-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
E8YRwv1lfKGGpBlPL3OKDaB7VmoDjJqy3FcmVWzUQ77eoofUJz4AbmT4ysTRAKoN
piTWFmAXMa3Vq1X2XVh0Lw==
<SEC-DOCUMENT>0000021344-01-000005.txt : 20010308
<SEC-HEADER>0000021344-01-000005.hdr.sgml : 20010308
ACCESSION NUMBER: 0000021344-01-000005
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 9
CONFORMED PERIOD OF REPORT: 20001231
FILED AS OF DATE: 20010307
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: COCA COLA CO
CENTRAL INDEX KEY: 0000021344
STANDARD INDUSTRIAL CLASSIFICATION: BEVERAGES [2080]
IRS NUMBER: 580628465
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K
SEC ACT:
SEC FILE NUMBER: 001-02217
FILM NUMBER: 1562865
BUSINESS ADDRESS:
STREET 1: ONE COCA COLA PLAZA
CITY: ATLANTA
STATE: GA
ZIP: 30313
BUSINESS PHONE: 4046762121
MAIL ADDRESS:
STREET 1: ONE COCA COLA PLAZA
ZIP: 30313
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>0001.txt
<TEXT>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NO. 1-2217
[THE COCA-COLA COMPANY LOGO PASTEUP]
(Exact name of Registrant as specified in its charter)
DELAWARE 58-0628465
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
ONE COCA-COLA PLAZA 30313
ATLANTA, GEORGIA (Zip Code)
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (404) 676-2121
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ------------------------
COMMON STOCK, $.25 PAR VALUE NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
YES [X] NO [ }
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. [ ]
THE AGGREGATE MARKET VALUE OF THE COMMON EQUITY HELD BY NON-AFFILIATES OF THE
REGISTRANT (ASSUMING FOR THESE PURPOSES, BUT WITHOUT CONCEDING, THAT ALL
EXECUTIVE OFFICERS AND DIRECTORS ARE "AFFILIATES" OF THE REGISTRANT) AS OF
FEBRUARY 20, 2001 (BASED ON THE CLOSING SALE PRICE OF THE REGISTRANT'S COMMON
STOCK AS REPORTED ON THE NEW YORK STOCK EXCHANGE ON FEBRUARY 20, 2001) WAS
$126,595,639,441.
THE NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK AS OF
FEBRUARY 20, 2001, WAS 2,487,036,532.
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE COMPANY'S ANNUAL REPORT TO SHARE OWNERS FOR THE YEAR ENDED
DECEMBER 31, 2000, ARE INCORPORATED BY REFERENCE IN PARTS I, II AND IV.
PORTIONS OF THE COMPANY'S PROXY STATEMENT FOR THE ANNUAL MEETING OF SHARE
OWNERS TO BE HELD ON APRIL 18, 2001, ARE INCORPORATED BY REFERENCE IN PART III.
================================================================================
PART I
ITEM 1. BUSINESS
- ----------------
The Coca-Cola Company (together with its subsidiaries, the "Company" or
"our Company") was incorporated in September 1919 under the laws of the State of
Delaware and succeeded to the business of a Georgia corporation with the same
name that had been organized in 1892. Our Company is the largest manufacturer,
distributor and marketer of soft drink concentrates and syrups in the world.
Finished beverage products bearing the Company's trademarks, sold in the United
States since 1886, are now sold in nearly 200 countries and include the leading
soft drink products in most of these countries. The Company also markets and
distributes juice and juice-drink products.
Our Company is one of numerous competitors in the commercial beverages
market. Of the approximately 48 billion beverage servings of all types consumed
worldwide every day, beverages bearing the Company's trademarks ("Company
Trademark Beverages") account for more than one billion.
The business of our Company is nonalcoholic beverages -- principally soft
drinks but also a variety of noncarbonated beverages. As used in this report,
the term "soft drinks" refers to nonalcoholic carbonated beverages containing
flavorings and sweeteners, excluding flavored waters and carbonated or
noncarbonated teas, coffees and sports drinks.
Our Company believes that its success ultimately depends on its ability to
build and nurture relationships with others: consumers, customers, bottlers,
partners, governmental authorities and other constituencies touched by our
business. To this end, the Company has adopted an overriding business strategy
of "Think local, act local," applicable to virtually all aspects of its
business. This strategy is designed to put the responsibility and accountability
for ensuring local relevance and maximizing business performance in the hands of
those closest to the market, locale by locale.
For the year ended December 31, 2000, the Company's operating structure
included the following operating segments: the North America Group (including
The Minute Maid Company); the Africa and Middle East Group; the Europe and
Eurasia Group; the Latin America Group; the Asia Pacific Group; and Corporate.
The North America Group includes the United States and Canada. Effective January
1, 2000, two of the Company's operating segments were geographically
reconfigured and renamed. The Middle East & North Africa Division was added to
the Africa Group, which changed its name to the Africa and Middle East Group. At
the same time the Middle & Far East Group, less the relocated Middle East &
North Africa Division, changed its name to the Asia Pacific Group. In the fourth
quarter of 2000, the Greater Europe Group was renamed the Europe and Eurasia
Group.
On March 4, 2001, our Company announced a new operational management
structure. Four strategic business units are being created: Americas, Asia,
Europe/Africa, and Coca-Cola Ventures. The heads of of these four strategic
business units will be as follows: Jeffrey T. Dunn (Americas), A.R.C. "Sandy"
Allan (Asia), Charles S. Frenette (Europe/Africa) and Steven J. Heyer (Coca-Cola
Ventures). See "Item X. -- Executive Officers of the Company." These executives
will report to Douglas N. Daft, Chairman of the Board of Directors and Chief
Executive Officer of the Company. All other corporate functions will maintain
their current reporting responsibilities.
Except to the extent that differences between operating segments are
material to an understanding of our Company's business taken as a whole, the
description of the Company's business in this report is presented on a
consolidated basis.
In the following table, prior period amounts have been restated to conform
to the current period presentation. Of the Company's consolidated net operating
revenues and operating income for each of the past three years, the percentage
represented by each operating segment (excluding Corporate) is as follows:
<PAGE>
<TABLE>
<CAPTION>
North Africa and Europe Latin Asia
America Middle East and Eurasia America Pacific
------- ----------- ----------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Operating Revenues
2000 39% 4% 21% 11% 25%
1999 38% 4% 23% 10% 25%
1998 37% 4% 26% 12% 21%
Operating Income
2000 29% 2% 30% 19% 20%
1999 31% 2% 23% 18% 26%
1998 24% 4% 29% 19% 24%
</TABLE>
For additional financial information about the Company's operating segments
and geographic areas, see Notes 1, 14 and 18 to the Consolidated Financial
Statements, set forth on pages 51-52, 62-63 and 65-67, respectively, of the
Company's Annual Report to Share Owners for the year ended December 31, 2000,
incorporated herein by reference.
Our Company manufactures and sells soft drink and noncarbonated beverage
concentrates and syrups, including fountain syrups, some finished beverages, and
certain juice and juice-drink products. Syrups are composed of sweetener, water
and flavoring concentrate. The concentrates and syrups for bottled and canned
beverages are sold by the Company to authorized bottling and canning operations.
The bottlers or canners of soft drink products either combine the syrup with
carbonated water or combine the concentrate with sweetener, water and carbonated
water to produce finished soft drinks. The finished soft drinks are packaged in
authorized containers bearing our Company's trademarks -- cans, refillable and
non-refillable glass and plastic bottles -- for sale to retailers or, in some
cases, wholesalers. Fountain syrups are manufactured and sold by the Company,
principally in the United States, to authorized fountain wholesalers and some
fountain retailers. (Outside the United States, fountain syrups typically are
manufactured by authorized bottlers from concentrates sold to them by the
Company.) Authorized fountain wholesalers (including certain authorized
bottlers) sell fountain syrups to fountain retailers. The fountain retailers use
dispensing equipment to mix the syrup with carbonated or still water and then
sell finished soft drinks or noncarbonated beverages to consumers in cups and
glasses. Finished beverages manufactured by our Company are sold by it to
authorized bottlers or distributors, who in turn sell these products to
retailers or, in some cases, wholesalers. Both directly and through a network of
business partners that includes certain Coca-Cola bottlers, juice and
juice-drink products manufactured by the Company are sold by our Company to
retailers and wholesalers in the United States and numerous other countries.
The Company's beverage products, including bottled and canned beverages
produced by independent and Company-owned bottling and canning operations, as
well as concentrates and syrups, include Coca-Cola, Coca-Cola classic, caffeine
free Coca-Cola, caffeine free Coca-Cola classic, diet Coke (sold under the
trademark Coca-Cola light in many countries outside the United States), caffeine
free diet Coke, Cherry Coke, diet Cherry Coke, Fanta brand soft drinks, Sprite,
diet Sprite, Mr. Pibb, Mello Yello, TAB, Fresca, Barq's root beer and other
flavors, Surge, Citra, POWERaDE, Fruitopia, Minute Maid flavors, Aquarius,
Sokenbicha, Ciel, Bonaqa, Dasani, Lift, Thums Up and other products developed
for specific countries, including Georgia brand ready-to-drink coffees, and
numerous other brands. In many countries (excluding the United States, among
others) our Company's beverage products also include Schweppes, Canada Dry, Dr
Pepper and Crush. The Minute Maid Company, a division with operations primarily
in the United States and Canada, produces, distributes and markets principally
juice and juice-drink products, including Minute Maid brand products, Five Alive
brand refreshment beverages, Bright & Early brand breakfast beverages, Bacardi
brand tropical fruit mixers (manufactured and marketed under a license from
Bacardi & Company Limited), and Hi-C brand ready-to-serve fruit drinks.
Additionally, Coca-Cola Nestle Refreshments, the Company's joint venture with
Nestle S.A., markets ready-to-drink teas and coffees in certain countries.
Ultimately, consumer demand determines the optimal menu of Company product
offerings. Consumer demand often varies from one locale to another, and can also
change over time within a single locale. Employing the "Think local, act local"
business strategy, and with special focus on brand Coca-Cola, the Company seeks
to build its existing brands and, at the same time, to broaden its historical
portfolio of brands, products and services in order to create and satisfy
consumer demand locale by locale.
2
In 2000, concentrates and syrups for beverages bearing the trademark
"Coca-Cola" or including the trademark "Coke" accounted for approximately 62% of
the Company's total gallon sales {1}.
In 2000, gallon sales in the United States ("U.S. gallon sales")
represented approximately 30% of the Company's worldwide gallon sales. In 2000,
our Company's principal markets outside the United States, based on gallon
sales, were Mexico, Brazil, Japan and Germany, which together accounted for
approximately 26% of the Company's worldwide gallon sales.
Approximately 57% of our Company's U.S. gallon sales for 2000 was
attributable to sales of beverage concentrates and syrups to approximately 84
authorized bottler ownership groups in approximately 396 licensed territories.
Those bottlers prepare and sell finished beverages bearing the Company's
trademarks for the food store and vending machine distribution channels and for
other distribution channels supplying home and immediate consumption.
Approximately 35% of 2000 U.S. gallon sales was attributable to fountain syrups
sold to fountain retailers and to approximately 525 authorized fountain
wholesalers, some of whom are authorized bottlers. These fountain wholesalers in
turn sell the syrups or deliver them on the Company's behalf to restaurants and
other fountain retailers. The remaining approximately 8% of 2000 U.S. gallon
sales was attributable to juice and juice-drink products sold by The Minute
Maid Company. Coca-Cola Enterprises Inc., including its bottling subsidiaries
and divisions ("Coca-Cola Enterprises"), accounted for approximately 48% of the
Company's U.S. gallon sales in 2000. At December 31, 2000, our Company held an
ownership interest of approximately 40% in Coca-Cola Enterprises, which is the
world's largest bottler of Company Trademark Beverages.
In addition to conducting its own independent advertising and marketing
activities, our Company may provide promotional and marketing services and/or
funds and consultation to its bottlers and to fountain and bottle/can retailers,
usually but not always on a discretionary basis. Also on a discretionary basis,
in most cases, the Company may develop and introduce new products, packages and
equipment to assist its bottlers, fountain syrup wholesalers and fountain
beverage retailers.
The profitability of our Company's business outside the United States is
subject to many factors, including governmental trade regulations and monetary
policies, economic and political conditions in the countries in which such
business is conducted and the risk of changes in currency exchange rates and
regulations.
BOTTLER'S AGREEMENTS AND DISTRIBUTION AGREEMENTS
Separate contracts ("Bottler's Agreements") between our Company and each of
its bottlers regarding the manufacture and sale of soft drinks, subject to
specified terms and conditions and certain variations, generally authorize the
bottler to prepare particular designated Company Trademark Beverages, to package
the same in particular authorized containers, and to distribute and sell the
same in (but generally only in) an identified territory. The bottler is
obligated to purchase its entire requirement of concentrates or syrups for the
designated Company Trademark Beverages from the Company or Company-authorized
suppliers. Our Company typically agrees to refrain from selling or distributing
or from authorizing third parties to sell or distribute the designated Company
Trademark Beverages throughout the identified territory in the particular
authorized containers; however, the
- ---------------
{1} Our Company measures sales volume in two ways: (1) gallon sales and (2)
unit cases of finished products. "Gallon sales" represents the primary business
of the Company and means the sum of (a) the volume of concentrates (converted to
their equivalents in gallons of syrup) and syrups sold by the Company to its
bottling partners or customers directly or through wholesalers and distributors,
and (b) the gallon sales equivalent of the juice and juice-drink products sold
by The Minute Maid Company. Most of the Company's revenues are based on this
measure of "wholesale" activity. Our Company also measures volume in unit cases.
As used in this report, "unit case" means a unit of measurement equal to 192
U.S. fluid ounces of finished beverage (24 eight-ounce servings); and "unit case
volume" of the Company means the sum of (i) the number of unit cases sold by the
Coca-Cola bottling system and by our Company to customers, including fountain
syrups sold by our Company to customers directly or through wholesalers or
distributors, and (ii) the volume of juice and juice-drink products (expressed
in equivalent unit cases) sold by The Minute Maid Company. Component (i) above
primarily includes unit case equivalents of products reported as gallon sales
and other key products owned by Coca-Cola bottling system bottlers. Our Company
believes unit case volume more accurately measures the underlying strength of
its business system because it measures trends at the retail level.
3
Company typically reserves for itself or its designee the right (i) to
prepare and package such beverages in such containers in the territory for sale
outside the territory and (ii) to prepare, package, distribute and sell such
beverages in the territory in any other manner or form.
The Bottler's Agreements between our Company and its authorized bottlers in
the United States differ in certain respects from those in the other countries
in which Company Trademark Beverages are sold. As hereinafter discussed, the
principal differences involve the duration of the agreements; the inclusion or
exclusion of canned beverage production rights; the inclusion or exclusion of
authorizations to manufacture and distribute fountain syrups; in some cases, the
degree of flexibility on the part of the Company to determine the pricing of
syrups and concentrates; and the extent, if any, of the Company's obligation to
provide marketing support.
OUTSIDE THE UNITED STATES. The Bottler's Agreements between our Company and
its authorized bottlers outside the United States generally are of stated
duration, subject in some cases to possible extensions or renewals of the term
of the contract. Generally, these contracts are subject to termination by the
Company following the occurrence of certain designated events, including defined
events of default and certain changes in ownership or control of the bottler.
In certain parts of the world outside the United States, the Company has
not granted comprehensive beverage production rights to the bottlers. In such
instances, our Company or its designee typically sells canned (or in some cases
bottled) Company Trademark Beverages to the bottlers for sale and distribution
throughout the designated territory under distribution agreements, often on a
non-exclusive basis. A majority of the Bottler's Agreements in force between the
Company and bottlers outside the United States authorize the bottler to
manufacture and distribute fountain syrups, usually on a non-exclusive basis.
Our Company generally has complete flexibility to determine the price and
other terms of sale of concentrates and syrups to bottlers outside the United
States and, although in its discretion it may determine to do so, the Company
typically (but not always) has no obligation under such Bottler's Agreements to
provide marketing support to the bottlers.
WITHIN THE UNITED STATES. In the United States, with certain very limited
exceptions, the Bottler's Agreements for Coca-Cola and other cola-flavored
beverages have no stated expiration date and the contracts for other flavors are
of stated duration, subject to bottler renewal rights. The Bottler's Agreements
in the United States are subject to termination by the Company for
nonperformance or upon the occurrence of certain defined events of default which
may vary from contract to contract. The hereinafter described "1987 Contract" is
terminable by the Company upon the occurrence of certain events including: (1)
the bottler's insolvency, dissolution, receivership or the like; (2) any
disposition by the bottler or any of its subsidiaries of any voting securities
of any bottler subsidiary without the consent of the Company; (3) any material
breach of any obligation of the bottler under the 1987 Contract; or (4) except
in the case of certain bottlers, if a person or affiliated group acquires or
obtains any right to acquire beneficial ownership of more than 10% of any class
or series of voting securities of the bottler without authorization by the
Company.
Under the terms of the Bottler's Agreements, bottlers in the United States
are authorized to manufacture and distribute Company Trademark Beverages in
bottles and cans, but generally are not authorized to manufacture fountain
syrups. Rather, our Company manufactures and sells fountain syrups to
approximately 525 authorized fountain wholesalers (including certain authorized
bottlers) and some fountain retailers. The wholesalers in turn sell the syrups
or deliver them on the Company's behalf to restaurants and other retailers. The
wholesaler typically acts pursuant to a non-exclusive letter of appointment
which neither restricts the pricing of fountain syrups by our Company nor the
territory in which the wholesaler may resell in the United States.
In the United States, the form of Bottler's Agreement for cola-flavored
soft drinks that covers the largest amount of U.S. volume (the "1987 Contract")
gives the Company complete flexibility to determine the price and other terms of
sale of soft drink concentrates and syrups for cola-flavored Company Trademark
Beverages ("Coca-Cola Trademark Beverages") and other Company Trademark
Beverages. Bottlers operating under the 1987 Contract accounted for
approximately 82% of our Company's total United States gallon sales for bottled
and canned beverages, excluding juice and juice-drink products of The Minute
Maid Company, ("U.S. bottle/can gallon sales") in 2000. Certain other forms of
the U.S. Bottler's Agreement, entered into prior to 1987, provide for soft drink
concentrates or syrups for certain Coca-Cola Trademark Beverages to be priced
pursuant to a stated formula. The
4
<PAGE>
oldest such form of contract, applicable to bottlers accounting for
approximately 1% of U.S. bottle/can gallon sales in 2000, provides for a fixed
price for Coca-Cola syrup used in bottles and cans, subject to quarterly
adjustments to reflect changes in the quoted price of sugar. Bottlers accounting
for the remaining approximately 17% of U.S. bottle/can gallon sales in 2000 have
contracts for certain Coca-Cola Trademark Beverages with pricing formulas
generally providing for a baseline price that may be adjusted periodically by
the Company, up to a maximum indexed ceiling price, and that is adjusted
quarterly based upon changes in certain sugar or sweetener prices, as
applicable.
Standard contracts with bottlers in the United States for the sale of
concentrates and syrups for non-cola-flavored soft drinks in bottles and cans
permit flexible pricing by the Company.
Under the 1987 Contract, our Company has no obligation to participate with
bottlers in expenditures for advertising and marketing, but may, at its
discretion, contribute toward such expenditures and undertake independent or
cooperative advertising and marketing activities. Some U.S. Bottler's Agreements
that pre-date the 1987 Contract impose certain marketing obligations on the
Company with respect to certain Company Trademark Beverages.
SIGNIFICANT EQUITY INVESTMENTS AND COMPANY BOTTLING OPERATIONS
Our Company maintains business relationships with three types of bottlers:
(1) independently owned bottlers, in which the Company has no ownership
interest; (2) bottlers in which the Company has invested and has a
noncontrolling ownership interest; and (3) bottlers in which the Company has
invested and has a controlling ownership interest. In 2000, independently owned
bottling operations produced and distributed approximately 25% of the Company's
worldwide unit case volume; cost or equity method investee bottlers in which the
Company owns a noncontrolling ownership interest produced and distributed
approximately 59% of such worldwide unit case volume; and controlled and
consolidated bottling and fountain operations, including The Minute Maid
Company, produced and distributed approximately 16% of such worldwide unit case
volume.
Our Company makes equity investments in selected bottling operations with
the intention of maximizing the strength and efficiency of the Coca-Cola
business system's production, distribution and marketing systems around the
world. These investments are intended to result in increases in unit case
volume, net revenues and profits at the bottler level, which in turn generate
increased gallon sales for the Company's concentrate business. When this occurs,
both the Company and the bottlers benefit from long-term growth in volume,
improved cash flows and increased share-owner value.
The level of our Company's investment generally depends on the bottler's
capital structure and its available resources at the time of the investment.
Historically, in certain situations, the Company has viewed it as advantageous
to acquire a controlling interest in a bottling operation. Owning such a
controlling interest has allowed the Company to compensate for limited local
resources and has enabled the Company to help focus the bottler's sales and
marketing programs and assist in the development of the bottler's business and
information systems and the establishment of appropriate capital structures. In
separate transactions during the first half of 2000, our Company purchased the
entire equity interest in two bottlers in Brazil, Companhia Mineira de
Refrescos, S.A., and Refrigerantes Minas Gerais Limitada. In October 2000, the
Company purchased a 58% equity interest in Paraguay Refrescos S.A. ("Paresa"), a
bottler located in Paraguay. This interest in Paresa was increased from 58% to
approximately 95% as a result of additional purchases of Paresa shares by our
Company in January 2001.
In line with its long-term bottling strategy, our Company periodically
considers options for reducing its ownership interest in a bottler. One such
option is to combine the Company's bottling interests with the bottling
interests of others to form strategic business alliances. Another option is to
sell the Company's interest in a bottling operation to one of the Company's
equity investee bottlers. In both of these situations, our Company continues
participating in the bottler's results of operations through its share of the
equity investee's earnings or losses.
In cases where the Company's investments in bottlers represent
noncontrolling interests, our Company's intention is to provide expertise and
resources to strengthen those businesses. During 2000, the Company and China
National Oils and Foodstuffs Imports/Exports Corporation ("COFCO") entered into
the COFCO Bottling Joint Venture in China, completion of which is subject to
satisfaction of certain conditions as of the date of this report. COFCO is
contributing to the joint venture its minority equity interests in 11 Chinese
bottlers. Our Company is
5
<PAGE>
contributing its equity interests in two Chinese bottlers plus cash in
exchange for a 35% equity interest in the joint venture.
Our Company views certain bottling operations in which the Company has a
noncontrolling ownership interest as key or anchor bottlers due to their level
of responsibility and performance. The strong commitment of both key and anchor
bottlers to their own profitable volume growth helps our Company meet its
strategic goals and furthers the interests of its worldwide production,
distribution and marketing systems. These bottlers tend to be large and
geographically diverse, with strong financial resources for long-term investment
and strong management resources. These bottlers give the Company strategic
business partners on every major continent. During the third quarter of 2000,
Coca-Cola Beverages plc and Hellenic Bottling Company S.A. merged, resulting in
a decrease of our Company's equity ownership interest from approximately 50.5%
of Coca-Cola Beverages plc to approximately 24% of the combined entity,
Coca-Cola HBC S.A.
Our Company has substantial equity positions in approximately 51
unconsolidated bottling, canning and distribution operations for its products
worldwide, including bottlers representing approximately 54% of the Company's
total U.S. unit case volume in 2000. Of these, significant investee bottlers
accounted for by the equity method include the following:
COCA-COLA ENTERPRISES INC. Our Company's ownership interest in Coca-Cola
Enterprises was approximately 40% at December 31, 2000. Coca-Cola Enterprises is
the world's largest bottler of the Company's beverage products. In 2000, net
sales of concentrates and syrups by the Company to Coca-Cola Enterprises were
approximately $3.5 billion, or approximately 17% of our Company's net operating
revenues. Coca-Cola Enterprises also purchases high fructose corn syrup through
the Company; however, related collections from Coca-Cola Enterprises and
payments to suppliers are not included in the Company's consolidated statements
of income. Coca-Cola Enterprises estimates that the territories in which it
markets beverage products to retailers (which include portions of 46 states, the
District of Columbia, the U.S. Virgin Islands, Canada, Great Britain,
continental France, the Netherlands, Luxembourg, Belgium and Monaco) contain
approximately 69% of the United States population, 97% of the population of
Canada, and 100% of the populations of Great Britain, continental France, the
Netherlands, Luxembourg, Belgium and Monaco.
Excluding products in post-mix (fountain) form, in 2000, approximately 62%
of the unit case volume of Coca-Cola Enterprises was Coca-Cola Trademark
Beverages, approximately 30% of its unit case volume was other Company Trademark
Beverages, and approximately 8% of its unit case volume was beverage products of
other companies. Coca-Cola Enterprises' net sales of beverage products were
approximately $14.8 billion in 2000.
COCA-COLA HBC S.A. (CCHBC). At December 31, 2000, our Company's ownership
interest in CCHBC was approximately 24%. CCHBC has bottling and distribution
rights, through direct ownership or joint ventures, in Armenia, Austria,
Belarus, Bosnia, Bulgaria, Croatia, Czech Republic, Greece, Hungary, Northern
Ireland, Republic of Ireland, Italy, Macedonia, Moldova, Nigeria, Poland,
Romania, Russia, Slovakia, Slovenia, Switzerland, Ukraine and Yugoslavia. CCHBC
estimates that the territories in which it markets beverage products contain
approximately 67% of the population of Italy, 31% of the population of Russia
and 100% of the populations of the other countries named above in which CCHBC
has bottling and distribution rights.
In 2000, CCHBCs net sales of beverage products were approximately U.S.$2.2
billion. In 2000, approximately 55% of the unit case volume of CCHBC was
Coca-Cola Trademark Beverages, approximately 37% of its unit case volume was
other Company Trademark Beverages and approximately 8% of its unit case volume
was beverage products of CCHBC or other companies.
COCA-COLA AMATIL LIMITED ("COCA-COLA AMATIL" OR "CCA"). At December 31,
2000, our Company's ownership interest in Coca-Cola Amatil was approximately
38%. Coca-Cola Amatil is the largest bottler of the Company's beverage products
in Australia and also has bottling and distribution rights, through direct
ownership or joint ventures, in New Zealand, Fiji, Papua New Guinea, Indonesia,
the Philippines and South Korea. Coca-Cola Amatil estimates that the territories
in which it markets beverage products contain approximately 99% of the
population of Australia, 100% of the populations of New Zealand, Fiji, South
Korea and the Philippines, 83% of the population of Papua New Guinea and 97% of
the population of Indonesia.
6
In 2000, Coca-Cola Amatil's net sales of beverage products were
approximately U.S.$2.4 billion. In 2000, approximately 66% of the unit case
volume of Coca-Cola Amatil was Coca-Cola Trademark Beverages, approximately 25%
of its unit case volume was other Company Trademark Beverages, approximately 5%
of its unit case volume was beverage products of Coca-Cola Amatil and
approximately 4% of its unit case volume was beverage products of other
companies.
PANAMERICAN BEVERAGES, INC. ("PANAMCO"). At December 31, 2000, our Company
owned an equity interest of approximately 24% in Panamco, a Panamanian holding
company with bottling subsidiaries operating in a substantial part of central
Mexico (excluding Mexico City), greater Sao Paulo, Campinas, Santos and Matto
Grosso do Sul, Brazil, central Guatemala, most of Colombia, and all of Costa
Rica, Venezuela and Nicaragua. Panamco estimates that the territories in which
it markets beverage products contain approximately 19% of the population of
Mexico, 16% of the population of Brazil, 94% of the population of Colombia, 47%
of the population of Guatemala and 100% of the populations of Costa Rica,
Venezuela and Nicaragua.
In 2000, Panamco's net sales of beverage products were approximately
U.S.$2.6 billion. In 2000, approximately 51% of the unit case volume of Panamco
was Coca-Cola Trademark Beverages, approximately 22% of its unit case volume was
other Company Trademark Beverages and approximately 27% of its unit case volume
was beverage products of Panamco or other companies.
COCA-COLA FEMSA, S.A. DE C.V. ("COCA-COLA FEMSA"). At December 31, 2000,
our Company owned a 30% equity interest in Coca-Cola FEMSA, a Mexican holding
company with bottling subsidiaries in the Valley of Mexico, Mexico's
southeastern region and Greater Buenos Aires, Argentina. Coca-Cola FEMSA
estimates that the territories in which it markets beverage products contain
approximately 30% of the population of Mexico and approximately 31% of the
population of Argentina.
In 2000, Coca-Cola FEMSA's net sales of beverage products were
approximately U.S.$1.7 billion. In 2000, approximately 76% of the unit case
volume of Coca-Cola FEMSA was Coca-Cola Trademark Beverages, approximately 23%
of its unit case volume was other Company Trademark Beverages, and approximately
1% of its unit case volume was beverage products of other companies.
OTHER INTERESTS. Under the terms of the Coca-Cola Nestle Refreshments
("CCNR") joint venture involving our Company, Nestle S.A. and certain
subsidiaries of Nestle S.A., the Company manages CCNR's ready-to-drink tea
business and Nestle S.A. manages CCNR's ready-to-drink coffee business. Our
Company owns a 50% equity interest in the joint venture, which currently has
sales in the United States and approximately 34 other countries.
On January 30, 2001, our Company and Nestle S.A. announced plans to further
develop the joint venture, which will be renamed Beverage Partners Worldwide
("BPW"). Under the proposed restructuring, which is subject to approval by
regulatory authorities, BPW will function as an entrepreneurial unit dedicated
to tapping the growth potential of emerging beverage segments, particularly
ready-to-drink coffee, teas and certain beverages with a healthful positioning.
BPW will be based in Zurich, Switzerland.
Brands already within the joint venture include Nestea and Nescafe for the
ready-to-drink categories. In addition, our Company will add the Planet Java
coffee business and the Yang Guang tea businesses, among others, while Nestle
will be contributing its Belte tea business. BPW also will focus on expanding
its geographical reach, seeking to enter new markets (excluding Japan) with both
new and existing products.
OTHER DEVELOPMENTS
- ------------------
In January 2000, our Company announced a major organizational realignment
(the "Realignment") intended to put more responsibility, accountability and
resources in the hands of local business units of the Company located around the
world. Fully implemented during calendar year 2000, the Realignment reduced the
Company's workforce while transferring responsibilities from corporate to
revenue-generating operating units. Under the Realignment, approximately 5,200
employees were separated from the Company, of which approximately 1,750 were
based within the United States. The total workforce reduction under the
Realignment included employees separated from the Company as well as the
elimination of open positions and contract labor.
7
Following the structural changes, roles and responsibilities within our
Company were redefined and certain corporate activities were outsourced. The
Company's corporate headquarters retained responsibility for setting policy and
strategy for the Company as a whole, while the Company's revenue-generating
units generally assumed all other responsibilities.
In February 2001, our Company and The Procter & Gamble Company ("P&G")
announced plans pursuant to a non-binding letter of intent to create a
stand-alone enterprise focused on developing and marketing juices, juice-based
beverages and salted snacks on a global basis. Under the terms of the proposed
transaction, our Company and P&G each will own 50% of the stand-alone
enterprise, which will be named at a later date. Our Company will contribute its
juice beverages business, and P&G will contribute its juice beverages business
and its salted snack products business. The transaction has been approved by the
boards of directors of both companies, and the stand-alone enterprise is
expected to begin operations following regulatory approvals and satisfaction of
certain other conditions. Until then, the two companies will continue to operate
independently.
In February 2001, our Company announced it had reached agreement in
principle with Coca-Cola Amatil and San Miguel Corporation ("SMC") regarding the
ownership and management of bottling operations in the Philippines. Under the
agreement, CCA will sell Coca-Cola Bottlers Philippines, Inc. ("CCBPI") to SMC,
which will acquire a 65% equity interest, and to the Company, which will acquire
a 35% equity interest, in a share, cash and debt transaction valued at A$2.25
billion (U.S.$1.24 billion). The consideration for CCBPI comprises the
cancellation of approximately 149 million CCA shares held by our Company and
219.4 million CCA shares held by SMC at a price of A$4.75 (U.S.$2.62) and
additional consideration of approximately A$495 million (U.S.$273 million)
comprising cash and debt. The number of CCA shares held by our Company to be
cancelled and the cash and debt component may vary depending on future movements
of the AUD/PHP exchange rate. Completion of the transaction is subject to
certain conditions, including approval by CCA's shareholders not associated with
our Company or SMC.
In February 2001, our Company reached an agreement with Carlsberg A/S for
the dissolution of Coca-Cola Nordic Beverages (CCNB), a joint venture
anchor bottler which presently is 51%-owned by Carlsberg and 49%-owned by the
Company. CCNB currently has bottling operations in Sweden, Norway, Denmark,
Finland, and Iceland. Under the terms of the agreement, subject to required
regulatory approvals, our Company will acquire CCNB's Sweden and Norway bottling
operations, which will increase the Company's ownership in those bottlers to
100%. Carlsberg will acquire CCNB's Denmark and Finland bottling operations,
which will increase Carlsberg's ownership in those bottlers to 100%. CCNB's
Iceland bottling operation will be sold to a third-party group of investors. It
is anticipated that these bottler ownership restructurings will be completed by
the end of second quarter, 2001. The CCNB holding company will subsequently be
dissolved.
SEASONALITY
- -----------
Sales of ready-to-drink nonalcoholic beverages are somewhat seasonal, with
the second and third calendar quarters accounting for the highest sales volumes
in the Northern Hemisphere. The volume of sales in the beverages business may be
affected by weather conditions.
COMPETITION
- -----------
Our Company competes in the nonalcoholic beverages segment of the
commercial beverages industry. That segment is highly competitive, consisting of
numerous firms. These include firms that compete, like the Company, in multiple
geographical areas as well as firms that are primarily local in operation.
Competitive products include carbonates, packaged water, juices and nectars,
fruit drinks and dilutables (including syrups and powdered drinks), sports and
energy drinks, coffee and tea, still drinks and other beverages. Nonalcoholic
beverages are sold to consumers in both ready-to-drink and not-ready-to-drink
form.
