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<SEC-DOCUMENT>0000021344-02-000011.txt : 20020415
<SEC-HEADER>0000021344-02-000011.hdr.sgml : 20020415
ACCESSION NUMBER: 0000021344-02-000011
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 22
CONFORMED PERIOD OF REPORT: 20011231
FILED AS OF DATE: 20020311
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: 1934 Act
SEC FILE NUMBER: 001-02217
FILM NUMBER: 02571885
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>kok01.txt
<DESCRIPTION>KO 2001 10-K
<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, 2001
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 22, 2002 (based on the closing sale price of the Registrant's Common
Stock as reported on the New York Stock Exchange on February 22, 2002) was
$102,447,327,359.
The number of shares outstanding of the Registrant's Common Stock as of February
22, 2002, was 2,484,715,366.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's Annual Report to Share Owners for the year ended
December 31, 2001, 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 17, 2002, are incorporated by reference in Part III.
================================================================================
<PAGE>
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 world's leading
manufacturer, distributor and marketer of nonalcoholic beverage concentrates and
syrups. We manufacture beverage concentrates and syrups and, in certain
instances, finished beverages, which we sell to bottling and canning operations,
fountain wholesalers and some fountain retailers. 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. In addition, we have ownership interests in numerous
bottling and canning operations.
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 1.1 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 waters, flavored waters and carbonated or
noncarbonated teas, coffees and sports drinks.
Our Company believes that our success depends on our ability to connect
with consumers by creating brands they love, and the capacity of our people,
together with our bottling partners, to find new and appealing ways to deliver
those brands to thirsty people everywhere. To this end, the Company has adopted
an approach to its business that is based on the following objectives:
- Accelerate carbonated soft-drink growth, led by Coca-Cola
- Selectively broaden our family of beverage brands to drive profitable
growth
- Grow system profitability and capability together with our bottling
partners
- Serve customers with creativity and consistency to generate growth across
all channels
- Direct investments to highest potential areas across markets
- Drive efficiency and cost-effectiveness everywhere
The Company's operating structure includes the following operating
segments: North America (including The Minute Maid Company); Africa; Europe,
Eurasia and Middle East; Latin America; Asia; and Corporate. This structure is
the basis for our Company's internal financial reporting. The North America
segment includes the United States, Canada and Puerto Rico. Effective January 1,
2001, the Company's operating segments were geographically reconfigured and
renamed as follows: Puerto Rico was added to the North America segment from the
Latin America segment. The Middle East Division was added to the Europe and
Eurasia segment, which changed its name to the Europe, Eurasia and Middle East
segment. At the same time the Africa and Middle East segment, less the relocated
Middle East Division, changed its name to the Africa segment. During the first
quarter of 2001, the Asia Pacific segment was renamed the Asia segment.
In March 2001, our Company announced a new operational management
structure. Four strategic business units were created: Americas, Asia,
Europe/Africa, and Coca-Cola Ventures. In July 2001, this structure was modified
to comprise a total of four strategic business units: Americas; Asia; Europe,
Eurasia and Middle East; and Coca-Cola Ventures; as well as a separate business
unit: the Africa Group. Coca-Cola Ventures (including, for operational reporting
purposes, The Minute Maid Company) is a strategic business unit responsible for
identifying and developing significant new business opportunities, managing our
Company's interests in noncarbonated beverage new businesses and ventures
worldwide, and coordinating and overseeing unconsolidated joint ventures and
partnerships. These responsibilities are shared jointly between Coca-Cola
Ventures and operating management of the Company's applicable operating
segments. The financial results of these businesses, ventures, and
1
<PAGE>
partnerships are included in the financial results of the applicable geographic
operating segments. Consequently, the Coca-Cola Ventures strategic business unit
is not considered an operating segment with profit and loss statements and
separate, identifiable assets.
At the date of this report, the heads of the strategic business units are
as follows: Jeffrey T. Dunn (Americas), Mary E. Minnick (Asia), A.R.C. "Sandy"
Allan (Europe, Eurasia and Middle East), and Steven J. Heyer (Coca-Cola
Ventures). See "Item X. -- Executive Officers of the Company." Alexander B.
Cummings, Jr. is the head of the Africa Group. Steven J. Heyer reports to
Douglas N. Daft, Chairman of the Board of Directors and Chief Executive Officer
of the Company. The other executives named above report to Brian G. Dyson, Vice
Chairman and Chief Operating Officer of the Company.
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:
<TABLE>
<CAPTION>
North Europe, Eurasia Latin
America Africa and Middle East America Asia
------- ------ --------------- ------- ----
<S> <C> <C> <C> <C> <C>
Net Operating Revenues
2001 38% 3% 23% 11% 25%
2000 37% 3% 23% 11% 26%
1999 37% 4% 24% 10% 25%
Operating Income
2001 24% 4% 25% 18% 29%
2000 30% 4% 27% 19% 20%
1999 31% 5% 20% 18% 26%
</TABLE>
For additional financial information about the Company's operating segments and
geographic areas, see Notes 1, 14 and 19 to the Consolidated Financial
Statements, set forth on pages 62-64, 77-78 and 81-83, respectively, of the
Company's Annual Report to Share Owners for the year ended December 31, 2001,
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.
