002, and currently estimates
the impact to the Company's results of operations of discontinuing the
amortization of goodwill to be approximately $26.0 million on an
annualized basis. The Company is currently evaluating what additional
impact these new accounting standards may have on the Company's financial
position or results of operations.

In April 2001, the Emerging Issues Task Force ("EITF") of the FASB
reached a consensus on Issue No. 00-25, "Vendor Income Statement
Characterization of Consideration to a Purchaser of the Vendor's Products
or Services." This issue addresses the income statement classification of
various sales incentives such as slotting fees, cooperative advertising
arrangements and buy-downs. EITF 00-25 requires that such customer
promotional payments that are currently classified as selling and
distribution expenses be classified as a reduction of net sales. Had the
Company applied EITF 00-25 to its fiscal year 2001 results, this would
have resulted in a $20.1 million reclassification between net sales and
selling and distribution expense. The adoption of EITF 00-25 will have no
impact on operating income, net income or earnings per share. The Company
will adopt EITF 00-25 for fiscal quarters beginning after December 15,
2001.

F-19





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)

(2) REORGANIZATION PROGRAMS

During the quarter ended December 31, 2000, the Company continued its
reorganization programs, which were implemented originally during the
first quarter of 2000. As a result of these reorganization programs,
during the year ended December 31, 2000, the Company recorded the
following items in the statements of operations:

Facilities Reorganization Charges - During the year ended December 31,
2000, the Company recorded $503.7 million of facilities reorganization
charges, of which $79.9 million was recorded during the first quarter and
$423.8 million was recorded during the fourth quarter. These charges are
primarily the result of the $350.0 million write-down of goodwill,
attributable to Panamco Venezuela; the write-off of noncash items of
property, plant and equipment, obsolete bottles and cases and
nonrecurring charges (related to legal contingencies) amounting to $65.1
million; and cash items relating primarily to severance payments, job
terminations and reorganization of the distribution system of the
Venezuelan and Brazilian subsidiaries amounting to $88.6 million.

Severance payments recorded during 2000 relate to the termination of
approximately 10,000 employees across all levels and operating units of
the Company. Approximately 7,700 employees had been terminated by the
Company as of December 31, 2001 relating to the restructuring effected
during 2000. During the fourth quarter of 2001, the Company reevaluated
its original estimated headcount reduction of approximately 10,000
employees, and determined that the headcount reduction will now
approximate 8,200 employees throughout the company.

During 1999, the Company recorded $35.2 million of charges primarily
resulting from the write-off of non-cash items amounting to $20.3 million
relating to physical assets in Venezuela and Colombia and $14.9 million
cash items relating to severances in Brazil and Venezuela which have
recorded as facilities reorganization charges.

Nonoperating Charges - During the year ended December 31, 2000, the
Company recorded $6.0 million of charges, of which $5.4 million was
recorded in the first quarter and $0.6 were recorded in the fourth
quarter, related to the disposal of nonoperating assets, including land
from some of the operating plants, which are included in other expense,
net. During the year ended December 31, 1999, the Company recorded $4.4
million of charges, all of which were recorded in the fourth quarter,
related to the disposal of nonoperating assets in Venezuela.

As a result of the facilities reorganization charges and nonoperating
charges, the Company recorded a tax benefit of $46.5 million, of which
$23.4 million was recorded in the first quarter of 2000 and $23.1 million
was recorded in the fourth quarter of fiscal 2000. The facilities
reorganization charges and nonoperating charges resulted in a tax benefit
of $11.9 million for the year ended December 31, 1999.

During the fourth quarter of 2001, the Company reversed into income $5.5
million of charges initially recorded in 2000 related to the sale of
property in the Company's Venezuelan operations and job termination and
severance payments throughout some of its operations. At the time of the
restructuring announcement in 2000, the Company determined it would sell
off specific property located throughout most of its operations. During
the fourth quarter of 2001, the Company reevaluated its restructuring
plans related to the sale of property and determined that it would no
longer sell off one of its properties located in the Company's Venezuelan
operations and that approximately 1800 employees that had been identified
for termination would not be terminated. As a result of these decisions,
the Company reduced the liability and reversed into income $5.5 million
of charges initially recorded in 2000.

During the fourth quarter of 2001, the Company increased its
restructuring allowance by $5.5 million related to job termination and
severance payments throughout some of its operations and corporate
offices. At the time of the restructuring announcement in 2000, the
Company determined it would terminate employees across all levels and
operating units of the Company. During the fourth quarter of 2001, the
Company reevaluated its restructuring plans related to reduction in
headcount and determined that it needed to adjust its calculation of the
affected employees, thereby recording an additional $5.5 million charge
related to job termination and severance payments. Specifically, at the
Company's headquarters in Miami, employees identified for termination
were not part of the 2000 facilities reorganization charges, because the
requirements for accrual under EITF Issue No. 94-03, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to
Exit an Activity (Including Certain Costs Incurred in a Restructuring),"
were not met until the fourth quarter of 2001.

F-20





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)


(2) REORGANIZATION PROGRAMS (CONTINUED)

The following table shows a summary of the net charges and benefits
recorded in the consolidated statements of operations for the year ended
December 31, 2000 and 1999:





CASH NONCASH TOTAL
---------------------------------------------------------------------
2000 1999 2000 1999 2000 1999
---------------------------------------------------------------------


Restructuring charges $86,677 $14,902 $ 24,814 $ - $111,491 $ 14,902
Asset write-offs 1,894 - 381,637 20,270 383,531 20,270
Nonrecurring charges - - 8,637 - 8,637 -
------- ------- -------- ------- -------- --------
Facilities reorganization charges 88,571 14,902 415,088 20,270 503,659 35,172

Nonoperating charges - - 5,977 4,391 5,977 4,391
------- ------- -------- ------- -------- --------
Gross charges $88,571 $14,902 $421,065 $24,661 509,636 39,563
======= ======= ======== =======
Income tax benefit 46,516 11,869
-------- --------
Net charges $463,120 $ 27,694
======== ========

The following table shows the status of the balance of the reorganization accrual and asset write-down allowance at
December 31, 2001 and 2000. Balances of $6.0 million and $7.8 million are reflected in other long-term liabilities in the
consolidated balance sheets at December 31, 2001 and 2000:





BALANCE AT SEVERANCE PROPERTY / ASSET BALANCE AT
DECEMBER 31, AND OTHER EQUIPMENT WRITE-OFFS/ DECEMBER 31,
2000 CASH PAYMENTS SOLD WRITE-DOWNS REVERSALS (ADDITIONS) 2001
-------------------------------------------------------------------------------------------------------

Write-off of property $ - $ - $ - $ (2,015) $ 2,015 $ - $ -
and equipment
Job termination and
severance payments 44,899 42,693 - - 3,500 (5,515) 4,221
Other 10,732 2,427 - - - - 8,305
-------- -------- ------ -------- ------- -------- --------
Facilities
reorganization
charges $ 55,631 $ 45,120 $ - $ (2,015) $ 5,515 $ (5,515) $ 12,526
======== ======== ====== ======== ======= ======== ========





==== CHARGES ==== ========= APPLICATIONS =========
BALANCE AT SEVERANCE PROPERTY / ASSET BALANCE AT
DECEMBER 31, AND OTHER CASH EQUIPMENT WRITE-OFFS/ DECEMBER 31,
1999 CASH NONCASH PAYMENTS SOLD WRITE-DOWNS 2000
--------------------------------------------------------------------------------------------------

Write-off of property $ - $ 2,770 $ 54,451 $ - $ 6,112 $ 51,109 $ -
and equipment
Job termination and
severance payments - 78,769 - 33,870 - - 44,899
Venezuela goodwill
impairment - - 350,000 - - 350,000 -

Other - 7,032 10,637 6,937 - - 10,732
--------- -------- --------- ---------- ------- -------- --------
Facilities
reorganization
charges $ - $ 88,571 $ 415,088 $ 40,807 $ 6,112 $401,109 $ 55,631
========= ======== ========= ========== ======= ======== ========


F-21





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)


(3) ACCOUNTS RECEIVABLE



Current accounts receivable consist of: DECEMBER 31,
-------------------------------
2001 2000
-------------------------------

Customers and distributors $ 87,183 $ 94,044
Employees 5,929 4,514
Subsidiaries of Coca-Cola and related companies 16,510 9,301
Sales and income taxes receivable 8,942 8,561
Other 26,487 31,927
--------- ---------
145,051 148,347
Less - Allowance for doubtful accounts 8,437 9,874
--------- ---------
$ 136,614 $ 138,473
========= =========







Long-term receivables consist of: DECEMBER 31,
-------------------------------
2001 2000
-------------------------------

Notes from distributors $ 1,158 $ 1,136
Employee housing loan fund 592 610
Other 3,771 5,458
--------- ---------
$ 5,521 $ 7,204
========= =========



Notes from distributors relate to financing provided by the Company to
distributors to acquire vehicles. Notes have maturities ranging from
three to five years and bear interest at 15% as of December 31, 2001.