Most of our Company's beverages business currently is in soft drinks, as
that term is defined in this report. The soft drink business, which is part of
the nonalcoholic beverages segment, is itself highly competitive. Our Company is
the leading seller of soft drink concentrates and syrups in the world. Numerous
firms, however, compete in that business. These consist of a range of firms,
from local to international, that compete against the Company in numerous
geographical areas.
8
In many parts of the world in which our Company does business, demand for
soft drinks is growing at the expense of other commercial beverages. Competitive
factors with respect to the Company's business include pricing, advertising and
sales promotion programs, product innovation, increased efficiency in production
techniques, the introduction of new packaging, new vending and dispensing
equipment and brand and trademark development and protection.
RAW MATERIALS
- -------------
The principal raw material used by our Company's business in the United
States is high fructose corn syrup, a form of sugar, which is available from
numerous domestic sources and is historically subject to fluctuations in its
market price. The principal raw material used by the Company's business outside
the United States is sucrose. Our Company has a specialized sweetener
procurement staff and has not experienced any difficulties in obtaining its
requirements. In the United States and certain other countries, the Company has
authorized the use of high fructose corn syrup in syrup for Coca-Cola and other
Company Trademark Beverages for use in both fountain syrup and finished
beverages in bottles and cans.
Generally, raw materials utilized by our Company in its business are
readily available from numerous sources. However, aspartame, which is usually
used alone or in combination with either saccharin or acesulfame potassium in
the Company's low-calorie soft drink products, is currently purchased by the
Company primarily from The NutraSweet Company and from Holland Sweetener.
Acesulfame potassium is currently purchased from Nutrinova Nutrition Specialties
& Food Ingredients GmbH.
With regard to juice and juice-drink products, the citrus industry is
subject to the variability of weather conditions, in particular the possibility
of freezes in central Florida, which may result in higher prices and lower
consumer demand for orange juice throughout the industry. Due to our Company's
long-standing relationship with a supplier of high-quality Brazilian orange
juice concentrate, the supply of juice available that meets the Company's
standards is normally adequate to meet demand.
PATENTS, TRADE SECRETS, TRADEMARKS AND COPYRIGHTS
- -------------------------------------------------
Our Company is the owner of numerous patents, copyrights and trade secrets,
as well as substantial know-how and technology (herein collectively referred to
as "technology"), relating to its products and the processes for their
production, the packages used for its products, the design and operation of
various processes and equipment used in its business and certain quality
assurance and financial software. Some of the technology is licensed to
suppliers and other parties. The Company's soft drink and other beverage
formulae are among the important trade secrets of the Company.
Our Company owns numerous trademarks which are very important to its
business. Depending upon the jurisdiction, trademarks are valid as long as they
are in use and/or their registrations are properly maintained and they have not
been found to have become generic. Registrations of trademarks can generally be
renewed indefinitely as long as the trademarks are in use. The majority of our
Company's trademark license agreements are included in the Company's Bottler's
Agreements. The Company has registered and licenses the right to use its
trademarks in conjunction with certain merchandise other than soft drinks.
GOVERNMENTAL REGULATION
- -----------------------
The production, distribution and sale in the United States of many of the
Company's products are subject to the Federal Food, Drug and Cosmetic Act; the
Occupational Safety and Health Act; the Lanham Act; various environmental
statutes; and various other federal, state and local statutes and regulations
applicable to the production, transportation, sale, safety, advertising,
labeling and ingredients of such products.
A California law requires that a specific warning appear on any product
that contains a component listed by the State as having been found to cause
cancer or birth defects. The law exposes all food and beverage producers to the
possibility of having to provide warnings on their products because the law
recognizes no generally applicable quantitative thresholds below which a warning
is not required. Consequently, even trace amounts of listed components can
expose affected products to the prospect of warning labels. Products containing
listed substances that occur naturally in the product or that are contributed to
the product solely by a municipal water supply are
9
generally exempt from the warning requirement. While no Company beverage
products are currently required to display warnings under this law, our Company
is unable to predict whether an important component of a Company product might
be added to the California list in the future. Our Company is also unable to
predict whether or to what extent a warning under this law would have an impact
on costs or sales of Company beverage products.
Bottlers of the Company's beverage products presently offer non-refillable,
recyclable containers in all areas of the United States and Canada. Some of
these bottlers also offer refillable containers, which are also recyclable.
Measures have been enacted in various localities and states which require that a
deposit be charged for certain non-refillable beverage containers. The precise
requirements imposed by these measures vary. Other deposit, recycling or product
stewardship proposals have been introduced in states and localities and in the
Congress, and the Company anticipates that similar legislation or regulations
may be proposed in the future at the local, state and federal levels, both in
the United States and elsewhere.
All of our Company's facilities in the United States are subject to
federal, state and local environmental laws and regulations. Compliance with
these provisions has not had, and the Company does not expect such compliance to
have, any material adverse effect upon our Company's capital expenditures, net
income or competitive position.
EMPLOYEES
- ---------
As of December 31, 2000, our Company employed approximately 36,900 persons,
compared to approximately 37,400 at the end of 1999. The differential is
primarily due to the organizational Realignment, offset by the Company's
acquisition of certain bottlers in Latin America and the final consolidation of
our bottler in Southeast Asia. At the end of 2000, approximately 9,130 Company
employees were located in the United States. Our Company, through its divisions
and subsidiaries, has entered into numerous collective bargaining agreements,
and the Company has no reason to believe it will not be able to renegotiate any
such agreements on satisfactory terms. The Company believes that its relations
with its employees are generally satisfactory.
ITEM 2. PROPERTIES
- ------------------
Our Company's worldwide headquarters is located on a 35-acre office complex
in Atlanta, Georgia. The complex includes the approximately 621,000 square foot
headquarters building, the approximately 870,000 square foot Coca-Cola USA
building and the approximately 264,000 square foot Coca-Cola Plaza building.
Also located in the complex are several other buildings, including the technical
and engineering facilities, learning center and the Company's Reception Center.
The Company leases approximately 278,000 square feet of office space at Ten
Peachtree Place, Atlanta, Georgia, owned by a joint venture of which an indirect
subsidiary of the Company is a partner; the Company plans to vacate this space
prior to expiration of the lease in November 2001. In the first quarter of 2001,
the Company began leasing approximately 250,000 square feet of office space at
10 Glenlake Parkway, Atlanta, Georgia, as the main office for the Company's
Coca-Cola Fountain business unit, which is responsible for fountain sales in the
United States. In addition, the Company leases approximately 150,000 square feet
of office space at Northridge Business Park, Dunwoody, Georgia, for some of
Coca-Cola Fountain's operations. The Company has facilities for administrative
operations, manufacturing, processing, packaging, packing, storage and
warehousing throughout the United States.
Our Company owns and operates 32 principal beverage concentrate and/or
syrup manufacturing plants located throughout the world. The Company currently
owns or holds a majority interest in 24 operations with 71 principal beverage
bottling and canning plants located outside the United States.
The Minute Maid Company, whose business headquarters is located in Houston,
Texas, occupies its own office building, which contains approximately 330,000
square feet. The Minute Maid Company operates eight production facilities
throughout the United States and Canada and utilizes a system of contract
packers to produce and distribute certain products in areas where The Minute
Maid Company does not have its own manufacturing centers or during periods when
it experiences shortfalls in manufacturing capacity.
Our Company owns or leases additional real estate, including a
Company-owned office and retail building at 711 Fifth Avenue in New York, New
York and approximately 315,000 square feet of Company-owned office and technical
space in Brussels, Belgium. Additional owned or leased real estate located
throughout the world is used
10
by the Company as office space, for bottling, warehouse or retail
operations or, in the case of some owned property, is leased to others.
Management believes that the facilities for the production of its products
are suitable and adequate for the business conducted therein, that they are
being appropriately utilized in line with past experience and that they have
sufficient production capacity for their present intended purposes. The extent
of utilization of such facilities varies based upon the seasonal demand for
product. While it is not possible to measure with any degree of certainty or
uniformity the productive capacity and extent of utilization of these
facilities, management believes that additional production can be obtained at
the existing facilities by the addition of personnel and capital equipment and,
in some facilities, the addition of shifts of personnel or expansion of such
facilities. Our Company continuously reviews its anticipated requirements for
facilities and, on the basis of that review, may from time to time acquire
additional facilities and/or dispose of existing facilities.
ITEM 3. LEGAL PROCEEDINGS
- -------------------------
On January 30, 1997, the Brazilian Federal Revenue Service issued Notices
of Assessment to Recofarma Industrias do Amazonas Ltda. ("Recofarma"), an
indirect wholly owned subsidiary of the Company, for the period from January 1,
1992 to February 28, 1994. The assessments alleged that Recofarma should have
paid a Brazilian excise tax on intra-company transfers of product manufactured
at its Manaus plant to its warehouse in Rio de Janeiro. Assessments of tax,
interest and penalties totaled approximately U.S. $302 million as of the
assessment date (based on exchange rates as of February 4, 2000) and accrue
interest from the assessment date. The transfer of product from the plant to the
warehouse, which was discontinued in February 1994, was the subject of a
favorable advance ruling issued by the Federal Revenue Service on September 24,
1990. In the Company's opinion, the ruling has continuing effect and Recofarma's
operations conformed with the ruling. On March 3, 1997, Recofarma filed appeals
with the Brazilian Federal Revenue Service contesting the assessments.
On September 30, 1997, the Rio de Janeiro Branch of the Brazilian Federal
Revenue Service dismissed the assessments against Recofarma. This determination
was subject to an automatic ex officio appeal ("recurso ex-officio") on the
Federal Revenue Service's behalf to the Taxpayers Council in Brazilia. On August
16, 2000, the case was heard by the Taxpayers Council, which unanimously decided
in Recofarma's favor. The Federal Revenue Service did not appeal the decision
within the required period and the decision is therefore final in Recofarma's
favor.
On October 27, 2000, a class action lawsuit was filed in the United States
District Court for the Northern District of Georgia alleging that the Company,
M. Douglas Ivester, Jack L. Stahl and James E. Chestnut violated antifraud
provisions of the federal securities laws by making misrepresentations or
material omissions relating to the Companys financial condition and prospects in
late 1999 and early 2000 (the Carpenters Health & Welfare Fund Action). A
second, largely identical lawsuit was filed in the same court on November 9,
2000 (the LaValla Action). The Complaints allege that the Company and the
individual named officers: (1) forced certain Coca-Cola system bottlers to
accept excessive, unwanted and unneeded sales of concentrate during the third
and fourth quarters of 1999, thus creating a misleading sense of improvement in
our Companys performance in those quarters; (2) failed to write down the value
of impaired assets in Russia, Japan and elsewhere on a timely basis, again
resulting in the presentation of misleading interim financial results in the
third and fourth quarters of 1999; and (3) misrepresented the reasons for Mr.
Ivesters departure from the Company and then misleadingly reassured the
financial community that there would be no changes in the Companys core business
strategy or financial outlook following that departure. Damages in an
unspecified amount are sought in both Complaints.
On January 8, 2001, an order was entered by Judge Willis B. Hunt, Jr. of
the United States District Court for the Northern District of Georgia
consolidating the two cases for all purposes. Judge Hunt also ordered the
plaintiffs to file a Consolidated Amended Complaint. Our Companys initial
response to these lawsuits will be due 60 days after service of the Consolidated
Amended Complaint. The Company believes it has meritorious legal and factual
defenses and intends to defend the consolidated action vigorously.
The Company is involved in various other legal proceedings. Management of
the Company believes that any liability to the Company which may arise as a
result of these proceedings, including the proceedings specifically discussed
above, will not have a material adverse effect on the financial condition of the
Company and its subsidiaries taken as a whole.
11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -----------------------------------------------------------
Not applicable.
ITEM X. EXECUTIVE OFFICERS OF THE COMPANY
- -----------------------------------------
The following are the executive officers of our Company:
Douglas N. Daft, 57, is Chairman of the Board of Directors and Chief
Executive Officer of the Company. In November 1984, Mr. Daft was appointed
President of the Central Pacific Division. In October 1987, he was appointed
Senior Vice President of the Pacific Group of the International Business Sector.
In December 1988, he was named President of Coca-Cola (Japan) Company, Limited
and President of the North Pacific Division of the International Business
Sector. Effective 1991 he was elected Senior Vice President of the Company and
named President of the Pacific Group of the International Business Sector. He
was appointed President of the Middle and Far East Group in January 1995 and
served in that capacity until October 1999 when he was given expanded
responsibilities for the Middle and Far East Group, the Africa Group, the
Schweppes Beverages Division and the Japan Division. He was elected President
and Chief Operating Officer and a Director of the Company in December 1999. Mr.
Daft was elected to his current positions in February 2000.
James E. Chestnut, 50, is Executive Vice President, Operations Support of
the Company. Mr. Chestnut joined the Company in 1972 in London. In 1984, he was
named Finance Manager for the Philippine Region in Manila and, in 1987, Manager
of International Treasury Services, Pacific Group, in Atlanta. He was named
Finance Manager for the North Pacific Division of the International Business
Sector in 1989 before being elected Vice President and Controller of the Company
in 1993. He was elected Senior Vice President and Chief Financial Officer in
July 1994 and was appointed Senior Vice President, Operations Support in October
1999. Mr. Chestnut was elected Executive Vice President in January 2000.
Charles S. Frenette, 48, is Executive Vice President of the Company. Mr.
Frenette joined the Company in 1974. In 1983, he was appointed Vice President of
Coca-Cola USA. In 1986, he was appointed Senior Vice President and General
Manager of Coca-Cola USA Fountain. In 1992, he was appointed Executive Vice
President, Operations, of Coca-Cola USA. He was elected Vice President of the
Company in 1995 and was appointed President of the Southern Africa Division in
1996. He was elected Senior Vice President of the Company in April 1998 and
became Chief Marketing Officer in May 1998. Mr. Frenette was elected Executive
Vice President of the Company and appointed President of the Europe and Eurasia
Group in January 2000. On March 4, 2001, Mr. Frenette was named head of the
newly created Europe/Africa strategic business unit of the Company.
Joseph R. Gladden, Jr., 58, is Executive Vice President and General Counsel
of the Company. In October 1985, Mr. Gladden was elected Vice President. He was
named Deputy General Counsel in October 1987 and served in that capacity until
he was elected Vice President and General Counsel in April 1990. He was elected
Senior Vice President in April 1991 and Executive Vice President in January
2000. On January 24, 2001, Mr. Gladden announced his plans to resign his offices
effective April 18, 2001.
Carl Ware, 57, is Executive Vice President of the Company and in January
2000 was appointed head of the Company's Global Public Affairs and
Administration division. In 1979, Mr. Ware was appointed Vice President, Special
Markets, Coca-Cola USA. In March 1982, he was appointed Vice President, Urban
Affairs, of the Company. He was elected Senior Vice President and Director,
Corporate External Affairs in 1986 and became Deputy Group President of the
Northeast Europe/Africa Group of the International Business Sector in July 1991.
In January 1993 he was appointed President of the Africa Group. Mr. Ware was
elected Executive Vice President in January 2000.
Gary P. Fayard, 48, is Senior Vice President and Chief Financial Officer of
the Company. Mr. Fayard joined the Company in April 1994. In July 1994, he was
elected Vice President and Controller. Prior to joining the Company, Mr. Fayard
was a partner with Ernst & Young. Mr. Fayard was elected to his current position
in December 1999.
12
Stephen C. Jones, 45, is Senior Vice President and in January 2000 was
appointed Chief Marketing Officer of the Company. Mr. Jones joined Coca-Cola
Canada in 1986 as Brand Manager for Sprite. In 1988, he joined Coca-Cola USA as
Brand Manager for diet Coke and Sprite. Mr. Jones was named Marketing Manager
for Coca-Cola Great Britain in 1990 and was promoted to Regional Manager,
Coca-Cola Great Britain in 1991 and to Marketing Director, Coca-Cola Great
Britain and Ireland Division in 1992. In 1994, he was appointed Senior Vice
President, Consumer Marketing for Coca-Cola (Japan) Co., Ltd. ("CCJC"), and was
named Deputy Division Manager and Executive Vice President of CCJC in 1997. He
was appointed President and Chief Executive Officer of The Minute Maid Company
in October 1999. Mr. Jones was elected to his current position in January 2000.
Alexander R.C. Allan, 56, is Senior Vice President of the Company. Mr.
Allan joined Coca-Cola Bottling Company of Johannesburg in 1968 as an Internal
Auditor. He was appointed the financial Controller for the Southern Africa
Division of The Coca-Cola Company in 1978 and Assistant Division Manager and
Finance Manager of the Southern and Central Africa Division in 1986. In January
1993, he was appointed President of the Middle East Division (renamed Middle
East & North Africa Division in 1998). Mr. Allan was appointed President of the
Middle & Far East Group in October 1999 and was elected to his current position
in December 1999. On March 4, 2001, Mr. Allan was named head of the newly
created Asia strategic business unit of the Company.
Jeffrey T. Dunn, 43, is Senior Vice President of the Company. Mr. Dunn
joined the Company in 1981. From 1985 to 1990, Mr. Dunn served in various
positions in Coca-Cola USA Fountain. In 1990, Mr. Dunn was named Vice President,
Presence Marketing, Coca-Cola USA. In 1994, he rejoined Coca-Cola USA Fountain
as Vice President, Marketing and in May 1996, was named Vice President, Field
Sales and Marketing. He was named Vice President and General Manager, Coca-Cola
USA Fountain in February 1998, and Senior Vice President, Coca-Cola USA Fountain
in June 1998. In January 2000, Mr. Dunn was appointed Senior Vice President of
The Coca-Cola North America Marketing Division. Mr. Dunn was elected to Senior
Vice President of the Company and President of the North America Group in
October 2000. On March 4, 2001, Mr. Dunn was named head of the newly created
Americas strategic business unit of the Company.
Steven J. Heyer, 48, was named head of the newly created Coca-Cola Ventures
strategic business unit of the Company on March 7, 2001. On April 18, 2001, Mr.
Heyer will be considered for election as Executive Vice President of the
Company. Mr. Heyer joins our Company from AOL Time Warner, where he served since
1996 as President and Chief Operating Officer of Turner Broadcasting System,
Inc. Mr. Heyer joined TBS, Inc. in 1994 as President of Turner Broadcasting
Sales, Inc. Prior to that, Mr. Heyer was President and Chief Operating Officer
of Young & Rubicam Advertising Worldwide, as well as Executive Vice President of
Young & Rubicam, Inc.
Deval L. Patrick, 45. On April 18, 2001, Mr. Patrick will be considered for
election as Executive Vice President and General Counsel of the Company. Mr.
Patrick's employment with the Company will commence on April 2, 2001. In 1999,
Mr. Patrick joined Texaco Inc. as Vice President and General Counsel. Mr.
Patrick had been a partner with the Boston law firm of Day Berry & Howard LLP
since 1997. Mr. Patrick was also Assistant Attorney General of the United States
and Chief of the U.S. Justice Department's Civil Rights Division from 1994 until
1997, where he was responsible for enforcing federal laws prohibiting
discrimination.
The Executive Committee is responsible for setting policy and establishing
strategic direction for the Company. On March 7, 2001, the Company announced the
expansion of the Executive Committee, which will consist of Mr. Daft, as
chairman, and Messrs. Allan, Chestnut, Dunn, Frenette, Heyer, Patrick and Ware.
All executive officers serve at the pleasure of the Board of Directors.
There is no family relationship between any of the executive officers of the
Company.
On March 4, 2001, our Company announced a new operational management
structure. See "Item 1. - Business". As part of this new management structure,
the Company also announced that Jack L. Stahl had decided to resign from his
position as President and Chief Operating Officer of the Company, effective
immediately, in order to explore other career interests and opportunities.
13
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHARE-OWNER
MATTERS
- -------------------------------------------------------------------------
"Financial Review Incorporating Management's Discussion and Analysis" on
pages 33 through 43, "Selected Financial Data" for the years 1999 and 2000 on
page 44, "Stock Prices" on page 69 and "Common Stock", "Stock Exchanges" and
"Dividends" under the heading "Share-Owner Information" on page 72 of the
Company's Annual Report to Share Owners for the year ended December 31, 2000
(the "Company's 2000 Annual Report to Share Owners"), are incorporated herein by
reference.
During the fiscal year ended December 31, 2000, no equity securities of the
Company were sold by the Company which were not registered under the Securities
Act of 1933, as amended.
ITEM 6. SELECTED FINANCIAL DATA
- -------------------------------
"Selected Financial Data" for the years 1996 through 2000, on pages 44 and
45 of the Company's 2000 Annual Report to Share Owners, is incorporated herein
by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- -----------------------------------------------------------------------
"Financial Review Incorporating Management's Discussion and Analysis" on
pages 33 through 43 of the Company's 2000 Annual Report to Share Owners, is
incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- -------------------------------------------------------------------
"Financial Risk Management" on page 36 of the Company's 2000 Annual Report
to Share Owners, is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ---------------------------------------------------
The following consolidated financial statements of the Company and its
subsidiaries, included in the Company's 2000 Annual Report to Share Owners, are
incorporated herein by reference:
Consolidated Balance Sheets -- December 31, 2000 and 1999.
Consolidated Statements of Income -- Years ended December 31, 2000,
1999 and 1998.
Consolidated Statements of Cash Flows -- Years ended December 31, 2000,
1999 and 1998.
Consolidated Statements of Share-Owners' Equity -- Years ended
December 31, 2000, 1999 and 1998.
Notes to Consolidated Financial Statements.
Report of Independent Auditors.
"Quarterly Data (Unaudited)" on page 69 of the Company's 2000 Annual Report
to Share Owners, is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
- -----------------------------------------------------------------------
Not applicable.
14
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -----------------------------------------------------------
For information on Directors of the Company, the subsection under the
heading "Election of Directors" entitled "Board of Directors" on pages 5 through
9 and under the heading "Section 16(a) Beneficial Ownership Reporting
Compliance" on page 12 of the Company's Proxy Statement for the Annual Meeting
of Share Owners to be held April 18, 2001 (the "Company's 2001 Proxy
Statement"), is incorporated herein by reference. See Item X in Part I for
information regarding executive officers of the Company.
ITEM 11. EXECUTIVE COMPENSATION
- -------------------------------
The subsection under the heading "Election of Directors" entitled
"Information about Committees, Meetings and Compensation of Directors" on pages
13 and 14, the portion of the section entitled "Executive Compensation" set
forth on pages 16 through 23, and the subsection entitled "Compensation
Committee Interlocks and Insider Participation" on pages 31 and 32 of the
Company's 2001 Proxy Statement, are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -----------------------------------------------------------------------
The subsections under the heading "Election of Directors" entitled
"Ownership of Equity Securities in the Company" on pages 10 through 12 and
"Principal Share Owners" on pages 12 and 13, and the subsection under the
heading "Certain Investee Companies" entitled "Ownership of Securities in the
Investee Companies" on page 33 of the Company's 2001 Proxy Statement, are
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------------------------------------------------------
The subsections under the heading "Election of Directors" entitled
"Information about Committees, Meetings and Compensation of Directors" and
"Certain Transactions and Relationships" on pages 13 through 15, the subsection
under the heading "Executive Compensation" entitled "Compensation Committee
Interlocks and Insider Participation" on pages 31 and 32 and the section under
the heading "Certain Investee Companies" on pages 32 and 33 of the Company's
2001 Proxy Statement, are incorporated herein by reference.
15
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
- -----------------------------------------------------------------------
(a) 1. Financial Statements
The following consolidated financial statements of The Coca-Cola
Company and subsidiaries, included in the Company's 2000 Annual Report
to Share Owners, are incorporated by reference in Part II, Item 8:
Consolidated Balance Sheets -- December 31, 2000 and 1999.
Consolidated Statements of Income -- Years ended December 31, 2000,
1999 and 1998.
Consolidated Statements of Cash Flows -- Years ended December 31, 2000,
1999 and 1998.
Consolidated Statements of Share-Owners'Equity -- Years ended
December 31, 2000, 1999 and 1998.
Notes to Consolidated Financial Statements.
Report of Independent Auditors.
2. The following consolidated financial statement schedule of The Coca-Cola
Company and subsidiaries is included in Item 14(d):
Schedule II -- Valuation and Qualifying Accounts. All other schedules
for which provision is made in the applicable accounting regulations
of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and, therefore, have been
omitted.
3. Exhibits
EXHIBIT NO.
- -----------
3.1 Certificate of Incorporation of the Company, including
Amendment of Certificate of Incorporation, effective May 1,
1996 -- incorporated herein by reference to Exhibit 3 of the
Company's Form 10-Q Quarterly Report for the quarter ended
March 31, 1996. (With regard to applicable cross references
in this report, the Company's Current, Quarterly and Annual
Reports are filed with the Securities and Exchange Commission
under File No. 1-2217.)
3.2 By-Laws of the Company, as amended and restated through
February 17, 2000 -- incorporated herein by reference to
Exhibit 3.2 of the Company's Form 10-K Annual Report for the
year ended December 31, 1999.
4.1 The Company agrees to furnish to the Securities and Exchange
Commission, upon request, a copy of any instrument defining the
rights of holders of long-term debt of the Company and all of
its consolidated subsidiaries and unconsolidated subsidiaries
for which financial statements are required to be filed with
the Securities and Exchange Commission.
10.1.1 The Key Executive Retirement Plan of the Company, as amended --
incorporated herein by reference to Exhibit 10.2 of the
Company's Form 10-K Annual Report for the year ended December
31, 1995.*
16
EXHIBIT NO.
- -----------
10.1.2 Third Amendment to the Key Executive Retirement Plan of the
Company, dated as of July 9, 1998 -- incorporated herein by
reference to Exhibit 10.1.2 of the Company's Form 10-K Annual
Report for the year ended December 31, 1999.*
10.1.3 Fourth Amendment to the Key Executive Retirement Plan of the
Company, dated as of February 16, 1999 -- incorporated herein
by reference to Exhibit 10.1.3 of the Company's Form 10-K Annual
Report for the year ended December 31, 1999.*
10.1.4 Fifth Amendment to the Key Executive Retirement Plan of the
Company, dated as of January 25, 2000 -- incorporated herein by
reference to Exhibit 10.1.4 of the Company's Form 10-K Annual
Report for the year ended December 31, 1999.*
10.2 Supplemental Disability Plan of the Company, as amended --
incorporated herein by reference to Exhibit 10.3 of the
Company's Form 10-K Annual Report for the year ended December
31, 1991.*
10.3 Annual Performance Incentive Plan of the Company, as amended --
incorporated herein by reference to Exhibit 10.4 of the
Company's Form 10-K Annual Report for the year ended December
31, 1995.*
10.4 1987 Stock Option Plan of the Company, as amended and restated
through April 20, 1999 -- incorporated herein by reference to
Exhibit 10.1 of the Company's Form 10-Q Quarterly Report for
the quarter ended March 31, 1999*
10.5 1991 Stock Option Plan of the Company, as amended and restated
through April 20, 1999 -- incorporated herein by reference to
Exhibit 10.2 of the Company's Form 10-Q Quarterly Report for
the quarter ended March 31, 1999.*
10.6 1999 Stock Option Plan of the Company, as amended and restated
through April 18, 2000 - incorporated herein by reference to
Exhibit 10 of the Company's Form 10-Q Quarterly Report for the
quarter ended March 31, 2000.*
10.7 1983 Restricted Stock Award Plan of the Company, as amended
through February 17, 2000 -- incorporated herein by reference
to Exhibit 10.7 of the Company's Form 10-K Annual Report for
the year ended December 31, 1999.*
10.8 1989 Restricted Stock Award Plan of the Company, as amended
through February 17, 2000 -- incorporated herein by reference
to Exhibit 10.8 of the Company's Form 10-K Annual Report for
the year ended December 31, 1999.*
10.9.1 Compensation Deferral & Investment Program of the Company, as
amended, including Amendment Number Four dated November 28,
1995 -- incorporated herein by reference to Exhibit 10.13 of
the Company's Form 10-K Annual Report for the year ended
December 31, 1995.*
10.9.2 Amendment Number 5 to the Compensation Deferral & Investment
Program of the Company, effective as of January 1, 1998 --
incorporated herein by reference to Exhibit 10.8.2 of the
Company's Form 10-K Annual Report for the year ended December
31, 1997.*
10.10 Special Medical Insurance Plan of the Company, as amended --
incorporated herein by reference to Exhibit 10.16 of the
Company's Form 10-K Annual Report for the year ended December
31, 1995.*
10.11.1 Supplemental Benefit Plan of the Company, as amended --
incorporated herein by reference to Exhibit 10.17 of the
Company's Form 10-K Annual Report for the year ended December
31, 1993.*
17
EXHIBIT NO.
- -----------
10.11.2 Amendment Number Five to the Supplemental Benefit Plan of the
Company -- incorporated herein by reference to Exhibit 10.17.2
of the Company's Form 10-K Annual Report for the year ended
December 31, 1996.*
10.11.3 Amendment Number Six to the Supplemental Benefit Plan of the
Company, dated as of July 1, 1998 -- incorporated herein by
reference to Exhibit 10.11.3 of the Company's Form 10-K Annual
Report for the year ended December 31, 1999.*
10.11.4 Amendment Number Seven to the Supplemental Benefit Plan of the
Company, dated January 24, 2000 -- incorporated herein by
reference to Exhibit 10.11.4 of the Company's Form 10-K Annual
Report for the year ended December 31, 1999.*
10.11.5 Amendment Number Eight to the Supplemental Benefit Plan of the
Company, dated January 25, 2000 -- incorporated herein by
reference to Exhibit of 10.11.5 of the Company's Form 10-K
Annual Report for the year ended December 31, 1999.*
10.12 Retirement Plan for the Board of Directors of the Company, as
amended -- incorporated herein by reference to Exhibit 10.22 of
the Company's Form 10-K Annual Report for the year ended
December 31, 1991.*
10.13 Deferred Compensation Plan for Non-Employee Directors of the
Company, adopted as of October 16, 1997 -- incorporated herein
by reference to Exhibit 10.12 of the Company's Form 10-K Annual
Report for the year ended December 31, 1997.*
10.14 Deferred Compensation Agreement for Officers or Key Executives
of the Company -- incorporated herein by reference to Exhibit
10.20 of the Company's Form 10-K Annual Report for the year
ended December 31, 1993.*
10.15 Long Term Performance Incentive Plan of the Company, as amended
and restated effective April 21, 1999 -- incorporated herein by
reference to Exhibit 10.4 of the Company's Form 10-Q Quarterly
Report for the quarter ended March 31, 1999.*
10.16 Executive Performance Incentive Plan of the Company, as amended
and restated effective April 21, 1999 -- incorporated herein by
reference to Exhibit 10.5 of the Company's Form 10-Q Quarterly
Report for the quarter ended March 31, 1999.*
10.17.1 Letter Agreement, dated December 6, 1999, between the Registrant
and M. Douglas Ivester -- incorporated herein by reference to
Exhibit 10.17.1 of the Company's Form 10-K Annual Report for
the year ended December 31, 1999.*
10.17.2 Letter Agreement, dated December 15, 1999, between the
Registrant and M. Douglas Ivester -- incorporated herein by
reference to Exhibit 10.17.2 of the Company's Form 10-K Annual
Report for the year ended December 31, 1999.*
10.17.3 Letter Agreement, dated February 17, 2000, between the
Registrant and M. Douglas Ivester -- incorporated herein by
reference to Exhibit 10.17.3 of the Company's Form 10-K Annual
Report for the year ended December 31, 1999.*
10.18 Group Long-Term Performance Incentive Plan of the Company, as
amended and restated effective February 17, 2000 -- incorporated
herein by reference to Exhibit 10.18 of the Company's Form 10-K
Annual Report for the year ended December 31, 1999.*
10.19 Executive Incentive Plan of the Company, adopted as of February
14, 2001.*
18
Exhibit No.
- ----------
10.20 Restricted Stock Agreement, dated December 20, 2000, between the
Company and Charles S. Frenette.*
10.21 Form of United States Master Bottle Contract, as amended,
between the Company and Coca-Cola Enterprises Inc. ("Coca-Cola
Enterprises") or its subsidiaries incorporated herein by
reference to Exhibit 10.24 of Coca-Cola Enterprises' Annual
Report on Form 10-K for the fiscal year ended December 30, 1988
(File No. 01-09300).
12.1 Computation of Ratios of Earnings to Fixed Charges for the years
ended December 31, 2000, 1999, 1998, 1997 and 1996.
13.1 Portions of the Company's 2000 Annual Report to Share Owners
expressly incorporated by reference herein: Pages 33 through
67, 69, 72 and the inside back cover (definitions of "Dividend
Payout Ratio," "Economic Profit," "Free Cash Flow," "Interest
Coverage Ratio," "Net Capital," "Net Debt," "Return on Capital,"
"Return on Common Equity," "Total Capital" and "Total Market
Value of Common Stock").
21.1 List of subsidiaries of the Company as of December 31, 2000.
23.1 Consent of Independent Auditors.
24.1 Powers of Attorney of Officers and Directors signing this
report.
99.1 Cautionary Statement Relative to Forward-Looking Statements.
- --------------------------------------------------------------------------------
*Management contracts and compensatory plans and arrangements required to be
filed as exhibits pursuant to Item 14(c) of this report.
(b) Reports on Form 8-K -- The Company did not file any reports on Form 8-K
during the last quarter of the period covered by this report.
(c) Exhibits -- The response to this portion of Item 14 is submitted as a
separate section of this report.
(d) Financial Statement Schedule -- The response to this portion of Item 14
is submitted as a separate section of this report.