2
<PAGE>
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 other than the United States),
caffeine free diet Coke, diet Coke with lemon, Cherry Coke, diet Cherry Coke,
Fanta brand soft drinks, Sprite, diet Sprite (sold under the trademark Sprite
light in many countries other than the United States), Mr. Pibb, Mello Yello,
TAB, Fresca, Barq's root beer and other flavors, Citra, POWERade, Fruitopia,
Minute Maid flavors, Aquarius, Sokenbicha, Ciel, Bonaqa, Dasani, Lift, Thums Up,
Kuat, Qoo 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
global division with operations primarily in the United States and Canada,
produces, distributes and markets principally juice and juice-drink products,
including Minute Maid products, Simply Orange orange juice, Odwalla and Samantha
super premium juices and drinks, Five Alive refreshment beverages, Bacardi
tropical fruit mixers (manufactured and marketed under a license from Bacardi &
Company Limited), and Hi-C ready-to-serve fruit drinks. Additionally, Beverage
Partners Worldwide, the Company's joint venture with Nestle S.A., markets
ready-to-drink teas and coffees in certain countries.
Consumer demand determines the optimal menu of Company product offerings.
Consumer demand can vary from one locale to another and can change over time
within a single locale. Employing our business strategy, and with special focus
on Coca-Cola, our Company seeks to build its existing brands and, at the same
time, to broaden its historical family of brands, products and services in order
to create and satisfy consumer demand locale by locale.
Our Company introduced a variety of new brands and acquired brands during
2001. Diet Coke with lemon was rolled out initially in the United States, Canada
and Puerto Rico, commencing in September. In July, our Company introduced a
reformulated POWERade, including B vitamins, as a family of drinks that combine
the benefits of energy and hydration. Other product introductions included:
- Simply Orange, a not-from-concentrate premium orange juice from The
Minute Maid Company
- U.S. rollout of Minute Maid Lemonade and Minute Maid Fruit Punch
- The juice drink, Qoo, in Korea, Singapore, Hong Kong and Taiwan
- Joy, a bottled drinking water, and the energy drink Samurai in Vietnam
- Marocha Green Tea in Japan
- Lan Feng, a bottled green tea beverage, in China
Also during 2001, our Company teamed with The Walt Disney Company to market
innovative children's beverages. The first products launched under the
multi-year agreement are from The Minute Maid Company in the United States, and
include the DISNEY XTREME! COOLERS(tm) line, a fortified juice drink with 25%
less sugar than the average of leading kids' juice drinks, and the DISNEY
HUNDRED ACRE WOOD(tm) 100% JUICE line, fortified with Vitamin C and Calcium.
In 2001 concentrates and syrups for beverages bearing the trademark
"Coca-Cola" or including the trademark "Coke" accounted for approximately 60% of
the Company's total gallon sales.(1)
- --------------
(1) Our Company measures sales volume in two ways: (1) gallons and (2) unit
cases of finished products. "Gallons" is a unit of measurement for concentrates,
syrups and other beverage products (expressed in equivalent gallons of syrup)
included by the Company in unit case volume. Most of the Company's revenues are
based on this measure of primarily "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 number of
unit cases (or unit case equivalents) of Company trademark or licensed beverage
products directly or indirectly sold by the Coca-Cola bottling system or by the
Company to customers, including (i) beverage products bearing trademarks
licensed to the Company and (ii) certain key products (which are not material)
owned by Coca-Cola system bottlers and for which the Company provides marketing
support and derives profit from the sales.
3
<PAGE>
In 2001, gallon sales in the United States ("U.S. gallon sales")
represented approximately 28% of the Company's worldwide gallon sales.
Approximately 60% of U.S. gallon sales for 2001 was attributable to sales of
beverage concentrates and syrups to approximately 82 authorized bottler
ownership groups in approximately 394 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 34% of 2001
U.S. gallon sales was attributable to fountain syrups sold to fountain retailers
and to approximately 500 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 6% of 2001 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 52% of the Company's U.S.
gallon sales in 2001. At December 31, 2001, our Company held an ownership
interest of approximately 38% in Coca-Cola Enterprises, which is the world's
largest bottler of Company Trademark Beverages.
In 2001, gallon sales outside the United States represented approximately
72% of the Company's worldwide gallon sales. In 2001, our Company's principal
markets outside the United States, based on gallon sales, were Mexico, Brazil,
Japan and Germany, which together accounted for approximately 25% of the
Company's worldwide gallon sales. Approximately 90% of non-U.S. unit case volume
for 2001 was attributable to sales of beverage concentrates and syrups to
authorized bottlers in approximately 478 licensed territories. Approximately 7%
of 2001 non-U.S. unit case volume was attributable to fountain syrups. The
remaining approximately 3% of 2001 non-U.S. unit case volume was attributable to
juice and juice-drink products.
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 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
4
<PAGE>
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. In some instances, the Company has
agreed or may in the future agree with the bottler with respect to concentrate
pricing on a prospective basis for specified time periods.
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 500 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. In some instances, the Company has agreed or may in the future agree
with the bottler with respect to concentrate pricing on a prospective basis for
specified time periods. Bottlers operating under the 1987 Contract accounted for
approximately 85% 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 2001. Certain other forms of
the U.S. Bottler's Agreement, entered into prior to 1987, provide for soft drink
concentrates or syrups for certain Coca-Cola Trademark Beverages to be priced
pursuant to a stated formula. The oldest such form of contract, applicable to
bottlers accounting for approximately 1% of U.S. bottle/can gallon sales in
2001, 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 14% of U.S.
bottle/can gallon sales in 2001 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.
5
<PAGE>
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 2001, independently owned
bottling operations produced and distributed approximately 23% 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 61% 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, often on a temporary
basis. 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 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 to
participate 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.