(4) INVENTORIES




Inventories consist of: DECEMBER 31,
-----------------------------
2001 2000
-----------------------------

Bottled beverages $ 28,335 $ 31,745
Raw materials 51,837 41,675
Spare parts and supplies 29,637 35,473
--------- ---------
109,809 108,893
Less - Allowance for obsolete and slow moving items 6,769 3,454
--------- ---------

$ 103,040 $ 105,439
========= =========





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)


(5) INVESTMENTS

The principal components of investments and balances as of December 31,
2001 and 2000 with respective ownership percentages at December 31, 2001
are as follows:




December 31,
---------------------------
Description Ownership 2001 2000
-------------------------------------------------- ------------- ------------- -------------

Cervejarias Kaiser, S.A. ("Kaiser") 12.1% $ 13,276 $ 15,773
Ingenio San Carlos 8.0% 3,556 4,000
Tapon Corona de Colombia, S.A. 40.0% 2,794 2,211
Comptec, S.A. 20.0% 1,633 1,727
Industria Envasadora de Queretaro, S.A. de C.V. 14.9% 1,132 1,078
Beta San Miguel 3.6% 1,030 981
Marketable bonds - 3,133 3,682
Long-term bank investments - - 126,141
Other - 1,968 2,413
--------- ---------
$ 28,522 $ 158,006
========= =========


The Company holds an investment interest of 12.1% in Kaiser (see Note 23),
a Brazilian brewery, which amounted to $13.3 million as of December 31,
2001. This investment was accounted for under the equity method of
accounting through June 30, 2000. Beginning July 1, 2000, this investment
was accounted for under the cost method. The Company's ability to
influence decision-making at Kaiser decreased significantly during 2000,
resulting in a change in the method of accounting for this investment.


F-22





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)



(6) PROPERTY, PLANT AND EQUIPMENT




Property, plant and equipment consist of: DECEMBER 31,
--------------------------------------------
ESTIMATED
2001 2000 USEFUL LIVES

Land $ 86,040 $ 103,345 -
Buildings 309,355 296,713 20 to 40 years
Leasehold improvements 7,563 7,467 3 to 25 years
Machinery, equipment, furniture and fixtures 1,162,129 1,161,181 4 to 20 years
Vehicles 357,178 363,876 4 to 10 years
Construction in progress 51,829 64,238 -
---------- ----------
1,974,094 1,996,820

Less - Accumulated depreciation and amortization 930,224 871,101
---------- ----------
$1,043,870 $1,125,719
========== ==========


(7) OTHER CURRENT ASSETS

Other current assets consist of: December 31,
-----------------------------
2001 2000
-----------------------------
Prepaid expenses $ 7,466 $ 10,089
Deferred income taxes 13,059 11,268
Other current assets 6,941 8,911
--------- ---------
$ 27,466 $ 30,268
========= =========


F-23






PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)


(8) Related Party Transactions

The Company purchases raw materials from various suppliers, including
related parties, subject to approval of Coca-Cola. Such transactions are
in the ordinary course of business at negotiated prices comparable to
those transactions with other customers and suppliers. The principal
components of related party transactions were purchases of concentrates,
syrups, sugars, returnable and non-returnable bottles, cans, and caps.

Amounts due from or due to related parties as of December 31, 2001 and
2000, respectively, are as follows:

December 31,
------------------------------
2001 2000
Accounts receivable:
Subsidiaries of Coca-Cola $ 14,025 $ 6,769
Subsidiaries of Kaiser 2,485 2,532
-------- --------
$ 16,510 $ 9,301
======== ========
Accounts payable:
Subsidiaries of Coca-Cola $ 21,842 $ 18,282
Productos de Vidrio, S.A. 2,912 1,137
Central Azucarero Portuguesa, C.A. 1,950 339
Tapon Corona de Colombia, S.A. 1,564 994
Comptec, S.A. 767 976
Other - 773
-------- --------
$ 29,035 $ 22,501
======== ========

The Company had the following significant transactions with related
parties:




YEAR ENDED DECEMBER 31,
--------------------------------------
2001 2000 1999
--------------------------------------

Income:
Marketing expense support from Coca-Cola
(recorded net against marketing expenses) $ 36,503 $ 18,017 $ 59,279
Kaiser beer distribution fees 3,650 4,840 5,658
Other 2,453 - -
-------- -------- --------
$ 42,606 $ 22,857 $ 64,937
======== ======== ========





YEAR ENDED DECEMBER 31,
--------------------------------------
2001 2000 1999
--------------------------------------

Expenses:
Purchases of concentrate from Coca-Cola $361,052 $343,075 $266,215
Purchases of beer 52,295 59,372 74,020
Purchases of other inventories 179,133 79,011 106,712
-------- -------- --------
$592,480 $481,458 $446,947
======== ======== ========
Capital expenditure incentives
received in cash $ 303 $ 408 $ 9,833
======== ======== ========



F-24





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)


(9) INCOME TAXES

The Company is exempt from income tax in Panama, but the operations of
the subsidiaries are subject to income taxes at the applicable local
rates in the countries where the subsidiaries operate. Income taxes are
computed taking into consideration the taxable and deductible effects of
inflation in each of the countries in which the Company operates. The
provisions for income taxes have been determined on the basis of the
taxable income of each individual company and not on a consolidated
basis.

At the end of 1998, certain Brazilian tax rules were changed as part of
the federal government's reform of the tax system. For example, the
"Cofins" tax, which is assessed on sales revenues, was increased from
2.0% to 3.0%, beginning in February 1999. One third of the "Cofins" tax
paid may be offset against the social contribution tax calculated for the
year, which is reported with the provision for income tax. Amounts not
offset during the year may not be carried forward to future periods. The
change in tax rules reduces the ability of Brazilian companies to fully
recover credits derived from social contribution tax loss carryforwards,
as in the case of the Company's Brazilian subsidiaries. Accordingly, the
Company recorded a valuation allowance on previously recorded deferred
income tax assets amounting to $14.1 million by charging the provision
for income taxes in the fourth quarter of 1998. As a result of tax
legislative changes during 1999, "Cofins" can no longer be offset against
the social contribution tax. The Company reversed the aforementioned
valuation allowance of $14.1 million by recording a benefit of $9.5
million, at the current exchange rate, against the provision for income
tax resulting in a $4.6 million translation loss due to the devaluation
of the Brazilian real as of December 31, 1998 and resumed recording
assets corresponding to the social contribution tax loss carryforwards.

As of December 31, 2001, the Company had $94.9 million of net operating
loss carryforwards, including investment tax credits, available from its
subsidiaries to offset future taxable income. The Company has recorded a
valuation allowance of $19.8 million against net operating loss
carryforwards from its subsidiaries. The Company's net operating loss
carryforwards, totaling $94.9 million, expire as follows:





2002 2003 2004 2005 to 2010 Thereafter No Expiration Total
----------------------------------------------------------------------------------------

NOLAD $ 107 $ 6 $ 4 $ 2,539 $ 2,395 - $ 5,051
Brazil - - - - - $60,961 $60,961
Venezuela $ 18,879 $ 6,196 $ 3,790 - - - $28,865
-------- ------- ------- ------- ------- ------- -------
Total $ 18,986 $ 6,202 $ 3,794 $ 2,539 $ 2,395 $60,961 $94,877
======== ======= ======== ======= ======== ======== =======




The Mexican and Venezuelan subsidiaries are subject to an asset tax, to
the extent that such asset tax exceeds the income tax of the period, at
an annual rate of 1.8% and 1.0%, respectively. Any required payment of
asset taxes is refundable against the excess of income taxes over asset
taxes for the following ten and three years in the case of Mexico and
Venezuela, respectively.

Income tax expense for the years ended December 31, 2001, 2000 and 1999
consists of the following:





Current Deferred Valuation Allowance Total
Expense Expense (Benefit) Increase (Decrease) Expense (Benefit)
-------------------------------------------------------------------

2001:
NOLAD $ 79,258 $ (12,948) $ - $ 66,310
Brazil 1,058 (3,236) - (2,178)
Colombia 4,900 (124) - 4,776
Venezuela 2,453 4,836 (28,673) (21,384)
Corporate 2,845 - - 2,845
-------- --------- --------- --------
Total $ 90,514 $ (11,472) $ (28,673) $ 50,369
======== ========== ========== ========


F-25



PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)

(9) INCOME TAXES (CONTINUED)



Current Deferred Valuation Allowance Total
Expense Expense (Benefit) Increase (Decrease) Expense (Benefit)
-------------------------------------------------------------------

2000:
NOLAD $ 78,609 $ (26,695) $ - $ 51,914
Brazil 1,429 (16,449) - (15,020)
Colombia 11,612 (19,212) - (7,600)
Venezuela 5,366 (2,288) (11,037) (7,959)
Corporate 465 - - 465
-------- --------- --------- --------
Total $ 97,481 $ (64,644) $ (11,037) $ 21,800
======== ========== ========== ========
1999:
NOLAD $ 47,529 $ 5,418 $ - $ 52,947
Brazil 2,341 (24,158) (9,507) (31,324)
Colombia 11,589 (10,311) - 1,278
Venezuela 9,196 (15,892) 15,049 8,353
Corporate - - - -
-------- --------- --------- --------
Total $ 70,655 $(44,943) $ 5,542 $ 31,254
======== ========== ========= ========


The provisions (benefits) for income taxes computed by applying the local
statutory rates to income before taxes, as reconciled to the actual
provisions (benefits), are as follows for the years ended December 31,
2001, 2000 and 1999:

2001 2000 1999
-------------------------

Tax expense (benefit) at local
country statutory rate 52% (2%) 97%
Add (deduct)--
Tax inflation adjustments, net (11%) (2%) 6%
Indexed tax depreciation 1% 1% 2%
Employee profit sharing 4% 1% 13%
Asset tax - 1% 20%
Tax credits relating to the
deduction of interest on
shareholders' equity and other (2%) - (18%)
Provision for valuation allowance - 5% 60%
Reversal of valuation allowance (11%) - (18%)
Other ( 4%) 1% (37%)
----- ----- -----
Tax at effective tax rate 29% 5% 125%
===== ===== =====

The local country statutory rate has been determined on the basis of each
subsidiary and not on a consolidated basis. The local country statutory rate
for the Company and its subsidiaries as of December 31, 2001, 2000 and 1999
was as follows:

2001 2000 1999
---- ---- ----

NOLAD 35% 34% 34%
Brazil 33% (33%) (33%)
Colombia 35% (35%) 35%
Venezuela 34% (34%) (34%)
Corporate - - -
---- ----- ----
Total 52% ( 2%) 97%

The components of the net deferred income tax liability (asset) as of
December 31, 2001 and 2000 are as follows:



DECEMBER 31,
---------------------------
2001 2000
---------------------------


Current:
Inventories $ 18,404 $ 10,928
Nondeductible provisions (1,995) (10,653)
Tax loss carryforwards (28,865) (46,617)
Valuation allowance 19,800 48,473
Other 7,640 5,859
--------- --------
Total current liability, net 14,984 7,990
--------- --------



F-26





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)

(9) INCOME TAXES (CONTINUED)


DECEMBER 31,
---------------------------
2001 2000
---------------------------

Long-Term:
Bottles and cases 24,619 36,970
Property, plant and equipment 68,344 60,190
Nondeductible provisions (31,120) (44,990)
Tax loss carryforwards (66,012) (57,200)
Other (3,132) (1,429)
------- ---------

Total long-term asset, net (7,301) (6,459)
--------- ---------
Total $ 7,683 $ 1,531
========= =========



As of December 31, 2001, the net deferred income tax liability of $7.7
million was presented in the balance sheet, based on tax jurisdiction, as
current deferred income tax assets of $13.0 million, non-current deferred
income tax assets of $94.6 million, current deferred income tax
liabilities of $28.0 million and non-current deferred income tax
liabilities of $87.3 million. Similarly, at December 31, 2000, the net
deferred income tax liability of $1.5 million was presented in the
balance sheet, based on tax jurisdiction, as current deferred income tax
assets of $11.3 million, non-current deferred income tax assets of $99.2
million, current deferred income tax liabilities of $19.3 million and
non-current deferred income tax liabilities of $92.7 million.


(10) BANK LOANS AND LONG-TERM OBLIGATIONS

At December 31, 2001, the Company and its subsidiaries had $35.2 million
in direct unsecured bank loans denominated in U.S. dollars, with
maturities between one and twelve months. The weighted average annual
fixed interest rate for $25.2 million of the loans as of December 31,
2001 was 10.5%. The remaining $10.0 million in bank loans, as of December
31, 2001, had an average annual interest rate of three-month LIBOR plus
1.3% (2.6% as of December 31, 2001).

Current and long-term obligations at December 31, 2001 and 2000 consisted
of the following:



DECEMBER 31,
---------------------------
2001 2000
---------------------------



Current obligations:
Notes payable to banks, in various currencies,
weighted average interest rates of 9.2% and
9.5%, respectively $ 35,184 $ 40,295
Current maturities of long-term obligations 75,439 184,889
--------- ---------
Total current obligations 110,623 225,184
--------- ---------

Long-term obligations:
Senior notes, in U.S. dollars, weighted average interest
rates of 7.5% and 7.5%, respectively, maturing
from April 2003 to July 2009 $ 450,000 $ 450,000



F-27




PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)

(10) BANK LOANS AND LONG-TERM OBLIGATIONS (CONTINUED)



DECEMBER 31,
---------------------------
2001 2000
---------------------------

Long-term obligations:
Notes payable to banks, in U.S. dollars, weighted
average interest rates of 3.6% and 9.0%, respectively,
maturing from June 2003 to February 2005 179,975 549,111
Notes payable to banks, in Mexican pesos, weighted
average interest rates of 8.0% and 0%, respectively,
maturing in December 2003 101,960 -
Notes payable to banks, in Brazilian reales, weighted
average interest rates of 9.2% and 13.6%, respectively,
maturing from April 2002 to March 2003 1,558 10,125
Notes payable to banks, in Venezuelan bolivares, weighted
average interest rates of 0% and 29.5%, respectively,
maturing in July 2001 - 49,139
Notes payable to banks, in Guatemalan quetzales, weighted
average interest rates of 15.0% and 19.7%, respectively,
maturing December 2002 to October 2005 2,908 5,130
Notes payable to banks, in Costa Rican colones, weighted
average interest rates of 17.5% and 0%, respectively,
maturing in May 2005 4,224 -
Unsecured promissory notes, in Mexican pesos, weighted
average interest rates of 8.7% and 8.7%, respectively,
maturing in November 2006 126,993 115,158
Marketable bonds, in Colombian pesos, weighted average
interest rates of 11.3% and 16.1%, respectively 63,287 29,159
Capital lease, in U.S. dollars, interest rates of
5.4% and 5.9%, respectively 4,153 5,642
------- ---------
935,058 1,213,464
Less -current maturities 75,439 184,889
------- ---------
Total long-term obligations, net of current maturities $ 859,619 $ 1,028,575
======= =========


During the fourth quarter of 2001, the Company restructured $130.0
million of a syndicated loan maturing in November 2004 with quarterly
interest payments at an average annual interest rate of three-month LIBOR
plus 0.75% to three-month LIBOR plus 1.25% (2.6% at December 31, 2001).

On November 12, 1999, the Mexican subsidiaries issued unsecured
promissory notes for 1.0 billion Mexican pesos equivalent to 380.0
million UDI's (unit of real constant value, in Mexican pesos, whose value
is calculated by Bank of Mexico), payable semiannually with a seven-year
maturity and bearing an annual interest rate of 8.65% (including
withholding). As of December 31, 2001 and 2000, the amount of this debt
is $127.0 million and $115.2 million, respectively.

During December 2001, the Company entered into a debt agreement for 930.0
million Mexican pesos (US$ 102.0 million at December 31, 2001), maturing
in 2003 with semiannual principal payments and bearing interest at the
28-day TIIE (interbank equilibrium rate of Mexico) plus 0.75% (8.75% at
December 31, 2001).

During February 2001 and August 2001, the Company issued unsecured
marketable bonds denominated in Colombian pesos for a total of Col$80.0
billion (US$34.9 million at December 31, 2001), with five-year maturities
and annual interest rates ranging from DTF (the Colombian borrowing rate)
plus 1.9% to DTF plus 2.7% (ranging from 10.7% to 11.5%, respectively, at
December 31, 2001).

The Company's debt agreements establish, among other restrictions, an
interest coverage ratio ranging from not less than 3.25 to 1 to not less
than 4.0 to 1 and a debt-to-earnings before interest, taxes, depreciation
and amortization ("EBITDA") ratio ranging from not more than 2.5 to 1 to
not more than 2.25 to 1.

F-28






PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)

(10) BANK LOANS AND LONG-TERM OBLIGATIONS (CONTINUED)

Maturities of long-term obligations at December 31, 2001 are as follows:

2002 $ 75,439
2003 278,707
2004 88,273
2005 31,056
2006 146,634
Thereafter 314,949
---------
$ 935,058
=========


As of December 31, 2001, the Company and its subsidiaries have complied
with all the terms and conditions established in the loan agreements.


(11) DERIVATIVE INSTRUMENTS

SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," and SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities - an amendment of FASB
Statement No. 133," became effective for the Company on January 1, 2001.
Adoption of these statements as of January 1, 2001 did not have a
material effect on the Company's financial statements.

The Company had a floating-to-fixed interest rate swap (the "Swap"),
expiring in November 2002, with a total notional amount outstanding at
December 31, 2001 of $250.0 million, which exchanges LIBOR for a fixed
interest rate of 6.437%. Upon adoption of SFAS No. 133, the Company
designated the Swap as a cash flow hedge. During 2001, the Company
determined that it was probable that the original forecasted transaction
would not continue through the expiration of the Swap. Therefore, the
Company reclassified $12.2 million of unrealized losses related to the
Swap from accumulated other comprehensive income to other expense, net in
the Company's statement of operations. The fair value of the Swap was
$10.4 million as of December 31, 2001.

The Company uses futures contracts and options on futures in the normal
course of business to hedge anticipated purchases of certain raw
materials used in its operations. As of December 31, 2001, the Company
had call options outstanding to purchase 4,000 metric tons of sugar for a
total cost of $18 thousand. The fair value of these options was $30
thousand as of December 31, 2001.

The Company uses currency swap arrangements to hedge exchange rate
exposure arising from the Company's operations in its international
subsidiaries. On December 28, 2001, the Company entered into foreign
currency forward purchase contracts, expiring in 2002, with total
notional amounts of approximately $23.5 million, which exchange Brazilian
reales for U.S. dollars. As of December 31, 2001, the fair value of these
foreign currency forward purchase contracts was zero.