19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
THE COCA-COLA COMPANY
(Registrant)
By: /s/ DOUGLAS N. DAFT
-------------------------
DOUGLAS N. DAFT
Chairman, Board of Directors, Chief
Executive Officer and a Director
Date: March 7, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ DOUGLAS N. DAFT *
- ----------------------------------- ---------------------------------
DOUGLAS N. DAFT CATHLEEN P. BLACK
Chairman, Board of Directors, Chief Director
Executive Officer and a Director
(Principal Executive Officer)
March 7, 2001 March 7, 2001
/s/ GARY P. FAYARD *
- ----------------------------------- ------------------------------------
GARY P. FAYARD WARREN E. BUFFETT
Senior Vice President and Chief Director
Financial Officer
(Principal Financial Officer)
March 7, 2001 March 7, 2001
/s/ CONNIE D. McDANIEL *
- ----------------------------------- ------------------------------------
CONNIE D. McDANIEL SUSAN B. KING
Vice President and Controller Director
(Principal Accounting Officer)
March 7, 2001 March 7, 2001
* *
- ----------------------------------- ----------------------------------
HERBERT A. ALLEN DONALD F. McHENRY
Director Director
March 7, 2001 March 7, 2001
* *
- ----------------------------------- -----------------------------------
RONALD W. ALLEN SAM NUNN
Director Director
March 7, 2001 March 7, 2001
20
* *
- ----------------------------------- -----------------------------------
PAUL F. OREFFICE PETER V. UEBERROTH
Director Director
March 7, 2001 March 7, 2001
* *
- ----------------------------------- -----------------------------------
JAMES D. ROBINSON III JAMES B. WILLIAMS
Director Director
March 7, 2001 March 7, 2001
* By: /s/ CAROL C. HAYES
----------------------------
CAROL C. HAYES
Attorney-in-fact
March 7, 2001
21
[This Page Intentionally Left Blank]
ANNUAL REPORT ON FORM 10-K
ITEM 14(d)
FINANCIAL STATEMENT SCHEDULE
YEAR ENDED DECEMBER 31, 2000
THE COCA-COLA COMPANY AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
THE COCA-COLA COMPANY AND SUBSIDIARIES
Year ended December 31, 2000
(in millions)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- ----------------------------------------------------------------------------------------------------------------------
ADDITIONS
------------------------
(1) (2)
BALANCE AT CHARGED TO CHARGED BALANCE
BEGINNING OF COSTS AND TO OTHER DEDUCTIONS AT END
DESCRIPTION PERIOD EXPENSES ACCOUNTS (NOTE 1) OF PERIOD
- ----------- ------------ ----------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED IN THE
BALANCE SHEET FROM THE
ASSETS TO WHICH THEY
APPLY
Allowance for losses on:
Trade accounts receivable........ $ 26 $ 37 $ 4 $ 5 $ 62
Miscellaneous investments and
other assets................... 322 23 - 51 294
Deferred tax assets.............. 443 353 - 155 641
----- ----- ----- ----- -----
$ 791 $ 413 $ 4 $ 211 $ 997
===== ===== ===== ===== =====
</TABLE>
- --------------
[FN]
Note 1 - The amounts shown in Column D consist of the following:
</FN>
<TABLE>
<CAPTION>
TRADE MISCELLANEOUS DEFERRED
ACCOUNTS INVESTMENTS TAX
RECEIVABLE AND OTHER ASSETS ASSETS TOTAL
---------- ---------------- -------- -------
<S> <C> <C> <C> <C>
Charge off of uncollectible accounts....... $ 4 $ - $ - $ 4
Write-off of impaired assets............... - 51 - 51
Other transactions......................... 1 - 155 156
---- ---- ----- -----
$ 5 $ 51 $ 155 $ 211
==== ==== ===== =====
</TABLE>
F-1
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
THE COCA-COLA COMPANY AND SUBSIDIARIES
YEAR ENDED DECEMBER 31, 1999
(IN MILLIONS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- ----------------------------------------------------------------------------------------------------------------------
ADDITIONS
------------------------
(1) (2)
BALANCE AT CHARGED TO CHARGED BALANCE
BEGINNING OF COSTS AND TO OTHER DEDUCTIONS AT END
DESCRIPTION PERIOD EXPENSES ACCOUNTS (NOTE 1) OF PERIOD
- ----------- ------------ ----------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED IN THE
BALANCE SHEET FROM THE
ASSETS TO WHICH THEY
APPLY
Allowance for losses on:
Trade accounts receivable........ $ 10 $ 13 $ 5 $ 2 $ 26
Miscellaneous investments and
other assets................... 275 43 88 84 322
Deferred tax assets.............. 18 443 - 18 443
----- ----- ----- ----- -----
$ 303 $ 499 $ 93 $ 104 $ 791
===== ===== ===== ===== =====
</TABLE>
- --------------------------
[FN]
Note 1 - The amounts shown in Column D consist of the following:
</FN>
<TABLE>
<CAPTION>
TRADE MISCELLANEOUS DEFERRED
ACCOUNTS INVESTMENTS TAX
RECEIVABLE AND OTHER ASSETS ASSETS TOTAL
---------- ---------------- -------- -------
<S> <C> <C> <C>
Charge off of uncollectible accounts....... $ 3 $ 2 $ - $ 5
Write-off of impaired assets............... - 81 - 81
Other transactions......................... (1) 1 18 18
---- ---- ---- -----
$ 2 $ 84 $ 18 $ 104
==== ==== ==== =====
</TABLE>
F-2
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
THE COCA-COLA COMPANY AND SUBSIDIARIES
YEAR ENDED DECEMBER 31, 1998
(IN MILLIONS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- ----------------------------------------------------------------------------------------------------------------------
ADDITIONS
------------------------
(1) (2)
BALANCE AT CHARGED TO CHARGED BALANCE
BEGINNING OF COSTS AND TO OTHER DEDUCTIONS AT END
DESCRIPTION PERIOD EXPENSES ACCOUNTS (NOTE 1) OF PERIOD
- ----------- ------------ ----------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
RESERVES DEDUCTED IN THE
BALANCE SHEET FROM THE
ASSETS TO WHICH THEY
APPLY
Allowance for losses on:
Trade accounts receivable........ $ 23 $ 3 $ - $ 16 $ 10
Miscellaneous investments and
other assets................... 301 76 - 102 275
Deferred tax assets.............. 21 - - 3 18
----- ----- ----- ----- -----
$ 345 $ 79 $ - $ 121 $ 303
===== ===== ===== ===== =====
</TABLE>
- --------------------------
[FN]
Note 1 - The amounts shown in Column D consist of the following:
</FN>
<TABLE>
<CAPTION>
TRADE MISCELLANEOUS DEFERRED
ACCOUNTS INVESTMENTS TAX
RECEIVABLE AND OTHER ASSETS ASSETS TOTAL
---------- ---------------- -------- -------
<S> <C> <C> <C> <C>
Charge off of uncollectible accounts....... $ 6 $ 23 $ - $ 29
Write-off of impaired assets............... - 70 - 70
Other transactions......................... 10 9 3 22
---- ----- ---- -----
$ 16 $ 102 $ 3 $ 121
==== ===== ==== =====
</TABLE>
F-3
EXHIBIT INDEX
-------------
EXHIBIT NO. DESCRIPTION
- ----------- -----------
3.1 Certificate of Incorporation of the Company, including
Amendment of Certificate of Incorporation, effective May 1,
1996 -- incorporated herein by reference to Exhibit 3 of the
Company's Form 10-Q Quarterly Report for the quarter ended
March 31, 1996. (With regard to applicable cross references
in this report, the Company's Current, Quarterly and Annual
Reports are filed with the Securities and Exchange Commission
under File No. 1-2217.)
3.2 By-Laws of the Company, as amended and restated through
February 17, 2000 -- incorporated herein by reference to
Exhibit 3.2 of the Company's Form 10-K Annual Report for the
year ended December 31, 1999.
4.1 The Company agrees to furnish to the Securities and Exchange
Commission, upon request, a copy of any instrument defining the
rights of holders of long-term debt of the Company and all of
its consolidated subsidiaries and unconsolidated subsidiaries
for which financial statements are required to be filed with
the Securities and Exchange Commission.
10.1.1 The Key Executive Retirement Plan of the Company, as amended
-- incorporated herein by reference to Exhibit 10.2 of the
Company's Form 10-K Annual Report for the year ended December
31, 1995.*
10.1.2 Third Amendment to the Key Executive Retirement Plan of the
Company, dated as of July 9, 1998 -- incorporated herein by
reference to Exhibit 10.1.2 of the Company's Form 10-K Annual
Report for the year ended December 31, 1999.*
10.1.3 Fourth Amendment to the Key Executive Retirement Plan of the
Company, dated as of February 16, 1999 -- incorporated herein
by reference to Exhibit 10.1.3 of the Company's Form 10-K Annual
Report for the year ended December 31, 1999.*
10.1.4 Fifth Amendment to the Key Executive Retirement Plan of the
Company, dated as of January 25, 2000 -- incorporated herein by
reference to Exhibit 10.1.4 of the Company's Form 10-K Annual
Report for the year ended December 31, 1999.*
10.2 Supplemental Disability Plan of the Company, as amended --
incorporated herein by reference to Exhibit 10.3 of the
Company's Form 10-K Annual Report for the year ended December
31, 1991.*
10.3 Annual Performance Incentive Plan of the Company, as amended --
incorporated herein by reference to Exhibit 10.4 of the
Company's Form 10-K Annual Report for the year ended December
31, 1995.*
10.4 1987 Stock Option Plan of the Company, as amended and restated
through April 20, 1999 -- incorporated herein by reference to
Exhibit 10.1 of the Company's Form 10-Q Quarterly Report for
the quarter ended March 31, 1999*
10.5 1991 Stock Option Plan of the Company, as amended and restated
through April 20, 1999 -- incorporated herein by reference to
Exhibit 10.2 of the Company's Form 10-Q Quarterly Report for
the quarter ended March 31, 1999.*
EXHIBIT NO. DESCRIPTION
- ----------- -----------
10.6 1999 Stock Option Plan of the Company, as amended and restated
through April 18, 2000 - incorporated herein by reference to
Exhibit 10 of the Company's Form 10-Q Quarterly Report for the
quarter ended March 31, 2000.*
10.7 1983 Restricted Stock Award Plan of the Company, as amended
through February 17, 2000 -- incorporated herein by reference
to Exhibit 10.7 of the Company's Form 10-K Annual Report for
the year ended December 31, 1999.*
10.8 1989 Restricted Stock Award Plan of the Company, as amended
through February 17, 2000 -- incorporated herein by reference
to Exhibit 10.8 of the Company's Form 10-K Annual Report for
the year ended December 31, 1999.*
10.9.1 Compensation Deferral & Investment Program of the Company, as
amended, including Amendment Number Four dated November 28,
1995 -- incorporated herein by reference to Exhibit 10.13 of
the Company's Form 10-K Annual Report for the year ended
December 31, 1995.*
10.9.2 Amendment Number 5 to the Compensation Deferral & Investment
Program of the Company, effective as of January 1, 1998 --
incorporated herein by reference to Exhibit 10.8.2 of the
Company's Form 10-K Annual Report for the year ended December
31, 1997.*
10.10 Special Medical Insurance Plan of the Company, as amended --
incorporated herein by reference to Exhibit 10.16 of the
Company's Form 10-K Annual Report for the year ended December
31, 1995.*
10.11.1 Supplemental Benefit Plan of the Company, as amended --
incorporated herein by reference to Exhibit 10.17 of the
Company's Form 10-K Annual Report for the year ended December
31, 1993.*
10.11.2 Amendment Number Five to the Supplemental Benefit Plan of the
Company -- incorporated herein by reference to Exhibit 10.17.2
of the Company's Form 10-K Annual Report for the year ended
December 31, 1996.*
10.11.3 Amendment Number Six to the Supplemental Benefit Plan of the
Company, dated as of July 1, 1998 -- incorporated herein by
reference to Exhibit 10.11.3 of the Company's Form 10-K Annual
Report for the year ended December 31, 1999.*
10.11.4 Amendment Number Seven to the Supplemental Benefit Plan of the
Company, dated January 24, 2000 -- incorporated herein by
reference to Exhibit 10.11.4 of the Company's Form 10-K Annual
Report for the year ended December 31, 1999.*
10.11.5 Amendment Number Eight to the Supplemental Benefit Plan of the
Company, dated January 25, 2000 -- incorporated herein by
reference to Exhibit of 10.11.5 of the Company's Form 10-K
Annual Report for the year ended December 31, 1999.*
10.12 Retirement Plan for the Board of Directors of the Company, as
amended -- incorporated herein by reference to Exhibit 10.22 of
the Company's Form 10-K Annual Report for the year ended
December 31, 1991.*
10.13 Deferred Compensation Plan for Non-Employee Directors of the
Company, adopted as of October 16, 1997 -- incorporated herein
by reference to Exhibit 10.12 of the Company's Form 10-K Annual
Report for the year ended December 31, 1997.*
EXHIBIT NO. DESCRIPTION
- ----------- -----------
10.14 Deferred Compensation Agreement for Officers or Key Executives
of the Company -- incorporated herein by reference to Exhibit
10.20 of the Company's Form 10-K Annual Report for the year
ended December 31, 1993.*
10.15 Long Term Performance Incentive Plan of the Company, as amended
and restated effective April 21, 1999 -- incorporated herein by
reference to Exhibit 10.4 of the Company's Form 10-Q Quarterly
Report for the quarter ended March 31, 1999.*
10.16 Executive Performance Incentive Plan of the Company, as amended
and restated effective April 21, 1999 -- incorporated herein by
reference to Exhibit 10.5 of the Company's Form 10-Q Quarterly
Report for the quarter ended March 31, 1999.*
10.17.1 Letter Agreement, dated December 6, 1999, between the Registrant
and M. Douglas Ivester -- incorporated herein by reference to
Exhibit 10.17.1 of the Company's Form 10-K Annual Report for
the year ended December 31, 1999.*
10.17.2 Letter Agreement, dated December 15, 1999, between the
Registrant and M. Douglas Ivester -- incorporated herein by
reference to Exhibit 10.17.2 of the Company's Form 10-K Annual
Report for the year ended December 31, 1999.*
10.17.3 Letter Agreement, dated February 17, 2000, between the
Registrant and M. Douglas Ivester -- incorporated herein by
reference to Exhibit 10.17.3 of the Company's Form 10-K Annual
Report for the year ended December 31, 1999.*
10.18 Group Long-Term Performance Incentive Plan of the Company, as
amended and restated effective February 17, 2000 -- incorporated
herein by reference to Exhibit 10.18 of the Company's Form 10-K
Annual Report for the year ended December 31, 1999.*
10.19 Executive Incentive Plan of the Company, adopted as of February
14, 2001.*
10.20 Restricted Stock Agreement, dated December 20, 2000, between the
Company and Charles S. Frenette.*
10.21 Form of United States Master Bottle Contract, as amended,
between the Company and Coca-Cola Enterprises Inc. ("Coca-Cola
Enterprises") or its subsidiaries incorporated herein by
reference to Exhibit 10.24 of Coca-Cola Enterprises' Annual
Report on Form 10-K for the fiscal year ended December 30, 1988
(File No. 01-09300).
12.1 Computation of Ratios of Earnings to Fixed Charges for the years
ended December 31, 2000, 1999, 1998, 1997 and 1996.
13.1 Portions of the Company's 2000 Annual Report to Share Owners
expressly incorporated by reference herein: Pages 33 through
67, 69, 72 and the inside back cover (definitions of "Dividend
Payout Ratio," "Economic Profit," "Free Cash Flow," "Interest
Coverage Ratio," "Net Capital," "Net Debt," "Return on Capital,"
"Return on Common Equity," "Total Capital" and "Total Market
Value of Common Stock").
21.1 List of subsidiaries of the Company as of December 31, 2000.
23.1 Consent of Independent Auditors.
24.1 Powers of Attorney of Officers and Directors signing this
report.
99.1 Cautionary Statement Relative to Forward-Looking Statements.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.19
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>EXECUTIVE INCENTIVE PLAN, ADOPTED ON FEBRUARY 14, 2001
<TEXT>
Exhibit 10.19
EXECUTIVE INCENTIVE PLAN
OF THE COCA-COLA COMPANY
I. Plan Objective
-----------------
The purpose of the Executive Incentive Plan of The Coca-Cola Company is to
promote the interests of the Company by providing a competitive level of
incentive compensation for participating executive and senior officers to better
enable the Company to attract and retain highly qualified executive and senior
officers. This Plan is intended to provide an opportunity through which the
Company can measure and reward the performance of eligible participating
executive and senior officers pursuant to standards based on performance
measures other than the Companys financial performance.
II. Definitions
---------------
The terms used herein will have the following meanings:
a. "Award" means an award, with adjustments (if any), paid pursuant to the
provisions of the Plan.
b. "Board of Directors" means the Board of Directors of the Company.
c. "Committee" means the Compensation Committee of the Board of Directors
or a subcommittee thereof consisting of not less than two members of
the Board of Directors.
d. "Company" means The Coca-Cola Company and any corporation or other
business organization in which the Company owns, directly or
indirectly, at least 20 percent of the voting stock or capital.
e. "Opportunity" will have the meaning set forth in Section V(a) hereof.
f. "Participant" means an executive or senior officer who is selected for
participation by the Committee.
g. "Plan" means this Executive Incentive Plan of The Coca-Cola Company.
h. "Plan Year" means the 12 month period beginning January 1 and ending
December 31.
III. Administration of the Plan
-------------------------------
The Committee will have full power and authority to interpret and
administer the Plan in accordance with the rules and determinations adopted by
it.
IV. Eligibility
---------------
Eligibility for participation in the Plan is limited to executive and
senior officers who are selected in the sole discretion of the Committee. No
person will be automatically entitled to participate in the Plan in any Plan
Year.
The fact that an executive or senior officer has been designated eligible
to participate in the Plan in one Plan Year does not assure that such officer
will be eligible to participate in any subsequent year. The fact that an
executive or senior officer participates in the Plan for any Plan Year does not
mean that such officer will receive an Award in any Plan Year.
V. Determination of Performance Criteria
----------------------------------------
a. The Committee will determine a dollar amount for each Participant that
will represent a percentage of the Participants annual salary and level of
responsibility (the "Opportunity") that may be awarded to each such Participant
under this Plan for such Plan Year, provided that such Participant satisfies
certain performance criteria.
The Committee will, at the time the Opportunity is determined, designate
certain individual performance criteria for each Participant. Such criteria may
include, but will not be limited to, any of the following: (i) enhancement of
diversity among the employees of the Company; (ii) improvement in the quality of
the Companys products; (iii) outstanding individual professional performance;
and (iv) any other criteria as approved by the Committee. Awards will be paid
for such Plan Year at such time following the end of the Plan Year as will be
determined by the Committee.
Any Participant who changes executive positions during the Plan Year and
who retains the Opportunity initially set for him or her may have his or her
Award determined by prorating the portion of the Award that would be derived
upon satisfaction of the individual performance criteria for the portion of the
year to which such Opportunity applies.
b. The satisfaction of individual performance criteria for a particular
Plan Year will be determined and approved as follows: (i) the determination and
approval with respect to the Chairman and Chief Executive Officer will be made
by the Committee, and (ii) the determination and approval with respect to the
other executive and senior officers will be made by the Committee upon the
recommendation of the Chairman and Chief Executive Officer. Awards will be paid
for such Plan Year at such time following the end of the Plan Year as will be
determined by the Committee. The date on which the Committee approves the
satisfaction of performance criteria and determines the Awards is called the
Award Certification Date.
VI. Method of Payment of Awards
-------------------------------
All Awards will be paid in cash within 60 days following the Award
Certification Date, unless the Committee has, no later than the grant of an
Award, received and, in its sole discretion, approved a request by a Participant
to defer receipt of any Award in accordance with the following options:
2
a. An option to receive full cash payment at a date, specified in the
request, not less than one year from the date of the Award nor more than one
year after the Participants date of retirement, or
b. An option to receive the Award in equal annual installments over a
period, specified in the request, of not more than 15 years, such period
commencing not less than one year from the Award Certification Date nor more
than one year after the Award Certification Date.
Any request to defer receipt of an Award will specify the particular option
chosen. Any amount deferred in accordance with the above options will bear
interest at the prime rate of SunTrust Bank, Atlanta as in effect from time to
time from the date on which Awards that have not been deferred in accordance
with this Section VI are paid to the date of payment, but interest will in no
case constitute interest that is "above-market" as set forth in Item 402 of
Regulation S-K (or any successor thereto) promulgated by the Securities and
Exchange Commission.
The Committee, in its sole discretion, may reduce or refuse to pay any
Award.
The Company will have the right to deduct from any payment, in whole or in
part, of an Award, any taxes required to be withheld with respect to such
payment.
A Participant who retires, dies, is granted a leave of absence or whose
employment is otherwise terminated prior to the end of such Plan Year may have
his or her Award pro-rated to reflect the Participants actual term of service.
VII. Effect on Benefit Plans
----------------------------
Awards will be included in the computation of benefits under the Employee
Retirement Plan, Overseas Retirement Plan and other retirement plans maintained
by the Company under which the Participant may be covered and the Thrift and
Investment Plan, subject to all applicable laws and in accordance with the
provisions of those plans.
Awards will not be included in the computation of benefits under any group
life insurance plan, travel accident insurance plan, personal accident insurance
plan or under Company policies such as severance pay and payment for accrued
vacation, unless required by applicable laws.
VIII. Determinations of the Committee
-------------------------------------
The Committee will, subject to the provisions of the Plan, establish such
rules and regulations as it deems necessary or advisable for the proper
administration of the Plan and will make determinations and will take such other
action in connection with or in relation to accomplishing the objectives of the
Plan as it deems necessary or advisable. Each determination or other action made
or taken pursuant to the Plan, including interpretation of the Plan and the
specific conditions and provisions of the Awards granted hereunder by the
Committee, will be final and conclusive for all purposes and upon all persons
including, but without limitation, the Participants, the Company, the Committee,
the Board of Directors, the officers, the affected
3
employees of the Company and their respective successors in interest. The
Committee has full discretion to reduce the amount of any Award or to refuse to
pay any Award.
IX. Amendment and Termination
-----------------------------
The Board of Directors or the Committee may terminate the Plan at any time.
From time to time, the Committee may suspend the Plan, in whole or in part. From
time to time, the Board of Directors or the Committee may amend the Plan,
including the adoption of amendments deemed necessary or desirable to correct
any defect, supply an omission or reconcile any inconsistency in the Plan or in
any Award granted hereunder. No amendment, termination or modification of the
Plan may in any manner affect Awards theretofore granted without the consent of
the Participant unless the Committee has made a determination that an amendment
or modification is in the best interest of all persons to whom Awards have
theretofore been granted, but in no event may such amendment or modification
result in an increase in the amount of compensation payable pursuant to such
Award.
X. Applicable Law
-----------------
The Plan and all rules and determinations made and taken pursuant hereto
will be governed by the laws of the State of Georgia and construed accordingly.
XI. Change in Control
---------------------
Except as set forth herein, the Committee has no obligation to pay any
amounts under the Plan to a Participant who leaves the employ of the Company for
any reason. If there is a Change in Control (as defined in this Section XI) at
any time during a Plan Year, the Committee promptly will determine the Award
that would have been payable to each Participant under the Plan for such Plan
Year if such Participant had continued to work for the Company for such entire
year and any criteria established under Section V had been met in full for such
Plan Year, and such Award multiplied by a fraction, the numerator of which will
be the number of full calendar months that such Participant is an employee of
the Company during such Plan Year and the denominator of which will be 12 or the
number of full calendar months the Plan is in effect during such Plan Year,
whichever is less. The payment of a Participants nonforfeitable interest in his
or her Award under this Section XI will be made in cash as soon as practicable
after such Participants employment by the Company terminates or as soon as
practicable after the end of such Plan Year, whichever comes first.
A "Change in Control", for purposes of this Section XI, will mean a change
in control of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation l4A promulgated under the Securities Exchange
Act of 1934 (the "Exchange Act") as in effect on January 1, 2001, provided that
such a change in control will be deemed to have occurred at such time as (i) any
"person" (as that term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act) is or becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) directly or indirectly, of securities representing 20% or more of
the combined voting power for election of directors of the then outstanding
securities of the Company or any successor of the Company; (ii) during any
period of two consecutive years or less, individuals who at the beginning of
such period constituted the Board of Directors of the Company cease,
4
for any reason, to constitute at least a majority of the Board of
Directors, unless the election or nomination for election of each new director
was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period; (iii) the share owners
of the Company approve any merger or consolidation as a result of which its
stock will be changed, converted or exchanged (other than a merger with a
wholly-owned subsidiary of the Company) or any liquidation of the Company or any
sale or other disposition of 50% or more of the assets or earning power of the
Company; or (iv) the share owners of the Company approve any merger or
consolidation to which the Company is a party as a result of which the persons
who were share owners of the Company immediately prior to the effective date of
the merger or consolidation will have beneficial ownership of less than 50% of
the combined voting power for election of directors of the surviving corporation
following the effective date of such merger or consolidation; provided, however,
that no Change in Control will be deemed to have occurred if, prior to such time
as a Change in Control would otherwise be deemed to have occurred, the Board of
Directors determines otherwise.
5
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.20
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>RESTRICTED STOCK AGREEMENT, DATED DECEMBER 20, 2001,
BETWEEN TCCC AND CHARLES S. FRENETTE
<TEXT>
Exhibit 10.20
RESTRICTED STOCK AGREEMENT
The Coca-Cola Company (the "Company") hereby agrees to award to the
recipient named below (the Recipient) on the date set forth below (Future Award
Date) the number of shares of Common Stock, $.25 par value, of the Company (the
"Shares"), in accordance with and subject to the terms, conditions and
restrictions of this Agreement. If the conditions described below are satisfied,
such award will be made under the terms of The Coca-Cola 1989 Restricted Stock
Award Plan (the "Plan") of the Company on the Future Award Date. All benefits
hereunder will be cancelled and all terms of this Agreement shall be null and
void if a majority of shareholders voting at the next annual meeting of
shareowners do not approve the granting of this award:
Name and Address of Recipient: Charles S. Frenette,
London, England
Number of Shares Subject to Agreement: 125,000
Agreement Date: December 20, 2000
Future Award Date: January 3, 2006
Performance Criteria:* simple average annual growth in earnings per share
equals or exceeds 15% during the Measurement
Period. Earnings per share shall be defined as:
Income available to common shareholders (excluding
nonrecurring items) + Effect of assumed conversions
-------------------------------------------------------------
Weighted-average shares + Dilutive potential common shares
Measurement Period:* January 1, 2001 December 31, 2005
Release Date:* March 1, 2006
Acceptance Date: December 29, 2000
(1) An award of Restricted Stock under the Plan will be awarded to the
Recipient on the Future Award Date noted above. No Shares will be
delivered to the Recipient or
* All as qualified herein
- HIGHLY RESTRICTED -
1
transferred into the Recipients name until such Future Award Date.
After such Future Award is made, the Shares will be released from
restrictions on the Release Date noted above only upon the satisfaction
of all terms and conditions set forth in this Agreement.
(a) Certificate(s) representing the Shares shall be delivered on the
Release Date only if the Recipient, on the Release Date, is, and
has continuously been since the Award Date set forth above (the
"Award Date"), employed by the Company or a Related Company
since the Agreement Date, except as provided in paragraph 1 (b).
In addition, the Shares shall be delivered only if certain
Performance Criteria, set forth above, are met during the
Measurement Period. Further, Recipient understands and acknow-
ledges that the Compensation Committee may reduce the number of
Shares released even if the specified performance criteria are
met if the Recipient fails to meet other objectives and goals,
as determined solely in the discretion of the Compensation
Committee or a subcommittee thereof. Recipient will be
required to agree to such additional conditions as set by the
Compensation Committee or a subcommittee thereof or to
immediately forfeit the Shares.
(b) If the Recipient dies or becomes disabled prior to the Future
Award Date, the terms of this subparagraph shall apply. If death
or disability occurs in the first year of the Measurement
Period, no award will be made on the Future Award Date and no
payments shall be due under this Agreement. If death or
disability occurs in any year thereafter, the Recipient or the
Recipients estate shall receive a cash payment, less any
applicable taxes, equal to the value of the Shares (in U.S.
Dollars) (the Cash Payment) determined based upon the dates and
Measurement Periods as modified below :
1. If death or disability occurs between January 1 and
June 30 of any calendar year following the first year,
the Measurement Period will begin on January 1, 2001
and end on December 31 of the calendar year preceding
the death or disability. The Cash Payment will be made
on the 90th day following death or disability; or
2. If death or disability occurs between July 1 and
December 31 of any calendar year following the first
year, the Measurement Period will begin on January 1,
2001 and end on December 31 of the calendar year in
which the death or disability occurs. The Cash Payment
will be made on the March 1 following the year in which
death or disability occurs.
The number of Shares to be valued for the Cash Payment will be
pro-rated by a fraction with the numerator being the number of
months the Recipient was
- HIGHLY RESTRICTED -
2
in the position during the Measurement Period and the
denominator being the original number of months in the
Measurement Period. The value of any additional Shares will
not be included in the Cash Payment. If the performance
criteria are not met during the shortened Measurement Period,
no payment shall be due.
(c) Recipient shall have no rights with respect to the Shares,
including but not limited to rights to sell, vote, exchange,
transfer, pledge, hypothecate or otherwise dispose of the
Shares.
(d) The Recipient shall indicate his or her acceptance of this
Agreement by signing and returning this Agreement by the
Acceptance Date indicated above.
(e) During the period between the Agreement Date and the Future
Award Date, the Recipient will receive from Recipients employer
a quarterly cash payment, less all applicable taxes, equal to
the dividend that would be paid on an equivalent number of
shares of Company Stock.
(f) In the event that the Companys shares, as a result of a stock
split or stock dividend or combination of shares or any other
change or exchange for other securities, by reclassification,
reorganization or otherwise, are increased or decreased or
changed into or exchanged for a different number or kind of
shares of stock or other securities of the Company or of another
corporation, the number of Shares to be awarded under this
Agreement shall be adjusted to reflect such change in such
manner as the Board of Directors of the Company or the
Committee may deem appropriate. If any such adjustment shall
result in a fractional share, such fraction shall be
disregarded.
(g) In the event that the Recipient shall cease to be employed by
the Company or a Related Company (including due to retirement as
defined in the Plan) for any reason other than death, disability
(subject to Section 1(b)) or a Change of Control as defined in
the Plan prior to the Release Date, or shall violate any of the
provisions of this Agreement, this Agreement shall become null
and void and no awards or payments shall be due to the
Recipient.
2. Each notice relating to this award shall be in writing. All notices to
the Company shall be addressed to the Secretary, The Coca-Cola Company, One
Coca-Cola Plaza, Atlanta, Georgia 30313. All notices to the Recipient shall be
addressed to the address of the Recipient specified on the face page of this
Agreement. Either the Company or the Recipient may designate a different address
by written notice to the other. Written notice to
- HIGHLY RESTRICTED -
3
said addresses shall be effective to bind the Company, the Recipient and
the Recipient's representatives and beneficiaries.
4. The Recipient hereby agrees that (a) any change, interpretation,
determination or modification of this agreement by the Committee shall be final
and conclusive for all purposes and on all persons including the Company and the
Recipient; provided, however, that with respect to any amendment or modification
of the Plan which affects the award of Shares made hereby, the Committee shall
have determined that such amendment or modification is in the best interests of
the Recipient of such award; and (b) this Agreement and the award of Shares
shall not affect in any way the right of the Recipients employer to terminate or
change the employment of the Recipient.
5. If any of the terms of this Agreement may in the opinion of the Company
conflict or be inconsistent with any applicable law or regulation of any
governmental agency having jurisdiction, the Company reserves the right to
modify this Agreement to be consistent with applicable laws or regulations.
6. This Agreement has been made in and shall be construed under and in
accordance with the laws of the State of Georgia.
THE COCA-COLA COMPANY
BY: THE COMMITTEE
/s/ SUSAN E. SHAW
-------------------------
Authorized Signature
I have read the above Agreement and hereby accept the above award of the
terms and conditions of this agreement and I agree to be bound thereby and by
the actions of the Committee.
27/12/00 /s/ CHARLES S. FRENETTE
- ---------- --------------------------
Date Accepted Recipient
- HIGHLY RESTRICTED -
4
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12.1
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>RATIOS OF EARNINGS TO FIXED CHARGES
<TEXT>
Exhibit 12.1
The Coca-Cola Company and Subsidiaries
Computation of Ratios of Earnings to Fixed Charges
(IN MILLIONS EXCEPT RATIOS)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------
2000 1999 1998 1997 1996
-----------------------------------------------
Earnings:
<S> <C> <C> <C> <C> <C>
Income from continuing
operations before
income taxes and
changes in accounting
principles $ 3,399 $ 3,819 $ 5,198 $ 6,055 $ 4,596
Fixed charges 489 386 320 300 324
Less: Capitalized interest,
net (11) (18) (17) (17) (7)
Equity income or loss,
net of dividends 380 292 31 (108) (89)
------- ------- ------- ------- -------
Adjusted earnings $ 4,257 $ 4,479 $ 5,532 $ 6,230 $ 4,824
======= ======= ======= ======= =======
Fixed charges:
Gross interest incurred $ 458 $ 355 $ 294 $ 275 $ 293
Interest portion of rent
expense 31 31 26 25 31
------- ------- ------- ------- -------
Total fixed charges $ 489 $ 386 $ 320 $ 300 $ 324
======= ======= ======= ======= =======
Ratios of earnings to
fixed charges 8.7 11.6 17.3 20.8 14.9
======= ======= ======= ======= =======
</TABLE>
The Company is contingently liable for guarantees of indebtedness owed by third
parties in the amount of $397 million, of which $7 million related to
independent bottling licensees. Fixed charges for these contingent liabilities
have not been included in the computation of the above ratios as the amounts are
immaterial and, in the opinion of Management, it is not probable that the
Company will be required to satisfy the guarantees.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13.1
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>PORTIONS OF 2000 ANNUAL REPORT
<TEXT>
EXHIBIT 13.1
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
The Coca-Cola Company and Subsidiaries
The Coca-Cola Company exists to benefit and refresh everyone who is touched
by our business. We believe that our success ultimately depends on our ability
to build and nurture relationships with constituents that are essential to our
business: consumers, customers, bottlers, partners, government authorities,
communities, employees and share owners. To this end, our Company has adopted an
overriding strategy of "Think local, act local," applicable to virtually all
aspects of our business. This strategy is designed to put the responsibility and
accountability for ensuring local relevance and maximizing business performance
in the hands of those closest to the market. This enables us to achieve our
objectives of increasing volume, expanding our share of worldwide nonalcoholic
ready-to-drink beverage sales, maximizing our long-term cash flows and creating
economic value added by improving economic profit. We pursue these objectives by
strategically investing in the high-return beverage business and by optimizing
our cost of capital through appropriate financial strategies.