Our Company has substantial equity positions in 56 unconsolidated bottling,
canning and distribution operations for its products worldwide, including
bottlers representing approximately 57% of the Company's total U.S. unit case
volume in 2001. 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 38% at December 31, 2001. Coca-Cola Enterprises is
the world's largest bottler of the Company's beverage products. In 2001, net
sales of concentrates and syrups by the Company to Coca-Cola Enterprises were
approximately $3.9 billion, or approximately 19% 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 and
the District of Columbia in the U.S., Canada, Great Britain, continental France,
the Netherlands, Luxembourg, Belgium and Monaco) contain approximately 79% of
the United States population, 98% of the population of Canada, and 100% of the
populations of Great Britain, continental France, the Netherlands, Luxembourg,
Belgium and Monaco.
6
<PAGE>
Excluding products in post-mix (fountain) form, in 2001, approximately 61%
of the unit case volume of Coca-Cola Enterprises was Coca-Cola Trademark
Beverages, approximately 31% 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 operating revenues were
approximately $15.7 billion in 2001.
COCA-COLA HBC S.A. ("COCA-COLA HBC"). At December 31, 2001, our Company's
ownership interest in Coca-Cola HBC was approximately 24%. Coca-Cola HBC has
bottling and distribution rights, through direct ownership or joint ventures, in
Armenia, Austria, Belarus, Bosnia, Bulgaria, Croatia, Czech Republic, Estonia,
Greece, Hungary, Latvia, Lithuania, Northern Ireland, Republic of Ireland,
Italy, Macedonia, Moldova, Nigeria, Poland, Romania, Russia, Slovakia, Slovenia,
Switzerland, Ukraine and Yugoslavia. Coca-Cola HBC estimates that the
territories in which it markets beverage products contain approximately 67% of
the population of Italy and 100% of the populations of the other countries named
above in which Coca-Cola HBC has bottling and distribution rights.
In 2001, Coca-Cola HBC's net sales of beverage products were approximately
U.S.$3.1 billion. In 2001, approximately 54% of the unit case volume of
Coca-Cola HBC was Coca-Cola Trademark Beverages, approximately 40% of its unit
case volume was other Company Trademark Beverages and approximately 6% of its
unit case volume was beverage products of Coca-Cola HBC or other companies.
COCA-COLA AMATIL LIMITED ("COCA-COLA AMATIL"). At December 31, 2001, our
Company's ownership interest in Coca-Cola Amatil was approximately 35%.
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
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 and South Korea, 86% of
the population of Papua New Guinea and 98% of the population of Indonesia.
In 2001, Coca-Cola Amatil's net sales of beverage products were
approximately U.S.$1.9 billion. In 2001, approximately 60% of the unit case
volume of Coca-Cola Amatil was Coca-Cola Trademark Beverages, approximately 30%
of its unit case volume was other Company Trademark Beverages, approximately 5%
of its unit case volume was beverage products of Coca-Cola Amatil and
approximately 5% of its unit case volume was beverage products of other
companies.
PANAMERICAN BEVERAGES, INC. ("PANAMCO"). At December 31, 2001, our Company
owned an equity interest of approximately 25% 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 2001, Panamco's net sales of beverage products were approximately
U.S.$2.7 billion. In 2001, approximately 51% of the unit case volume of Panamco
was Coca-Cola Trademark Beverages, approximately 23% of its unit case volume was
other Company Trademark Beverages and approximately 26% 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, 2001,
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 2001, Coca-Cola FEMSA's net sales of beverage products were
approximately U.S.$1.9 billion. In 2001, approximately 74% of the unit case
volume of Coca-Cola FEMSA was Coca-Cola Trademark Beverages, approximately 26%
of its unit case volume was other Company Trademark Beverages and less than 1%
of its unit case volume was beverage products of Coca-Cola FEMSA or other
companies.
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OTHER INTERESTS. Our Company owns a 50% interest in a joint venture with
Nestle S.A. and certain of its subsidiaries which is focused upon the
ready-to-drink tea and coffee businesses. The joint venture currently has sales
in the United States and approximately 30 other countries.
On January 30, 2001, our Company and Nestle S.A. announced plans to further
develop the joint venture, including by expanding its scope to virtually all
countries other than Japan, and to rename the joint venture "Beverage Partners
Worldwide" ("BPW"). The purpose of the restructuring was to create an
entrepreneurial unit dedicated to tapping the growth potential of emerging
beverage segments, particularly ready-to-drink teas and coffees and certain
beverages with a healthful positioning.
Brands already within the joint venture include Nestea and Nescafe for the
ready-to-drink categories. As a part of the restructuring, our Company is to
contribute to BPW the Planet Java coffee business, the Mad River noncarbonated
drink business and the Yang Guang and Nagomi tea businesses, among others.
Nestle will contribute its Belte tea business and certain other businesses.
In March 2001, our Company and Nestle S.A. signed an amended and restated
shareholders agreement as the first step in undertaking the proposed
restructuring. In late 2001, the restructuring was granted all necessary
competition law approvals. Our Company is currently working with Nestle to
finalize the legal documentation necessary to effectuate the transaction, and
expects this to be completed in the near future.