F-29



PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)

(12) ACCOUNTS PAYABLE



Accounts payable consists of: December 31,
---------------------------
2001 2000
---------------------------


Trade and other payables $ 245,129 $ 148,738
Related party payables 29,035 22,501
--------- ---------
Total $ 274,164 $ 171,239
========= =========



(13) OTHER ACCRUED LIABILITIES

Other accrued liabilities consist of: December 31,
---------------------------
2001 2000
---------------------------


Accrued salaries and benefits $ 17,365 $ 9,071
Fair value of derivative instruments 10,433 -
Interest payable 4,472 16,247
Other accrued expenses 19,039 21,843
--------- ---------
Total $ 51,309 $ 47,161
========= =========



(14) PENSIONS

The status of the pension plans are presented in accordance with SFAS No.
132, "Employers' Disclosures about Pensions and Other Post-retirement
Benefits":




December 31,
----------------------------------------------------
2001 2000
----------------------------------------------------

Unfunded Funded Unfunded Funded
-------- ------ -------- ------
Change in benefit obligation
Benefit obligation at beginning of year $ 14,556 $ 29,049 $ 14,255 $ 28,759
Service cost 610 2,410 668 2,626
Interest cost, net 1,886 2,508 2,110 3,760
Effect of curtailment and settlements 3,733 (8,601) (308) (2,604)
Actuarial (gain) loss 252 (704) 2,357 4,407
Benefit payments (78) (2,304) (4,748) (6,288)
Translation (gain) loss (1,976) 2,223 222 (1,611)
--------- -------- -------- --------
Benefit obligation at end of year $ 18,983 $ 24,581 $ 14,556 $ 29,049
-------- -------- -------- --------


F-30


PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)

(14) PENSIONS (CONTINUED)

December 31,
----------------------------------------------------
2001 2000
----------------------------------------------------

Unfunded Funded Unfunded Funded
-------- ------ -------- ------
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year $ - $ 12,964 $ - $ 14,256
Actual return on plan assets - 769 - (294)
Employer contributions - 3,263 - 3,194
Benefit payments - (3,543) - (3,316)
Translation gain - (1,915) - (876)
-------- --------- -------- ---------
Fair value of plan assets at end of year $ - $ 11,538 $ - $ 12,964
-------- -------- -------- --------
FUNDED STATUS
Benefit obligation in excess of
fair value of plan assets $ 18,983 $ 13,043 $ 14,556 $ 16,085
Unrecognized net actuarial (gain) loss 1,721 (2,584) (2,528) 595
Unrecognized prior service cost (benefit) (102) (6,747) 32 (11,635)
Effect of curtailment and settlements (3,733) 797 229 -
Unrecognized net transition
obligation (asset) 69 (700) (207) (821)
-------- -------- -------- --------
Net obligation recognized $ 16,938 $ 3,809 $ 12,082 $ (4,224)
======== ======== ======== ========

The net periodic pension cost consists of the following:

YEAR ENDED DECEMBER 31,
------------------------------------
2001 2000 1999
------------------------------------

Service cost $ 3,020 $ 3,294 $ 2,400
Interest cost, net 4,394 5,870 5,464
Expected return on plan assets (817) (1,518) (1,333)
Amortization of prior service cost 601 540 272
Recognized net actuarial loss (gain) (14) 121 -
Transition obligation (80) (32) -
--------- --------- --------
Net periodic pension costs $ 7,104 $ 8,275 $ 6,803
========= ========= ========

The actuarial assumptions in 2001, 2000 and 1999, net of inflation, which
reflect the local economic conditions and particular circumstances of
each of the subsidiaries, are as follows:

2001
---------------------------------------------------------
EXPECTED RETURN RATE OF COMPENSATION
DISCOUNT RATE ON PLAN ASSETS INCREASE
---------------------------------------------------------

Mexico 12.0% 13.0% 9.0%
Brazil 11.3% 11.3% 7.1%
Colombia 19.0% * 13.0%
Costa Rica 18.0% 20.0% 13.0%
Nicaragua 14.0% * 10.0%
Guatemala 15.0% * 10.0%
Corporate 7.5% 8.0% 7.5%

2000
---------------------------------------------------------
Expected return Rate of compensation
Discount rate on plan assets increase
---------------------------------------------------------
Mexico 7.3% 9.0% 3.3%
Brazil 6.0% 6.0% 2.0%
Colombia 19.0% * 13.0%
Guatemala 15.0% * 10.0%

F-31



PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)


(14) PENSIONS (CONTINUED)





1999
---------------------------------------------------------
Expected return Rate of compensation
Discount rate on plan assets increase
---------------------------------------------------------


Mexico 4.5% 6.0% 1.0%
Brazil 6.0% 6.0% 2.0%
Colombia 7.0% * 1.0%
Guatemala 8.0% * 3.0%

*Not applicable, as the benefits are not funded.



(15) COMMITMENTS AND CONTINGENCIES

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to credit
risk, consist primarily of trade accounts receivable. The Company extends
credit on an unsecured basis to some of its distributors and customers.
Diversification of credit risk is difficult since the Company sells
primarily in the beverage industry. The Company's management recognizes
that extending credit and setting appropriate allowances for
uncollectible accounts receivable is largely a subjective decision based
on knowledge of the customer. The Company's management and their staff
meet regularly to evaluate credit exposure in the aggregate, and by
individual credit and maintains allowances for potential losses or
adjustments. Management sets and maintains credit standards and ensures
the overall quality of the credit portfolio.


Litigation, Claims and Assessments

From time to time, the Company and its subsidiaries are involved in
litigation, claims and assessments incidental to the operation of the
Company's business. As a general policy, the Company defends matters in
which the Company or its subsidiaries are named defendants and, for
insurable losses, maintains insurance to protect against adverse
judgments, claims or assessments that may affect the Company. In the
opinion of the Company, although the adequacy of existing insurance
coverage or the outcome of any legal proceedings cannot be predicted with
certainty, the ultimate liability associated with any claims or
litigation in which the Company or its subsidiaries are currently
involved will not materially affect the Company's financial condition but
could be material to the results of operations or cash flows in any one
accounting period.


Self-insurance

As of December 31, 2001, the Company's subsidiaries in Mexico, Colombia,
and Venezuela are partly self-insured through a fully owned subsidiary,
Panamco Insurance Company Limited ("Panamco Insurance"), for various
property risks. The Company maintains insurance coverage for these
subsidiaries for individual claims in excess of $0.3 million and up to
$79.5 million in aggregate coverage. Expense related to claims covered by
Panamco Insurance was approximately $0.5 million, $0.6 million and $0.8
million in 2001, 2000 and 1999, respectively. While the ultimate amount
of claims incurred is dependent on future developments, in management's
opinion, recorded allowances are adequate to cover the future payment of
claims. However, it is reasonably possible that recorded allowances may
not be adequate to cover future payment of claims. Adjustments, if any,
to estimates recorded resulting from ultimate claim payments will be
reflected in operations in the periods in which such adjustments are
known.




F-32





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)


(15) COMMITMENTS AND CONTINGENCIES (CONTINUED)


Construction Commitments

In the normal course of business, the Company occasionally enters into
commitments for the construction of new production facilities. At
December 31, 2001, the amounts outstanding under these construction
commitments totaled approximately $10.2 million.

EDS Contract

On December 1, 2000, the Company entered into a five-year outsourcing
contract with EDS to manage its information technology infrastructure
throughout Latin America for approximately $97.6 million, which will end
on November 30, 2005. During 2001, the Company incurred $17.9 million in
expense related to this contract. The future minimum obligations under
this contract are $21.9 million in 2002, $21.0 million in 2003, $18.4
million in 2004 and $14.9 million in 2005.

Vulnerability due to Concentration and Franchise Arrangements

The Company's primary raw material supplier is Coca-Cola. Transactions
with Coca-Cola are subject to maintenance provisions under existing
bottler agreements. The Company's other raw materials are sourced from
multiple vendors and the Company believes additional supply sources exist
for all these raw materials.

The Company has the right to sell Coca-Cola's products pursuant to
bottling or other similar agreements described below, which may have a
material effect on the Company's financial statements in the case of
non-compliance by the Company or non-performance by Coca-Cola.

In the event of a problem with the quality of a beverage, Coca-Cola may
require the Company to take all necessary measures to withdraw the
beverage from the market. Coca-Cola must also approve the types of
container used in bottling and controls the design and decoration of the
bottles, boxes, cartons, stamps and other materials used in production.
The agreements grant Coca-Cola the right to inspect the products.

Coca-Cola charges the Company a fixed price for concentrates, which may
change from time to time at the discretion of Coca-Cola. Coca-Cola
currently charges the Company a percentage of the weighted average
wholesale price (net of taxes) of each case sold to retailers within each
of the Company's franchise territories. The Company pays no additional
compensation to Coca-Cola under the licenses for the use of the
associated trade names and trademarks. Subject to local law, Coca-Cola
has the right to limit the wholesale prices of its products.

As it has in the past, Coca-Cola may, in its discretion, contribute to
the Company's advertising and marketing expenditures as well as undertake
independent advertising and marketing activities. Coca-Cola has routinely
established annual budgets with the Company for cooperative advertising
and promotion programs.

Service Fees

The Company is appealing a decision by the Brazilian tax authorities
imposing income taxes, interest and fines in an amount equivalent to $3.0
million and $3.5 million as of December 31, 2001 and 2000, respectively,
relating primarily to the deductibility of certain inter-company service
payments.