There are over 6 billion people in the world who decide every day whether or
not to buy our products. Each of these people represents a potential consumer of
our Company's products. As we increase consumer demand for our portfolio of
brands, we produce growth throughout the Coca-Cola system. This growth typically
comes in the form of increased finished product purchases by our consumers,
increased finished product sales by our customers, increased case sales by our
bottling partners and increased gallon sales by our Company.
The Coca-Cola system has millions of customers around the world who sell or
serve our products directly to consumers. We keenly focus on enhancing value for
these customers and providing solutions to grow their beverage businesses. Our
approach includes understanding each customers business and needs, whether that
customer is a sophisticated retailer in a developed market or a kiosk owner in
an emerging market.
INVESTMENTS
- -----------
With a business system that operates locally in nearly 200 countries and
generates superior cash flows, we consider our Company to be uniquely positioned
to capitalize on profitable investment opportunities. Our criteria for
investment are simple: New investments must directly enhance our existing
operations and must be expected to provide cash returns that exceed our long-
term, after-tax, weighted-average cost of capital, currently estimated at
approximately 11 percent.
Because it consistently generates high returns, the beverage business is a
particularly attractive investment for us. In highly developed markets, our
expenditures focus primarily on marketing our Company's brands. In emerging and
developing markets, our objective is to increase the penetration of our
products. In these markets, we allocate most of our investments to enhancing our
brands and infrastructure such as production facilities, distribution networks,
sales equipment and technology. We make these investments by forming strategic
business alliances with local bottlers and by matching local expertise with our
experience, resources and focus. Our investment strategy focuses on four
fundamental components of our business: people, marketing, brands and our
bottling system.
PEOPLE
To meet our long-term growth objectives, we recruit and actively cultivate a
diverse workforce and establish a culture that fosters learning, innovation and
value creation on a daily basis. This means maintaining and refining a corporate
culture that encourages our people to develop to their fullest potential,
assuring enjoyment and satisfaction in the Coca-Cola work environment. Our
Company values the uniqueness of all employees and the contributions they make.
MARKETING
We make significant investments in marketing to support our brands. Marketing
investments enhance consumer awareness and increase consumer preference for our
brands. This produces long-term growth in volume, per capita consumption and our
share of worldwide nonalcoholic ready-to-drink beverage sales.
We heighten consumer awareness and product appeal for our brands using
integrated marketing programs. Through our relationships with bottling partners
and those who sell our products in the marketplace, we create and implement
these programs locally. In developing a strategy for a Company brand, we conduct
product and packaging research, establish brand positioning, develop precise
consumer communications and solicit consumer feedback. Our integrated global and
local marketing programs include activities such as advertising, point-of-sale
merchandising and sales promotions.
BRANDS
We compete in the nonalcoholic ready-to-drink beverage business. Our
offerings in this category include some of the world's most valuable brands --
239 in all. These include soft drinks and noncarbonated beverages such as sports
drinks, juice and juice drinks, water products, teas and coffees. Ultimately,
consumer demand determines the Company's optimal brand portfolio. Employing the
"Think local, act local" business strategy with a special focus on brand
Coca-Cola, the Company seeks to build its existing brands and, at the same time,
to broaden its historical portfolio of brands. As discussed earlier, to meet our
long-term growth objectives, we make significant investments to support our
brands. This involves investments to support existing brands, to develop new
global or local brands, and to acquire global or local brands, when appropriate.
33
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
The Coca-Cola Company and Subsidiaries
BOTTLING SYSTEM
Our Company has business relationships with three types of bottlers: (1)
independently owned bottlers, in which we have no ownership interest; (2)
bottlers in which we have invested and have a noncontrolling ownership interest;
and (3) bottlers in which we have invested and have a controlling ownership
interest.
During 2000, independently owned bottling operations produced and distributed
approximately 25 percent of our worldwide unit case volume. Bottlers in which we
own a noncontrolling ownership interest produced and distributed approximately
59 percent of our 2000 worldwide unit case volume. Controlled bottling and
fountain operations produced and distributed approximately 16 percent.
We view certain bottling operations in which we have a noncontrolling
ownership interest as key or anchor bottlers due to their level of
responsibility and performance. The strong commitment of both key and anchor
bottlers to their own profitable volume growth helps us meet our strategic goals
and furthers the interests of our worldwide production, distribution and
marketing systems. These bottlers tend to be large and geographically diverse,
with strong financial resources for long-term investment and strong management
resources. These bottlers give us strategic business partners on every major
continent.
In 1998, Coca-Cola Amatil Limited (Coca-Cola Amatil) completed a spin-off of
its European operations into a new, publicly traded European anchor bottler,
Coca-Cola Beverages plc (Coca-Cola Beverages). On December 31, 1999, we owned
approximately 50.5 percent of Coca-Cola Beverages. In July 2000, a merger of
Coca-Cola Beverages and Hellenic Bottling Company S.A. was completed to create
Coca-Cola HBC S.A. (CCHBC). This merger resulted in a decrease of our Company's
equity ownership interest from approximately 50.5 percent of Coca-Cola Beverages
to approximately 24 percent of the combined entity, CCHBC. This change in
ownership resulted in the Company recognizing a $118 million tax-free noncash
gain in the third quarter of 2000.
In January 1999, two Japanese bottlers, Kita Kyushu Coca-Cola Bottling
Company Ltd. and Sanyo Coca-Cola Bottling Company Ltd., announced plans for a
merger to become a new, publicly traded bottling company, Coca-Cola West Japan
Company Ltd. The transaction, which was completed in July 1999, created our
first anchor bottler in Japan. We currently own approximately 5 percent of this
bottler.
Historically, in certain situations, we have viewed it to be advantageous for
our Company to acquire a controlling interest in a bottling operation. Owning
such a controlling interest has allowed us to compensate for limited local
resources and has enabled us to help focus the bottler's sales and marketing
programs, assist in developing its business and information systems, and
establish appropriate capital structures.
In separate transactions during the first half of 2000, our Company purchased
two bottlers in Brazil, Companhia Mineira de Refrescos, S.A., and Refrigerantes
Minas Gerais Ltda. In October 2000, the Company purchased a 58 percent interest
in Paraguay Refrescos S.A. (Paresa), a bottler located in Paraguay. In December
2000, the Company made a tender offer for the remaining 42 percent of the shares
in Paresa. In January 2001, we completed the tender offer. We currently own
approximately 95 percent of Paresa.
In July 1999, our Company acquired from Fraser and Neave Limited its 75
percent ownership interest in F&N Coca-Cola Pte Limited (F&N Coca-Cola). Prior
to the acquisition, our Company held a 25 percent equity interest in F&N
Coca-Cola. Acquisition of Fraser and Neave Limited's 75 percent stake gave our
Company full ownership of F&N Coca-Cola. F&N Coca-Cola holds a majority
ownership in bottling operations in Brunei, Cambodia, Nepal, Pakistan, Sri
Lanka, Singapore and Vietnam.
In line with our long-term bottling strategy, we periodically consider
options for reducing our ownership interest in a bottler. One option is to
combine our bottling interests with the bottling interests of others to form
strategic business alliances. Another option is to sell our interest in a
bottling operation to one of our equity investee bottlers. In both of these
situations, we continue participating in the bottler's earnings through our
portion of the equity investee's income.
As stated earlier, our investments in a bottler can represent either a
noncontrolling or a controlling interest. Through noncontrolling investments in
bottling companies, we provide expertise and resources to strengthen those
businesses. During 2000, the Company entered into a joint venture in China with
China National Oils and Foodstuffs Imports/Exports Corporation (COFCO),
completion of which is subject to satisfaction of certain conditions. COFCO is
contributing to the joint venture its minority equity interests in 11 Chinese
bottlers. Our Company is contributing its equity interests in two Chinese
bottlers plus cash in exchange for a 35 percent equity interest in the venture.
In 1999, we increased our interest in Embotelladora Arica S.A. (since
renamed Coca-Cola Embonor S.A.), a bottler headquartered in Chile, from
approximately 17 percent to approximately 45 percent.
Bottlers in which we have a noncontrolling ownership interest are accounted
for under the cost or equity method as appropriate. Equity income or loss,
included in our consolidated net income, represents our share of the net
earnings or losses of our investee companies. In 2000, our Company's share of
losses from equity method investments totaled $289 million.
34
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
The Coca-Cola Company and Subsidiaries
The following table illustrates the difference in calculated fair values,
based on quoted closing prices of publicly traded shares, and our Company's
carrying values for selected equity method investees (in millions):
<TABLE>
<CAPTION>
Fair Carrying
December 31, Value Value Difference{1}
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
2000
- ----
Coca-Cola Enterprises Inc. $3,210 $707 $2,503
Coca-Cola Amatil Limited 965 617 348
Coca-Cola FEMSA,
S.A. de C.V. 957 152 805
Coca-Cola HBC S.A. 851 758 93
Panamerican
Beverages, Inc. 435 487 (52)
Grupo Continental, S.A. 176 139 37
Embotelladoras Argos S.A. 97 113 (16)
Coca-Cola Bottling Company
Consolidated 94 66 28
Coca-Cola Embonor S.A. 90 227 (137)
Embotelladoras Polar S.A. 27 54 (27)
- --------------------------------------------------------------------------------
$3,582
================================================================================
</TABLE>
</FN>
{1} In instances where carrying value exceeds fair value, the decline in
value is considered to be temporary.
</FN>
FINANCIAL STRATEGIES
- --------------------
The following strategies allow us to optimize our cost of capital,
increasing our ability to maximize share-owner value.
DEBT FINANCING
Our Company maintains debt levels we consider prudent based on our cash flow,
interest coverage and percentage of debt to capital. We use debt financing to
lower our overall cost of capital, which increases our return on share-owner's
equity.
Our capital structure and financial policies have earned long-term credit
ratings of "A+" from Standard & Poor's and "Aa3" from Moody's, and a credit
rating of "A-1" and "P-1" for our commercial paper programs from Standard &
Poor's and Moody's, respectively.
Our global presence and strong capital position give us easy access to key
financial markets around the world, enabling us to raise funds with a low
effective cost. This posture, coupled with the active management of our mix of
short-term and long-term debt, results in a lower overall cost of borrowing. Our
debt management policies, in conjunction with our share repurchase programs and
investment activity, typically result in current liabilities exceeding current
assets.
In managing our use of debt capital, we consider the following financial
measurements and ratios:
<TABLE>
<CAPTION>
Year Ended December 31, 2000 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net debt (in billions) $3.9 $4.5 $3.3
Net debt-to-net capital 29% 32% 28%
Free cash flow to net debt 72% 52% 57%
Interest coverage 12x 14x 19x
Ratio of earnings to
fixed charges 8.7x 11.6x 17.3x
- --------------------------------------------------------------------------------
</TABLE>
SHARE REPURCHASES
In October 1996, our Board of Directors authorized a plan to repurchase up to
206 million shares of our Company's common stock through the year 2006. In 2000,
we did not repurchase any shares under the 1996 plan. This was due to our
utilization of cash for an organizational Realignment (the Realignment), as
discussed under the heading "Other Operating Charges," and the impact on cash
from the reduction in concentrate inventory levels by certain bottlers, as
discussed under the heading "Volume." In December 2000, we announced our
intention to reinitiate share repurchases in 2001 under the 1996 plan.
In 1999, we did not repurchase any shares under the 1996 plan due primarily
to our utilization of cash for brand and bottler acquisitions. Since the
inception of our initial share repurchase program in 1984 through our current
program as of December 31, 2000, we have repurchased more than 1 billion shares.
This represents 32 percent of the shares outstanding as of January 1, 1984, at
an average price per share of $12.46.
DIVIDEND POLICY
At its February 2001 meeting, our Board of Directors again increased our
quarterly dividend, raising it to $.18 per share. This is equivalent to a
full-year dividend of $.72 in 2001, our 39th consecutive annual increase. Our
annual common stock dividend was $.68 per share, $.64 per share and $.60 per
share in 2000, 1999 and 1998, respectively.
In 2000, our dividend payout ratio was approximately 77 percent of our net
income, reflecting the impact of other operating charges and nonrecurring items
recorded in 2000 as well as the impact of the reduction in concentrate inventory
levels by certain bottlers during 2000. Detailed discussions of these other
operating charges and nonrecurring items follow under the heading "Other
Operating Charges" and in Note 15, respectively. A discussion of the inventory
reduction appears under the heading "Volume." Our dividend payout ratio would
have been approximately 45 percent excluding these items. To free up additional
cash for reinvestment in our high-return beverage business, our Board of
Directors intends to gradually reduce our dividend payout ratio to 30 percent
over time.
35
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
The Coca-Cola Company and Subsidiaries
FINANCIAL RISK MANAGEMENT
- -------------------------
Our Company uses derivative financial instruments primarily to reduce our
exposure to adverse fluctuations in interest rates and foreign exchange rates
and, to a lesser extent, adverse fluctuations in commodity prices and other
market risks. We do not enter into derivative financial instruments for trading
purposes. As a matter of policy, all our derivative positions are used to reduce
risk by hedging an underlying economic exposure. Because of the high correlation
between the hedging instrument and the underlying exposure, fluctuations in the
value of the instruments are generally offset by reciprocal changes in the value
of the underlying exposure. The derivatives we use are straightforward
instruments with liquid markets.
Our Company monitors our exposure to financial market risks using several
objective measurement systems, including value-at-risk models. For the
value-at-risk calculations discussed below, we used a historical simulation
model to estimate potential future losses our Company could incur as a result of
adverse movements in foreign currency and interest rates. We have not considered
the potential impact of favorable movements in foreign currency and interest
rates on our calculations. We examined historical weekly returns over the
previous 10 years to calculate our value at risk. Our value-at-risk calculations
do not represent actual losses that our Company expects to incur.
FOREIGN CURRENCY
We manage most of our foreign currency exposures on a consolidated basis,
which allows us to net certain exposures and take advantage of any natural
offsets. With approximately 72 percent of 2000 operating income generated
outside the United States, weakness in one particular currency is often offset
by strengths in others over time. We use derivative financial instruments to
further reduce our net exposure to currency fluctuations.
Our Company enters into forward exchange contracts and purchases currency
options (principally Euro and Japanese yen) to hedge firm sale commitments
denominated in foreign currencies. We also purchase currency options
(principally Euro and Japanese yen) to hedge certain anticipated sales. Premiums
paid and realized gains and losses, including those on any terminated contracts,
are included in prepaid expenses and other assets. These are recognized in
income, along with unrealized gains and losses, in the same period we realize
the hedged transactions. Gains and losses on derivative financial instruments
that are designated and effective as hedges of net investments in international
operations are included in share-owners' equity as a foreign currency
translation adjustment, a component of other comprehensive income.
Our value-at-risk calculation estimates foreign currency risk on our
derivatives and other financial instruments. The average value at risk
represents the simple average of quarterly amounts for the past year. We have
not included in our calculation the effects of currency movements on anticipated
foreign currency denominated sales and other hedged transactions. We performed
calculations to estimate the impact to the fair values of our derivatives and
other financial instruments over a one-week period resulting from an adverse
movement in foreign currency exchange rates. As a result of our calculations, we
estimate with 95 percent confidence that the fair values would decline by less
than $45 million using 2000 average fair values and by less than $37 million
using December 31, 2000, fair values. On December 31, 1999, we estimated the
fair value would decline by less than $56 million. However, we would expect that
any loss in the fair value of our derivatives and other financial instruments
would generally be offset by an increase in the fair value of our underlying
exposures.
INTEREST RATES
Our Company maintains our percentage of fixed and variable rate debt within
defined parameters. We enter into interest rate swap agreements that maintain
the fixed-to-variable mix within these parameters. We recognize any differences
paid or received on interest rate swap agreements as adjustments to interest
expense over the life of each swap. Our Company also enters into interest rate
cap agreements that may entitle us to receive from a financial institution the
amount, if any, by which our interest payments on our variable rate debt exceed
prespecified interest rates through 2004.
Our value-at-risk calculation estimates interest rate risk on our derivatives
and other financial instruments. The average value at risk represents the simple
average of quarterly amounts for the past year. According to our calculations,
we estimate with 95 percent confidence that any increase in our net interest
expense due to an adverse move in our 2000 average or in our December 31, 2000,
interest rates over a one-week period would not have a material impact on our
Consolidated Financial Statements. Our December 31, 1999, estimate also was not
material to our Consolidated Financial Statements.
PERFORMANCE TOOLS
- -----------------
Economic profit provides a framework by which we measure the value of our
actions. We define economic profit as income from continuing operations, after
giving effect to taxes and excluding the effects of interest, in excess of a
computed capital charge for average operating capital employed. We seek to
maximize economic profit by strategically investing in the high-return beverage
business and by optimizing our cost of capital through appropriate financial
strategies.
TOTAL RETURN TO SHARE OWNERS
- ----------------------------
Our Company has provided share owners with an excellent return on their
investments over the past decade. A $100 investment in our Company's common
stock on December 31, 1990, together with reinvested dividends, grew in pretax
value to approximately $588 on December 31, 2000, an average annual compound
return of 19 percent.
36
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
The Coca-Cola Company and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS
OUR BUSINESS
- ------------
We are the world's leading manufacturer, marketer and distributor of
nonalcoholic beverage concentrates and syrups. Our Company manufactures beverage
concentrates and syrups and, in certain instances, finished beverages, which we
sell to bottling and canning operations, authorized fountain wholesalers and
some fountain retailers. We also market and distribute juice and juice-drink
products. In addition, we have ownership interests in numerous bottling and
canning operations.
VOLUME
- ------
We measure our sales volume in two ways: (1) gallon sales and (2) unit cases
of finished products. Gallon sales represent our primary business and measure
the volume of concentrates and syrups we sell to our bottling partners or
customers, plus the gallon sales equivalent of the juice and juice-drink
products sold by The Minute Maid Company. Most of our revenues are based on this
measure of "wholesale" activity. We also measure volume in unit cases, which
represent the amount of finished products we and our bottling system sell to
customers. We believe unit case volume more accurately measures the underlying
strength of our business system because it measures trends at the retail level.
In both measures we include fountain syrups sold by the Company to customers
directly or through wholesalers or distributors.
Our worldwide unit case volume increased 4 percent in 2000, on top of a
2 percent increase in 1999. The increase in unit case volume reflects improving
global economic conditions and successful implementation of local marketing
programs. Our business system sold 17.1 billion unit cases in 2000.
In 2000, certain bottlers reduced their concentrate inventory levels. This
was based on a joint review performed by the Company and our bottlers around the
world in order to determine the optimum level of bottler concentrate
inventories. The joint review established that opportunities existed to reduce
the level of concentrate inventory carried by bottlers in various regions of the
world. During the first half of 2000, bottlers in these regions reduced
concentrate inventory levels, the majority of which occurred during the first
three months of 2000.
OPERATIONS
- ----------
NET OPERATING REVENUES AND GROSS MARGIN
In 2000, on a consolidated basis, our net operating revenues and our gross
profit each grew 3 percent. The growth in net operating revenues was primarily
due to improved business conditions and price increases in selected countries.
This growth was partially offset by the negative impact of a stronger U.S.
dollar and the inventory reduction by certain bottlers. Our gross profit margin
of 69.7 percent remained unchanged in 2000 compared to 1999.
In 1999, on a consolidated basis, our net operating revenues and our gross
profit grew 5 percent and 4 percent, respectively. The growth in net operating
revenues was primarily due to price increases in certain markets, the
consolidation in 1999 of our bottling operations in India and our vending
operations in Japan, partially offset by the impact of a stronger U.S. dollar,
and the sale of our previously consolidated bottling and canning operations in
Italy in June 1998.
Our gross profit margin in 1999 decreased slightly to 69.7 percent from
70.4 percent in 1998. This was primarily due to the consolidation in 1999 of our
bottling operations in India and our vending operations in Japan. Generally, the
consolidation of bottling and vending operations shifts a greater portion of our
net revenues to the higher-revenue, but lower-margin, bottling and vending
operations.
SELLING, ADMINISTRATIVE AND GENERAL EXPENSES
Selling expenses totaled $7,432 million in 2000, $7,266 million in 1999 and
$6,552 million in 1998. The increase in 2000 was primarily due to higher
marketing expenditures in line with the Company's unit case volume growth and
the consolidation in 2000 of F&N Coca-Cola. Additionally, as a result of the
gain recognized in the third quarter of 2000 from the merger of Coca-Cola
Beverages and Hellenic Bottling Company S.A., discussed in "Other Income-Net,"
the Company invested approximately $30 million in incremental marketing
initiatives in CCHBC regions. The increase in 1999 was primarily due to the
temporary product withdrawal in Belgium and France and marketing expenditures
associated with brand-building activities.
Administrative and general expenses totaled $1,688 million in 2000, $1,735
million in 1999 and $1,659 million in 1998. The decrease in 2000 was primarily a
result of savings realized from the Realignment initiated in 2000, offset by the
consolidation in 2000 of F&N Coca-Cola. See discussion under the heading "Other
Operating Charges" for a more complete description of the Realignment. The
increase in 1999 was primarily related to the consolidation in 1999 of our
bottling operations in India and our vending operations in Japan.
Administrative and general expenses, as a percentage of net operating
revenues, totaled approximately 8 percent in 2000, 9 percent in 1999 and
9 percent in 1998.
OTHER OPERATING CHARGES
During 2000, we recorded total nonrecurring charges of approximately $1,443
million. Of this $1,443 million, approximately $405 million related to the
impairment of certain bottling, manufacturing and intangible assets;
approximately $850 million related to the Realignment; and approximately $188
million related to the settlement terms of a class action discrimination lawsuit
and a donation to The Coca-Cola Foundation.
37
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
The Coca-Cola Company and Subsidiaries
In the first quarter of 2000, we recorded charges of approximately $405
million related to the impairment of certain bottling, manufacturing and
intangible assets, primarily within our Indian bottling operations. These
impairment charges were recorded to reduce the carrying value of the identified
assets to fair value. Fair value was derived using cash flow analysis. The
assumptions used in the cash flow analysis were consistent with those used in
our internal planning process. The assumptions included estimates of future
growth in unit cases, estimates of gross margins, estimates of the impact of
exchange rates and estimates of tax rates and tax incentives. The charge was
primarily the result of our revised outlook for the Indian beverage market
including the future expected tax environment. The remaining carrying value of
long-lived assets within our Indian bottling operations, immediately after
recording the impairment charge, was approximately $300 million.
In the first quarter of 2000, the Company initiated the Realignment, which
reduced our workforce around the world and transferred responsibilities from our
corporate headquarters to local revenue-generating operating units. The intent
of the Realignment was to effectively align our corporate resources, support
systems and business culture to fully leverage the local capabilities of our
system.
Employees have been separated from almost all functional areas of the
Company's operations, and certain activities have been outsourced to third
parties. The total number of employees separated as of December 31, 2000, was
approximately 5,200. Employees separated from the Company as a result of the
Realignment were offered severance or early retirement packages, as appropriate,
which included both financial and nonfinancial components. The Realignment
expenses included costs associated with involuntary terminations, voluntary
retirements and other direct costs associated with implementing the Realignment.
Other direct costs included repatriating and relocating employees to local
markets; asset write-downs; lease cancellation costs; and costs associated with
the development, communication and administration of the Realignment. We
recorded total charges of approximately $850 million related to the Realignment.
During the year, the Company achieved approximately $150 million in savings from
the Realignment. For a more complete description of the costs related to the
Realignment, refer to Note 16 in our Consolidated Financial Statements.
In the fourth quarter of 2000, we recorded charges of approximately $188
million related to the settlement terms of, and direct costs related to, a class
action discrimination lawsuit. The monetary settlement includes cash payments to
fund back pay, compensatory damages, a promotional achievement fund and
attorneys' fees. In addition, the Company introduced a wide range of training,
monitoring and mentoring programs. Of the $188 million, $50 million was donated
to The Coca-Cola Foundation to continue its broad range of community support
programs. Under the terms of the settlement agreement, the Company has the
option to rescind the agreement if more than 200 potential class members opt out
of the settlement.
In the fourth quarter of 1999, we recorded charges of approximately $813
million. Of this $813 million, approximately $543 million related to the
impairment of certain bottling, manufacturing and intangible assets, primarily
within our Russian and Caribbean bottlers and in the Middle and Far East and in
North America. These impairment charges were recorded to reduce the carrying
value of the identified assets to fair value. Fair values were derived using a
variety of methodologies, including cash flow analysis, estimates of sales
proceeds and independent appraisals. Where cash flow analyses were used to
estimate fair values, key assumptions employed, consistent with those used in
our internal planning process, included our estimates of future growth in unit
case sales, estimates of gross margins and estimates of the impact of inflation
and foreign currency fluctuations. The charges were primarily the result of our
revised outlook in certain markets due to the prolonged severe economic
downturns. The remaining carrying value of these impaired long-lived assets,
immediately after recording the impairment charge, was approximately $140
million.
Of the $813 million, approximately $196 million related to charges associated
with the impairment of the distribution and bottling assets of our vending
operations in Japan and our bottling operations in the Baltics. The charges
reduced the carrying value of these assets to their fair value less the cost to
sell. Consistent with our long-term bottling investment strategy, management has
committed to a plan to sell our ownership interest in these operations to one of
our strategic business partners. The remaining carrying value of long-lived
assets within these operations and the income from operations on an after-tax
basis as of and for the 12-month period ending December 31, 2000, were
approximately $143 million and $21 million, respectively.
On December 22, 2000, the Company signed a definitive agreement to sell the
assets of our vending operations in Japan. The expected proceeds from the sale
of the assets are equal to the current carrying value of the long-lived assets
less the cost to sell. The sale transaction is expected to close in early 2001.
Management had intended to sell the assets of our bottling operations in the
Baltics to one of our strategic business partners. That partner is currently in
the process of an internal restructuring and no longer plans to purchase the
Baltics bottling operations. At this time another suitable buyer has not been
identified. Therefore, the Company will continue to operate the Baltics bottlers
as consolidated operations until a new buyer is identified.
The remainder of the $813 million charges, approximately $74 million,
primarily related to the change in senior management and charges related to
organizational changes within the Europe and Eurasia, Latin America and
Corporate segments. These charges were incurred during the fourth quarter of
1999.
In the second quarter of 1998, we recorded nonrecurring provisions primarily
related to the impairment of certain assets in North America of $25 million and
Corporate of $48 million.
38
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
The Coca-Cola Company and Subsidiaries
OPERATING INCOME AND OPERATING MARGIN
On a consolidated basis, our operating income declined 7 percent in 2000 to
$3,691 million. This follows a decline of 20 percent in 1999 to $3,982 million.
The 2000 results reflect the recording of nonrecurring charges, as previously
discussed under the heading "Other Operating Charges," the impact of the
stronger U.S. dollar, the consolidation of F&N Coca-Cola and the effect of the
previously discussed reduction of concentrate inventory by certain bottlers
within the Coca-Cola system, which was completed in the first half of 2000.
The 1999 results reflect the recording of nonrecurring provisions, as
previously discussed under the heading "Other Operating Charges"; the difficult
economic conditions in many markets throughout the world; the temporary product
withdrawal in Belgium and France; the impact of the stronger U.S. dollar; and
the consolidation in 1999 of our bottling operations in India and vending
operations in Japan. Our consolidated operating margin was 18.0 percent in 2000,
20.1 percent in 1999 and 26.4 percent in 1998.
<TABLE>
<CAPTION>
MARGIN ANALYSIS
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
2000 1999 1998
Net Operating Revenues
(in billions) $20.5 $19.8 $18.8
Gross Margin 69.7% 69.7% 70.4%
Operating Margin 18.0% 20.1% 26.4%
- --------------------------------------------------------------------------------
</TABLE>
INTEREST INCOME AND INTEREST EXPENSE
In 2000, our interest income increased 33 percent due primarily to higher
average cash balances and higher interest rates. In 1999, our interest income
increased 19 percent primarily due to cash held in locations outside the United
States earning higher interest rates, on a comparative basis. Interest expense
increased 33 percent in 2000 due to both an increase in average commercial paper
balances and higher interest rates throughout the period. Average 2000 debt
balances increased from 1999 primarily due to our utilization of cash for the
Realignment, as discussed under the heading "Other Operating Charges," and the
impact on cash from the reduction in concentrate inventory levels by certain
bottlers, as discussed under the heading "Volume." Interest expense increased 22
percent in 1999 due to higher total borrowings throughout the period. Average
1999 debt balances increased from 1998 primarily due to brand and bottler
acquisitions during the period.
EQUITY INCOME (LOSS)
In 2000, our Company's share of losses from equity method investments totaled
$289 million. This includes a nonrecurring charge of approximately $306 million,
which represents the Company's portion of a charge recorded by Coca-Cola Amatil
to reduce the carrying value of its investment in the Philippines. In addition,
Panamerican Beverages, Inc. (Panamco) wrote down selected assets, including the
impairment of the value of its Venezuelan operating unit. The Company's portion
of this charge was approximately $124 million. Also contributing to the equity
losses were nonrecurring charges recorded by investees in Eurasia and the Middle
East.
These nonrecurring charges were partially offset by overall improvement in
operating performance by our portfolio of bottlers and the positive impact of
lower tax rates on current and deferred taxes at Coca-Cola Erfrischungsgetranke
AG (CCEAG), a bottler in Germany.
In 1999, our Company's share of losses from equity method investments totaled
$184 million, reflecting the negative impact of difficult economic conditions in
many worldwide markets, continued structural change in the bottling system, the
impact of the temporary product withdrawal in Belgium and France, and one-time
charges taken by certain equity investees. Our Company's share of the charges
taken by certain equity investees in countries such as Venezuela and the
Philippines was approximately $22 million. Our Company's share of Coca-Cola
Enterprises Inc's (Coca-Cola Enterprises) nonrecurring product recall costs
resulting from the product withdrawal was approximately $28 million.
OTHER INCOME-NET
In 2000, other income-net was $99 million, primarily reflecting the impact of
a gain related to the merger of Coca-Cola Beverages and Hellenic Bottling
Company S.A. during the third quarter of 2000. This merger resulted in a
decrease of our Company's equity ownership interest from approximately 50.5
percent of Coca-Cola Beverages to approximately 24 percent of the combined
entity, CCHBC. As a result of our Company's decreased equity ownership, a
tax-free noncash gain of approximately $118 million was recognized. This was
partially offset by exchange losses recognized in 2000 versus exchange gains in
1999 attributable to the hedging of our resources in Brazil.
In 1999, other income-net decreased 57 percent to $98 million, primarily
reflecting the impact of the gains recorded on the sales of our bottling and
canning operations in Italy in June 1998, partially offset by an increase in
exchange gains in 1999.
39
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
The Coca-Cola Company and Subsidiaries
GAINS ON ISSUANCES OF STOCK BY EQUITY INVESTEES
At the time an equity investee sells its stock to third parties at a price in
excess of our book value, our Company's equity in the underlying net assets of
that investee increases. We generally record an increase to our investment
account and a corresponding gain in these transactions. No gains on issuances of
stock by equity investees were recorded to the income statement during 2000 or
1999, and pretax gains of approximately $27 million were recorded in 1998. This
gain represents the increase in our Company's equity in the underlying net
assets of the related investee. For a more complete description of these
transactions, refer to Note 3 in our Consolidated Financial Statements.
INCOME TAXES
Our effective tax rates were 36.0 percent in 2000, 36.3 percent in 1999 and
32.0 percent in 1998. The change in our effective tax rate in 2000 was primarily
the result of our current inability to realize a tax benefit associated with the
impairment charges taken in 2000, as previously discussed under the headings
"Other Operating Charges" and "Equity Income (Loss)," partially offset by the
tax-free gain of approximately $118 million, as previously discussed under the
heading "Other Income-Net." Our effective tax rates reflect tax benefits
derived from significant operations outside the United States, which are taxed
at rates lower than the U.S. statutory rate of 35 percent. For a more complete
description of our income taxes, refer to Note 14 in our Consolidated Financial
Statements.
During the first quarter of 2000, the United States and Japan taxing
authorities entered into an Advance Pricing Agreement (APA) whereby the level of
royalties paid by Coca-Cola (Japan) Company, Ltd. (our Subsidiary) to our
Company has been established for the years 1993 through 2001. Pursuant to the
terms of the APA, our Subsidiary has filed amended returns for the applicable
periods reflecting the negotiated royalty rate. These amended returns resulted
in the payment during the first and second quarters of 2000 of additional
Japanese taxes, the effect of which on both our financial performance and our
effective tax rate was not material, due primarily to offsetting tax credits on
our U.S. income tax return. The majority of the offsetting tax credits are
expected to be realized within the next 12 months.
INCOME PER SHARE
Our basic net income per share decreased by 10 percent in 2000, compared to a
31 percent decline in 1999. Diluted net income per share decreased by 10 percent
in 2000, compared to a 31 percent decline in 1999.
RECENT DEVELOPMENTS
In January 2001, we announced plans to further develop our existing
partnership with Nestle S.A., Coca-Cola Nestle Refreshments. Under the proposed
restructuring, which is subject to approval by regulatory authorities, the
partnership will be renamed Beverage Partners Worldwide (BPW) and will function
as an entrepreneurial unit dedicated to tapping the growth potential of emerging
beverage segments, particularly ready-to-drink coffees, teas and beverages with
a healthful positioning.
In February 2001, our Company and San Miguel Corporation (SMC) announced an
agreement in principle with Coca-Cola Amatil to purchase Coca-Cola Bottlers
Philippines, Inc. (CCBPI). The consideration for this transaction, comprised of
Coca-Cola Amatil shares, cash and the assumption of debt, is valued at
approximately $1.2 billion. SMC will manage day-to-day operations and own
65 percent of the common equity of CCBPI and our Company will own the remaining
35 percent. The completion of this transaction is subject to Coca-Cola Amatil
share-owner approval and certain other conditions.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
We believe our ability to generate cash from operations to reinvest in our
business is one of our fundamental financial strengths. We anticipate that our
operating activities in 2001 will continue to provide us with cash flows to
assist in our business expansion and to meet our financial commitments.
FREE CASH FLOW
Free cash flow is the cash remaining from operations after we have satisfied
our business reinvestment opportunities. We focus on increasing free cash flow
to achieve our objective of maximizing share-owner value over time. We use free
cash flow along with borrowings to pay dividends, make share repurchases and
make acquisitions.