OTHER DEVELOPMENTS
- ------------------
In February 2001, our Company reached agreement with Carlsberg A/S
("Carlsberg") for the dissolution of Coca-Cola Nordic Beverages ("CCNB"), a
joint venture bottler which was 51%-owned by Carlsberg and 49%-owned by the
Company. At that time, CCNB had bottling operations in Sweden, Norway, Denmark,
Finland and Iceland. Pursuant to the agreement, CCNB sold its Iceland bottling
operation to a third-party group of investors in May 2001. Also under the
agreement with Carlsberg, our Company acquired CCNB's Sweden and Norway bottling
operations in June 2001, increasing the Company's ownership in those bottlers to
100%. At that same time, Carlsberg acquired CCNB's Denmark and Finland bottling
operations, increasing Carlsberg's ownership in those bottlers to 100%. It is
planned for the CCNB holding company to be liquidated during 2002.
In July 2001, our Company and San Miguel Corporation ("SMC") acquired
Coca-Cola Bottlers Philippines, Inc. ("CCBPI") from Coca-Cola Amatil. Coca-Cola
Amatil bought back and cancelled approximately 153.9 million shares of its stock
from our Company, and 219.4 million shares of its stock from SMC, all at A$5.16
per share, in exchange for Coca-Cola Amatil's transfer of 1.236 million shares
of CCBPI to our Company and SMC. Upon completion of this transaction, our
Company owned 35% of the common shares and 100% of the Preferred B shares, and
SMC owned 65% of the common shares of CCBPI. CCBPI retained liability for
approximately A$135.2 million in net debt. Also, prior to the transaction, CCBPI
bought back and cancelled certain shares of its common stock from Coca-Cola
Amatil in exchange for a cash payment of A$351.2 million to Coca-Cola Amatil. As
a result of the transaction, our Company's interest in the reduced equity of
Coca-Cola Amatil was reduced from approximately 38% to approximately 35%.
In November 2001, our Company sold substantially all of its ownership
interests in various Russian bottling operations to Coca-Cola HBC. These
consisted of the Company's 40% ownership interest in a joint venture with
Coca-Cola HBC that operates bottling territories in Siberia and in part of
Western Russia, together with the Company's substantially 100%-ownership
interests in bottling operations with territories covering the remainder of
Russia.
In December 2001, the Company successfully completed its acquisition of
Odwalla, Inc. Featuring the Odwalla and Samantha lines of all-natural juices,
smoothies, dairy-free shakes, pure spring water and natural food bars, the
California-based company is the leading branded super-premium beverage company
in the United States.
The Company has concluded negotiations regarding the terms of a Control and
Profit and Loss ("CPL") agreement with certain other share owners of Coca-Cola
Erfrischungsgetraenke AG ("CCEAG"), the largest bottler in Germany, in which the
Company owns approximately a 41% ownership interest. Under the terms of the CPL
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agreement, in early 2002 the Company obtained management control of CCEAG for a
period of up to five years. This transaction will be accounted for as a business
combination. In return for the management control of CCEAG, the Company
guaranteed annual payments in lieu of dividends by CCEAG to all other CCEAG
share owners. Additionally, all CCEAG share owners entered into either a put or
a put/call option agreement with the Company, exercisable at the end of the term
of the CPL agreement at agreed prices.
In January 2002, our Company and CCBPI acquired from RFM Corp., a
Philippine food and beverage concern, RFM's 83% ownership interest in Cosmos
Bottling Corporation ("Cosmos"), a publicly traded Philippine beverage company.
Our Company acquired direct and indirect ownership interests in Cosmos
effectively totaling approximately 62%. A subsequent tender offer has been made
by CCBPI and our Company to the remaining minority share owners and is expected
to close in March 2002.
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.
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
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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 nonalcoholic
beverages.
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 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.
10
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EMPLOYEES
- ---------
As of December 31, 2001, our Company employed approximately 38,000 persons,
compared to approximately 36,900 at the end of 2000. At the end of 2001,
approximately 9,800 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 North
America 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. 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 155,000 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 19 operations with 72 principal beverage
bottling and canning plants located outside the United States. The Company also
owns a facility that manufactures juice concentrates for food service use.
In addition, The Minute Maid Company, a Company division with business
headquarters 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 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.
11
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
- -------------------------
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 Company's 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 Company's 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.
Ivester's departure from the Company and then misleadingly reassured the
financial community that there would be no changes in the Company's 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. On July 25, 2001,
plaintiffs filed a Consolidated Amended Complaint, which largely repeated the
allegations made in the original Complaints and added Douglas N. Daft as an
additional defendant.
On September 25, 2001, the Company filed a Motion to Dismiss all counts of
the Consolidated Amended Complaint. Plaintiffs filed their response to the
Motion to Dismiss on December 10, 2001, and the Company filed its reply brief on
January 18, 2002. A decision on the Motion to Dismiss is expected in 2002.
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.
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, 58, 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 also was given responsibilities for the Africa Group and the
Schweppes Beverages 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.
Brian G. Dyson, 66, is Vice Chairman and Chief Operating Officer of
the Company. Mr. Dyson joined the Company in Venezuela in 1959, and worked
for many years in South America, the Caribbean and Mexico.
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In 1978 he was named President of Coca-Cola USA, the Company's U.S. soft
drink division. In 1983 he was named President of Coca-Cola North America,
with responsibility for the Company's entire North American business. In
1986 Mr. Dyson was named President and Chief Executive Officer of Coca-Cola
Enterprises, the company's largest bottler; and in 1991 he was named Vice
Chairman of Coca-Cola Enterprises. Mr. Dyson retired from the Coca-Cola
system in 1994, but remained active as a consultant to the Company. In
August 2001, he came out of retirement and accepted his current positions.
Alexander R.C. Allan, 57, is Executive Vice President of the Company
and President and Chief Operating Officer, Europe, Eurasia and Middle East.