Tax Credits

The Brazilian subsidiaries are also being assessed by the Brazilian tax
authorities for tax credits taken during 1995 and 1996, relating to
overpayments of the value-added tax in previous years. Such overpayments
related to value-added tax applied to samples, free products given to
customers and to credit sales. These assessments amount to approximately
$37.2 million and $35.9 million as of December 31, 2001 and 2000,
respectively, and the Company has appealed the assessments at the
administrative level. The Company and its outside legal advisors believe
that in view of the legal basis adopted for the use of such credits, no
significant liability should result from this issue and therefore no
provision for this matter has been recorded in the accompanying
consolidated financial statements.



F-33


PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)


(15) COMMITMENTS AND CONTINGENCIES (CONTINUED)


During May 2000, the Comision Federal de Competencia (the Mexican
Antitrust Commission, the "Commission") pursuant to a compliant filed by
PepsiCo, Inc. and certain of its bottlers in Mexico, initiated an
investigation of the sales practices of Coca-Cola and its bottlers. In
November 2000, in a preliminary decision and in February 2002, through a
final resolution, the Mexican Antitrust Commission held that Coca-Cola
and its bottlers engaged in monopolistic practices with respect to
exclusivity arrangements with certain retailers. The Mexican Antitrust
Commission did not impose any fines, but ordered Coca-Cola and its
bottlers, including certain Mexican subsidiaries of Panamco, to abstain
from entering into any exclusivity arrangement with retailers. Panamco
plans to appeal this decision. Although no assurances can be given, we do
not believe that the outcome of this matter, even if determined against
us, will have a material adverse effect on our financial condition or
results of operations.

During August 2001, the Comision para Promover la Competencia (the "Costa
Rican Antitrust Commission") pursuant to a similar complaint filed by
PepsiCo, Inc. and its bottler in Costa Rica initiated an investigation on
the sales practices of Coca-Cola and Panamco Costa Rica for alleged
monopolistic practices in the retail distribution channel including the
gain of share of sales through exclusivity arrangements. The Costa Rican
Antitrust Commission is currently investigating the matter. We believe
that the complaint is without merit and we intend to vigorously defend
ourselves in this matter. Although no assurances can be given, we do not
believe that the outcome of this matter, even if determined against us,
will have a material adverse effect on our financial condition or results
of operations.

In connection with the Venezuela Acquisition, in 1999 we received notice
of certain tax claims asserted by the Venezuelan taxing authorities,
which mostly relate to fiscal periods prior to the Venezuela Acquisition.
The claims are in preliminary stages and currently total to approximately
$48.2 million. We have certain rights to indemnification from Venbottling
(a company owned by the Cisneros family) and Coca-Cola for a substantial
portion of such claims. Based on the information currently available, we
do not believe that the ultimate disposition of these cases will have a
material adverse affect on us.

During 1999, a group of independent distributors of Panamco Venezuela
commenced a proceeding to incorporate a union of distributors. As a
result, these distributors may, among other things, individually demand
certain labor and severance rights against Panamco Venezuela. Since the
incorporation process began, Panamco Venezuela has vigorously opposed its
formation through all available legal channels. In February 2000, Panamco
Venezuela presented a nullity recourse against the union incorporation
solicitation, as well as an injunction request before the Venezuelan
Supreme Court. On September 20, 2001, the Venezuelan Supreme Court
rendered its opinion confirming the incorporation of the union, but
withheld granting any specific labor rights to the members of the union
other than the right to be unionized. In order to obtain specific labor
rights, the union (or its members) will have to request and obtain from a
court of law a determination that the members of such union are
considered workers pursuant to Venezuelan labor laws, and thereafter
claim against Panamco Venezuela the payment of such benefits and rights
including retroactive payments.

F-34





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)


(15) COMMITMENTS AND CONTINGENCIES (CONTINUED)


To our knowledge, neither the union nor any of its individual members
have initiated any process with the objective of obtaining such a court
decision, although certain members of the union have threatened such
action. We intend to vigorously defend our rights should this action be
filed. During February 2002, the union filed a petition before the
Venezuelan administrative agency in charge of labor matters attempting to
obligate Panamco Venezuela to negotiate a collective bargaining
agreement. In response, Panamco Venezuela filed a nullity recourse before
the competent tribunal (the "Court") along with an injunction requesting
the Court to suspend the collective bargaining negotiations until the
nullity recourse is resolved. The Court granted the injunction in favor
of Panamco Venezuela and admitted the nullity recourse. This injunction
and nullity recourse was extended to a subsequent request by the union to
have the Venezuelan administrative agency mediate the matter. During
March 2002, a subcommittee of the Venezuelan congress conducted a hearing
with representatives of the union as well as representatives of Panamco
Venezuela. The subcommittee is currently reviewing the matter and a final
recommendation from this political body is pending. We strongly believe
that this matter should be resolved by the court system in Venezuela and
intend to vigorously defend any attempts to politicize the matter.

Panamco Brazil is the subject of administrative proceedings in the
Federal Revenue Office brought by Brazilian tax authorities seeking
income taxes, interest with respect to credits taken in current periods
and fines in an amount equivalent to $3.7 million as of December 31,
2000. Issues raised by the tax authorities include the deductibility of
certain investment losses. The Brazilian tax authorities prevailed at the
initial administrative proceeding in 1991 and at the appellate
administrative level in June 1993. Panamco Brazil has appealed the
decision. In April 1998, the Brazilian Taxpayers' Council ruled
unanimously in favor of Panamco Brazil. The amount in question represents
approximately $1.8 million. This ruling is not subject to appeal. The
Brazilian Taxpayers' Council, however, issued a ruling against a former
subsidiary of Panamco Brazil. The amount in question represents
approximately $1.9 million. Panamco Brazil has appealed this ruling.

During July 2001, a labor union and several individuals from the Republic
of Colombia filed a lawsuit in the U.S. District Court for the Southern
District of Florida against us (and certain of our subsidiaries) and
Coca-Cola (and certain of its subsidiaries). In the complaint, the
plaintiffs alleged that we engaged in wrongful acts against the labor
union and its members in Colombia, including kidnapping, torture, death
threats and intimidation. The complaint alleges claims under the Alien
Tort Claims Act, the Torture Victim Protection Act, RICO and state tort
law and seeks injunctive and declaratory relief and damages of more than
$500 million, including treble and punitive damages and the cost of the
suit, including attorney fees. We have filed a motion to dismiss the
complaint for lack of subject matter and personal jurisdiction. A ruling
on our motion to dismiss the lawsuit is expected in the second quarter of
2002. We believe this lawsuit is without merit and intend to vigorously
defend ourselves in this matter.

Other legal proceedings are pending against or involve the Company and
its subsidiaries, which are incidental to the conduct of their
businesses. We believe that the ultimate disposition of such other
proceedings will not have a material adverse effect on our consolidated
financial condition.


F-35




PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)


(16) LEASES

The Company leases buildings, machinery and equipment, vehicles, and
office equipment throughout its operations under both operating and
capital leases that expire between 2002 and 2007. The following are the
minimum lease payments for each of the years indicated applicable to
capital and operating leases as of December 31, 2001:

Capital Operating
----------- -------------
Fiscal year:
2002 $ 1,253 $11,096
2003 1,253 11,606
2004 1,253 9,129
2005 1,253 17,561
2006 - 3,196
Thereafter - 1,955
------ -------
Total minimum lease payments $ 5,102 $54,543
=======
Amount representing interest 859
-------
Present value of minimum
lease payments $ 4,153
=======

Rental expense for all operating leases charged against earnings amounted
approximately to $9.7 million, $13.5 million, and $8.9 million in 2001,
2000, and 1999, respectively, and is included within the general and
administrative expense in the consolidated statements of operations.


(17) COMPENSATION PLANS

Cash Bonus Plan

The Company has adopted a short-term incentive plan (the "Bonus Plan"),
pursuant to which key executives of the Company and subsidiaries may
receive bonus compensation based on Company performance, as determined by
the Compensation Committee of the Board of Directors (the "Committee").
Under the amended Bonus Plan, effective as of January 1, 2002, each
participant is assigned a target award expressed as a percentage of base
salary in varying amounts (which do not exceed 60% of base salary). The
actual award will be based on Company performance, and will vary from 0%
to 300% of the target award, on the basis of the relationship between
actual performance of the participant's "Economic Unit" (that is, the
Company or Panamco Mexico, Panamco Colombia, Panamco Brazil, Panamco
Venezuela, Panamco Costa Rica, Panamco Nicaragua and Panamco Guatemala)
and projected performance. For purposes of evaluating Economic Unit
performance, the Committee will compare actual revenues, cash operating
profit, net income, and free cash flow to projected amounts.

Employee Profit Sharing

Mexican, Brazilian and Venezuelan laws require that the Company make
payments to employees relating to profit sharing. Profit sharing payments
are treated as compensation expense and are reflected in the appropriate
captions in the accompanying statements of operations. The employee
profit sharing expense was $36.5 million, $33.2 million and $27.1 million
for the years ended December 31, 2001, 2000 and 1999, respectively.


F-36




PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)


(17) COMPENSATION PLANS (CONTINUED)

Stock Option Plans

At December 31, 2001, the Company had two stock option plans. A Stock
Option Plan for Employees (the "Employee Plan"), which has a maximum of
14,200,000 shares of Class A Common Stock available for stock option
grants of which 5,200,000 shares were authorized to be included in the
Employee Plan by the Board of Directors and shareholders with voting
rights in 2001. Under this plan, the options vest over a five-year period
for the options granted through 1996 and over a three-year period for
options granted beginning in 1997.