The consolidated statements of our cash flows are summarized as follows (in
millions):
<TABLE>
<CAPTION>
Year Ended December 31, 2000 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows provided by
(used in):
Operations $ 3,585 $ 3,883 $ 3,433
Business reinvestment (779) (1,551) (1,557)
- --------------------------------------------------------------------------------
FREE CASH FLOW 2,806 2,332 1,876
Cash flows (used in)
provided by:
Acquisitions,
net of disposals (386) (1,870) (604)
Share repurchases (133) (15) (1,563)
Dividends (1,685) (1,580) (1,480)
Other financing activities (254) 1,124 1,710
Exchange (140) (28) (28)
- --------------------------------------------------------------------------------
Increase (decrease) in cash $ 208 $ (37) $ (89)
================================================================================
</TABLE>
40
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
The Coca-Cola Company and Subsidiaries
Cash provided by operations in 2000 amounted to $3.6 billion, an 8 percent
decrease from 1999 due to the utilization of cash for the Realignment, as
discussed under the heading "Other Operating Charges," and the impact on cash
from the reduction in concentrate inventory levels by certain bottlers as
discussed under the heading "Volume." In 1999, cash provided by operations
amounted to $3.9 billion, a 13 percent increase from 1998.
In 2000, net cash used in investing activities decreased by $2.3 billion
compared to 1999. The decrease was primarily the result of brand and bottler
acquisitions during 1999. For a more complete description of these transactions,
refer to Note 17 in our Consolidated Financial Statements.
In 1999, net cash used in investing activities increased by $1.3 billion
compared to 1998. The increase was primarily the result of brand and bottler
acquisitions during 1999 and a decrease in proceeds from disposal of investments
and other assets.
Total capital expenditures for property, plant and equipment (including our
investments in information technology) and the percentage distribution by
operating segment for 2000, 1999 and 1998 are as follows (in millions):
<TABLE>
<CAPTION>
Year Ended December 31, 2000 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital expenditures $ 733 $ 1,069 $ 863
- --------------------------------------------------------------------------------
North America{1} 35% 25% 32%
Africa and Middle East 2% 2% 3%
Europe and Eurasia 26% 20% 25%
Latin America 2% 6% 8%
Asia Pacific 18% 30% 12%
Corporate 17% 17% 20%
================================================================================
{1}Includes The Minute Maid Company
</TABLE>
FINANCING ACTIVITIES
Our financing activities include net borrowings, dividend payments and share
issuances and repurchases. Net cash used in financing activities totaled $2.1
billion in 2000, $.5 billion in 1999 and $1.3 billion in 1998. The change
between 2000 and 1999 was primarily due to the use of excess cash to pay down
outstanding loans. The change between 1999 and 1998 was primarily due to a
decrease in treasury stock repurchases due to our utilization of cash for our
brand and bottler acquisitions during 1999.
Cash used to purchase common stock for treasury under the 1996 share
repurchase plan and employee stock award programs totaled $133 million in 2000,
$15 million in 1999 and $1.6 billion in 1998. In 2000 and in 1999, we did not
repurchase any shares under the 1996 share repurchase plan.
Commercial paper is our primary source of short-term financing. On December
31, 2000, we had $4.5 billion outstanding in commercial paper borrowings
compared to $4.9 billion outstanding at the end of 1999, a $.4 billion decrease
in borrowings. The 2000 decrease in loans and notes payable was due to the use
of excess cash to pay down outstanding loans. The Company's commercial paper
borrowings normally mature less than three months from the date of issuance. In
1999, as part of our Year 2000 plan, we increased the amount of commercial paper
borrowings with maturity dates greater than three months. The gross payments and
receipts of borrowings greater than three months from the date of issuance have
been included in the Consolidated Statements of Cash Flows. In addition, on
December 31, 2000, we had $3.0 billion in lines of credit and other short-term
credit facilities available, of which approximately $246 million was
outstanding.
On December 31, 2000, we had $835 million outstanding in long-term debt,
compared to $854 million outstanding at the end of 1999, a $19 million decrease
in borrowings.
EXCHANGE
Our international operations are subject to certain opportunities and risks,
including currency fluctuations and government actions. We closely monitor our
operations in each country and seek to adopt appropriate strategies that are
responsive to changing economic and political environments and to fluctuations
in foreign currencies.
We use approximately 65 functional currencies. Due to our global operations,
weaknesses in some of these currencies are often offset by strengths in others.
In 2000, 1999 and 1998, the weighted-average exchange rates for foreign
currencies, and for certain individual currencies, strengthened (weakened)
against the U.S. dollar as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 2000 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
All currencies (5)% Even (9)%
- --------------------------------------------------------------------------------
Australian dollar (8)% 3% (16)%
British pound (7)% (2)% 2%
Canadian dollar Even Even (7)%
French franc (14)% (2)% (3)%
German mark (14)% (2)% (3)%
Japanese yen 4% 15% (6)%
================================================================================
</TABLE>
These percentages do not include the effects of our hedging activities and,
therefore, do not reflect the actual impact of fluctuations in exchange on our
operating results. Our foreign currency management program mitigates over time a
portion of the impact of exchange on net income and earnings per share. The
impact of a stronger U.S. dollar reduced our operating income by approximately
4 percent in 2000 and 1999.
Exchange gains (losses)-net amounted to $(12) million in 2000, $87 million in
1999 and $(34) million in 1998, and were recorded in other income-net. Exchange
gains (losses)-net includes the remeasurement of certain currencies into
functional currencies and the costs of hedging certain exposures of our balance
sheet.
Additional information concerning our hedging activities is presented in Note
9 in our Consolidated Financial Statements.
41
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
The Coca-Cola Company and Subsidiaries
FINANCIAL POSITION
- ------------------
In 2000, the carrying value of our investment in Coca-Cola Amatil decreased,
primarily as a result of a nonrecurring charge recorded by Coca-Cola Amatil to
reduce the carrying value of its investment in the Philippines. The Company's
portion of this charge was $306 million. The carrying value of our investment in
CCHBC decreased due to the impact of foreign currency exchange partially offset
by a gain of approximately $118 million related to the merger of Coca-Cola
Beverages and Hellenic Bottling Company S.A. during the third quarter of 2000.
The carrying value of other investments, principally bottling companies,
decreased primarily due to a nonrecurring charge recorded by Panamco to write
down selected assets, including the impairment of the value of the Venezuelan
operating unit. The decrease in the carrying value of other equity investments
was also impacted by the consolidation in 2000 of F&N Coca-Cola, which was
previously recorded as an equity investment. The increase in marketable
securities and other assets is primarily due to an increase in marketing
prepayments. The increase in accounts payable and accrued expenses is due
primarily to the accrual for the Realignment expenses.
The carrying value of our investment in Coca-Cola Enterprises increased in
1999, primarily as a result of Coca-Cola Enterprises' issuance of stock in its
acquisitions of various bottling operations. The carrying value of our
investment in Coca-Cola Amatil decreased, primarily due to the transfer of
approximately 57 million shares of Coca-Cola Amatil to Fraser and Neave Limited
in conjunction with our acquisition of its 75 percent interest in F&N Coca-Cola.
The increase in our property, plant and equipment was primarily due to the
consolidation in 1999 of our bottling operations in India and our vending
operations in Japan. The increase in our goodwill and other intangible assets
was primarily due to our brand and bottler acquisitions during 1999.
EURO CONVERSION
- ---------------
In January 1999, certain member countries of the European Union established
irrevocable, fixed conversion rates between their existing currencies and the
European Union's common currency (the Euro).
The introduction of the Euro is scheduled to be phased in over a period
ending January 1, 2002, when Euro notes and coins will come into circulation.
The existing currencies are due to be completely removed from circulation on
February 28, 2002. Our Company has been preparing for the introduction of the
Euro for several years. The timing of our phasing out all uses of the existing
currencies will comply with the legal requirements and also be scheduled to
facilitate optimal coordination with the plans of our vendors, distributors and
customers. Our work related to the introduction of the Euro and the phasing out
of the other currencies includes converting information technology systems;
recalculating currency risk; recalibrating derivatives and other financial
instruments; evaluating and taking action, if needed, regarding the continuity
of contracts; and modifying our processes for preparing tax, accounting, payroll
and customer records.
Based on our work to date, we believe the Euro replacing the other currencies
will not have a material impact on our operations or our Consolidated Financial
Statements.
IMPACT OF INFLATION AND CHANGING PRICES
- ---------------------------------------
Inflation affects the way we operate in many markets around the world. In
general, we are able to increase prices to counteract the inflationary effects
of increasing costs and to generate sufficient cash flows to maintain our
productive capability.
NEW ACCOUNTING STANDARDS
- ------------------------
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended by Statements 137 and 138 in
June 1999 and June 2000, respectively. These statements, which were required to
be adopted for fiscal years beginning after June 15, 2000, require the Company
to recognize all derivatives on the balance sheet at fair value. The statements
also established new accounting rules for hedging instruments which, depending
on the nature of the hedge, require that changes in the fair value of
derivatives either be offset against the change in fair value of assets,
liabilities or firm commitments through earnings, or be recognized in other
comprehensive income until the hedged item is recognized in earnings. Any
ineffective portion of a derivative's change in fair value must be immediately
recognized in earnings.
We adopted the provisions of SFAS No. 133, as amended, on January 1, 2001,
which resulted in an immaterial impact on our consolidated results of operations
and financial position. Although these statements will not have a material
impact in our consolidated financial results, the requirements of these
statements may result in slightly increased volatility in the Company's future
quarterly consolidated financial results. The Company implemented new
information systems to ensure that we were in compliance with these statements
upon adoption.
OUTLOOK
- -------
While we cannot predict future performance, we believe considerable
opportunities exist for sustained, profitable growth, not only in the developing
population centers of the world, but also in our most established markets.
We firmly believe that the strength of our brands, our unparalleled
distribution system, our global presence, our strong financial condition and the
diversity and skills of our people give us the flexibility to capitalize on
growth opportunities as we continue to pursue our goal of increasing share-
owner value over time.
42
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
The Coca-Cola Company and Subsidiaries
FORWARD-LOOKING STATEMENTS
- --------------------------
Certain written and oral statements made by our Company and subsidiaries or
with the approval of an authorized executive officer of our Company may
constitute "forward-looking statements" as defined under the Private Securities
Litigation Reform Act of 1995, including statements made in this report and
other filings with the Securities and Exchange Commission. Generally, the words
"believe," "expect," "intend," "estimate," "anticipate," "project," "will" and
similar expressions identify forward-looking statements, which generally are not
historical in nature. All statements which address operating performance, events
or developments that we expect or anticipate will occur in the future --
including statements relating to volume growth, share of sales and earnings per
share growth and statements expressing general optimism about future operating
results -- are forward-looking statements. Forward-looking statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from our Company's historical experience and our present
expectations or projections. As and when made, management believes that these
forward-looking statements are reasonable. However, caution should be taken not
to place undue reliance on any such forward-looking statements since such
statements speak only as of the date when made. The Company undertakes no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
The following are some of the factors that could cause our Company's actual
results to differ materially from the expected results described in or
underlying our Company's forward-looking statements:
- -- Our ability to generate sufficient cash flows to support capital
expansion plans, share repurchase programs and general operating
activities.
- -- Changes in the nonalcoholic beverages business environment. These
include, without limitation, competitive product and pricing
pressures and our ability to gain or maintain share of sales in the
global market as a result of actions by competitors. While we believe
our opportunities for sustained, profitable growth are considerable,
factors such as these could impact our earnings, share of sales and
volume growth.
- -- Changes in laws and regulations, including changes in accounting
standards, taxation requirements (including tax rate changes, new tax
laws and revised tax law interpretations) and environmental laws in
domestic or foreign jurisdictions.
- -- Fluctuations in the cost and availability of raw materials and the
ability to maintain favorable supplier arrangements and relationships.
- -- Our ability to achieve earnings forecasts, which are generated based
on projected volumes and sales of many product types, some of which
are more profitable than others. There can be no assurance that we
will achieve the projected level or mix of product sales.
- -- Interest rate fluctuations and other capital market conditions,
including foreign currency rate fluctuations. Most of our exposures
to capital markets, including interest and foreign currency, are
managed on a consolidated basis, which allows us to net certain
exposures and, thus, take advantage of any natural offsets. We use
derivative financial instruments to reduce our net exposure to
financial risks. There can be no assurance, however, that our
financial risk management program will be successful in reducing
foreign currency exposures.
- -- Economic and political conditions, especially in international
markets, including civil unrest, governmental changes and restrictions
on the ability to transfer capital across borders.
- -- Our ability to penetrate developing and emerging markets, which also
depends on economic and political conditions, and how well we are
able to acquire or form strategic business alliances with local
bottlers and make necessary infrastructure enhancements to production
facilities, distribution networks, sales equipment and technology.
Moreover, the supply of products in developing markets must match the
customers' demand for those products, and due to product price and
cultural differences, there can be no assurance of product acceptance
in any particular market.
- -- The effectiveness of our advertising, marketing and promotional
programs.
- -- The uncertainties of litigation, as well as other risks and
uncertainties detailed from time to time in our Company's Securities
and Exchange Commission filings.
- -- Adverse weather conditions, which could reduce demand for Company
products.
The foregoing list of important factors is not exclusive.
ADDITIONAL INFORMATION
- ----------------------
For additional information about our operations, cash flows, liquidity and
capital resources, please refer to the information on pages 46 through 68 of
this report. Additional information concerning our operating segments is
presented on pages 65 through 67.
43
SELECTED FINANCIAL DATA
The Coca-Cola Company and Subsidiaries
<TABLE>
<CAPTION>
Compound Year Ended December 31,
(In millions except per Growth Rates
share data, ratios and ------------------- --------------------------------------------------------------
growth rates) 5 Years 10 Years 2000 1999 1998{2} 1997{2} 1996{2}
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
- ---------------------
Net operating revenues 2.4% 7.1% $ 20,458 $ 19,805 $ 18,813 $ 18,868 $ 18,673
Cost of goods sold (2.2)% 4.0% 6,204 6,009 5,562 6,015 6.738
- -----------------------------------------------------------------------------------------------------------------------
Gross profit 5.0% 8.9% 14,254 13,796 13,251 12,853 11,935
Selling, administrative
and general expenses 5.2% 8.4% 9,120 9,001 8,211 7,792 7,635
Other operating charges 1,443 813 73 60 385
- -----------------------------------------------------------------------------------------------------------------------
Operating income (1.7)% 6.6% 3,691 3,982 4,967 5,001 3,915
Interest income 345 260 219 211 238
Interest expense 447 337 277 258 286
Equity income (loss) (289) (184) 32 155 211
Other income (deductions)-net 99 98 230 583 87
Gains on issuances of stock
by equity investees - - 27 363 431
- -----------------------------------------------------------------------------------------------------------------------
Income from continuing
operations before income
taxes and changes in
accounting principles (4.7)% 5.4% 3,399 3,819 5,198 6,055 4.596
Income taxes (1.9)% 6.8% 1,222 1,388 1,665 1,926 1,104
- -----------------------------------------------------------------------------------------------------------------------
Income from continuing
operations before changes
in accounting principles (6.1)% 4.6% $ 2,177 $ 2,431 $ 3,533 $ 4,129 $ 3,492
=======================================================================================================================
Net income (6.1)% 4.6% $ 2,177 $ 2,431 $ 3,533 $ 4,129 $ 3,492
Preferred stock dividends - - - - -
- -----------------------------------------------------------------------------------------------------------------------
Net income available to
common share owners (6.1)% 4.8% $ 2,177 $ 2,431 $ 3,553 $ 4,129 $ 3,492
=======================================================================================================================
Average common shares
outstanding 2,477 2,469 2,467 2,477 2,494
Average common shares
outstanding assuming
dilution 2,487 2,487 2,496 2,515 2,523
PER COMMON SHARE DATA
- ---------------------
Income from continuing
operations before changes
in accounting principles
-- basic (5.7)% 5.6% $ .88 $ .98 $ 1.43 $ 1.67 $ 1.40
Income from continuing
operations before changes
in accounting principles
-- diluted (5.5)% 5.8% .88 .98 1.42 1.64 1.38
Basic net income (5.7)% 5.6% .88 .98 1.43 1.67 1.40
Diluted net income (5.5)% 5.8% .88 .98 1.42 1.64 1.38
Cash dividends 9.1% 13.0% .68 .64 .60 .56 .50
Market price on
December 31, 10.4% 18.0% 60.94 58.25 67.00 66.69 52.63
TOTAL MARKET VALUE OF
COMMON STOCK {1} 10.2% 17.2% $151,421 $143,969 $165,190 $164,766 $130,575
- ---------------------
BALANCE SHEET DATA
- ------------------
Cash, cash equivalents
and current marketable
securities $ 1,892 $ 1,812 $ 1,807 $ 1,843 $ 1,658
Property, plant and
equipment-net 4,168 4,267 3,669 3,743 3,550
Depreciation 465 438 381 384 442
Capital expenditures 733 1,069 863 1,093 990
Total assets 20,834 21,623 19,145 16,881 16,112
Long-term debt 835 854 687 801 1,116
Total debt 5,651 6,227 5,149 3,875 4,513
Share-owners' equity 9,316 9,513 8,403 7,274 6,125
Total capital {1} 14,967 15,740 13,552 11,149 10,638
OTHER KEY FINANCIAL MEASURES {1}
- --------------------------------
Total debt-to-total
capital 37.8% 39.6% 38.0% 34.8% 42.4%
Net debt-to-net capital 29.4% 32.2% 28.1% 22.0% 31.6%
Return on common equity 23.1% 27.1% 45.1% 61.6% 60.8%
Return on capital 16.2% 18.2% 30.2% 39.5% 36.8%
Dividend payout ratio 77.4% 65.0% 41.9% 33.6% 35.7%
Free cash flow {7} $ 2,806 $ 2,332 $ 1,876 $ 2,951 $ 2.215
Economic profit $ 861 $ 1,128 $ 2,480 $ 3,325 $ 2,718
=======================================================================================================================
</TABLE>
[FN]
{1} See Glossary on page 73.
{2} In 1998, we adopted SFAS No. 132 "Employers' Disclosures about Pensions and
Other Postretirement Benefits."
{3} In 1994, we adopted SFAS No. 115 "Accounting for Certain Investments in Debt
and Equity Securities."
{4} In 1993, we adopted SFAS No. 112 "Employers' Accounting for Postemployment
Benefits."
</FN>
44
SELECTED FINANCIAL DATA
The Coca-Cola Company and Subsidiaries
<TABLE>
<CAPTION>
Year Ended December 31,
(In millions except per
share data, ratios and ---------------------------------------------------------------------------------------------
growth rates) 1995{2} 1994{2}{3} 1993{2}{4} 1992{2}{5}{6} 1991{2}{6} 1990(2]{6}
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
- ---------------------
Net operating revenues $ 18,127 $ 16,264 $ 14,030 $ 13,119 $ 11,599 $ 10,261
Cost of goods sold 6,940 6,168 5,160 5,055 4,649 4,208
- --------------------------------------------------------------------------------------------------------------------------
Gross profit 11,187 10,096 8,870 8,064 6,950 6,053
Selling, administrative
and general expenses 7,075 6,459 5,721 5,317 4,628 4,054
Other operating charges 86 - 50 - 13 49
- --------------------------------------------------------------------------------------------------------------------------
Operating income 4,026 3,637 3,099 2,747 2,309 1,950
Interest income 245 181 144 164 175 170
Interest expense 272 199 168 171 192 231
Equity income (loss) 169 134 91 65 40 110
Other income (deductions)-net 86 (25) 7 (59) 51 15
Gains on issuances of stock
by equity investees 74 - 12 - - -
- -----------------------------------------------------------------------------------------------------------------------------
Income from continuing
operations before income
taxes and changes in
accounting principles 4,328 3,728 3,185 2,746 2,383 2,014
Income taxes 1,342 1,174 997 863 765 632
- -----------------------------------------------------------------------------------------------------------------------------
Income from continuing
operations before changes
in accounting principles $ 2,986 $ 2,554 $ 2,188 $ 1,883 $ 1,618 $ 1,382
=============================================================================================================================
Net income $ 2,986 $ 2,554 $ 2,176 $ 1,664 $ 1,618 $ 1,382
Preferred stock dividends - - - - 1 18
- -----------------------------------------------------------------------------------------------------------------------------
Net income available to
common share owners $ 2,986 $ 2,554 $ 2,176 $ 1,664 $ 1,617 $ 1,364
=============================================================================================================================
Average common shares
outstanding 2,525 2,580 2,603 2,634 2,666 2,674
Average common shares
outstanding assuming
dilution 2,549 2,599 2,626 2,668 2,695 2,706
PER COMMON SHARE DATA
- ---------------------
Income from continuing
operations before changes
in accounting principles
-- basic $ 1.18 $ .99 $ .84 $ .72 $ .61 $ .51
Income from continuing
operations before changes
in accounting principles
-- diluted 1.17 .98 .83 .71 .60 .50
Basic net income 1.18 .99 .84 .63 .61 .51
Diluted net income 1.17 .98 .83 .62 .60 .50
Cash dividends .44 .39 .34 .28 .24 .20
Market price on
December 31, 37.13 25.75 22.31 20.94 20.06 11.63
TOTAL MARKET VALUE OF
COMMON STOCK {1} $ 92,983 $ 65,711 $ 57,905 $ 54,728 $ 53,325 $ 31,073
- ---------------------
BALANCE SHEET DATA
- ------------------
Cash, cash equivalents
and current marketable
securities $ 1,315 $ 1,531 $ 1,078 $ 1,063 $ 1,117 $ 1,492
Property, plant and
equipment-net 4,336 4,080 3,729 3,526 2,890 2,386
Depreciation 421 382 333 310 254 236
Capital expenditures 937 878 800 1,083 792 593
Total assets 15,004 13,863 11,998 11,040 10,185 9,245
Long-term debt 1,141 1,426 1,428 1,120 985 536
Total debt 4,064 3,509 3,100 3,207 2,288 2,537
Share-owners' equity 5,369 5,228 4,570 3,881 4,236 3,662
Total capital {1} 9,433 8,737 7,670 7,088 6,524 6,199
OTHER KEY FINANCIAL MEASURES {1}
Total debt-to-total
capital 43.1% 40.2% 40.4% 45.2% 35.1% 40.9%
Net debt-to-net capital 32.3% 25.5% 29.0% 33.1% 24.2% 24.6%
Return on common equity 56.4% 52.1% 51.8% 46.4% 41.3% 41.4%
Return on capital 34.9% 32.8% 31.2% 29.4% 27.5% 26.8%
Dividend payout ratio 37.2% 39.4% 40.6% 44.3% 39.5% 39.2%
Free cash flow {7} $ 2,460 $ 2,356 $ 1,857 $ 875 $ 881 $ 844
Economic profit $ 2,291 $ 1,896 $ 1,549 $ 1,300 $ 1,073 $ 920
=============================================================================================================================
</TABLE>
[FN]
{5} In 1992, we adopted SFAS No. 106 "Employers' Accounting for Postretirement
Benefits Other Than Pensions."
{6} In 1992, we adopted SFAS No. 109 "Accounting for Income Taxes," by restating
financial statements beginning in 1989
{7} All years presented have been restated to exclude net cash flows related to
acquisitions.
</FN>
45
CONSOLIDATED BALANCE SHEETS
The Coca-Cola Company and Subsidiaries
<TABLE>
<CAPTION>
December 31, 2000 1999
- --------------------------------------------------------------------------------
(In millions except share data)
<S> <C> <C>
ASSETS
- ------
CURRENT
- -------
Cash and cash equivalents $ 1,819 $ 1,611
Marketable securities 73 201
- --------------------------------------------------------------------------------
1,892 1,812
Trade accounts receivable, less allowances
of $62 in 2000 and $26 in 1999 1,757 1,798
Inventories 1,066 1,076
Prepaid expenses and other assets 1,905 1,794
- --------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 6,620 6,480
- --------------------------------------------------------------------------------
INVESTMENTS AND OTHER ASSETS
- ----------------------------
Equity method investments
Coca-Cola Enterprises Inc. 707 728
Coca-Cola Amatil Limited 617 1,133
Coca-Cola HBC S.A. 758 788
Other, principally bottling companies 3,164 3,793
Cost method investments, principally
bottling companies 519 350
Marketable securities and other assets 2,364 2,124
- --------------------------------------------------------------------------------
8,129 8,916
- --------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT
- -----------------------------
Land 225 215
Buildings and improvements 1,642 1,528
Machinery and equipment 4,547 4,527
Containers 200 201
- --------------------------------------------------------------------------------
6,614 6,471
Less allowances for depreciation 2,446 2,204
- --------------------------------------------------------------------------------
4,168 4,267
- --------------------------------------------------------------------------------
GOODWILL AND OTHER INTANGIBLE ASSETS 1,917 1,960
- --------------------------------------------------------------------------------
$20,834 $21,623
================================================================================
</TABLE>
46
The Coca-Cola Company and Subsidiaries
<TABLE>
<CAPTION>
December 31, 2000 1999
- --------------------------------------------------------------------------------
LIABILITIES AND SHARE-OWNERS' EQUITY
- ------------------------------------
<S> <C> <C>
CURRENT
- -------
Accounts payable and accrued expenses $ 3,905 $ 3,714
Loans and notes payable 4,795 5,112
Current maturities of long-term debt 21 261
Accrued income taxes 600 769
- --------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 9,321 9,856
- --------------------------------------------------------------------------------
LONG-TERM DEBT 835 854
- --------------------------------------------------------------------------------
OTHER LIABILITIES 1,004 902
- --------------------------------------------------------------------------------
DEFERRED INCOME TAXES 358 498
- --------------------------------------------------------------------------------
SHARE-OWNERS' EQUITY
- --------------------
Common stock, $.25 par value
Authorized: 5,600,000,000 shares
Issued: 3,481,882,834 shares in 2000;
3,466,371,904 shares in 1999 870 867
Capital surplus 3,196 2,584
Reinvested earnings 21,265 20,773
Accumulated other comprehensive income and
unearned compensation on restricted stock (2,722) (1,551)
- --------------------------------------------------------------------------------
22,609 22,673
Less treasury stock, at cost
(997,121,427 shares in 2000;
994,796,786 shares in 1999) 13,293 13,160
- --------------------------------------------------------------------------------
9,316 9,513
- --------------------------------------------------------------------------------
$20,834 $21,623
===============================================================================
</TABLE>
[FN]
See Notes to Consolidated Financial Statements.
</FN>
47
CONSOLIDATED STATEMENTS OF INCOME
The Coca-Cola Company and Subsidiaries
<TABLE>
<CAPTION>
Year Ended December 31, 2000 1999 1998
- --------------------------------------------------------------------------------
(In millions except per share data)
<S> <C> <C> <C>
NET OPERATING REVENUES $20,458 $19,805 $18,813
- ----------------------
Cost of goods sold 6,204 6,009 5,562
- --------------------------------------------------------------------------------
GROSS PROFIT 14,254 13,796 13,251
- ------------
Selling, administrative and general
expenses 9,120 9,001 8,211
Other operating charges 1,443 813 73
- --------------------------------------------------------------------------------
OPERATING INCOME 3,691 3,982 4,967
- ----------------
Interest income 345 260 219
Interest expense 447 337 277
Equity income (loss) (289) (184) 32
Other income-net 99 98 230
Gains on issuances of stock by
equity investees - - 27
- --------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 3,399 3,819 5,198
- --------------------------
Income taxes 1,222 1,388 1,665
- --------------------------------------------------------------------------------
NET INCOME $ 2,177 $ 2,431 $ 3,533
================================================================================
BASIC NET INCOME PER SHARE $ .88 $ .98 $ 1.43
DILUTED NET INCOME PER SHARE $ .88 $ .98 $ 1.42
================================================================================
AVERAGE SHARES OUTSTANDING 2,477 2,469 2,467
- --------------------------
Dilutive effect of stock options 10 18 29
- --------------------------------------------------------------------------------
AVERAGE SHARES OUTSTANDING
ASSUMING DILUTION 2,487 2,487 2,496
================================================================================
</TABLE>
[FN]
See Notes to Consolidated Financial Statements.
</FN>
48
CONSOLIDATED STATEMENTS OF CASH FLOWS
The Coca-Cola Company and Subsidiaries
<TABLE>
<CAPTION>
Year Ended December 31, 2000 1999 1998
- --------------------------------------------------------------------------------
(In millions)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 2,177 $ 2,431 $ 3,533
Depreciation and amortization 773 792 645
Deferred income taxes 3 97 (38)
Equity income or loss, net of dividends 380 292 31
Foreign currency adjustments 196 (41) 21
Gains on issuances of stock by equity
investees - - (27)
Gains on sales of assets, including
bottling interests (127) (49) (306)
Other operating charges 916 799 73
Other items 119 119 51
Net change in operating assets and
liabilities (852) (557) (550)
- --------------------------------------------------------------------------------
Net cash provided by operating
activities 3,585 3,883 3,433
- --------------------------------------------------------------------------------
INVESTING ACTIVITIES
Acquisitions and investments,
principally trademarks
and bottling companies (397) (1,876) (1,428)
Purchases of investments and other
assets (508) (518) (610)
Proceeds from disposals of investments
and other assets 290 176 1,036
Purchases of property, plant and
equipment (733) (1,069) (863)
Proceeds from disposals of property,
plant and equipment 45 45 54
Other investing activities 138 (179) (350)
- --------------------------------------------------------------------------------
Net cash used in investing activities (1,165) (3,421) (2,161)
- --------------------------------------------------------------------------------
FINANCING ACTIVITIES
Issuances of debt 3,671 3,411 1,818
Payments of debt (4,256) (2,455) (410)
Issuances of stock 331 168 302
Purchases of stock for treasury (133) (15) (1,563)
Dividends (1,685) (1,580) (1,480)
- --------------------------------------------------------------------------------
Net cash used in financing activities (2,072) (471) (1,333)
- --------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS (140) (28) (28)
- --------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
Net increase (decrease) during the year 208 (37) (89)
Balance at beginning of the year 1,611 1,648 1,737
- --------------------------------------------------------------------------------
Balance at end of year $ 1,819 $ 1,611 $ 1,648
================================================================================
</TABLE>
[FN]
See Notes to Consolidated Financial Statements.
</FN>
49
CONSOLIDATED STATEMENTS OF SHARE-OWNERS' EQUITY
The Coca-Cola Company and Subsidiaries
<TABLE>
<CAPTION>
Number of | Accumulated
Common | Outstanding Other
Three Years Ended Shares | Common Capital Reinvested Restricted Comprehensive Treasury
December 31, 2000 Outstanding | Stock Surplus Earnings Stock Income Stock Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------|-----------------------------------------------------------------------------------------
|
(In millions except per share data) |
|
BALANCE DECEMBER 31, 1997 2,471 | $ 861 $ 1,527 $ 17,869 $ (50) $ (1,351) $ (11,582) $ 7,274
|
COMPREHENSIVE INCOME: |
Net income - | - - 3,533 - - - 3,533
Translation adjustments - | - - - - 52 - 52
Net change in unrealized |
gain on securities - | - - - - (47) - (47)
Minimum pension liability - | - - - - (4) - (4)
| -------
COMPREHENSIVE INCOME | 3,534
|
Stock issued to employees |
exercising stock options 16 | 4 298 - - - - 302
Tax benefit from employees' |
stock option and restricted |
stock plans - | - 97 - - - - 97
Stock issued under restricted |
stock plans, less amortization |
of $5 1 | - 47 - (34) - - 13
Stock issued by an equity |
investee - | - 226 - - - - 226
Purchases of stock for treasury (22){1}| - - - - - (1,563) (1,563)
Dividends (per share -- $.60) - | - - (1,480) - - - (1,480)
- -----------------------------------------|------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1998 2,466 | 865 2,195 19,922 (84) (1,350) (13,145) 8,403
|
COMPREHENSIVE INCOME: |
Net income - | - - 2,431 - - - 2,431
Translation adjustments - | - - - - (190) - (190)
Net change in unrealized |
gain on securities - | - - - - 23 - 23
Minimum pension liability - | - - - - 25 - 25
| ------
COMPREHENSIVE INCOME | 2,289
|
Stock issued to employees |
exercising stock options 6 | 2 166 - - - - 168
Tax benefit from employees' |
stock option and restricted |
stock plans - | - 72 - - - - 72
Stock issued under restricted |
stock plans, less amortization |
of $27 - | - 2 - 25 - - 27
Stock issued by an equity |
investee - | - 146 - - - - 146
Stock issued under Directors' |
plan - | - 3 - - - - 3
Purchases of stock for treasury - | - - - - - (15) (15)
Dividends (per share -- $.64) - | - - (1,580) - - - (1,580)
- -----------------------------------------|------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1999 2,472 | 867 2,584 20,773 (59) (1,492) (13,160) 9,513
|
COMPREHENSIVE INCOME: |
Net income - | - - 2,177 - - - 2,177
Translation adjustments - | - - - - (965) - (965)
Net change in unrealized gain |
on securities - | - - - - (60) - (60)
Minimum pension liability - | - - - - (10) - (10)
| -------
COMPREHENSIVE INCOME | 1,142
|
Stock issued to employees |
exercising stock options 12 | 2 329 - - - - 331
Tax benefit from employees' |
stock option and restricted |
stock plans - | - 116 - - - - 116
Stock issued under restricted |
stock plans, less amortization |
of $24 3 | 1 166 - (136) - - 31
Stock issued under Directors' |
plan - | - 1 - - - - 1
Purchases of stock for treasury (2){1}| - - - - - (133) (133)
Dividends (per share -- $.68) - | - - (1,685) - - - (1,685)
- -----------------------------------------|------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 2000 2,485 | $870 $ 3,196 $ 21,265 $ (195) $(2,527) $ (13,293) $ 9,316
====================================================================================================================================
</TABLE>
[FN]
{1} Common stock purchased from employees exercising stock options numbered 2.2
million, .3 million and 1.4 million shares for the years ended December 31,
2000, 1999 and 1998, respectively.
See Notes to Consolidated Financial Statements.