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. From January 1986 until January 1993, he served as the
Managing Director of National Beverage Services (Pty) Ltd., a management
and services company in South Africa. 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. On March 4, 2001, Mr. Allan was named head of
the newly created Asia strategic business unit of the Company. Mr. Allan
was elected to his current position in April 2001, and was appointed
President and Chief Operating Officer of the Europe, Eurasia and Middle
East strategic business unit as of January 1, 2002.
Jeffrey T. Dunn, 44, is Executive Vice President of the Company and
President and Chief Operating Officer, Americas. 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 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. Mr. Dunn was elected to his current position
in April 2001.
Steven J. Heyer, 49, is Executive Vice President of the Company and
President and Chief Operating Officer, Coca-Cola Ventures. Mr. Heyer was
named head of the newly created Coca-Cola Ventures strategic business unit
of the Company and was elected to his current position in April 2001. Mr.
Heyer joined the 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. In addition, Mr. Heyer was for 15 years
with Booz Allen & Hamilton, Inc. and served as Senior Vice President and
Managing Partner of the firm's New York office and leader of its Marketing
Practice Worldwide.
Mary E. Minnick, 42, is Executive Vice President of the Company and
President and Chief Operating Officer, Asia. Ms. Minnick joined the Company
in 1983 and spent ten years working in Fountain Sales and the Bottle/Can
Division of Coca-Cola USA. In 1993, she joined Corporate Marketing. In
1996, she was appointed Vice President and Director, Middle and Far East
Marketing, and served in that capacity until 1997 when she was appointed
President of the South Pacific Division. In 2000, she was named President
of Coca-Cola (Japan) Company Ltd. Ms. Minnick was appointed President and
Chief Operating Officer of the Asia strategic business unit as of January
1, 2002, and was elected to her current position in February 2002.
Deval L. Patrick, 45 is Executive Vice President and General Counsel
of the Company. He was elected to this position in April 2001. Mr. Patrick
joined our Company from Texaco Inc., where he served since 1999 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.
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Carl Ware, 58, is Executive Vice President, Public Affairs and
Administration. 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 to his current position in January
2000.
Gary P. Fayard, 49, is Senior Vice President and Chief Financial
Officer of the Company. Mr. Fayard joined the Company in April 1994. In
July 1994, he was elected Vice President and Controller. Prior to joining
the Company, Mr. Fayard was a partner with Ernst & Young. Mr. Fayard was
elected to his current position in December 1999.
Stephen C. Jones, 46, is Senior Vice President and 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.
The Executive Committee is responsible for setting policy and establishing
strategic direction for the Company. At the date of this report, the members of
the Executive Committee are Mr. Daft, chairman, Ms. Minnick, and Messrs. Allan,
Dunn, Dyson, Fayard, Heyer, Jones, 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.
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 41 through 56, "Selected Financial Data" for the years 2000 and 2001 on
page 86, "Stock Prices" on page 85 and "Common Stock," "Stock Exchanges" and
"Dividends" under the heading "Share-Owner Information" on page 90 of the
Company's Annual Report to Share Owners for the year ended December 31, 2001
(the "Company's 2001 Annual Report to Share Owners"), are incorporated herein by
reference.
During the fiscal year ended December 31, 2001, 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 1997 through 2001, on pages 86 and
87 of the Company's 2001 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 41 through 56 of the Company's 2001 Annual Report to Share Owners, is
incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- --------------------------------------------------------------------
14
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"Financial Risk Management" on page 45, and Note 9 to the Consolidated
Financial Statements on pages 70 through 72, of the Company's 2001 Annual Report
to Share Owners, are 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 2001 Annual Report to Share Owners, are
incorporated herein by reference:
Consolidated Statements of Income - Years ended December 31, 2001,
2000 and 1999.
Consolidated Balance Sheets - December 31, 2001 and 2000.
Consolidated Statements of Cash Flows - Years ended December 31, 2001,
2000 and 1999.
Consolidated Statements of Share-Owners' Equity - Years ended December
31, 2001, 2000 and 1999.
Notes to Consolidated Financial Statements.
Report of Independent Auditors.
"Quarterly Data (Unaudited)" on page 85 of the Company's 2001 Annual Report
to Share Owners, is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
- -----------------------------------------------------------------------
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
For information on Directors of the Company, the subsection under the
heading "Election of Directors" entitled "Board of Directors" on pages 5 through
10 and under the heading "Section 16(a) Beneficial Ownership Reporting
Compliance" on page 13 of the Company's Proxy Statement for the Annual Meeting
of Share Owners to be held April 17, 2002 (the "Company's 2002 Proxy
Statement"), is incorporated herein by reference. See Item X in Part I of this
report 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
14 and 15, the portion of the section entitled "Executive Compensation" set
forth on pages 17 through 23, and the subsection entitled "Compensation
Committee Interlocks and Insider Participation" on pages 30 and 31 of the
Company's 2002 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 11 through 13 and
"Principal Share Owners" on pages 13 and 14, and the subsection under the
heading "Certain Investee Companies" entitled "Ownership of Securities in the
Investee Companies" on page 32 of the Company's 2002 Proxy Statement, are
incorporated herein by reference.
15
<PAGE>
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 14 through 16, the subsection
under the heading "Executive Compensation" entitled "Compensation Committee
Interlocks and Insider Participation" on pages 30 and 31 and the section under
the heading "Certain Investee Companies" on pages 31 and 32 of the Company's
2002 Proxy Statement, are incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
- ------------------------------------------------------------------------
(a) 1. Financial Statements
The following consolidated financial statements of The Coca-Cola Company
and subsidiaries, included in the Company's 2001 Annual Report to Share
Owners, are incorporated by reference in Part II, Item 8:
Consolidated Statements of Income - Years ended December 31, 2001, 2000
and 1999.