The Company also has a Stock Option Plan for Nonemployee Directors (the
"Directors Plan"), which was implemented to attract and retain the
services of experienced and knowledgeable nonemployee directors and
nonemployee members of the advisory board of the Company. The Directors
Plan provides each nonemployee director and each nonemployee advisory
board member with an option to purchase a specified number of shares of
Class A Common Stock. A total of 190,000 shares of Class A Common Stock
is available for grants under the Directors Plan of which 90,000 shares
were authorized to be included in the Directors Plan by the Board of
Directors in 2001, which is administered by the Board of Directors or a
subcommittee thereof. The Board of Directors has the discretion to amend,
terminate or suspend the Directors Plan at any time. Under the Directors
Plan, the options vest over a four-year period for the options granted
until 1996 and over a three-year period for the options granted beginning
in 1997. As of December 31, 2001, no options have been exercised or
cancelled under the Directors Plan.

There were 6,856,716 shares of common stock reserved for future grants as
of December 31, 2001 under all stock option plans.

On November 10, 2000, when the closing price of the Class A Common Stock
on the New York Stock Exchange was $14.25 per share, the Company granted
600,000 options to certain executive officers, but not pursuant to the
Employee Plan, at an exercise price of $14.25 per share. These options
vested 50% upon issuance and 50% after one year. Since the grant of the
stock options was at an exercise price equal to that of the quoted market
price on the date of the grant, no compensation expense was recorded by
the Company related to these options.

Nonvested Stock Grant

On November 10, 2000, when the closing price of the Class A Common Stock
on the New York Stock Exchange was $14.25 per share, the Company granted
700,000 shares of nonvested stock to certain executive officers. The
terms of the restricted stock are as follows: one-third of the shares
shall vest in the event that the share price equals or exceeds the grant
date share price by $5.00 or more on or before the second anniversary of
the grant date; two-thirds of the shares (reduced by one-third if shares
already vested) shall vest if the share price exceeds the grant date
share price by $10.00 or more on or before the third anniversary of the
grant date; and all the unvested shares shall vest in the event that the
share price equals or exceeds the grant date share price by $15.00 or
more on or before the fourth anniversary of the grant date. The holders
are entitled to dividends on the entire amount of the restricted stock.
Non-vested shares shall be forfeited to the extent that they do not vest
on or before the fourth anniversary of the grant date.

During the second quarter of 2001, the Company issued 700,000 shares and
retained possession of the shares subject to meeting the vesting
requirements. During July 2001, one-third of the shares became vested and
the Company delivered the vested shares to the executive officers and
recognized compensation expense totaling $4.5 million associated with the
vesting of one-third of the shares. Due to the uncertainty of the future
market price of the stock, management cannot make a reasonable estimate
as to what the compensation expense, associated with the vesting of
two-thirds of the shares, may be or if the remaining restricted stock
will vest.


F-37



PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)


(17) COMPENSATION PLANS (CONTINUED)

Stock Option Activity

A summary of option transactions is presented below:




2001 2000 1999
------------------------------- -------------------------------- -------------------------------
Options Weighted Options Weighted Options Weighted
average average average
exercise exercise exercise
price price price
------------------------------- -------------------------------- -------------------------------


Outstanding on 7,003,224 $ 17.82 5,463,414 $ 19.00 4,129,314 $ 20.45
January 1,
Granted 1,039,295 16.31 1,750,110 14.54 1,560,000 15.69
Exercised (336,582) 14.23 (25,000) 16.20 (76,500) 16.33
Forfeited (351,935) 19.26 (185,300) 21.89 (149,400) 25.87
------------- ----------- -----------
Outstanding on
December 31, 7,354,002 $ 17.70 7,003,224 $ 17.82 5,463,414 $ 19.00
============ ========== ==========
Options exercisable
at end of year 5,139,626 $ 18.59 4,041,840 $ 19.06 2,535,719 $ 19.37
============ ========== ==========
Nonvested stock
at end of year 466,667 $ 14.25 700,000 $ 14.25 - $ -
============ ========== ==========




The following table sets forth certain information relating to
outstanding and exercisable stock options at December 31, 2001:


Options Outstanding Options Exercisable
--------------------------------------------------------------- ---------------------------------------
Number Weighted average
outstanding at Weighted remaining Number Weighted
December 31, average contractual life outstanding at average
2001 exercise price (in years) December 31, 2001 exercise price
--------------------------------------------------------------- ---------------------------------------


$13.75 to $15.00 2,380,310 $ 14.41 7.3 1,659,437 $ 14.29
$15.01 to $20.00 2,957,438 16.24 7.8 1,472,935 16.39
$20.01 to $25.00 1,509,310 21.66 6.6 1,500,310 21.67
$25.01 to $29.94 506,944 29.94 6.0 506,944 29.94
--------- ---------
7,354,002 $ 17.70 7.2 5,139,626 $ 18.59
========= =========




The Company accounts for its stock option plans in accordance with the
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock
Issued to Employees" and related interpretations. Accordingly, no
compensation cost has been recognized in the consolidated statements of
operations with respect to stock option grants where the exercise price
is equal to or greater than quoted market value at the date of grant. Had
compensation costs for the Company's stock-based compensation plans been
determined based on the fair value at the grant dates for awards under
the stock option plans, consistent with the method preferred by SFAS No.
123, the Company's pro forma net earnings (loss) and earnings (loss) per
share would be as follows:



F-38





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)




(17) COMPENSATION PLANS (CONTINUED)


December 31,
-----------------------------------------
2001 2000 1999
------------ ------------ -----------
Net income (loss):
As reported $ 118,024 $ (504,660) $ (59,904)
========== =========== ==========

Pro forma $ 107,984 $ (510,039) $ (69,017)
========== =========== ==========

Net income (loss) per share:
As reported:
Basic $ 0.94 $ (3.92) $ (0.46)
========== =========== ==========

Diluted $ 0.93 $ (3.92) $ (0.46)
========== =========== ==========

Pro forma:
Basic $ 0.86 $ (3.96) $ (0.53)
========== =========== ==========

Diluted $ 0.85 $ (3.96) $ (0.53)
========== =========== ==========

SFAS No. 123 requires pro forma disclosure to include expense from grants
beginning in 1995. As such, for 1999, the Company's pro forma information
is not representative of the pro forma effect of the fair value
provisions of SFAS No. 123 on the Company's net income because pro forma
compensation expense related to grants made prior to 1995 was not taken
into consideration.

The weighted-average fair value at date of grant for stock options
granted during 2001, 2000 and 1999 was $6.57, $6.69 and $6.60,
respectively, and was estimated using the Black-Scholes option valuation
model with the following weighted-average assumptions:


December 31,
-----------------------------------------
2001 2000 1999
------------ ------------ -----------
Risk-free interest rate 3.90% 5.78% 5.82%
Dividend yield 1.40% 1.30% 1.11%
Expected volatility 40.5% 42.0% 59.20%
Expected option term lives 6.4 years 6.7 years 3 years

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options, which have no vesting
restrictions and are fully transferable. Option valuation models require
the input of highly subjective assumptions, including expected stock
price volatility. The Company's stock-based compensation arrangements
have characteristics significantly different from those of traded
options, and changes in the subjective input assumptions used in
valuation models can materially affect the fair value estimate. As a
result, the existing models may not necessarily provide a reliable
measure of the fair value of its stock-based compensation.


F-39





PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)


(18) CAPITAL AND OTHER TRANSACTIONS

At the time of the signing of the Agreement (mentioned in Note 1), and in
connection with the acquisition of the Costa Rican franchise, Export
acquired additional shares of Class A and B Common Stock and 2 shares of
a new Series C Preferred Stock of the Company. The holder of the Series C
Shares (the "Holder") is not entitled to receive any dividends with
respect to the Series C Stock and is only entitled to a preference on the
liquidation, dissolution or winding up of the Company of $1.00 in total.
Pursuant to the Certificate of Designation for the Series C Shares, the
Company has agreed with the Holder not to take certain actions without
the approval of the Holder, including, but not limited to: (i) certain
consolidations, mergers and sales of substantially all of the Company's
assets; (ii) any acquisition or sale of a business (or an equity interest
therein) if the purchase price or sales price thereof, as the case may
be, exceeds a material amount (as defined therein); (iii) entry into any
new significant line of business or termination of any existing
significant line of business; (iv) certain capital expenditures and
acquisitions and dispositions of property and equipment; (v) certain
transactions with affiliates (as defined); (vi) certain changes in the
Company's policy with respect to dividends or distributions to
shareholders and (vii) certain changes to the Company's Articles or
By-laws. These rights are subject to certain exceptions and
qualifications and may be suspended or terminated in certain
circumstances.

On December 9, 1999, the Board of Directors authorized a $100.0 million
share repurchase program of the Company's Class A Common Stock (the
"Share Repurchase Program") in accordance with the
anti-market-manipulation safe harbor of Rule 10b-18 promulgated under the
Securities Exchange Act of 1934. The Share Repurchase Program was
supplemented with $25.0 million increases on each of July 20, 2001 and
September 6, 2001. In addition to this $150.0 million authority, the
Share Repurchase Program also provides for repurchases of shares from
independent brokers by the Company (currently totaling $4.8 million) made
in connection with employees' stock option exercises. Company shares may
be purchased in the open market or in privately negotiated transactions,
depending on market conditions and other factors. During 2001, the
Company has repurchased 7,283,685 shares amounting to $133.5 million
(including brokerage commissions) during 2001. From the Share Repurchase
Program's inception on December 9, 1999 to December 31, 2001, the Company
has repurchased 8,437,564 shares for a total amount of $154.8 million
(including brokerage commissions).