</FN>
50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- -------------------------------------------------------------------
ORGANIZATION
The Coca-Cola Company and subsidiaries (our Company) is predominantly a
manufacturer, marketer and distributor of nonalcoholic beverage concentrates and
syrups. Operating in nearly 200 countries worldwide, we primarily sell our
concentrates and syrups to bottling and canning operations, fountain wholesalers
and fountain retailers. We also market and distribute juice and juice-drink
products. We have significant markets for our products in all the world's
geographic regions. We record revenue when title passes to our customers or our
bottling partners.
BASIS OF PRESENTATION
Certain amounts in the prior years' financial statements have been
reclassified to conform to the current year presentation.
CONSOLIDATION
Our Consolidated Financial Statements include the accounts of The Coca-Cola
Company and all subsidiaries except where control is temporary or does not rest
with our Company. Our investments in companies in which we have the ability to
exercise significant influence over operating and financial policies, including
certain investments where there is a temporary majority interest, are accounted
for by the equity method. Accordingly, our Company's share of the net earnings
of these companies is included in consolidated net income. Our investments in
other companies are carried at cost or fair value, as appropriate. All
significant intercompany accounts and transactions are eliminated upon
consolidation.
ISSUANCES OF STOCK BY EQUITY INVESTEES
When one of our equity investees issues additional shares to third parties,
our percentage ownership interest in the investee decreases. In the event the
issuance price per share is more or less than our average carrying amount per
share, we recognize a noncash gain or loss on the issuance. This noncash gain or
loss, net of any deferred taxes, is generally recognized in our net income in
the period the change of ownership interest occurs.
If gains have been previously recognized on issuances of an equity investee's
stock and shares of the equity investee are subsequently repurchased by the
equity investee, gain recognition does not occur on issuances subsequent to the
date of a repurchase until shares have been issued in an amount equivalent to
the number of repurchased shares. This type of transaction is reflected as an
equity transaction and the net effect is reflected in the accompanying
Consolidated Balance Sheets. For specific transaction details, refer to Note 3.
ADVERTISING COSTS
Our Company expenses production costs of print, radio and television
advertisements as of the first date the advertisements take place. Advertising
expenses included in selling, administrative and general expenses were $1,742
million in 2000, $1,699 million in 1999 and $1,597 million in 1998. As of
December 31, 2000 and 1999, advertising costs of approximately $818 million and
$523 million, respectively, were recorded primarily in prepaid expenses and
other assets and in marketable securities and other assets in the accompanying
Consolidated Balance Sheets.
NET INCOME PER SHARE
Basic net income per share is computed by dividing net income by the
weighted-average number of shares outstanding. Diluted net income per share
includes the dilutive effect of stock options.
CASH EQUIVALENTS
Marketable securities that are highly liquid and have maturities of three
months or less at the date of purchase are classified as cash equivalents.
INVENTORIES
Inventories consist primarily of raw materials and supplies and are valued at
the lower of cost or market. In general, cost is determined on the basis of
average cost or first-in, first-out methods.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost and are depreciated
principally by the straight-line method over the estimated useful lives of the
assets.
OTHER ASSETS
Our Company invests in infrastructure programs with our bottlers that are
directed at strengthening our bottling system and increasing unit case sales.
The costs of these programs are recorded in other assets and are subsequently
amortized over the periods to be directly benefited.
GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets are stated on the basis of cost and are
amortized, principally on a straight-line basis, over the estimated future
periods to be benefited (not exceeding 40 years). Goodwill and other intangible
assets are periodically reviewed for impairment to ensure they are appropriately
valued. Conditions that may indicate an impairment issue exists include an
economic downturn in a worldwide market or a change in the assessment of future
operations. In the event that a condition is identified that may indicate an
impairment issue exists, an assessment is performed using a variety of
methodologies, including cash flow analysis, estimates of sales proceeds and
independent appraisals. Where
51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
applicable, an appropriate interest rate is utilized, based on location-specific
economic factors. Accumulated amortization was approximately $192 million and
$154 million on December 31, 2000 and 1999, respectively.
USE OF ESTIMATES
In conformity with generally accepted accounting principles, the preparation
of our financial statements requires our management to make estimates and
assumptions that affect the amounts reported in our financial statements and
accompanying notes including our assessment of the carrying value of our
investments in bottling operations. Although these estimates are based on our
knowledge of current events and actions we may undertake in the future, actual
results may ultimately differ from estimates.
NEW ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended by Statements 137 and 138 in
June 1999 and June 2000, respectively. These statements, which were required to
be adopted for fiscal years beginning after June 15, 2000, require the Company
to recognize all derivatives on the balance sheet at fair value. The statements
also established new accounting rules for hedging instruments which, depending
on the nature of the hedge, require that changes in the fair value of
derivatives either be offset against the change in fair value of assets,
liabilities or firm commitments through earnings, or be recognized in other
comprehensive income until the hedged item is recognized in earnings. Any
ineffective portion of a derivative's change in fair value must be immediately
recognized in earnings.
We adopted the provisions of SFAS No. 133, as amended, on January 1, 2001,
which resulted in an immaterial impact on our consolidated results of operations
and financial position. Although these statements will not have a material
impact in our annual consolidated financial results, the requirements of these
statements may result in slightly increased volatility in the Company's future
quarterly consolidated financial results. The Company implemented new
information systems to ensure that we were in compliance with these statements
upon adoption.
NOTE 2: BOTTLING INVESTMENTS
- ----------------------------
COCA-COLA ENTERPRISES INC.
Coca-Cola Enterprises is the largest soft-drink bottler in the world,
operating in eight countries, and is one of our anchor bottlers. On December 31,
2000, our Company owned approximately 40 percent of the outstanding common stock
of Coca-Cola Enterprises, and accordingly, we account for our investment by the
equity method of accounting. The excess of our equity in the underlying net
assets of Coca-Cola Enterprises over our investment is primarily amortized on a
straight-line basis over 40 years. The balance of this excess, net of
amortization, was approximately $438 million on December 31, 2000. A summary of
financial information for Coca-Cola Enterprises is as follows (in millions):
<TABLE>
<CAPTION>
December 31, 2000 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
Current assets $ 2,631 $ 2,581
Noncurrent assets 19,531 20,149
- --------------------------------------------------------------------------------
Total assets $22,162 $22,730
================================================================================
Current liabilities $ 3,094 $ 3,614
Noncurrent liabilities 16,234 16,192
- --------------------------------------------------------------------------------
Total liabilities $19,328 $19,806
================================================================================
Share-owners' equity $ 2,834 $ 2,924
================================================================================
Company equity investment $ 707 $ 728
================================================================================
Year Ended December 31, 2000 1999 1998
- --------------------------------------------------------------------------------
Net operating revenues $14,750 $14,406 $13,414
Cost of goods sold 9,083 9,015 8,391
- --------------------------------------------------------------------------------
Gross profit $ 5,667 $ 5,391 $ 5,023
================================================================================
Operating income $ 1,126 $ 839 $ 869
================================================================================
Cash operating profit{1} $ 2,387 $ 2,187 $ 1,989
================================================================================
Net income $ 236 $ 59 $ 142
================================================================================
Net income available to
common share owners $ 233 $ 56 $ 141
================================================================================
</TABLE>
[FN]
{1} Cash operating profit is defined as operating income plus depreciation
expense, amortization expense and other noncash operating expenses.
</FN>
Our net concentrate and syrup sales to Coca-Cola Enterprises were $3.5
billion in 2000, $3.3 billion in 1999 and $3.1 billion in 1998, or approximately
17 percent, 17 percent and 16 percent of our 2000, 1999 and 1998 net operating
revenues, respectively. Coca-Cola Enterprises purchases sweeteners through our
Company; however, related collections from Coca-Cola Enterprises and payments to
suppliers are not included in our Consolidated Statements of Income. These
transactions amounted to $298 million in 2000, $308 million in 1999 and $252
million in 1998. We also provide certain administrative and other services to
Coca-Cola Enterprises under negotiated fee arrangements.
Our direct support for certain marketing activities of Coca-Cola Enterprises
and participation with them in cooperative advertising and other marketing
programs amounted to approximately $766 million in 2000, $767 million in 1999
and $899 million in 1998. Pursuant to cooperative advertising and trade
arrangements with Coca-Cola Enterprises, we received approximately $195 million,
$243 million and $173 million in 2000, 1999 and 1998, respectively, from
Coca-Cola Enterprises for local media and marketing program expense
reimbursements. Additionally, we committed approximately $223 million in 2000,
$338 million in 1999 and $324 million in 1998, respectively, to Coca-Cola
Enterprises under a Company program that encourages bottlers to invest in
building and supporting beverage infrastructure.
52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
If valued at the December 31, 2000, quoted closing price of publicly traded
Coca-Cola Enterprises shares, the calculated value of our investment in
Coca-Cola Enterprises would have exceeded its carrying value by approximately
$2.5 billion.
OTHER EQUITY INVESTMENTS
Operating results include our proportionate share of income (loss) from our
equity investments. A summary of financial information for our equity
investments in the aggregate, other than Coca-Cola Enterprises, is as follows
(in millions):
<TABLE>
<CAPTION>
December 31, 2000 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
Current assets $ 5,985 $ 6,652
Noncurrent assets 19,030 21,306
- --------------------------------------------------------------------------------
Total assets $25,015 $27,958
================================================================================
Current liabilities $ 5,419 $ 6,550
Noncurrent liabilities 8,357 8,361
- --------------------------------------------------------------------------------
Total liabilities $13,776 $14,911
================================================================================
Share-owners' equity $11,239 $13,047
================================================================================
Company equity investment $ 4,539 $ 5,714
================================================================================
Year Ended December 31, 2000 1999 1998
- --------------------------------------------------------------------------------
Net operating revenues $21,666 $19,785 $17,975
Cost of goods sold 13,014 12,085 11,122
- --------------------------------------------------------------------------------
Gross profit $ 8,652 $ 7,700 $ 6,853
================================================================================
Operating income (loss) $ (24) $ 809 $ 905
================================================================================
Cash operating profit{1} $ 2,796 $ 2,474 $ 1,998
================================================================================
Net income (loss) $ (894) $ (134) $ 217
================================================================================
</TABLE>
Equity investments include certain nonbottling investees.
[FN]
{1} Cash operating profit is defined as operating income plus depreciation
expense, amortization expense and other noncash operating expenses.
</FN>
Net sales to equity investees other than Coca-Cola Enterprises were $3.5
billion in 2000, $3.2 billion in 1999 and $2.6 billion in 1998. Our direct
support for certain marketing activities with equity investees other than
Coca-Cola Enterprises, the majority of which are located outside the United
States, was approximately $663 million, $685 million and $640 million for 2000,
1999 and 1998, respectively.
In July 1999, we acquired from Fraser and Neave Limited its ownership
interest in F&N Coca-Cola as discussed in Note 17. In August 1998, we exchanged
our Korean bottling operations with Coca-Cola Amatil for an additional ownership
interest in Coca-Cola Amatil.
In June 1998, we sold our previously consolidated Italian bottling and
canning operations to Coca-Cola Beverages. This transaction resulted in proceeds
valued at approximately $1.0 billion and an after-tax gain of approximately $.03
per share (basic and diluted).
If valued at the December 31, 2000, quoted closing prices of shares
actively traded on stock markets, the calculated value of our equity investments
in publicly traded bottlers other than Coca-Cola Enterprises would have
exceeded our carrying value by approximately $1.0 billion.
NOTE 3: ISSUANCES OF STOCK BY EQUITY INVESTEES
- ----------------------------------------------
No gains on issuances of stock by equity investees were recorded during 2000.
In the first quarter of 1999, Coca-Cola Enterprises completed its acquisition of
various bottlers. These transactions were funded primarily with shares of
Coca-Cola Enterprises common stock. The Coca- Cola Enterprises common stock
issued was valued in an amount greater than the book value per share of our
investment in Coca-Cola Enterprises. As a result of these transactions, our
equity in the underlying net assets of Coca-Cola Enterprises increased, and we
recorded a $241 million increase to our Company's investment basis in Coca-Cola
Enterprises. Due to Coca-Cola Enterprises' share repurchase program, the
increase in our investment in Coca-Cola Enterprises was recorded as an equity
transaction, and no gain was recognized. We recorded a deferred tax liability of
approximately $95 million on this increase to our investment in Coca-Cola
Enterprises. These transactions reduced our ownership in Coca-Cola Enterprises
from approximately 42 percent to approximately 40 percent.
In December 1998, Coca-Cola Enterprises completed its acquisition of certain
independent bottling operations operating in parts of Texas, New Mexico and
Arizona (collectively known as the Wolslager Group). The transactions were
funded primarily with the issuance of shares of Coca-Cola Enterprises common
stock. The Coca-Cola Enterprises common stock issued in exchange for these
bottlers was valued at an amount greater than the book value per share of our
investment in Coca-Cola Enterprises. As a result of this transaction, our equity
in the underlying net assets of Coca-Cola Enterprises increased, and we recorded
a $116 million increase to our Company's investment basis in Coca-Cola
Enterprises. Due to Coca-Cola Enterprises' share repurchase program the increase
in our investment in Coca-Cola Enterprises was recorded as an equity
transaction, and no gain was recognized. We recorded a deferred tax liability of
approximately $46 million on this increase to our investment in Coca-Cola
Enterprises. At the completion of this transaction, our ownership in Coca- Cola
Enterprises was approximately 42 percent.
In September 1998, CCEAG, our bottler in Germany, issued new shares valued at
approximately $275 million to effect a merger with Nordwest Getranke GmbH & Co.
KG, another German bottler. Approximately 7.5 million shares were issued,
resulting in a one-time noncash pretax gain for our Company of approximately $27
million. We provided deferred taxes of approximately $10 million on this gain.
This issuance reduced our ownership in CCEAG from approximately 45 percent to
approximately 40 percent.
In June 1998, Coca-Cola Enterprises completed its acquisition of CCBG
Corporation and Texas Bottling Group, Inc. (collectively known as Coke
Southwest). The transaction was valued at approximately $1.1 billion.
Approximately 55 percent of the transaction was funded with the issuance of
approximately 17.7 million shares of Coca-Cola Enterprises common stock, and the
remaining portion was funded through debt and assumed debt. The
53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
Coca-Cola Enterprises common stock issued in exchange for Coke Southwest was
valued at an amount greater than the book value per share of our investment
in Coca-Cola Enterprises. As a result of this transaction, our equity in the
underlying net assets of Coca-Cola Enterprises increased and we recorded a $257
million increase to our Company's investment basis in Coca-Cola Enterprises. Due
to Coca-Cola Enterprises' share repurchase program, the increase in our
investment in Coca-Cola Enterprises was recorded as an equity transaction, and
no gain was recognized. We recorded a deferred tax liability of approximately
$101 million on this increase to our investment in Coca-Cola Enterprises. At the
completion of this transaction, our ownership in Coca-Cola Enterprises was
approximately 42 percent.
NOTE 4: ACCOUNTS PAYABLE AND ACCRUED EXPENSES
- ---------------------------------------------
Accounts payable and accrued expenses consist of the following (in millions):
<TABLE>
<CAPTION>
December 31, 2000 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
Accrued marketing $ 1,163 $ 1,056
Container deposits 58 53
Accrued compensation 141 164
Sales, payroll and other taxes 166 297
Accrued realignment expenses 254 -
Accounts payable and other accrued expenses 2,123 2,144
- --------------------------------------------------------------------------------
$ 3,905 $ 3,714
================================================================================
</TABLE>
NOTE 5: SHORT-TERM BORROWINGS AND CREDIT ARRANGEMENTS
- -----------------------------------------------------
Loans and notes payable consist primarily of commercial paper issued in the
United States. On December 31, 2000, we had $4.5 billion outstanding in
commercial paper borrowings. In addition, we had $3.0 billion in lines of credit
and other short-term credit facilities available, of which approximately $246
million was outstanding. Our weighted-average interest rates for commercial
paper outstanding were approximately 6.7 percent and 6.0 percent at December 31,
2000 and 1999, respectively.
These facilities are subject to normal banking terms and conditions. Some of
the financial arrangements require compensating balances, none of which is
presently significant to our Company.
NOTE 6: LONG-TERM DEBT
- ----------------------
Long-term debt consists of the following (in millions):
December 31, 2000 1999
- --------------------------------------------------------------------------------
6% U.S. dollar notes due 2000 $ - $ 250
6 5/8% U.S. dollar notes due 2002 150 150
6% U.S. dollar notes due 2003 150 150
5 3/4% U.S. dollar notes due 2009 399 399
7 3/8% U.S. dollar notes due 2093 116 116
Other, due 2001 to 2013 41 50
- --------------------------------------------------------------------------------
856 1,115
Less current portion 21 261
- --------------------------------------------------------------------------------
$ 835 $ 854
================================================================================
After giving effect to interest rate management instruments, the principal
amount of our long-term debt that had fixed and variable interest rates,
respectively, was $706 million and $150 million on December 31, 2000, and $690
million and $425 million on December 31, 1999. The weighted-average interest
rate on our Company's long-term debt was 5.9 percent and 5.6 percent for the
years ended December 31, 2000 and 1999, respectively. Total interest paid was
approximately $458 million, $314 million and $298 million in 2000, 1999 and
1998, respectively. For a more complete discussion of interest rate management,
refer to Note 9.
<TABLE>
<CAPTION>
Maturities of long-term debt for the five years succeeding December 31, 2000,
are as follows (in millions):
2001 2002 2003 2004 2005
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
$ 21 $154 $153 $ 2 $ 1
================================================================================
</TABLE>
The above notes include various restrictions, none of which is presently
significant to our Company.
NOTE 7: COMPREHENSIVE INCOME
- ----------------------------
<TABLE>
<CAPTION>
Accumulated other comprehensive income consists of the following (in
millions):
December 31, 2000 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
Foreign currency
translation adjustment $(2,475) $(1,510)
Unrealized gain on
available-for-sale securities (26) 34
Minimum pension liability (26) (16)
- --------------------------------------------------------------------------------
$(2,527) $(1,492)
================================================================================
</TABLE>
54
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
<TABLE>
<CAPTION>
A summary of the components of other comprehensive income for the years ended
December 31, 2000, 1999 and 1998, is as follows (in millions):
Before-Tax Income After-Tax
December 31, Amount Tax Amount
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
2000
Net foreign currency
translation $(1,074) $ 109 $ (965)
Net change in unrealized
gain (loss) on available-
for-sale securities (90) 30 (60)
Minimum pension liability (17) 7 (10)
- --------------------------------------------------------------------------------
Other comprehensive
income (loss) $(1,181) $ 146 $(1,035)
================================================================================
Before-Tax Income After-Tax
December 31, Amount Tax Amount
- --------------------------------------------------------------------------------
1999
Net foreign currency
translation $ (249) $ 59 $ (190)
Net change in unrealized
gain (loss) on available-
for-sale securities 37 (14) 23
Minimum pension liability 38 (13) 25
- --------------------------------------------------------------------------------
Other comprehensive
income (loss) $ (174) $ 32 $ (142)
================================================================================
Before-Tax Income After-Tax
December 31, Amount Tax Amount
- --------------------------------------------------------------------------------
1998
Net foreign currency
translation $ 52 $ - $ 52
Net change in unrealized
gain (loss) on available-
for-sale securities (70) 23 (47)
Minimum pension liability (5) 1 (4)
- --------------------------------------------------------------------------------
Other comprehensive
income (loss) $ (23) $ 24 $ 1
================================================================================
</TABLE>
NOTE 8: FINANCIAL INSTRUMENTS
- -----------------------------
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts reflected in our Consolidated Balance Sheets for cash,
cash equivalents, marketable equity securities, cost method investments,
receivables, loans and notes payable and long-term debt approximate their
respective fair values. Fair values are based primarily on quoted prices for
those or similar instruments. A comparison of the carrying value and fair value
of our hedging instruments is included in Note 9.
CERTAIN DEBT AND MARKETABLE EQUITY SECURITIES
Investments in debt and marketable equity securities, other than investments
accounted for by the equity method, are categorized as either trading,
available-for-sale or held-to-maturity. On December 31, 2000 and 1999, we had no
trading securities. Securities categorized as available-for-sale are stated at
fair value, with unrealized gains and losses, net of deferred income taxes,
reported as a component of accumulated other comprehensive income. Debt
securities categorized as held-to-maturity are stated at amortized cost.
On December 31, 2000 and 1999, available-for-sale and held-to-maturity
securities consisted of the following (in millions):
<TABLE>
<CAPTION>
Gross Gross Estimated
Unrealized Unrealized Fair
December 31, Cost Gains Losses Value
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2000
Available-for-sale
securities
Equity securities $ 248 $ 57 $ (90) $ 215
Collateralized
mortgage
obligations 25 - (2) 23
Other debt
securities 15 - - 15
- --------------------------------------------------------------------------------
$ 288 $ 57 $ (92) $ 253
================================================================================
Held-to-maturity
securities
Bank and
corporate debt $ 1,115 $ - $ - $ 1,115
- --------------------------------------------------------------------------------
$ 1,115 $ - $ - $ 1,115
================================================================================
</TABLE>
55
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
<TABLE>
<CAPTION>
Gross Gross Estimated
Unrealized nrealized Fair
December 31, Cost Gains Losses Value
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999
Available-for-sale
securities
Equity securities $ 246 $ 69 $ (13) $ 302
Collateralized
mortgage
obligations 45 - (1) 44
Other debt
securities 8 - - 8
- --------------------------------------------------------------------------------
$ 299 $ 69 $ (14) $ 354
================================================================================
Held-to-maturity
securities
Bank and
corporate debt $ 1,137 $ - $ - $ 1,137
Other debt
securities 49 - - 49
- --------------------------------------------------------------------------------
$ 1,186 $ - $ - $ 1,186
================================================================================
</TABLE>
On December 31, 2000 and 1999, these investments were included in the
following captions in our Consolidated Balance Sheets (in millions):
<TABLE>
<CAPTION>
Available-for-Sale Held-to-Maturity
December 31, Securities Securities
- --------------------------------------------------------------------------------
<S> <C> <C>
2000
Cash and cash equivalents $ - $ 1,113
Current marketable securities 71 2
Cost method investments,
principally bottling companies 151 -
Marketable securities and
other assets 31 -
- --------------------------------------------------------------------------------
$ 253 $ 1,115
================================================================================
1999
Cash and cash equivalents $ - $ 1,061
Current marketable securities 76 125
Cost method investments,
principally bottling companies 227 -
Marketable securities and
other assets 51 -
- --------------------------------------------------------------------------------
$ 354 $ 1,186
================================================================================
</TABLE>
The contractual maturities of these investments as of December 31, 2000, were
as follows (in millions):
<TABLE>
<CAPTION>
Available-for-Sale Held-to-Maturity
Securities Securities
------------------- --------------------
Fair Amortized Fair
Cost Value Cost Value
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2001 $ 7 $ 7 $ 1,115 $ 1,115
2002- 2005 8 8 - -
Collateralized
mortgage
obligations 25 23 - -
Equity securities 248 215 - -
- --------------------------------------------------------------------------------
$ 288 $ 253 $ 1,115 $ 1,115
================================================================================
</TABLE>
For the years ended December 31, 2000 and 1999, gross realized gains and
losses on sales of available-for-sale securities were not material. The cost of
securities sold is based on the specific identification method.
NOTE 9: HEDGING TRANSACTIONS AND DERIVATIVE
FINANCIAL INSTRUMENTS
- -------------------------------------------
Our Company uses derivative financial instruments primarily to reduce our
exposure to adverse fluctuations in interest rates and foreign exchange rates
and, to a lesser extent, to reduce our exposure to adverse fluctuations in
commodity prices and other market risks. When entered into, these financial
instruments are designated as hedges of underlying exposures. Because of the
high correlation between the hedging instrument and the underlying exposure
being hedged, fluctuations in the value of the instruments are generally offset
by changes in the value of the underlying exposures. Virtually all our
derivatives are "over-the-counter" instruments. Our Company does not enter into
derivative financial instruments for trading purposes.
The estimated fair values of derivatives used to hedge or modify our risks
fluctuate over time. These fair value amounts should not be viewed in isolation,
but rather in relation to the fair values of the underlying hedging transactions
and investments and to the overall reduction in our exposure to adverse
fluctuations in interest rates, foreign exchange rates, commodity prices and
other market risks.
The notional amounts of the derivative financial instruments do not
necessarily represent amounts exchanged by the parties and, therefore, are not a
direct measure of our exposure from our use of derivatives. The amounts
exchanged are calculated by reference to the notional amounts and by other terms
of the derivatives, such as interest rates, exchange rates or other financial
indices.
We have established strict counterparty credit guidelines and enter into
transactions only with financial institutions of investment grade or better. We
monitor counterparty exposures daily and review any downgrade in credit rating
immediately. If a downgrade in the credit rating of a counterparty were to
occur, we have provisions requiring
56
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
collateral in the form of U.S. government securities for substantially all
our transactions. To mitigate presettlement risk, minimum credit standards
become more stringent as the duration of the derivative financial instrument
increases. To minimize the concentration of credit risk, we enter into
derivative transactions with a portfolio of financial institutions. As a result,
we consider the risk of counterparty default to be minimal.
INTEREST RATE MANAGEMENT
Our Company maintains a percentage of fixed and variable rate debt within
defined parameters. We enter into interest rate swap agreements that maintain
the fixed-to-variable mix within these parameters. These contracts had
maturities ranging from one to four years on December 31, 2000. Variable rates
are predominantly linked to the London Interbank Offered Rate. Any differences
paid or received on interest rate swap agreements are recognized as adjustments
to interest expense over the life of each swap, thereby adjusting the effective
interest rate on the underlying obligation. Additionally, our Company enters
into interest rate cap agreements that may entitle us to receive from a
financial institution the amount, if any, by which our interest payments on our
variable rate debt exceed prespecified interest rates through 2004.
FOREIGN CURRENCY MANAGEMENT
The purpose of our foreign currency hedging activities is to reduce the risk
that our eventual dollar net cash inflows resulting from sales outside the
United States will be adversely affected by changes in exchange rates.
We enter into forward exchange contracts and purchase currency options
(principally Euro and Japanese yen) to hedge firm sale commitments denominated
in foreign currencies. We also purchase currency options (principally Euro and
Japanese yen) to hedge certain anticipated sales. Premiums paid and realized
gains and losses, including those on any terminated contracts, are included in
prepaid expenses and other assets. These are recognized in income, along with
unrealized gains and losses in the same period the hedging transactions are
realized. Approximately $26 million of realized gains and $85 million of
realized losses on settled contracts entered into as hedges of firmly committed
transactions that have not yet occurred were deferred on December 31, 2000 and
1999, respectively. Deferred gains/losses from hedging anticipated transactions
were not material on December 31, 2000 or 1999. In the unlikely event that the
underlying transaction terminates or becomes improbable, the deferred gains or
losses on the associated derivative will be recorded in our income statement.
Gains and losses on derivative financial instruments that are designated and
effective as hedges of net investments in international operations are included
in share-owners' equity as a foreign currency translation adjustment, a
component of accumulated other comprehensive income.
The following tables present the aggregate notional principal amounts,
carrying values, fair values and maturities of our derivative financial
instruments outstanding on December 31, 2000 and 1999 (in millions):
<TABLE>
<CAPTION>
Notional
Principal Carrying Fair
December 31, Amounts Values Values Maturity
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2000
Interest rate
management
Swap agreements
Assets $ 150 $ 1 $ 8 2003
Liabilities 25 (1) (10) 2001-2003
Interest rate caps
Assets 1,600 8 4 2004
Foreign currency
management
Forward contracts
Assets 1,812 49 74 2001
Swap agreements
Assets 48 2 (3) 2001
Liabilities 359 (2) (19) 2001-2002
Purchased options
Assets 706 18 53 2001-2002
Other
Assets 87 2 3 2001
- --------------------------------------------------------------------------------
$ 4,787 $ 77 $ 110
================================================================================
</TABLE>
57
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
<TABLE>
<CAPTION>
Notional
Principal Carrying Fair
December 31, Amounts Values Values Maturity
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999
Interest rate
management
Swap agreements
Assets $ 250 $ 2 $ 6 2000-2003
Liabilities 200 (1) (8) 2000-2003
Foreign currency
management
Forward contracts
Assets 1,108 57 71 2000-2001
Liabilities 344 (6) (3) 2000-2001
Swap agreements
Assets 102 9 16 2000
Liabilities 412 - (77) 2000-2002
Purchased options
Assets 1,770 47 18 2000
Other
Assets 185 - 2 2000
Liabilities 126 (8) (8) 2000
- --------------------------------------------------------------------------------
$ 4,497 $ 100 $ 17
================================================================================
</TABLE>
Maturities of derivative financial instruments held on December 31, 2000, are
as follows (in millions):
<TABLE>
<CAPTION>
2001 2002 2003 2004
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$2,878 $ 234 $ 75 $1,600
================================================================================
</TABLE>
NOTE 10: COMMITMENTS AND CONTINGENCIES
- --------------------------------------
On December 31, 2000, we were contingently liable for guarantees of
indebtedness owed by third parties in the amount of $397 million, of which $7
million related to independent bottling licensees. We do not consider it
probable that we will be required to satisfy these guarantees.
We believe our exposure to concentrations of credit risk is limited, due to
the diverse geographic areas covered by our operations.
We have committed to make future marketing expenditures of $772 million, of
which the majority is payable over the next 12 years. Additionally, under
certain circumstances, we have committed to make future investments in bottling
companies. However, we do not consider any of these commitments to be
individually significant.
NOTE 11: NET CHANGE IN OPERATING ASSETS AND LIABILITIES
- -------------------------------------------------------
The changes in operating assets and liabilities, net of effects of
acquisitions and divestitures of businesses and unrealized exchange
gains/losses, are as follows (in millions):
<TABLE>
<CAPTION>
2000 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Increase in trade accounts
receivable $ (39) $ (96) $ (237)
Increase in inventories (2) (163) (12)
Increase in prepaid expenses
and other assets (618) (547) (318)
Increase (decrease) in
accounts payable
and accrued expenses (84) 281 (70)
Increase (decrease) in
accrued taxes (96) (36) 120
Increase (decrease) in
other liabilities (13) 4 (33)
- --------------------------------------------------------------------------------
$ (852) $ (557) $ (550)
================================================================================
</TABLE>
NOTE 12: RESTRICTED STOCK, STOCK OPTIONS AND OTHER STOCK PLANS
- --------------------------------------------------------------
Our Company currently sponsors restricted stock award plans and stock option
plans. Our Company applies Accounting Principles Board Opinion No. 25 and
related Interpretations in accounting for our plans. Accordingly, no
compensation cost has been recognized for our stock option plans. The
compensation cost charged against income for our restricted stock award plans
was $6 million in 2000, $39 million in 1999 and $14 million in 1998. In
addition, the Company recorded a charge of $37 million for special termination
benefits as part of the Realignment discussed in Note 16. Had compensation cost
for the stock option plans been determined based on the fair value at the grant
dates for awards under the plans, our Company's net income and net income per
share (basic and diluted) would have been as presented in the following table.
58
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
The pro forma amounts are indicated below (in millions, except per share
amounts):
<TABLE>
<CAPTION>
Year Ended December 31, 2000 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income
As reported $ 2,177 $ 2,431 $ 3,533
Pro forma $ 1,995 $ 2,271 $ 3,405
Basic net income per share
As reported $ .88 $ .98 $ 1.43
Pro forma $ .81 $ .92 $ 1.38
Diluted net income per share
As reported $ .88 $ .98 $ 1.42
Pro forma $ .80 $ .91 $ 1.36
================================================================================
</TABLE>
Under the amended 1989 Restricted Stock Award Plan and the amended 1983
Restricted Stock Award Plan (the Restricted Stock Award Plans), 40 million and
24 million shares of restricted common stock, respectively, may be granted to
certain officers and key employees of our Company.
On December 31, 2000, 30 million shares were available for grant under the
Restricted Stock Award Plans. In 2000, there were 546,585 shares of restricted
stock granted at an average price of $58.20. In 1999, there were 32,100 shares
of restricted stock granted at an average price of $53.86. In 1998, 707,300
shares of restricted stock were granted at an average price of $67.03.
Participants are entitled to vote and receive dividends on the shares and, under
the 1983 Restricted Stock Award Plan, participants are reimbursed by our Company
for income taxes imposed on the award, but not for taxes generated by the
reimbursement payment. The shares are subject to certain transfer restrictions
and may be forfeited if a participant leaves our Company for reasons other than
retirement, disability or death, absent a change in control of our Company.
In addition, 270,000 shares of three-year performance-based and 2,025,000
shares of five-year performance-based restricted stock were granted in 2000.
The release of these shares is contingent upon the Company achieving certain
predefined performance targets over the three-year or five-year measurement
periods, respectively. Participants are entitled to vote and receive dividends
on these shares during the measurement period. The Company also promised to
grant 180,000 shares of stock at the end of three years and 200,000 shares of
stock at the end of five years to certain employees if the Company achieves
predefined performance targets over the three-year or five-year periods,
respectively. The Company did not grant any performance-based stock awards in
1999 or 1998.
Under our 1991 Stock Option Plan (the 1991 Option Plan), a maximum of 120
million shares of our common stock was approved to be issued or transferred to
certain officers and employees pursuant to stock options and stock appreciation
rights granted under the 1991 Option Plan. The stock appreciation rights permit
the holder, upon surrendering all or part of the related stock option, to
receive cash, common stock or a combination thereof, in an amount up to 100
percent of the difference between the market price and the option price. Options
to purchase common stock under the 1991 Option Plan have been granted to Company
employees at fair market value at the date of grant.
Our stock option plan (the 1999 Option Plan) was approved by share owners in
April of 1999. Following the approval of the 1999 Option Plan, no grants were
made from the 1991 Option Plan and shares available under the 1991 Option Plan
were no longer available to be granted. Under the 1999 Option Plan, a maximum of
120 million shares of our common stock was approved to be issued or transferred
to certain officers and employees pursuant to stock options granted under the
1999 Option Plan. Options to purchase common stock under the 1999 Option Plan
have been granted to Company employees at fair market value at the date of
grant.
Generally, stock options become exercisable over a four-year vesting period
and expire 15 years from the date of grant. Prior to 1999, generally, stock
options became exercisable over a three-year vesting period and expired 10 years
from the date of grant.