Consolidated Balance Sheets - December 31, 2001 and 2000.
Consolidated Statements of Cash Flows - Years ended December 31, 2001,
2000 and 1999.
Consolidated Statements of Share-Owners' Equity - Years ended December
31, 2001, 2000 and 1999.
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 21,
2002.
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
16
<PAGE>
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.*
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
April 18, 2001.*
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.*
17
<PAGE>
Exhibit No.
- -----------
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.*
10.14 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.*
10.15 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.*
10.16.1 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.*
10.16.2 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.*
10.16.3 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.*
10.17 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.*
18
<PAGE>
Exhibit No.
- -----------
10.18 Executive Incentive Plan of the Company, adopted as of February 14,
2001 - incorporated herein by reference to Exhibit 10.19 of the
Company's Form 10-K Annual Report for the year ended December 31,
2000.*
10.19 Restricted Stock Agreement, dated December 20, 2000, between the
Company and Charles S. Frenette - incorporated herein by reference to
Exhibit 10.20 of the Company's Form 10-K Annual Report for the year
ended December 31, 2000.*
10.20 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).
10.21.1 Employment Agreement, dated as of February 21, 2001, between the
Company and Deval L. Patrick.*
10.21.2 Letter, dated January 4, 2002, from the Company to Deval L. Patrick.*
10.22.1 Employment Agreement, dated March 2, 2001, between the Company and
Steven J. Heyer.*
10.22.2 Letter, dated January 4, 2002, from the Company to Steven J. Heyer.*
10.23 Letter Agreement, dated March 31, 2001, between the Company and Jack
L. Stahl - incorporated herein by reference to Exhibit 10.4 of the
Company's Form 10-Q Quarterly Report for the quarter ended March 31,
2001.*
10.24 Letter Agreement, dated June 12, 2001, between the Company and Joseph
R. Gladden, Jr.*
10.25 Letter Agreement, dated August 22, 2001, between the Company and
Charles S. Frenette.*
10.26 Letter Agreement, dated August 22, 2001, between The Coca-Cola Export
Corporation and Charles S. Frenette.*
10.27 Letter Agreement, dated September 17, 2001, between the Company and
Brian G. Dyson.*
10.28 Letter, dated October 17, 2001, from the Company to James E.
Chestnut.*
10.29 Resolutions of the Compensation Committee of the Company's Board of
Directors, dated October 17, 2001, pertaining to A.R.C. (Sandy)
Allan.*
10.30 Deferred Compensation Plan of the Company, adopted as of December 20,
2001.*
12.1 Computation of Ratios of Earnings to Fixed Charges for the years ended
December 31, 2001, 2000, 1999, 1998 and 1997.
13.1 Portions of the Company's 2001 Annual Report to Share Owners expressly
incorporated by reference herein: Pages 41 through 83, 85 through 87,
90 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, 2001.
19
<PAGE>
Exhibit No.
- -----------
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 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.
20
<PAGE>
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 11, 2002
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 11, 2002 March 11, 2002
/s/ GARY P. FAYARD *
- ----------------------------------- ------------------------------------
GARY P. FAYARD WARREN E. BUFFETT
Senior Vice President and Chief Director
Financial Officer
(Principal Financial Officer)
March 11, 2002 March 11, 2002
/s/ CONNIE D. McDANIEL *
- ----------------------------------- ------------------------------------
CONNIE D. McDANIEL SUSAN B. KING
Vice President and Controller Director
(Principal Accounting Officer)
March 11, 2002 March 11, 2002
* *
- ----------------------------------- ------------------------------------
HERBERT A. ALLEN DONALD F. McHENRY
Director Director
March 11, 2002 March 11, 2002
* *
- ----------------------------------- ------------------------------------
RONALD W. ALLEN SAM NUNN
Director Director
March 11, 2002 March 11, 2002
21
<PAGE>
* *
- ----------------------------------- ------------------------------------
PAUL F. OREFFICE PETER V. UEBERROTH
Director Director
March 11, 2002 March 11, 2002
* *
- ----------------------------------- ------------------------------------
JAMES D. ROBINSON III JAMES B. WILLIAMS
Director Director
March 11, 2002 March 11, 2002
* By: /s/ CAROL C. HAYES
----------------------------
CAROL C. HAYES
Attorney-in-fact
March 11, 2002
22
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2
<SEQUENCE>4
<FILENAME>koksch.txt
<DESCRIPTION>SCHEDULES
<TEXT>
ANNUAL REPORT ON FORM 10-K
ITEM 14(d)
FINANCIAL STATEMENT SCHEDULE
YEAR ENDED DECEMBER 31, 2001
THE COCA-COLA COMPANY AND SUBSIDIARIES
<PAGE>
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
THE COCA-COLA COMPANY AND SUBSIDIARIES
Year ended December 31, 2001
(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........ $ 62 $ 20 $ - $ 23 $ 59
Miscellaneous investments and
other assets................... 294 5 - 69 230
Deferred tax assets.............. 641 218 - 296 563
----- ----- ---- ----- -----
$ 997 $ 243 $ - $ 388 $ 852
===== ===== ==== ===== =====
<FN>
- ---------------
Note 1 - The amounts shown in Column D consist of the following:
</FN>
</TABLE>
<TABLE>
<CAPTION>
TRADE MISCELLANEOUS DEFERRED
ACCOUNTS INVESTMENTS TAX
RECEIVABLE AND OTHER ASSETS ASSETS TOTAL
---------- ---------------- -------- -------
<S> <C> <C> <C> <C>
Charge off of uncollectible accounts....... $ 23 $ 13 $ - $ 36
Write-off of impaired assets............... - 36 - 36
Other transactions......................... - 20 296 316
----- ----- ----- -----
$ 23 $ 69 $ 296 $ 388
===== ===== ===== =====
</TABLE>
F-1
<PAGE>
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
===== ===== ===== ===== =====
- --------------
<FN>
Note 1 - The amounts shown in Column D consist of the following:
</FN>
</TABLE>
<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-2
<PAGE>
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
===== ===== ===== ===== =====
- --------------------------
<FN>
Note 1 - The amounts shown in Column D consist of the following:
</FN>
</TABLE>
<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-3
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-1
<SEQUENCE>5
<FILENAME>kokx01.txt
<DESCRIPTION>EXHIBIT INDEX
<TEXT>
INDEX TO EXHIBITS
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 21,
2002.