In general, with the exception of voting rights and certain conversion
rights, the Class A Common Stock and the Class B Common Stock have the
same rights and privileges. Each share of Class B Common Stock entitles
the holder to one vote on all matters as to which the shareholders are
entitled to vote. The Class A Common Stock is non-voting and does not
entitle the holder thereof to vote on any matter.

The Company declared cash dividends of $0.24 per share of common stock
for each of the years ended December 31, 2001, 2000, and 1999.


(19) RETAINED EARNINGS

Certain of the Company's subsidiaries are required by law to appropriate
a portion of their annual net income to legal provisions until such
allowances equal prescribed percentages of outstanding capital stock.
These legal allowances, which aggregated $39.2 million and $38.4 million
at December 31, 2001 and 2000, respectively, are generally not available
for distribution to shareholders until the liquidation of the individual
companies, except in the form of stock dividends in the Mexican
subsidiaries.


F-40



PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)

(19) RETAINED EARNINGS (CONTINUED)

The Brazilian companies' statutes require minimum dividend distributions
representing 25% of net income (after deducting reserves provided by law
or by the shareholders) for the year. This dividend requirement may be
waived by the unanimous vote of shareholders at a meeting where a quorum
(consisting of the holders of a majority of the shares) is present.

At present, Colombia and Costa Rica impose withholding taxes of 7% and
15%, respectively, on dividends paid by domestic subsidiaries to the
Company. Brazil imposes a withholding tax of 15% on dividends paid by
domestic subsidiaries to the Company that are derived from earnings
generated prior to January 1, 1996.

Dividends from earnings generated until 1998 are not subject to income
taxes in Mexico, as long as they are paid from "net taxed income" (UFIN).
Dividends not paid from UFIN are subject to a 35% income tax. During 2000
and 2001, dividends paid to individuals or foreign residents were subject
to income tax withholding of an effective tax rate of approximately 7.7%.
In addition, if earnings generated after 1998 for which no corporate tax
has been paid are distributed, the tax must be paid upon distribution of
the dividends. Consequently, the Company must keep a record of earnings
subject to each tax rate.

Effective January 1, 2001, dividends declared and paid in Venezuela out
of retained earnings that have not been subject to income taxes are
subject to a withholding tax rate of 34%.

As of December 31, 2001, dividends are not subject to withholding taxes
in Nicaragua and Guatemala.

(20) OTHER INCOME (EXPENSE), NET

Other income (expense), net for the three years ended December 31, 2001,
2000 and 1999 is as follows:



December 31,
------------------------------------------
2001 2000 1999
------------ ------------ ------------


Provision for contingencies $ (522) $ (8,418) $ (5,270)
Exchange losses, net (9,272) (8,217) (32,701)
Gain (loss) on sale of property and
equipment and investments 2,047 (3,642) 2,760
Equity in earnings (losses) of
unconsolidated companies, net 516 (1,189) (4,371)
Capital expenditure incentives 2,637 1,886 5,115
Operating income (loss) from
non-bottling subsidiaries (2,333) (741) 3,950
Nonoperating charges (874) (5,977) (4,391)
Other, net (3,090) (5,364) (4,388)
-------- --------- ---------

Other income (expense), net $(10,891) $(31,662) $ (39,296)
======== ========= ==========


F-41


PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)

(21) SEGMENTS AND RELATED INFORMATION

The Company operates in the bottling and distribution industries and in
markets throughout Latin America. The basis for determining the Company's
operating segments is the manner in which financial information is used
by the Company in its operations. Management operates and organizes
itself according to business units, which comprise the Company's products
across geographic locations. The Company evaluates performance and
allocates resources based on income or loss from operations. The
accounting policies of the reportable segments are the same as those
described in the summary of significant accounting policies. Long-lived
assets constitute total assets less current assets less long-term
deferred income taxes less long-term receivables from affiliated
companies.

Relevant information concerning the geographic areas in which the Company
operates in accordance with SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information," is as follows:

2001
---------------------------------------------------------------------------------------
NOLAD Brazil Colombia Venezuela Corporate Total
----------- ----------- ----------- ----------- ----------- -------------

Net sales $ 1,289,004 $ 419,926 $ 384,668 $ 557,274 $ -- $ 2,650,872
=========== =========== =========== =========== =========== ===========

Operating income (loss) $ 225,828 $ 11,950 $ 24,838 $ 37,271 $ (16,689) $ 283,198
=========== =========== =========== =========== ============ ===========

Interest income $ 8,367 $ 4,115 $ 2,287 $ 160 $ 6,412 $ 21,341
=========== =========== =========== =========== =========== ===========

Interest expense $ (20,532) $ (11,794) $ (13,084) $ (17,586) $ (56,394) $ (119,390)
============ ============ ============ ============ ============ ============

Depreciation and amortization $ 79,634 $ 19,913 $ 56,404 $ 61,184 $ 19,948 $ 237,083
=========== =========== =========== =========== =========== ===========

Capital expenditures $ 59,044 $ 5,965 $ 8,274 $ 9,808 $ 30 $ 83,121
=========== =========== =========== =========== =========== ===========

Long-lived assets $ 690,155 $ 189,279 $ 327,059 $ 339,512 $ 651,643 $ 2,197,648
=========== =========== =========== =========== =========== ===========

Total assets $ 853,458 $ 352,883 $ 383,188 $ 419,935 $ 683,562 $ 2,693,026
=========== =========== =========== =========== =========== ===========

2000
---------------------------------------------------------------------------------------
NOLAD Brazil Colombia Venezuela Corporate Total
----------- ----------- ----------- ----------- ----------- -------------
Net sales $ 1,200,350 $ 496,488 $ 386,720 $ 515,853 $ -- $ 2,599,411
=========== =========== =========== =========== =========== ===========

Operating income (loss) $ 142,688 $ (2,841) $ (20,544) $ (66,073) $ (392,118) $ (338,888)
=========== ============ ============ ============ ============ ============

Interest income $ 11,394 $ 1,572 $ 3,135 $ 3 $ 15,829 $ 31,933
=========== =========== =========== =========== =========== ===========

Interest expense $ (24,484) $ (13,810) $ (7,621) $ (24,819) $ (71,565) $ (142,299)
============ ============ ============ ============ ============ ============

Depreciation and amortization $ 88,988 $ 30,246 $ 64,597 $ 96,804 $ 29,230 $ 309,865
=========== =========== =========== =========== =========== ===========

Capital expenditures $ 74,659 $ 7,596 $ 9,104 $ 30,408 $ 2,130 $ 123,897
=========== =========== =========== =========== =========== ===========

Long-lived assets $ 617,516 $ 246,149 $ 361,364 $ 385,220 $ 850,954 $ 2,461,203
=========== =========== =========== =========== =========== ===========

Total assets $ 772,698 $ 425,134 $ 457,102 $ 461,486 $ 909,901 $ 3,026,321
=========== =========== =========== =========== =========== ===========

F-42

PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)

(21) SEGMENTS AND RELATED INFORMATION (CONTINUED)

1999
---------------------------------------------------------------------------------------
NOLAD Brazil Colombia Venezuela Corporate Total
----------- ----------- ----------- ----------- ----------- -------------

Net sales $ 1,005,828 $ 500,683 $ 397,014 $ 512,292 $ -- $ 2,415,817
=========== =========== =========== =========== =========== ===========

Operating income (loss) $ 160,220 $ 2,507 $ 13,090 $ (20,256) $ (41,110) $ 114,451
=========== =========== =========== ============ =========== ===========

Interest income $ 3,923 $ 2,933 $ 6,143 $ -- $ 15,963 $ 28,962
=========== =========== =========== =========== =========== ===========

Interest expense $ (17,615) $ (17,676) $ (12,896) $ (18,028) $ (62,857) $ (129,072)
============ ============ ============ ============ ============ ============

Depreciation and amortization $ 58,346 $ 32,763 $ 59,178 $ 71,156 $ 29,380 $ 250,823
=========== =========== =========== =========== =========== ===========

Capital expenditures $ 79,058 $ 22,686 $ 28,275 $ 33,184 $ -- $ 163,203
=========== =========== =========== =========== =========== ===========

Long-lived assets $ 581,276 $ 309,441 $ 445,428 $ 466,846 $ 1,293,878 $ 3,096,869
=========== =========== =========== =========== =========== ===========

Total assets $ 720,594 $ 486,198 $ 498,005 $ 556,696 $ 1,351,629 $ 3,613,122
=========== =========== =========== =========== =========== ===========

(22) QUARTERLY INFORMATION (UNAUDITED)
For the three months ended
-------------------------------------------------------------------------------------------------
March 31, June 30, September 30, December 31,
2001 2001 2001 2001
----------------------- ----------------------- ---------------------- -----------------------
Net sales $ 648,029 $ 671,434 $ 638,642 $ 692,767
========= ========= ========= ==========

Gross profit $ 331,766 $ 353,234 $ 328,982 $ 340,583
========= ========= ========= ==========

Net income $ 21,321 $ 40,242 $ 30,110 $ 26,351
========= ========= ========= ==========