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 2000, 1999 and 1998, respectively: dividend
yields of 1.2, 1.2 and 0.9 percent; expected volatility of 31.7, 27.1 and 24.1
percent; risk-free interest rates of 5.8, 6.2 and 4.0 percent; and expected
lives of five years for 2000 and four years for 1999 and 1998. The
weighted-average fair value of options granted was $19.85, $15.77 and $15.41 for
the years ended December 31, 2000, 1999 and 1998, respectively.
59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
A summary of stock option activity under all plans is as follows (shares in
millions):
<TABLE>
<CAPTION>
2000 1999 1998
------------------------- -------------------------- ---------------------------
Weighted-Average Weighted-Average Weighted-Average
Shares Exercise Price Shares Exercise Price Shares Exercise Price
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding on January 1, 101 $ 46.66 80 $ 42.77 80 $ 33.22
Granted {1} 32 57.35 28 53.53 17 65.91
Exercised (12) 26.00 (6) 26.12 (16) 18.93
Forfeited/Expired {2} (9) 57.51 (1) 60.40 (1) 55.48
- ----------------------------------------------------------------------------------------------------------------------------------
Outstanding on December 31, 112 $ 51.23 101 $ 46.66 80 $ 42.77
- ----------------------------------------------------------------------------------------------------------------------------------
Exercisable on December 31, 60 $ 46.57 59 $ 39.40 52 $ 32.41
- ----------------------------------------------------------------------------------------------------------------------------------
Shares available on December 31,
for options that may be granted 65 92 18
==================================================================================================================================
</TABLE>
[FN]
{1} No grants were made from the 1991 Option Plan during 1999 or 2000.
{2} Shares Forfeited/Expired relate to the 1991 and 1999 Option Plans.
</FN>
The following table summarizes information about stock options at December
31, 2000 (shares in millions):
<TABLE>
<CAPTION>
Outstanding Stock Options Exercisable Stock Options
--------------------------------------------------- -------------------------------
Weighted-Average
Remaining Weighted-Average Weighted-Average
Range of Exercise Prices Shares Contractual Life Exercise Price Shares Exercise Price
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$10.00 to $20.00 2 0.8 years $ 15.37 2 $ 15.37
$20.01 to $30.00 11 3.1 years $ 23.41 11 $ 23.41
$30.01 to $40.00 10 4.8 years $ 35.63 10 $ 35.63
$40.01 to $50.00 10 5.8 years $ 48.86 9 $ 48.86
$50.01 to $60.00 65 8.9 years $ 56.31 17 $ 57.06
$60.01 to $86.75 14 7.8 years $ 65.87 11 $ 65.90
- ------------------------------------------------------------------------------------------------------------------------------------
$10.00 to $86.75 112 7.4 years $ 51.23 60 $ 46.57
====================================================================================================================================
</TABLE>
NOTE 13: PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS
- -------------------------------------------------------
Our Company sponsors and/or contributes to pension and postretirement health
care and life insurance benefit plans covering substantially all U.S. employees
and certain employees in international locations. We also sponsor nonqualified,
unfunded defined benefit pension plans for certain officers and other employees.
In addition, our Company and its subsidiaries have various pension plans and
other forms of postretirement arrangements outside the United States.
Total expense for all benefit plans, including defined benefit pension plans,
defined contribution pension plans, and postretirement health care and life
insurance benefit plans, amounted to approximately $116 million in 2000, $108
million in 1999 and $119 million in 1998. In addition, the Company recorded a
charge of $124 million for special retirement benefits as part of the
Realignment discussed in Note 16. Net periodic cost for our pension and other
benefit plans consists of the following (in millions):
<TABLE>
<CAPTION>
Pension Benefits
------------------------------------------
Year Ended December 31, 2000 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 54 $ 67 $ 56
Interest cost 119 111 105
Expected return on plan assets (132) (119) (105)
Amortization of prior service cost 4 6 3
Recognized net actuarial (gain) loss (7) 7 9
Settlements and curtailments 1 - -
- --------------------------------------------------------------------------------
Net periodic pension cost $ 39 $ 72 $ 68
================================================================================
Other Benefits
------------------------------------------
Year Ended December 31, 2000 1999 1998
- --------------------------------------------------------------------------------
Service cost $ 12 $ 14 $ 14
Interest cost 29 22 25
Expected return on plan assets (1) (1) (1)
Amortization of prior service cost 1 - -
Recognized net actuarial (gain) loss (1) - -
- --------------------------------------------------------------------------------
Net periodic cost $ 40 $ 35 $ 38
================================================================================
</TABLE>
60
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
The following table sets forth the change in benefit obligation for our
benefit plans (in millions):
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
----------------------------- ----------------------------
December 31, 2000 1999 2000 1999
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Benefit obligation at
beginning of year $ 1,670 $ 1,717 $ 303 $ 381
Service cost 54 67 12 14
Interest cost 119 111 29 22
Foreign currency
exchange rate changes (55) (13) - -
Amendments 57 4 21 -
Actuarial (gain) loss 77 (137) 25 (101)
Benefits paid (146) (84) (17) (14)
Settlements and
curtailments (67) - 13 -
Special retirement
benefits 104 - 20 -
Other 6 5 1 1
- --------------------------------------------------------------------------------------------------
Benefit obligation
at end of year $ 1,819 $ 1,670 $ 407 $ 303
==================================================================================================
</TABLE>
The following table sets forth the change in plan assets for our benefit
plans (in millions):
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
----------------------------- ----------------------------
December 31, 2000 1999 2000 1999
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fair value of plan assets
at beginning of year {1} $ 1,722 $ 1,516 $ 29 $ 36
Actual return on
plan assets 4 259 2 1
Employer contribution 31 34 - 5
Foreign currency
exchange rate changes (57) (20) - -
Benefits paid (120) (69) (14) (14)
Settlements (38) - - -
Other 13 2 - 1
- --------------------------------------------------------------------------------------------------
Fair value of plan assets
at end of year {1} $ 1,555 $ 1,722 $ 17 $ 29
==================================================================================================
</TABLE>
[FN]
{1} Pension benefit plan assets primarily consist of listed stocks including
1,621,050 and 1,584,000 shares of common stock of our Company with a
fair value of $99 million and $92 million as of December 31, 2000 and 1999,
respectively.
</FN>
The projected benefit obligation, accumulated benefit obligation and fair
value of plan assets for the pension plans with benefit obligations in excess of
plan assets were $570 million, $480 million and $152 million, respectively, as
of December 31, 2000, and $556 million, $434 million and $161 million,
respectively, as of December 31, 1999.
The accrued pension and other benefit costs recognized in our accompanying
Consolidated Balance Sheets are computed as follows (in millions):
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
----------------------------- ----------------------------
December 31, 2000 1999 2000 1999
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Funded status $ (264) $ 52 $ (390) $ (274)
Unrecognized net (asset)
liability at transition (6) 4 - -
Unrecognized prior
service cost 90 54 23 4
Unrecognized net gain (89) (285) (51) (91)
- --------------------------------------------------------------------------------------------------
Net liability recognized $ (269) $ (175) $ (418) $ (361)
- --------------------------------------------------------------------------------------------------
Prepaid benefit cost $ 39 $ 73 $ - $ -
Accrued benefit liability (374) (305) (418) (361)
Accumulated other
comprehensive income 43 26 - -
Intangible asset 23 31 - -
- --------------------------------------------------------------------------------------------------
Net liability recognized $ (269) $ (175) $ (418) $ (361)
==================================================================================================
</TABLE>
The weighted-average assumptions used in computing the preceding information
are as follows:
<TABLE>
<CAPTION>
Pension Benefits
------------------------------------------
December 31, 2000 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate 7% 7% 6 1/2%
Rate of increase in
compensation levels 4 1/2% 4 1/2% 4 1/2%
Expected long-term
rate of return on
plan assets 8 1/2% 8 1/2% 8 3/4%
Other Benefits
------------------------------------------
December 31, 2000 1999 1998
- --------------------------------------------------------------------------------
Discount rate 7 1/2% 8% 6 3/4%
Rate of increase in
compensation levels 4 3/4% 5% 4 1/2%
Expected long-term
rate of return on
plan assets 3% 3% 3%
</TABLE>
The rate of increase in per capita costs of covered health care benefits is
assumed to be 7 percent in 2001, decreasing gradually to 5 1/4 percent by the
year 2005.
61
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
A one percentage point change in the assumed health care cost trend rate
would have the following effects (in millions):
<TABLE>
<CAPTION>
One Percentage One Percentage
Point Increase Point Decrease
-------------- --------------
<S> <C> <C>
Effect on accumulated
postretirement benefit
obligation as of
December 31, 2000 $ 55 $ (45)
Effect on net periodic
postretirement benefit
cost in 2000 $ 8 $ (6)
</TABLE>
NOTE 14: INCOME TAXES
- ---------------------
Income before income taxes consists of the following (in millions):
<TABLE>
<CAPTION>
Year Ended December 31, 2000 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
United States $ 1,497 $ 1,504 $ 1,979
International 1,902 2,315 3,219
- --------------------------------------------------------------------------------
$ 3,399 $ 3,819 $ 5,198
================================================================================
</TABLE>
Income tax expense (benefit) consists of the following (in millions):
<TABLE>
<CAPTION>
Year Ended United State &
December 31, States Local International Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2000
Current $ 48 $ 16 $ 1,155 $ 1,219
Deferred (9) 46 (34) 3
1999
Current $ 395 $ 67 $ 829 $ 1,291
Deferred 182 11 (96) 97
1998
Current $ 683 $ 91 $ 929 $ 1,703
Deferred (73) 28 7 (38)
================================================================================
</TABLE>
We made income tax payments of approximately $1,327 million, $1,404 million
and $1,559 million in 2000, 1999 and 1998, respectively. During the first
quarter of 2000, the United States and Japan taxing authorities entered into an
Advance Pricing Agreement (APA) whereby the level of royalties paid by Coca-Cola
(Japan) Company, Ltd. (our Subsidiary) to our Company has been established for
the years 1993 through 2001. Pursuant to the terms of the APA, our Subsidiary
has filed amended returns for the applicable periods reflecting the negotiated
royalty rate. These amended returns resulted in the payment during the first and
second quarters of 2000 of additional Japanese taxes, the effect of which on
both our financial performance and our effective tax rate was not material, due
primarily to offsetting tax credits on our U.S. income tax return.
A reconciliation of the statutory U.S. federal rate and effective rates is as
follows:
<TABLE>
<CAPTION>
Year Ended December 31, 2000 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory U.S. federal rate 35.0% 35.0% 35.0%
State income taxes-net of
federal benefit .8 1.0 1.0
Earnings in jurisdictions taxed
at rates different from the
statutory U.S. federal rate (4.0) (6.0) (4.3)
Equity income or loss {1} 2.9 1.6 -
Other operating charges {2} 1.9 5.3 -
Other-net (.6) (.6) .3
- --------------------------------------------------------------------------------
36.0% 36.3% 32.0%
================================================================================
</TABLE>
[FN]
{1} Includes charges by equity investees. See Note 15.
{2} Includes charges related to certain bottling, manufacturing and intangible
assets. See Note 15.
</FN>
Our effective tax rate reflects the tax benefit derived from having
significant operations outside the United States that are taxed at rates lower
than the U.S. statutory rate of 35 percent.
In 2000, management concluded that it was more likely than not that local tax
benefits would not be realized with respect to principally all of the items
discussed in Note 15, with the exception of approximately $188 million of
charges related to the settlement terms of a class action discrimination
lawsuit. Accordingly, valuation allowances were recorded to offset the future
tax benefit of these nonrecurring items resulting in an increase in our
effective tax rate. Excluding the impact of these nonrecurring items, the
effective tax rate on operations for the year was slightly more than 30 percent.
In 1999, the Company recorded a charge of $813 million, primarily reflecting
the impairment of certain bottling, manufacturing and intangible assets. For
some locations with impaired assets, management concluded that it was more
likely than not that no local tax benefit would be realized. Accordingly, a
valuation allowance was recorded offsetting the future tax benefits for such
locations. This resulted in an increase in our effective tax rate for 1999.
Excluding the impact, the Company's effective tax rate for 1999 would have been
31.0 percent.
We have provided appropriate U.S. and international taxes for earnings of
subsidiary companies that are expected to be remitted to the parent company.
Exclusive of amounts that would result in little or no tax if remitted, the
cumulative amount of unremitted earnings from our international subsidiaries
that is expected to be indefinitely reinvested was approximately $3.7 billion on
December 31, 2000. The taxes that would be paid upon remittance of these
indefinitely reinvested earnings are approximately $1.3 billion, based on
current tax laws.
62
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
The tax effects of temporary differences and carryforwards that give rise to
deferred tax assets and liabilities consist of the following (in millions):
<TABLE>
<CAPTION>
December 31, 2000 1999
- --------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Benefit plans $ 261 $ 311
Liabilities and reserves 456 169
Net operating loss carryforwards 375 196
Other operating charges 321 254
Other 126 272
- --------------------------------------------------------------------------------
Gross deferred tax assets 1,539 1,202
Valuation allowance (641) (443)
- --------------------------------------------------------------------------------
$ 898 $ 759
- --------------------------------------------------------------------------------
Deferred tax liabilities:
Property, plant and equipment $ 425 $ 320
Equity investments 228 397
Intangible assets 224 197
Other 129 99
- --------------------------------------------------------------------------------
$1,006 $1,013
================================================================================
Net deferred tax asset (liability){1} $ (108) $ (254)
================================================================================
</TABLE>
[FN]
{1} Deferred tax assets of $250 million and $244 million have been included
in the consolidated balance sheet caption "Marketable securities and other
assets" at December 31, 2000 and 1999, respectively.
</FN>
On December 31, 2000 and 1999, we had approximately $143 million and $233
million, respectively, of gross deferred tax assets, net of valuation
allowances, located in countries outside the United States.
On December 31, 2000, we had $968 million of operating loss carryforwards
available to reduce future taxable income of certain international subsidiaries.
Loss carryforwards of $635 million must be utilized within the next five years;
$333 million can be utilized over an indefinite period. A valuation allowance
has been provided for a portion of the deferred tax assets related to these loss
carryforwards.
NOTE 15: NONRECURRING ITEMS
- ---------------------------
In the first quarter of 2000, we recorded charges of approximately $405
million related to the impairment of certain bottling, manufacturing and
intangible assets, primarily within our Indian bottling operations. These
impairment charges were recorded to reduce the carrying value of the identified
assets to fair value. Fair value was derived using cash flow analysis. The
assumptions used in the cash flow analysis were consistent with those used in
our internal planning process. The assumptions included estimates of future
growth in unit cases, estimates of gross margins, estimates of the impact of
exchange rates and estimates of tax rates and tax incentives. The charge was
primarily the result of our revised outlook for the Indian beverage market
including the future expected tax environment. The remaining carrying value of
long-lived assets within our Indian bottling operations, immediately after
recording the impairment charge, was approximately $300 million.
In the third quarter of 2000, we recorded a gain related to the merger of
Coca-Cola Beverages and Hellenic Bottling Company. This merger resulted in a
decrease of our Company's equity ownership interest from approximately 50.5
percent of Coca-Cola Beverages to approximately 24 percent of the combined
entity, CCHBC. As a result of our Company's decreased equity ownership, a
tax-free noncash gain of approximately $118 million was recognized.
In the fourth quarter of 2000, we recorded charges of approximately $188
million related to the settlement terms of, and direct costs related to, a class
action discrimination lawsuit. The monetary settlement includes cash payments to
fund back pay, compensatory damages, a promotional achievement fund and
attorneys' fees. In addition, the Company introduced a wide range of training,
monitoring and mentoring programs. Of the $188 million, $50 million was donated
to The Coca-Cola Foundation to continue its broad range of community support
programs. Under the terms of the settlement agreement, the Company has the
option to rescind the agreement if more than 200 potential class members opt out
of the settlement.
In 2000, the Company also recorded a nonrecurring charge of approximately
$306 million, which represents the Company's portion of a charge recorded by
Coca-Cola Amatil to reduce the carrying value of its investment in the
Philippines. In addition, Panamco wrote down selected assets, including the
impairment of the value of its Venezuelan operating unit. The Company's portion
of this charge was approximately $124 million. Also contributing to the equity
losses were nonrecurring charges recorded by investees in Eurasia and the Middle
East. These nonrecurring charges were partially offset by the impact of lower
tax rates related to current and deferred taxes at CCEAG.
In the fourth quarter of 1999, we recorded charges of approximately $813
million. Of this $813 million, approximately $543 million related to the
impairment of certain bottling, manufacturing and intangible assets, primarily
within our Russian and Caribbean bottlers and in the Middle and Far East and in
North America. These impairment charges were recorded to reduce the carrying
value of the identified assets to fair value. Fair values were derived using a
variety of methodologies, including cash flow analysis, estimates of sales
proceeds and independent appraisals. Where cash flow analyses were used to
estimate fair values, key assumptions employed, consistent with those used in
our internal planning process included our estimates of future growth in unit
case sales, estimates of gross margins and estimates of the impact of inflation
and foreign currency fluctuations. The charges were primarily the result of our
revised outlook in certain markets due to the prolonged severe economic
downturns. The remaining carrying value of these impaired long-lived assets,
immediately after recording the impairment charge, was approximately $140
million.
63
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
Of the $813 million, approximately $196 million related to charges associated
with the impairment of the distribution and bottling assets of our vending
operations in Japan and our bottling operations in the Baltics. The charges
reduced the carrying value of these assets to their fair value less the cost to
sell. Consistent with our long-term bottling investment strategy, management has
committed to a plan to sell our ownership interest in these operations to one of
our strategic business partners. The remaining carrying value of long-lived
assets within these operations and the income from operations on an after-tax
basis as of and for the 12-month period ending December 31, 2000, were
approximately $143 million and $21 million, respectively.
On December 22, 2000, the Company signed a definitive agreement to sell the
assets of our vending operations in Japan. The expected proceeds from the sale
of the assets are equal to the current carrying value of the long-lived assets
less the cost to sell. The sale transaction is expected to close in early 2001.
Management had intended to sell the assets of our bottling operations in the
Baltics to one of our strategic business partners. That partner is currently in
the process of an internal restructuring and no longer plans to purchase the
Baltics bottling operations. At this time another suitable buyer has not been
identified. Therefore, the Company will continue to operate the Baltics bottlers
as consolidated operations until a new buyer is identified.
The remainder of the $813 million charges, approximately $74 million,
primarily related to the change in senior management and charges related to
organizational changes within the Europe and Eurasia, Latin America and
Corporate segments. These charges were incurred during the fourth quarter of
1999.
In the second quarter of 1998, we recorded a nonrecurring charge primarily
related to the impairment of certain assets in North America of $25 million and
Corporate of $48 million.
NOTE 16: REALIGNMENT COSTS
- --------------------------
In January 2000, our Company initiated a major organizational Realignment
intended to put more responsibility, accountability and resources in the hands
of local business units of the Company so as to fully leverage the local
capabilities of our system.
Under the Realignment, employees were separated from almost all functional
areas of the Company's operations, and certain activities have been outsourced
to third parties. The total number of employees separated as of December 31,
2000, was approximately 5,200. Employees separated from the Company as a result
of the Realignment were offered severance or early retirement packages, as
appropriate, which included both financial and nonfinancial components. The
Realignment expenses included costs associated with involuntary terminations,
voluntary retirements and other direct costs associated with implementing the
Realignment. Other direct costs included repatriating and relocating employees
to local markets; asset write-downs; lease cancellation costs; and costs
associated with the development, communication and administration of the
Realignment.
The table below summarizes accrued Realignment expenses and amounts charged
against the accrual as of and for the year ended December 31, 2000 (in
millions):
<TABLE>
<CAPTION>
Noncash Accrued
and Balance
REALIGNMENT SUMMARY Expenses Payments Exchange December 31
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Employees involuntarily separated
Severance pay and benefits $ 216 $ (123) $ (2) $ 91
Outside services - legal,
outplacement, consulting 33 (25) - 8
Other - including asset write-downs 81 (37) (7) 37
- ------------------------------------------------------------------------------------------------------------------------------------
$ 330 $ (185) $ (9) $ 136
- ------------------------------------------------------------------------------------------------------------------------------------
Employees voluntarily separated
Special retirement pay and benefits $ 353 $ (174) $ - $ 179
Outside services - legal,
outplacement, consulting 6 (3) - 3
- ------------------------------------------------------------------------------------------------------------------------------------
$ 359 $ (177) $ - $ 182
- ------------------------------------------------------------------------------------------------------------------------------------
Other direct costs $ 161 $ (92) $ (9) $ 60
- ------------------------------------------------------------------------------------------------------------------------------------
Total Realignment $ 850 $ (454) $ (18) $ 378{1}
====================================================================================================================================
</TABLE>
[FN]
{1} Accrued realignment expenses of approximately $254 million and $124 million
have been included in the consolidated balance sheet captions "Accounts
payable and accrued expenses" and "Other liabilities," respectively.
</FN>
64
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
NOTE 17: ACQUISITIONS AND INVESTMENTS
- -------------------------------------
In separate transactions during the first half of 2000, our Company purchased
two bottlers in Brazil, Companhia Mineira de Refrescos, S.A., and Refrigerantes
Minas Gerais Ltda. In October 2000, the Company purchased a 58 percent interest
in Paresa, a bottler located in Paraguay. In December 2000, the Company made a
tender offer for the remaining 42 percent of the shares in Paresa. In January
2001, we completed the tender offer. We currently own approximately 95 percent
of Paresa. During 2000, our Company's acquisition and investment activity
totaled approximately $400 million.
During 1999, the Company's acquisition and investment activity, which
included the acquisition of beverage brands from Cadbury Schweppes plc and
investments in the bottling operations of Coca-Cola Embonor S.A., F&N Coca-Cola,
and Coca-Cola West Japan Company, Ltd., totaled $1.9 billion. During 1998, the
Company's acquisition and investment activity totaled $1.4 billion. None of the
acquisitions and investment activity in 1998 was individually significant.
In July 1999, we completed the acquisition of Cadbury Schweppes plc beverage
brands in 155 countries for approximately $700 million. These brands included
Schweppes, Canada Dry, Dr Pepper, Crush and certain regional brands. Among the
countries excluded from this transaction were the United States, South Africa,
Norway, Switzerland and the European Union member nations (other than the United
Kingdom, Ireland and Greece). In September 1999, we completed the acquisition of
Cadbury Schweppes beverage brands in New Zealand for approximately $20 million.
Also in September 1999, in a separate transaction valued at approximately $250
million, we acquired the carbonated soft-drink business of Cadbury Schweppes
(South Africa) Limited in South Africa, Botswana, Namibia, Lesotho and
Swaziland.
The acquisitions and investments have been accounted for by either the
purchase, equity or cost method of accounting, as appropriate. Their results
have been included in the Consolidated Financial Statements from their
respective dates of acquisition using the appropriate method of accounting. Had
the results of these businesses been included in operations commencing with
1998, the reported results would not have been materially affected.
NOTE 18: OPERATING SEGMENTS
- ----------------------------
Effective January 1, 2000, two of our Company's operating segments were
geographically reconfigured and renamed. The Middle East and North Africa
Division was added to the Africa Group, which changed its name to the Africa and
Middle East Group. At the same time the Middle and Far East Group, less the
relocated Middle East and North Africa Division, changed its name to the Asia
Pacific Group. In the fourth quarter of 2000, the Greater Europe Group was
renamed the Europe and Eurasia Group. Prior period amounts have been
reclassified to conform to the current period presentation.
Our Company's operating structure includes the following operating segments:
the North America Group (including The Minute Maid Company); the Africa and
Middle East Group; the Europe and Eurasia Group; the Latin America Group; the
Asia Pacific Group; and Corporate. The North America Group includes the United
States and Canada.
SEGMENT PRODUCTS AND SERVICES
The business of our Company is nonalcoholic ready-to-drink beverages,
principally soft drinks, but also a variety of noncarbonated beverages. Our
operating segments derive substantially all their revenues from the manufacture
and sale of beverage concentrates and syrups with the exception of Corporate,
which derives its revenues primarily from the licensing of our brands in
connection with merchandise.
METHOD OF DETERMINING SEGMENT PROFIT OR LOSS
Management evaluates the performance of its operating segments separately to
individually monitor the different factors affecting financial performance.
Segment profit or loss includes substantially all the segment's costs of
production, distribution and administration. Our Company manages income taxes on
a global basis. Thus, we evaluate segment performance based on profit or loss
before income taxes, exclusive of any significant gains or losses on the
disposition of investments or other assets. Our Company typically manages and
evaluates equity investments and related income on a segment level. However, we
manage certain significant investments, such as our equity interests in
Coca-Cola Enterprises, at the Corporate segment. We manage financial costs, such
as exchange gains and losses and interest income and expense, on a global basis
at the Corporate segment.
65
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
Information about our Company's operations by operating segment is as follows
(in millions):
<TABLE>
<CAPTION>
North Africa & Europe Latin Asia
America Middle East & Eurasia America Pacific Corporate Consolidated
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2000
Net operating revenues $ 7,870 $ 729 $ 4,377 $ 2,174 $ 5,159 {1} $ 149 $ 20,458
Operating income {2} 1,406 80 1,415 {3} 916 956 (1,082) {4} 3,691
Interest income 345 345
Interest expense 447 447
Equity income (loss) {5} 3 (73) 35 (75) (290) 111 (289)
Identifiable operating assets 4,271 622 1,408 1,545 1,953 5,270 {6} 15,069
Investments {7} 141 338 1,757 1,767 993 769 5,765
Capital expenditures 259 11 194 16 132 121 733
Depreciation and amortization 244 54 64 96 211 104 773
Income before income taxes 1,410 (6) 1,568 {8} 866 651 (1,090) 3,399
====================================================================================================================================
1999
Net operating revenues $ 7,519 $ 792 $ 4,540 $ 1,961 $ 4,828 {1} $ 165 $ 19,805
Operating income {9} 1,436 67 1,068 840 1,194 (623) 3,982
Interest income 260 260
Interest expense 337 337
Equity income (loss) (5) (29) (73) (5) (37) (35) (184)
Identifiable operating assets 3,591 672 1,624 1,653 2,439 4,852 {6} 14,831
Investments {7} 139 333 1,870 1,833 1,837 780 6,792
Capital expenditures 269 22 218 67 317 176 1,069
Depreciation and amortization 263 47 80 96 184 122 792
Income before income taxes 1,432 24 984 846 1,143 (610) 3,819
====================================================================================================================================
1998
Net operating revenues $6,934 $ 780 $ 4,827 $ 2,240 $ 3,856 {1} $ 176 $ 18,813
Operating income 1,383 {10} 223 1,655 1,056 1,343 (693){10} 4,967
Interest income 219 219
Interest expense 277 277
Equity income (loss) (1) (21) (47) 68 (38) 71 32
Identifiable operating assets 3,467 541 1,711 1,364 1,595 3,781 {6} 12,459
Investments {7} 141 312 2,010 1,629 1,979 615 6,686
Capital expenditures 274 22 216 72 104 175 863
Depreciation and amortization 231 40 92 93 101 88 645
Income before income taxes 1,392 192 1,577 1,132 1,289 (384) 5,198
====================================================================================================================================
Intercompany transfers between operating segments are not material.
Certain prior year amounts have been reclassified to conform to the current year
presentation.
</TABLE>
[FN]
{1} Japan revenues represent approximately 75 percent of total Asia Pacific
operating segment revenues related to 2000, and 80 percent related to 1999 and
1998.
{2} Operating income was reduced by $3 million for North America, $397
million for Asia Pacific and $5 million for Corporate related to the other
operating charges recorded for asset impairments in the first quarter of 2000.
Operating income was also reduced by $128 million for North America, $64 million
for Africa and Middle East, $174 million for Europe and Eurasia, $63 million for
Latin America, $127 million for Asia Pacific and $294 million for Corporate as a
result of other operating charges associated with the Realignment.
{3} Operating income was reduced by $30 million for Europe and Eurasia due to
incremental marketing expenses in Central Europe.
{4} Operating income was reduced by $188 million for Corporate related to the
settlement terms of a discrimination lawsuit and a donation to The Coca-Cola
Foundation.
{5} Equity income (loss) was reduced by $9 million for Africa and Middle
East, $26 million for Europe and Eurasia, $124 million for Latin America and
$306 million for Asia Pacific, as a result of our Company's portion of
nonrecurring charges recorded by equity investees.
{6} Corporate identifiable operating assets are composed principally of
marketable securities, finance subsidiary receivables, goodwill and other
intangible assets and fixed assets.
{7} Principally equity investments in bottling companies.
{8} Income before taxes was increased by $118 million for Europe and Eurasia
as a result of a gain related to the merger of Coca-Cola Beverages plc and
Hellenic Bottling Company S.A.
{9} Operating income was reduced by $34 million for North America, $79
million for Africa and Middle East, $430 million for Europe and Eurasia, $35
million for Latin America, $176 million for Asia Pacific and $59 million for
Corporate related to the other operating charges recorded in the fourth quarter
of 1999.
{10} Operating income was reduced by $25 million for North America and $48
million for Corporate for provisions related to the impairment of certain
assets.
</FN>
<TABLE>
<CAPTION>
Compound Growth Rates North Africa & Europe & Latin Asia
Ending 2000 America Middle East Eurasia America Pacific Consolidated
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net operating revenues
5 years 7.3% .1% (6.1)% 2.2% 6.9% 2.4%
10 years 6.4% 11.6% 3.5% 10.2% 11.1% 7.1%
- --------------------------------------------------------------------------------------------------------------------
Operating income
5 years 10.6% (19.4)% .3% 1.6% (5.4)% (1.7)%
10 years 11.4% (3.0)% 6.1% 11.9% 4.2% 6.6%
=====================================================================================================================
</TABLE>
66
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
<TABLE>
<CAPTION>
[pie charts]
NET OPERATING REVENUES BY OPEATING SEGMENT {1}
2000 1999 1998
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
North America 39% 38% 37%
Europe & Eurasia 21% 23% 26%
Latin America 11% 10% 12%
Asia Pacific 25% 25% 21%
Africa & Middle East 4% 4% 4%
OPERATING INCOME BY OPERATING SEGMENT {1}
2000 1999 1998
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
North America 29% 31% 24%
Europe & Eurasia 30% 23% 29%
Latin America 19% 18% 19%
Asia Pacific 20% 26% 24%
Africa & Middle East 2% 2% 4%
</TABLE>
{1} Charts and percentages are calculated excluding Corporate.
================================================================================
Report of Independent Auditors
BOARD OF DIRECTORS AND SHARE OWNERS
The Coca-Cola Company
We have audited the accompanying consolidated balance sheets of The Coca-Cola
Company and subsidiaries as of December 31, 2000 and 1999, and the related
consolidated statements of income, share-owners' equity, and cash flows for each
of the three years in the period ended December 31, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of The Coca-Cola
Company and subsidiaries at December 31, 2000 and 1999, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States.
/s/ ERNST & YOUNG LLP
Atlanta, Georgia
January 26, 2001
67
The Coca-Cola Company and Subsidiaries
<TABLE>
<CAPTION>
QUARTERLY DATA (UNAUDITED)
(In millions except per
share data) First Second Third Fourth Full
Year Ended December 31, Quarter Quarter Quarter Quarter Year
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2000
Net operating revenues $ 4,391 $ 5,621 $ 5,543 $ 4,903 $ 20,458
Gross profit 2,993 3,944 3,807 3,510 14,254
Net income (loss) (58) 926 1,067 242 2,177
Basic net income
(loss) per share (.02) .37 .43 .10 .88
Diluted net income
(loss) per share (.02) .37 .43 .10 .88
================================================================================
1999
Net operating revenues $ 4,400 $ 5,335 $ 5,139 $ 4,931 $ 19,805
Gross profit 3,097 3,743 3,489 3,467 13,796
Net income (loss) 747 942 787 (45) 2,431
Basic net income
(loss) per share .30 .38 .32 (.02) .98
Diluted net income
(loss) per share .30 .38 .32 (.02) .98
================================================================================
</TABLE>
The first quarter of 2000 includes other operating charges of approximately $405
million ($.16 per share after income taxes, basic and diluted) primarily related
to the impairment of certain bottling, manufacturing and intangible assets. The
first quarter of 2000 also includes other operating charges of approximately
$275 million ($.08 per share after income taxes, basic and diluted) related to
costs associated with the Realignment.
The second quarter of 2000 includes other operating charges of approximately
$191 million ($.05 per share after income taxes, basic and diluted) related to
costs associated with the Realignment.
The third quarter of 2000 includes a gain of $118 million ($.05 per share after
income taxes, basic and diluted) related to the merger of Coca-Cola Beverages
plc and Hellenic Bottling Company S.A. This gain was partially offset by other
operating charges of approximately $94 million ($.03 per share after income
taxes, basic and diluted) related to costs associated with the Realignment and
$30 million ($.01 per share after income taxes, basic and diluted) for
incremental marketing expense in Central Europe.
The fourth quarter of 2000 includes other operating charges of approximately
$290 million ($.08 per share after income taxes, basic and diluted) related to
costs associated with the Realignment. The fourth quarter of 2000 also includes
other operating charges of approximately $188 million ($.05 per share after
income taxes, basic and diluted) related to the settlement terms of a class
action discrimination lawsuit and a donation to The Coca-Cola Foundation. The
fourth quarter of 2000 also includes the Company's share of charges recorded by
investees of approximately $463 million ($.19 per share after income taxes,
basic and diluted).
The fourth quarter of 1999 includes provisions of $813 million ($.31 per share
after income taxes, basic and diluted) recorded in other operating charges,
primarily related to the impairment of certain bottling, manufacturing and
intangible assets.
STOCK PRICES
- ------------
Below are the New York Stock Exchange high, low and closing prices of The
Coca-Cola Company's stock for each quarter of 2000 and 1999.
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2000
High $ 66.88 $ 60.88 $ 64.00 $ 63.38
Low 42.88 44.75 49.19 53.50
Close 46.94 57.44 55.13 60.94
=============================================================================
1999
High $ 70.38 $ 70.88 $ 65.50 $ 69.00
Low 59.56 57.63 47.94 47.31
Close 61.38 62.00 48.25 58.25
=============================================================================
</TABLE>
69
SHARE-OWNER INFORMATION
COMMON STOCK
Ticker symbol: KO
The Coca-Cola Company is one of 30 companies in the
Dow Jones Industrial Average.