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.*
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
April 18, 2001.*
<PAGE>
Exhibit No. Description
- ----------- -----------
10.9.1 Compensation Deferral & Investment Program of the Company, as amended,
including Amendment Number Four dated November 28, 1995 - incorporated
herein by reference to Exhibit 10.13 of the Company's Form 10-K Annual
Report for the year ended December 31, 1995.*
10.9.2 Amendment Number 5 to the Compensation Deferral & Investment Program
of the Company, effective as of January 1, 1998 - incorporated herein
by reference to Exhibit 10.8.2 of the Company's Form 10-K Annual
Report for the year ended December 31, 1997.*
10.10 Special Medical Insurance Plan of the Company, as amended -
incorporated herein by reference to Exhibit 10.16 of the Company's
Form 10-K Annual Report for the year ended December 31, 1995.*
10.11.1 Supplemental Benefit Plan of the Company, as amended - incorporated
herein by reference to Exhibit 10.17 of the Company's Form 10-K Annual
Report for the year ended December 31, 1993.*
10.11.2 Amendment Number Five to the Supplemental Benefit Plan of the Company
- incorporated herein by reference to Exhibit 10.17.2 of the Company's
Form 10-K Annual Report for the year ended December 31, 1996.*
10.11.3 Amendment Number Six to the Supplemental Benefit Plan of the Company,
dated as of July 1, 1998 - 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 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.*
10.15 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.*
10.16.1 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.*
10.16.2 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.*
2
<PAGE>
Exhibit No. Description
- ----------- -----------
10.16.3 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.*
10.17 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.*
10.18 Executive Incentive Plan of the Company, adopted as of February 14,
2001 - incorporated herein by reference to Exhibit 10.19 of the
Company's Form 10-K Annual Report for the year ended December 31,
2000.*
10.19 Restricted Stock Agreement, dated December 20, 2000, between the
Company and Charles S. Frenette - incorporated herein by reference to
Exhibit 10.20 of the Company's Form 10-K Annual Report for the year
ended December 31, 2000.*
10.20 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).
10.21.1 Employment Agreement, dated as of February 21, 2001, between the
Company and Deval L. Patrick.*
10.21.2 Letter, dated January 4, 2002, from the Company to Deval L. Patrick.*
10.22.1 Employment Agreement, dated March 2, 2001, between the Company and
Steven J. Heyer.*
10.22.2 Letter, dated January 4, 2002, from the Company to Steven J. Heyer.*
10.23 Letter Agreement, dated March 31, 2001, between the Company and Jack
L. Stahl - incorporated herein by reference to Exhibit 10.4 of the
Company's Form 10-Q Quarterly Report for the quarter ended March 31,
2001.*
10.24 Letter Agreement, dated June 12, 2001, between the Company and Joseph
R. Gladden, Jr.*
10.25 Letter Agreement, dated August 22, 2001, between the Company and
Charles S. Frenette.*
10.26 Letter Agreement, dated August 22, 2001, between The Coca-Cola Export
Corporation and Charles S. Frenette.*
10.27 Letter Agreement, dated September 17, 2001, between the Company and
Brian G. Dyson.*
10.28 Letter, dated October 17, 2001, from the Company to James E.
Chestnut.*
10.29 Resolutions of the Compensation Committee of the Company's Board of
Directors, dated October 17, 2001, pertaining to A.R.C. (Sandy)
Allan.*
10.30 Deferred Compensation Plan of the Company, adopted as of December 20,
2001.*
12.1 Computation of Ratios of Earnings to Fixed Charges for the years ended
December 31, 2001, 2000, 1999, 1998 and 1997.
13.1 Portions of the Company's 2001 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").
3
<PAGE>
Exhibit No. Description
- ----------- -----------
21.1 List of subsidiaries of the Company as of December 31, 2001.
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 pursuant to Item 14(c) of this report.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3
<SEQUENCE>6
<FILENAME>x3-2.txt
<DESCRIPTION>BY-LAWS, AS AMENDED 2-22-02
<TEXT>
EXHIBIT 3.2
BY-LAWS
OF
THE COCA-COLA COMPANY
AS AMENDED AND RESTATED THROUGH FEBRIARY 21, 2002
ARTICLE I
SHAREHOLDERS:
Section 1. Place, Date and Time of Holding Annual Meetings. Annual meetings
of shareholders shall be held at such place, date and time as shall be
designated from time to time by the Board of Directors. In the absence of a
resolution adopted by the Board of Directors establishing such place, date and
time, the annual meeting shall be held at 1209 Orange Street, Wilmington,
Delaware, on the third Wednesday in April of each year at 9:00 A.M. (local
time).