Basic earnings per share
$ 0.17 $ 0.32 $ 0.24 $ 0.22
========= ========= ========= ==========

Diluted earnings per share
$ 0.16 $ 0.31 $ 0.24 $ 0.21
========= ========= ========= ==========
For the three months ended
-------------------------------------------------------------------------------------------------
March 31, June 30, September 30, December 31,
2000 2000 2000 2000
----------------------- ----------------------- ---------------------- -----------------------
Net sales $ 608,181 $ 641,061 $ 648,180 $ 701,989
========= ========= ========= ==========

Gross profit $ 309,760 $ 340,548 $ 343,258 $ 362,360
========= ========= ========= ==========

Net income (loss) $ (71,502) $ 11,524 $ 464 $ (445,146)
========== ========= ========= ===========

Basic earnings (loss) per share
$ (0.55) $ 0.09 $ 0.00 $ (3.46)
========== ========= ========= ===========

Diluted earnings (loss) per share
$ (0.55) $ 0.09 $ 0.00 $ (3.46)
========== ========= ========= ===========

F-43



PANAMERICAN BEVERAGES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Balances in the tables are stated in thousands of U.S. dollars)


(23) SUBSEQUENT EVENTS

On March 18, 2002, Molson, Inc. announced the acquisition of Kaiser, in
which the Company holds a 12.1% ownership interest. The transaction is
valued at $765 million. The Company expects to receive gross proceeds of
approximately $78 million from this transaction. A small portion of the
proceeds will be received in Molson, Inc. shares, with the remaining
amount to be received in cash within the next 90 days. At the present
time, the Company distributes Kaiser products in its franchise area in
Brazil and the Molson, Inc. acquisition will not impact this distribution
agreement.


F-44





REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON SCHEDULE


To Panamerican Beverages, Inc.:

We have audited in accordance with auditing standards generally accepted
in the United States of America, the consolidated financial statements
included in the Panamerican Beverages, Inc. (the "Company") annual report
to shareholders incorporated by reference in this Form 10-K, and have
issued our report thereon dated February 5, 2002 (except with respect to
the matters discussed in Note 23, as to which the date is March 18,
2002). Our audit was made for the purpose of forming an opinion on those
statements taken as a whole. The Financial Statement Schedule II listed
in Item 14 is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic consolidated financial
statements. This financial statement schedule has been subjected to the
auditing procedures applied in the audit of the basic consolidated
financial statements and, in our opinion, fairly states in all material
respects the financial data required to be set forth therein in relation
to the basic consolidated financial statements taken as a whole.

Arthur Andersen LLP

Miami, Florida,
February 5, 2002.


F-45






SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

The following is an analysis of the valuation and qualifying accounts for
the three years ended December 31, 2001, 2000 and 1999:



Additions
---------------------------
Balance at Charged to Charged to
beginning costs and other Deductions- Balance at
Description of year expenses accounts applications end of year
----------- ------------ ------------- ------------ ------------ -----------


2001:
Allowance for doubtful accounts $ 9,874 718 (499) 1,656 $ 8,437
Allowance for obsolete and
slow-moving inventory $ 3,454 7,011 -- 3,696 $ 6,769
Allowance for restructuring $ 55,631 -- -- 43,105 $ 12,526

2000:
Allowance for doubtful accounts $ 11,534 585 861 3,106 $ 9,874
Allowance for obsolete and
slow-moving inventory $ 4,064 (1,609) 1,250 251 $ 3,454
Allowance for restructuring $ -- 503,659 -- 448,028 $ 55,631

1999:
Allowance for doubtful accounts $ 10,427 3,049 204 2,146 $ 11,534
Allowance for obsolete and
slow-moving inventory $ 1,486 2,664 -- 86 $ 4,064
Allowance for restructuring $ -- 35,172 -- 35,172 $ --





F-46




EXHIBIT 21.1

SUBSIDIARIES OF THE REGISTRANT

PANAMERICAN BEVERAGES INC.
- --------------------------

Interamerican Financial Corporation (Incorporated in Panama)
Panamco Insurance Company Ltd. (Incorporated in Bermuda)
Alliance International Corp. (Incorporated in Panama)
Panamco L.L.C. (Incorporated in Delaware)
Pan Air Holding, Inc. (Incorporated in Panama)
Panamco Aircraft L.L.C. (Incorporated in Delaware)
Kristin Overseas (Incorporated in Panama)
Panamco USA (Incorporated in Delaware)

MEXICO (Companies related to the operation of Panamco in Mexico).
- -----------------------------------------------------------------

Panamco Mexico SA de CV (98.14 % ownership)
Panamco Bajio SA de CV (97.20% ownership)
Panamco Golfo SA de CV
Compania Inmobiliaria de Puebla SA de CV
Compania Inmobiliaria de Apizaco SA de CV
Inmobiliaria Impulsa SA de CV
Compania Inmobiliaria de Coatepec SA de CV
Administracion SA de CV (99.83% ownership)
Arrendadora del Bajio SA de CV Prosein SA de CV
Proyectos y Construcciones Azteca SA de CV
Arrendadora Azteca SA de CV
Industrial Metalica de Leon SA de CV (60.17% ownership)
Plastehsa SA de CV
Maseri de Leon SA de CV (90% ownership)
Impulsora Azteca SA de CV
Compania Inmobiliaria de Leon SA de CV (97.95% ownership)
Compania Inmobiliaria de Irapuato SA de CV (98.18% ownership)
Inmuebles Urbanos de Apatzingan
Compania Inmobiliaria de Celaya SA de CV (98.03% ownership)
Compania Inmobiliaria de Morelia SA de CV (87.11% ownership)
Impulsora de Michoacan SA de CV
Compania Inmobiliaria de Zamora SA de CV (87.02% ownership)
Compania Inmobiliaria de Apatzingan SA de CV (85.82% ownership)
Industria Envasadora de Queretaro SA de CV (14.9% ownership)
Pan-Air SA de CV

BRAZIL (Companies related to the operation of Panamco in Brazil).
- -----------------------------------------------------------------

Dixer Distribuidora de Bebidas SA
Juratuba SA Industria & Comercio
Refrescos Do Brazil SA (98.86% ownership)
Spal Industria Brazilera de Bebidas SA
KSP Participaciones Limitada SA (38.73% ownership)
Refigerantes Do Oeste SA
Supripack Ind. Com. De Embalagens Ltda





Distribuidora de Bebidas No Lar Ltda.
Distribuidora Capuava de Bebidas Ltda
Sabara Compania Administradora Ltda
American Participacoes Ltda.

COLOMBIA (Companies related to the operation in Colombia).
- ----------------------------------------------------------

Panamco Indega SA (97.24% ownership)
Embotelladoras de Santander SA
Embotelladora del Huila SA (65% ownership)
Embotelladora Roman SA
Tapon Corona de Colombia SA (40% ownership)
Friomix del Cauca SA
Comptec SA (20% ownership)

VENENZUELA (Companies related to the operation in Venezuela).
- -------------------------------------------------------------

The following companies are incorporated in Panama:

Embotelladora Coca-Cola y Hit de Venezuela SA
Wape Investments Inc.

The following Companies are incorporated in Venezuela:

Coca-Cola Refrescos Holdings SA
Coca-Cola Refrescos SA
Panamco de Venezuela SA
Distribuidora CCC SA
Valores Nirgua SA
Comercial Vendosa SA

COSTA RICA (Company related to the operation in Costa Rica).
- ------------------------------------------------------------

Embotelladora Panamco Tica SA

NICARAGUA (Company related to the operation in Nicaragua).
- ----------------------------------------------------------

The following Company is incorporated in Panama:

Centroamericana Investments SA

The following Company is incorporated in Nicaragua:

Panamco de Nicaragua SA

GUATEMALA (Companies related to the operation in Guatemala)
- -----------------------------------------------------------

Embotelladora Central SA
Bodegas de Distribucion SA
Apoyos Industriales y Comerciales Integrados, SA






EXHIBIT 23.1



CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


As independent certified public accountants, we hereby consent to
the incorporation of our reports included in this Form 10-K, into the
Company's previously filed Registration Statement File No. 333-9012.

Arthur Andersen LLP

Miami, Florida,
March 28, 2002.






Exhibit 99.1





March 28, 2002


U.S. Securities and Exchange Commission
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Ladies and Gentlemen:

Pursuant to Temporary Note 3T to Article 3 of Regulation S-X, Panamerican
Beverages, Inc. (the "Company") hereby certifies to the Securities and
Exchange Commission that it has met with representatives of Arthur Andersen
LLP ("Arthur Andersen") and has received from Arthur Andersen the following
written representations as of the date hereof:

1. Arthur Andersen's audit of the consolidated financial statements of
the Company and its subsidiaries as of December 31, 2001 and for the
year then ended was subject to Arthur Andersen's quality control
system for the United States of America accounting and auditing
practice to provide reasonable assurance that the engagement was
conducted in compliance with professional standards;

2. There was appropriate continuity of Arthur Andersen personnel
working on this audit;

3. For this audit, Arthur Andersen's national office was available for
consultation; and

4. Personnel at foreign affiliates of Arthur Andersen were available to
conduct the relevant portions of this audit.


Sincerely,


/s/ Mario Gonzalez Padilla
------------------------------
Mario Gonzalez Padilla
Vice President, Chief Financial Officer
and Treasurer