Share owners of record at year end: 380,581
Shares outstanding at year end: 2.48 billion
STOCK EXCHANGES
INSIDE THE UNITED STATES:
Common stock listed and traded: New York Stock Exchange, the principal
market for our common stock.
Common stock traded: Boston, Chicago, Cincinnati, Pacific and Philadelphia
stock exchanges.
OUTSIDE THE UNITED STATES:
Common stock listed and traded: The German exchange in Frankfurt and the
Swiss exchange in Zurich.
DIVIDENDS
At its February 2001 meeting, our Board increased our quarterly dividend to
18 cents per share, equivalent to an annual dividend of 72 cents per share.
The Company has increased dividends each of the last 39 years.
The Coca-Cola Company normally pays dividends four times a year, usually
on April 1, July 1, October 1 and December 15. The Company has paid 319
consecutive quarterly dividends, beginning in 1920.
SHARE-OWNER ACCOUNT ASSISTANCE
For address changes, dividend checks, direct deposit of dividends,
account consolidation, registration changes, lost stock certificates, stock
holdings and the Dividend and Cash Investment Plan, please contact:
Registrar and Transfer Agent
First Chicago Trust Company, a division of EquiServe
P.O. Box 2500
Jersey City, NJ 07303-2500
Toll-free: (888) COKESHR (265-3747)
For hearing impaired: (201) 222-4955
E-mail: fctc_cocacola@equiserve.com
Internet: www.equiserve.com
DIVIDEND AND CASH INVESTMENT PLAN
The Dividend and Cash Investment Plan permits share owners of record to
reinvest dividends from Company stock in shares of The Coca-Cola Company. The
Plan provides a convenient, economical and systematic method of acquiring
additional shares of our common stock. All share owners of record are eligible
to participate. Share owners also may purchase Company stock through voluntary
cash investments of up to $125,000 per year.
At year end, 75 percent of the Company's share owners of record were
participants in the Plan. In 2000, share owners invested $37 million in
dividends and $42 million in cash in the Plan.
If your shares are held in street name by your broker and you are interested
in participating in the Dividend and Cash Investment Plan, you may have your
broker transfer the shares to First Chicago Trust Company, a division of
EquiServe, electronically through the Direct Registration System.
For more details on the Dividend and Cash Investment Plan, please contact the
Plan Administrator, First Chicago Trust Company, or visit the investor section
of our Company's Web site, www.coca-cola.com, for more information.
SHARE-OWNER INTERNET ACCOUNT ACCESS
Share owners of record may access their accounts via the Internet to obtain
share balance, conduct secure transactions, request printable forms and view
current market value of their investment as well as historical stock prices.
To log on to this secure site and request your initial password, go to
www.equiserve.com and click on "Account Access."
ANNUAL MEETING OF SHARE OWNERS
April 18, 2001, 9:00 a.m., local time
The Playhouse Theatre
Du Pont Building
10th and Market Streets
Wilmington, Delaware
CORPORATE OFFICES
The Coca-Cola Company
One Coca-Cola Plaza
Atlanta, Georgia 30313
INSTITUTIONAL INVESTOR INQUIRIES
(404) 676-5766
INFORMATION RESOURCES
INTERNET SITE
Our Web site, www.coca-cola.com, offers information about our financial
performance, news about the Company, and brand experiences.
PUBLICATIONS
The Company's Annual Report, Proxy Statement, Form 10-K and Form 10-Q reports
are available free of charge upon request from our Industry & Consumer Affairs
Department at the Company's corporate address, listed above.
HOTLINE
The Company's hotline,(800)INVSTKO(468-7856),offers taped highlights from the
most recent quarter and may be used to request the most up-to-date quarterly
results news release.
AUDIO ANNUAL REPORT
An audiocassette version of this report is available without charge as a
service to the visually impaired. To receive a copy, please contact our Industry
& Consumer Affairs Department at (800) 571-2653.
DUPLICATE MAILINGS
If you are receiving duplicate or unwanted copies of our Annual Report,
please contact First Chicago Trust Company at (888) COKESHR (265-3747).
GLOSSARY
BOTTLING PARTNER OR BOTTLER: Businesses -- generally, but not always,
independently owned -- that buy concentrates or syrups from the Company, convert
them into finished packaged products and sell them to customers.
THE COCA-COLA SYSTEM: The Company and its bottling partners.
CONCENTRATE OR BEVERAGE BASE: Material manufactured from Company-defined
ingredients and sold to bottlers for use in the preparation of finished
beverages through the addition of sweetener and/or water.
CONSOLIDATED BOTTLING OPERATION (CBO): Bottler in which the Company holds a
controlling interest. The bottler's financial results are consolidated into the
Company's financial statements.
CONSUMER: Person who consumes Company products.
COST OF CAPITAL: Blended cost of equity and borrowed funds used to invest in
operating capital required for business.
CUSTOMER: Retail outlet, restaurant or other operation that sells or serves
Company products directly to consumers.
DERIVATIVES: Contracts or agreements, the value of which is linked to interest
rates, exchange rates, prices of securities, or financial or commodity indices.
The Company uses derivatives to reduce its exposure to adverse fluctuations in
interest and exchange rates and other market risks.
DIVIDEND PAYOUT RATIO: Calculated by dividing cash dividends on common
stock by net income available to common share owners.
ECONOMIC PROFIT: Income from continuing operations, after giving effect to
taxes and excluding the effects of interest, in excess of a computed capital
charge for average operating capital employed.
ECONOMIC VALUE ADDED: Growth in economic profit from year to year.
FOUNTAIN: System used by retail outlets to dispense product into cups or
glasses for immediate consumption.
FREE CASH FLOW: Cash provided by operations less cash used in business
reinvestment. The Company uses free cash flow along with borrowings to pay
dividends, make share repurchases and make acquisitions.
GALLON SALES: Unit of measurement for concentrates (expressed in equivalent
gallons of syrup) and syrups sold by the Company to its bottling partners or
customers.
GROSS MARGIN: Calculated by dividing gross profit by net operating revenues.
INTEREST COVERAGE RATIO: Income before taxes (excluding unusual items) plus
interest expense, divided by the sum of interest expense and capitalized
interest.
KO: The ticker symbol for common stock of The Coca-Cola Company.
MARKET: Geographic area in which the Company and its bottling partners do
business, often defined by national boundaries.
NET CAPITAL: Calculated by adding share-owners' equity to net debt.
NET DEBT: Calculated by subtracting from debt the sum of cash, cash equivalents,
marketable securities and certain temporary bottling investments, less the
amount of cash determined to be necessary for operations.
OPERATING MARGIN: Calculated by dividing operating income by net operating
revenues.
PER CAPITA CONSUMPTION: Average number of 8-ounce servings consumed per
person, per year in a specific market. Per capita consumption of Company
products is calculated by multiplying our unit case volume by 24, and dividing
by the population.
RETURN ON CAPITAL: Calculated by dividing income from continuing operations
- -- before changes in accounting principles, adding back interest expense -- by
average total capital.
RETURN ON COMMON EQUITY: Calculated by dividing income from continuing
operations -- before changes in accounting principles, less preferred stock
dividends -- by average common share-owners' equity.
SERVING: Eight U.S. fluid ounces of a beverage.
SOFT DRINK: Nonalcoholic carbonated beverage containing flavorings and
sweeteners. Excludes flavored waters and carbonated or noncarbonated teas,
coffees and sports drinks.
SYRUP: Concentrate mixed with sweetener and water, sold to bottlers and
customers who add carbonated water to produce finished soft drinks.
TOTAL CAPITAL: Equals share-owners' equity plus interest-bearing debt.
TOTAL MARKET VALUE OF COMMON STOCK: Stock price as of a date multiplied by the
number of shares outstanding as of the same date.
UNIT CASE: Unit of measurement equal to 24 8-U.S.-fluid-ounce servings.
UNIT CASE VOLUME: The sum of (i) the number of unit cases sold by the
Coca-Cola bottling system and by the Company to customers, including fountain
syrups sold by the Company to customers directly or through wholesalers or
distributors, and (ii) the volume of juice and juice-drink products (expressed
in equivalent unit cases) distributed by The Minute Maid Company. Component (i)
above primarily includes unit case equivalents of products reported as gallon
sales and other key products owned by our bottlers.
ENVIRONMENTAL STATEMENT: Our Company's approach to environmental issues is
guided by a simple principle: We will conduct our business in ways that protect
and preserve the environment. Throughout our organization, our employees at all
levels are determined to integrate our Company's environmental management
system, eKOsystem, throughout all business units worldwide. We use the results
of research and new technology to minimize the environmental impact of our
operations, products and packages. And, we seek to cooperate with public,
private and governmental organizations in pursuing solutions to environmental
challenges, directing our Company's skills, energies and resources to activities
and issues where we can make a positive and effective contribution.
EQUAL OPPORTUNITY POLICY: The Coca-Cola Company and its subsidiaries employed
approximately 37,000 employees as of December 31, 2000, relatively flat compared
to the end of 1999. During 2000, approximately 5,200 employees were separated
from the Company as a result of the organizational Realignment, offset by
acquisition of bottlers in Latin America and the final consolidation of our
bottler in Southeast Asia. We maintain a long-standing commitment to equal
opportunity, affirmative action and valuing the diversity of our employees,
share owners, customers and consumers. The Company strives to create a working
environment free of discrimination and harassment with respect to race, sex,
color, national origin, religion, age, sexual orientation, disability, being a
special disabled veteran or being a veteran of the Vietnam era, as well as to
make reasonable accommodations in the employment of qualified individuals with
disabilities. The Company maintains ongoing contact with labor and employee
associations to develop relationships that foster responsive and mutually
beneficial discussions pertaining to labor issues. These associations have
provided a mechanism for positive industrial relations. In addition, we provide
fair marketing opportunities to all suppliers and maintain programs to increase
transactions with firms that are owned and operated by minorities and women.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21.1
<SEQUENCE>6
<FILENAME>0006.txt
<DESCRIPTION>LIST OF SUBSIDIARIES
<TEXT>
EXHIBIT 21.1
Subsidiaries of The Coca-Cola Company
As of December 31, 2000
Organized Percentages
Under of Voting
Laws of: Power
--------- -----------
The Coca-Cola Company Delaware
Subsidiaries:
Barq's, Inc. Mississippi 100
Bottling Investments Corporation Delaware 100
ACCBC Holding Company Georgia 100
Caribbean Refrescos, Inc. Delaware 100
CRI Financial Corporation, Inc. Delaware 100
F&N CC Private Limited Singapore 100
Coca-Cola Oasis, Inc. Delaware 100
Caribbean International Sales Corporation, Inc. Nevada 100
Carolina Coca-Cola Bottling Investments, Inc. Delaware 100
Coca-Cola Financial Corporation Delaware 100
Coca-Cola Interamerican Corporation Delaware 100
Companhia Mineira de Refrescos, S.A. Brazil 100
Montevideo Refrescos, S.A. Uruguay 64.59
Paraguay Refrescos, S.A. Paraguay 57.97
Coca-Cola Refreshment Products Co. Ltd. Japan 100
Coca-Cola South Asia Holdings, Inc. Delaware 100
Coca-Cola (China) Investment Ltd. China 100
Coca-Cola (China)Beverages Limited China 100
Coca-Cola Beverages Vietnam Vietnam 77.70
Coca-Cola India Limited India 100
Coca-Cola (Thailand) Limited Thailand 100
Coca-Cola Tea Products Co. Ltd. Japan 100
CTI Holdings, Inc. Delaware 100
55th & 5th Avenue Corporation New York 100
The Coca-Cola Export Corporation Delaware 100
Atlantic Industries Cayman Islands 100
Coca-Cola Holdings (Middle East and
North Africa) E.C. Bahrain 100
FV Corporation Japan 100
Schweppes Namibia (Prop) Ltd. Namibia 100
Barlan, Inc. Delaware 100
Soft Drinks Holding S.N.C. France 100
Varoise de Concentres S.A. France 100
Coca-Cola G.m.b.H. Germany 100
Hindustan Coca-Cola Holding Pvt. Ltd. India 100
Hindustan Coca-Cola Beverages Pvt. Ltd. India 100
S.A. Coca-Cola Financial Services N.V. Belgium 99.20
Beverage Products, Ltd. Delaware 100
Coca-Cola Africa Limited Kenya 100
Coca-Cola Beverages of Estonia, Ltd. Estonia 100
Coca-Cola Canners of Southern Africa (Pty)
Limited South Africa 51.55
Coca-Cola China Limited Hong Kong 100
Coca-Cola de Argentina S.A. Argentina 100
Coca-Cola de Chile S.A. Chile 100
Coca-Cola de Colombia, S.A. Colombia 100
- 1 -
<BR>
Subsidiaries of The Coca-Cola Company
As of December 31, 2000
continued from page 1
- ---------------------
Organized Percentages
Under of Voting
Laws of: Power
--------- -----------
Coca-Cola Ges.m.b.H. Austria 100
Coca-Cola Industrias Ltda. Brazil 100
CCSI-Industria de Refrigerantes Ltda. Brazil 99.94
Recofarma Industria do Amazonas Ltda. Brazil 100
Refrigerantes Minas Gerais, Ltda. Brazil 100
Coca-Cola Ltd. Canada 100
The Minute Maid Company Canada Inc. Canada 100
Coca-Cola (Japan) Company, Limited Japan 100
Coca-Cola Korea Company, Limited Korea 100
Coca-Cola Nigeria Limited Nigeria 100
Coca-Cola Holdings West Japan, Inc. Delaware 100
Coca-Cola Overseas Parent Limited Delaware 100
Coca-Cola Holdings (Overseas) Limited Delaware &
Australia 100
Coca-Cola Southern Africa (Pty) Limited South Africa 100
Conco Limited Cayman Islands 100
International Beverages Ireland 100
Minute Maid SA Switzerland 100
Refreshment Product Services, Inc. Delaware 100
Beverage Brands, S.A. Peru 50
Corporacion Inca Kola Peru 50
Coca-Cola Holdings (Nederland) B.V. Netherlands 100
Coca-Cola Holdings (United Kingdom) Limited England and
Wales 100
Beverage Services Ltd. England and
Wales 100
Coca-Cola Italia SRL Italy 100
Coca-Cola Hungary Services, Ltd. Hungary 90
Soft Drink Services Co. Delaware 100
Coca-Cola Mesrubat Pazarlama ve
Danismanlik Hizmetleri A.S. Turkey 100
Coca-Cola Norge A/S Norway 100
Coca-Cola South Pacific Pty. Limited Australia 100
Refrescos Envasados S.A. Spain 100
Compania de Servicios de Bebidas
Refrescantes SLR Spain 99.99
The Inmex Corporation Florida 100
Servicios Integrados de Administracion
y Alta Gerencia, S.A. de C.V. Mexico 100
Star Bottling Limited Cyprus 100
Coca-Cola Central Eurasia Bottlers LLC Russia 100
Coca-Cola St. Petersburg Management Russia 100
Star Bottling Limited United Kingdom 100
Star Services Russia 100
SA Coca-Cola Services NV Belgium 100
Other subsidiaries whose combined size is not significant:
8 domestic wholly owned subsidiaries consolidated
106 foreign wholly owned subsidiaries consolidated
10 foreign majority-owned subsidiaries consolidated
- 2 -
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>7
<FILENAME>0007.txt
<DESCRIPTION>CONSENT OF AUDITORS
<TEXT>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report on Form
10-K of The Coca-Cola Company of our report dated January 26, 2001, included in
the 2000 Annual Report to Share Owners of The Coca-Cola Company.
Our audits also included the financial statement schedule of The Coca-Cola
Company listed in Item 14(a). This schedule is the responsibility of The
Coca-Cola Company's management. Our responsibility is to express an opinion
based on our audits. In our opinion, with respect to which the date is January
26, 2001, the financial statement schedule referred to above, when considered in
relation to the basic financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.
We also consent to the incorporation by reference in the registration
statements and related prospectuses of The Coca-Cola Company listed below of our
report dated January 26, 2001 with respect to the consolidated financial
statements of The Coca-Cola Company incorporated herein by reference, and our
report included in the preceding paragraph with respect to the financial
statement schedule included in this Annual Report on Form 10-K for the year
ended December 31, 2000:
1. Registration Statement Number 2-58584 on Form S-8
2. Registration Statement Number 2-79973 on Form S-3
3. Registration Statement Number 2-88085 on Form S-8
4. Registration Statement Number 2-98787 on Form S-3
5. Registration Statement Number 33-21529 on Form S-8
6. Registration Statement Number 33-21530 on Form S-3
7. Registration Statement Number 33-26251 on Form S-8
8. Registration Statement Number 33-39840 on Form S-8
9. Registration Statement Number 33-45763 on Form S-3
10. Registration Statement Number 33-50743 on Form S-3
11. Registration Statement Number 33-61531 on Form S-3
12. Registration Statement Number 333-27607 on Form S-8
13. Registration Statement Number 333-78763 on Form S-8
14. Registration Statement Number 333-35298 on Form S-8
ERNST & YOUNG LLP
Atlanta, Georgia
March 5, 2001
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-24.1
<SEQUENCE>8
<FILENAME>0008.txt
<DESCRIPTION>POWERS OF ATTORNEY
<TEXT>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, DOUGLAS N. DAFT, Chairman of the Board,
Chief Executive Officer and a Director of The Coca-Cola Company (the "Company"),
do hereby appoint JACK L. STAHL, President and Chief Operating Officer of the
Company, GARY P. FAYARD, Senior Vice President and Chief Financial Officer of
the Company, JOSEPH R. GLADDEN, JR., Executive Vice President and General
Counsel of the Company, SUSAN E. SHAW, Secretary of the Company, and CAROL C.
HAYES, Assistant Secretary of the Company, or any one of them, my true and
lawful attorneys-in-fact for me and in my name for the purpose of executing on
my behalf in any and all capacities the Company's Annual Report for the year
ended December 31, 2000 on Form 10-K, or any amendment or supplement thereto,
and causing such Annual Report or any such amendment or supplement to be filed
with the Securities and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of February
2001.
/s/ DOUGLAS N. DAFT
------------------------------------
Chairman of the Board,
Chief Executive Officer and Director
The Coca-Cola Company
<BR>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, GARY P. FAYARD, Senior Vice President
and Chief Financial Officer of The Coca-Cola Company (the "Company"), do hereby
appoint DOUGLAS N. DAFT, Chairman of the Board, Chief Executive Officer and a
Director of the Company, JACK L. STAHL, President and Chief Operating Officer of
the Company, JOSEPH R. GLADDEN, JR., Executive Vice President and General
Counsel of the Company, SUSAN E. SHAW, Secretary of the Company, and CAROL C.
HAYES, Assistant Secretary of the Company, or any one of them, my true and
lawful attorneys-in-fact for me and in my name for the purpose of executing on
my behalf in any and all capacities the Company's Annual Report for the year
ended December 31, 2000 on Form 10-K, or any amendment or supplement thereto,
and causing such Annual Report or any such amendment or supplement to be filed
with the Securities and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of February
2001.
/s/ GARY P. FAYARD
---------------------------------
Senior Vice President
and Chief Financial Officer
The Coca-Cola Company
<BR>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, CONNIE D. MCDANIEL, Vice President and
Controller of The Coca-Cola Company (the "Company"), do hereby appoint DOUGLAS
N. DAFT, Chairman of the Board, Chief Executive Officer and a Director of the
Company, JACK L. STAHL, President and Chief Operating Officer of the Company,
GARY P. FAYARD, Senior Vice President and Chief Financial Officer of the
Company, JOSEPH R. GLADDEN, JR., Executive Vice President and General Counsel of
the Company, SUSAN E. SHAW, Secretary of the Company, and CAROL C. HAYES,
Assistant Secretary of the Company, or any one of them, my true and lawful
attorneys-in-fact for me and in my name for the purpose of executing on my
behalf in any and all capacities the Company's Annual Report for the year ended
December 31, 2000 on Form 10-K, or any amendment or supplement thereto, and
causing such Annual Report or any such amendment or supplement to be filed with
the Securities and Exchange Commission pursuant to the Securities Exchange Act
of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of February
2001.
/s/ CONNIE D. MCDANIEL
----------------------------------
Vice President and Controller
The Coca-Cola Company
<BR>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, HERBERT A. ALLEN, a Director of The
Coca-Cola Company (the "Company"), do hereby appoint DOUGLAS N. DAFT, Chairman
of the Board, Chief Executive Officer and a Director of the Company, JACK L.
STAHL, President and Chief Operating Officer of the Company, GARY P. FAYARD,
Senior Vice President and Chief Financial Officer of the Company, JOSEPH R.
GLADDEN, JR., Executive Vice President and General Counsel of the Company, SUSAN
E. SHAW, Secretary of the Company, and CAROL C. HAYES, Assistant Secretary of
the Company, or any one of them, my true and lawful attorneys-in-fact for me and
in my name for the purpose of executing on my behalf in any and all capacities
the Company's Annual Report for the year ended December 31, 2000 on Form 10-K,
or any amendment or supplement thereto, and causing such Annual Report or any
such amendment or supplement to be filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of February
2001.
/s/ HERBERT A. ALLEN
---------------------------------
Director
The Coca-Cola Company
<BR>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, RONALD W. ALLEN, a Director of The
Coca-Cola Company (the "Company"), do hereby appoint DOUGLAS N. DAFT, Chairman
of the Board, Chief Executive Officer and a Director of the Company, JACK L.
STAHL, President and Chief Operating Officer of the Company, GARY P. FAYARD,
Senior Vice President and Chief Financial Officer of the Company, JOSEPH R.
GLADDEN, JR., Executive Vice President and General Counsel of the Company, SUSAN
E. SHAW, Secretary of the Company, and CAROL C. HAYES, Assistant Secretary of
the Company, or any one of them, my true and lawful attorneys-in-fact for me and
in my name for the purpose of executing on my behalf in any and all capacities
the Company's Annual Report for the year ended December 31, 2000 on Form 10-K,
or any amendment or supplement thereto, and causing such Annual Report or any
such amendment or supplement to be filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of February
2001.
/s/ RONALD W. ALLEN
-------------------------------
Director
The Coca-Cola Company
<BR>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, CATHLEEN P. BLACK, a Director of The
Coca-Cola Company (the "Company"), do hereby appoint DOUGLAS N. DAFT, Chairman
of the Board, Chief Executive Officer and a Director of the Company, JACK L.
STAHL, President and Chief Operating Officer of the Company, GARY P. FAYARD,
Senior Vice President and Chief Financial Officer of the Company, JOSEPH R.
GLADDEN, JR., Executive Vice President and General Counsel of the Company, SUSAN
E. SHAW, Secretary of the Company, and CAROL C. HAYES, Assistant Secretary of
the Company, or any one of them, my true and lawful attorneys-in-fact for me and
in my name for the purpose of executing on my behalf in any and all capacities
the Company's Annual Report for the year ended December 31, 2000 on Form 10-K,
or any amendment or supplement thereto, and causing such Annual Report or any
such amendment or supplement to be filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of February
2001.
/s/ CATHLEEN P. BLACK
--------------------------------
Director
The Coca-Cola Company
<BR>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, WARREN E. BUFFETT, a Director of The
Coca-Cola Company (the "Company"), do hereby appoint DOUGLAS N. DAFT, Chairman
of the Board, Chief Executive Officer and a Director of the Company, JACK L.
STAHL, President and Chief Operating Officer of the Company, GARY P. FAYARD,
Senior Vice President and Chief Financial Officer of the Company, JOSEPH R.
GLADDEN, JR., Executive Vice President and General Counsel of the Company, SUSAN
E. SHAW, Secretary of the Company, and CAROL C. HAYES, Assistant Secretary of
the Company, or any one of them, my true and lawful attorneys-in-fact for me and
in my name for the purpose of executing on my behalf in any and all capacities
the Company's Annual Report for the year ended December 31, 2000 on Form 10-K,
or any amendment or supplement thereto, and causing such Annual Report or any
such amendment or supplement to be filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of February
2001.
/s/ WARREN E. BUFFETT
--------------------------------
Director
The Coca-Cola Company
<BR>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, SUSAN B. KING, a Director of The
Coca-Cola Company (the "Company"), do hereby appoint DOUGLAS N. DAFT, Chairman
of the Board, Chief Executive Officer and a Director of the Company, JACK L.
STAHL, President and Chief Operating Officer of the Company, GARY P. FAYARD,
Senior Vice President and Chief Financial Officer of the Company, JOSEPH R.
GLADDEN, JR., Executive Vice President and General Counsel of the Company, SUSAN
E. SHAW, Secretary of the Company, and CAROL C. HAYES, Assistant Secretary of
the Company, or any one of them, my true and lawful attorneys-in-fact for me and
in my name for the purpose of executing on my behalf in any and all capacities
the Company's Annual Report for the year ended December 31, 2000 on Form 10-K,
or any amendment or supplement thereto, and causing such Annual Report or any
such amendment or supplement to be filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of February
2001.
/s/ SUSAN B. KING
--------------------------------
Director
The Coca-Cola Company
<BR>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, DONALD F. MCHENRY, a Director of The
Coca-Cola Company (the "Company"), do hereby appoint DOUGLAS N. DAFT, Chairman
of the Board, Chief Executive Officer and a Director of the Company, JACK L.
STAHL, President and Chief Operating Officer of the Company, GARY P. FAYARD,
Senior Vice President and Chief Financial Officer of the Company, JOSEPH R.
GLADDEN, JR., Executive Vice President and General Counsel of the Company, SUSAN
E. SHAW, Secretary of the Company, and CAROL C. HAYES, Assistant Secretary of
the Company, or any one of them, my true and lawful attorneys-in-fact for me and
in my name for the purpose of executing on my behalf in any and all capacities
the Company's Annual Report for the year ended December 31, 2000 on Form 10-K,
or any amendment or supplement thereto, and causing such Annual Report or any
such amendment or supplement to be filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of February
2001.
/s/ DONALD F. MCHENRY
--------------------------------
Director
The Coca-Cola Company
<BR>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, SAM NUNN, a Director of The Coca-Cola
Company (the "Company"), do hereby appoint DOUGLAS N. DAFT, Chairman of the
Board, Chief Executive Officer and a Director of the Company, JACK L. STAHL,
President and Chief Operating Officer of the Company, GARY P. FAYARD, Senior
Vice President and Chief Financial Officer of the Company, JOSEPH R. GLADDEN,
JR., Executive Vice President and General Counsel of the Company, SUSAN E. SHAW,
Secretary of the Company, and CAROL C. HAYES, Assistant Secretary of the
Company, or any one of them, my true and lawful attorneys-in-fact for me and in
my name for the purpose of executing on my behalf in any and all capacities the
Company's Annual Report for the year ended December 31, 2000 on Form 10-K, or
any amendment or supplement thereto, and causing such Annual Report or any such
amendment or supplement to be filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of February
2001.
/s/ SAM NUNN
--------------------------------
Director
The Coca-Cola Company
<BR>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, PAUL F. OREFFICE, a Director of The
Coca-Cola Company (the "Company"), do hereby appoint DOUGLAS N. DAFT, Chairman
of the Board, Chief Executive Officer and a Director of the Company, JACK L.
STAHL, President and Chief Operating Officer of the Company, GARY P. FAYARD,
Senior Vice President and Chief Financial Officer of the Company, JOSEPH R.
GLADDEN, JR., Executive Vice President and General Counsel of the Company, SUSAN
E. SHAW, Secretary of the Company, and CAROL C. HAYES, Assistant Secretary of
the Company, or any one of them, my true and lawful attorneys-in-fact for me and
in my name for the purpose of executing on my behalf in any and all capacities
the Company's Annual Report for the year ended December 31, 2000 on Form 10-K,
or any amendment or supplement thereto, and causing such Annual Report or any
such amendment or supplement to be filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of February
2001.
/s/ PAUL F. OREFFICE
--------------------------------
Director
The Coca-Cola Company
<BR>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, JAMES D. ROBINSON III, a Director of The
Coca-Cola Company (the "Company"), do hereby appoint DOUGLAS N. DAFT, Chairman
of the Board, Chief Executive Officer and a Director of the Company, JACK L.
STAHL, President and Chief Operating Officer of the Company, GARY P. FAYARD,
Senior Vice President and Chief Financial Officer of the Company, JOSEPH R.
GLADDEN, JR., Executive Vice President and General Counsel of the Company, SUSAN
E. SHAW, Secretary of the Company, and CAROL C. HAYES, Assistant Secretary of
the Company, or any one of them, my true and lawful attorneys-in-fact for me and
in my name for the purpose of executing on my behalf in any and all capacities
the Company's Annual Report for the year ended December 31, 2000 on Form 10-K,
or any amendment or supplement thereto, and causing such Annual Report or any
such amendment or supplement to be filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of February
2001.
/s/ JAMES D. ROBINSON III
--------------------------------
Director
The Coca-Cola Company
<BR>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, PETER V. UEBERROTH, a Director of The
Coca-Cola Company (the "Company"), do hereby appoint DOUGLAS N. DAFT, Chairman
of the Board, Chief Executive Officer and a Director of the Company, JACK L.
STAHL, President and Chief Operating Officer of the Company, GARY P. FAYARD,
Senior Vice President and Chief Financial Officer of the Company, JOSEPH R.
GLADDEN, JR., Executive Vice President and General Counsel of the Company, SUSAN
E. SHAW, Secretary of the Company, and CAROL C. HAYES, Assistant Secretary of
the Company, or any one of them, my true and lawful attorneys-in-fact for me and
in my name for the purpose of executing on my behalf in any and all capacities
the Company's Annual Report for the year ended December 31, 2000 on Form 10-K,
or any amendment or supplement thereto, and causing such Annual Report or any
such amendment or supplement to be filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of February
2001.
/s/ PETER V. UEBERRROTH
--------------------------------
Director
The Coca-Cola Company
<BR>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS THAT I, JAMES B. WILLIAMS, a Director of The
Coca-Cola Company (the "Company"), do hereby appoint DOUGLAS N. DAFT, Chairman
of the Board, Chief Executive Officer and a Director of the Company, JACK L.
STAHL, President and Chief Operating Officer of the Company, GARY P. FAYARD,
Senior Vice President and Chief Financial Officer of the Company, JOSEPH R.
GLADDEN, JR., Executive Vice President and General Counsel of the Company, SUSAN
E. SHAW, Secretary of the Company, and CAROL C. HAYES, Assistant Secretary of
the Company, or any one of them, my true and lawful attorneys-in-fact for me and
in my name for the purpose of executing on my behalf in any and all capacities
the Company's Annual Report for the year ended December 31, 2000 on Form 10-K,
or any amendment or supplement thereto, and causing such Annual Report or any
such amendment or supplement to be filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended.
IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of February
2001.
/s/ JAMES B. WILLIAMS
--------------------------------
Director
The Coca-Cola Company
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>9
<FILENAME>0009.txt
<DESCRIPTION>CAUTIONARY STATEMENT
<TEXT>
EXHIBIT 99.1
CAUTIONARY STATEMENT RELATIVE TO FORWARD-LOOKING STATEMENTS
Certain written and oral statements made by our Company and subsidiaries or
with the approval of an authorized executive officer of our Company may
constitute "forward-looking statements" as defined under the Private Securities
Litigation Reform Act of 1995, including statements made in this report and
other filings with the Securities and Exchange Commission. Generally, the words
"believe," "expect," "intend," "estimate," "anticipate," "project," "will" and
similar expressions identify forward-looking statements, which generally are not
historical in nature. All statements which address operating performance, events
or developments that we expect or anticipate will occur in the future including
statements relating to volume growth, share of sales and earnings per share
growth, and statements expressing general optimism about future operating
results are forward-looking statements. Forward-looking statements are subject
to certain risks and uncertainties that could cause actual results to differ
materially from our Company's historical experience and our present expectations
or projections. As and when made, management believes that these forward-looking
statements are reasonable. However, caution should be taken not to place undue
reliance on any such forward-looking statements since such statements speak only
as of the date when made. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. The following are some of the factors
that could cause our Company's actual results to differ materially from the
expected results described in or underlying our Company's forward-looking
statements:
- -- Our ability to generate sufficient cash flows to support capital
expansion plans, share repurchase programs and general operating activities.
- -- Changes in the nonalcoholic beverages business environment. These
include, without limitation, competitive product and pricing pressures and
our ability to gain or maintain share of sales in the global market as a
result of actions by competitors. While we believe our opportunities for
sustained, profitable growth are considerable, factors such as these
could impact our earnings, share of sales and volume growth.
- -- Changes in laws and regulations, including changes in accounting
standards, taxation requirements (including tax rate changes, new tax laws
and revised tax law interpretations) and environmental laws in domestic or
foreign jurisdictions.
- -- Fluctuations in the cost and availability of raw materials and the
ability to maintain favorable supplier arrangements and relationships.
- -- Our ability to achieve earnings forecasts, which are generated based on
projected volumes and sales of many product types, some of which are
more profitable than others. There can be no assurance that we will
achieve the projected level or mix of product sales.
- -- Interest rate fluctuations and other capital market conditions,
including foreign currency rate fluctuations. Most of our exposures to
capital markets, including interest and foreign currency, are managed on a
consolidated basis, which allows us to net certain exposures and, thus, take
advantage of any natural offsets. We use derivative financial instruments
to reduce our net exposure to financial risks. There can be no assurance,
however, that our financial risk management program will be successful
in reducing foreign currency exposures.
- -- Economic and political conditions, especially in international markets,
including civil unrest, governmental changes and restrictions on the ability
to transfer capital across borders.
- -- Our ability to penetrate developing and emerging markets, which also
depends on economic and political conditions, and how well we are able
to acquire or form strategic business alliances with local bottlers and
make necessary infrastructure enhancements to production facilities,
distribution networks, sales equipment and technology. Moreover, the supply
of products in developing markets must match the customers' demand for those
products, and due to product price and cultural differences, there can be
no assurance of product acceptance in any particular market.
- -- The effectiveness of our advertising, marketing and promotional programs.
- -- The uncertainties of litigation, as well as other risks and
uncertainties detailed from time to time in our Company's Securities
and Exchange Commission filings.
- -- Adverse weather conditions, which could reduce demand for Company
products. The foregoing list of important factors is not exclusive.
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----