Section 2. Voting. Each outstanding share of common stock of the Company is
entitled to one vote on each matter submitted to a vote. Directors shall be
elected by plurality votes cast in the election for such directors. All other
action shall be authorized by a majority of the votes cast unless a greater vote
is required by the laws of Delaware. A shareholder may vote in person or by
proxy authorized by an instrument in writing or by a transmission permitted by
law filed in accordance with the procedures established for the meeting. Any
copy, facsimile telecommunication or other reliable reproduction of the writing
or transmission created pursuant to this section may be substituted or used in
lieu of the original writing or the transmission that could be used, provided
that such copy, facsimile telecommunication or other reproduction shall be a
complete reproduction of the entire original writing or transmission.
Section 3. Quorum. The holders of a majority of the issued and outstanding
shares of the common stock of the Company, present in person or represented by
proxy, shall constitute a quorum at all meetings of shareholders.
Section 4. Adjournment of Meetings. In the absence of a quorum or for any
other reason, the chairman of the meeting may adjourn the meeting from time to
time. If the adjournment is not for more than thirty days, the adjourned meeting
may be held without notice other than an announcement at the meeting. If the
adjournment is for more than thirty days, or if a new record date is fixed for
the adjourned meeting, a notice of
<PAGE>
the adjourned meeting shall be given to each shareholder of record entitled
to vote at such meeting. At any such adjourned meeting at which a quorum is
present, any business may be transacted which might have been transacted at the
meeting originally called.
Section 5. Special Meetings. Special meetings of the shareholders for any
purpose or purposes may be called by the Board of Directors, the Chairman of the
Board of Directors or the President. Special meetings shall be held at the
place, date and time fixed by the Secretary.
Section 6. Notice of Shareholders Meeting. Written notice, stating the
place, date, hour and purpose of the annual or special meeting shall be given by
the Secretary not less than ten nor more than sixty days before the date of the
meeting to each shareholder entitled to vote at such meeting.
Section 7. Organization. The Chairman of the Board of Directors shall
preside at all meetings of shareholders. In the absence of, or in case of a
vacancy in the office of, the Chairman of the Board of Directors, the President,
or in his absence or in the event that the Board of Directors has not selected a
President, any Senior Executive Vice President, Executive Vice President, Senior
Vice President or Vice President in order of seniority as specified in this
sentence, and, within each classification of office in order of seniority in
time in that office, shall preside. The Secretary of the Company shall act as
secretary at all meetings of the shareholders and in the Secretary's absence,
the chairman of the meeting may appoint a secretary.
The Board of Directors of the Company shall be entitled to make such rules
or regulations for the conduct of meetings of shareholders as it shall deem
necessary, appropriate or convenient. Subject to such rules and regulations of
the Board of Directors, if any, the chairman of the meeting shall have the right
and the authority to prescribe such rules, regulations and procedures and to do
all such acts as, in the judgment of such chairman, are necessary, appropriate
or convenient for the proper conduct of the meeting, including, without
limitation, establishing (i) an agenda or order of business for the meeting,
(ii) rules and procedures for maintaining order at the meeting and the safety of
those present, (iii) limitations on participation in such meetings to
shareholders of record of the Company and their duly authorized and constituted
proxies, and such other persons as the chairman of the meeting shall permit,
(iv) restrictions on entries to the meeting after the time affixed for the
commencement thereof, (v) limitations on the time allotted to the questions or
comments by participants and (vi) regulation of the opening and closing of the
polls for balloting and matters which are to be voted on by ballot. Unless and
to the extent determined by the Board of Directors or the chairman of the
meeting, meetings of shareholders shall not be required to be held in accordance
with rules of parliamentary procedure.
2
<PAGE>
Section 8. Inspectors of Election. All votes by ballot at any meeting of
shareholders shall be conducted by such number of inspectors of election as are
appointed for that purpose by either the Board of Directors or by the chairman
of the meeting. The inspectors of election shall decide upon the qualifications
of voters, count the votes and declare the results.
Section 9. Record Date. The Board of Directors, in order to determine the
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or entitled to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights or entitled to exercise any rights
in respect of any change, conversion or exchange of stock or for the purpose of
any other lawful action, shall fix in advance a record date which shall not be
more than sixty nor less than ten days before the date of such meeting, nor more
than sixty days prior to any other action and in such case only such
shareholders as shall be shareholders of record on the date so fixed, shall be
entitled to such notice of or to vote at such meeting or any adjournment
thereof, or entitled to express consent to such corporate action in writing
without a meeting, or be entitled to receive payment of any such dividend or
other distribution or allotment of any rights or be entitled to exercise any
such rights in respect of stock or to take any such other lawful action, as the
case may be, notwithstanding any transfer of any stock on the books of the
Company after any such record date fixed as aforesaid.
Section 10. Notice of Shareholder Proposals. At any annual or special
meeting of shareholders, only such business shall be conducted as shall have
been properly brought before the meeting. To be properly brought before an
annual or special meeting, business must be: (A) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors, (B) otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or (C) otherwise properly brought before
the meeting by a shareholder. In order for business to be properly brought
before an annual meeting by a shareholder, the shareholder must have given
timely notice thereof in writing to the Secretary of the Company and such
proposal must be a proper matter for shareholder action under the General
Corporation Law of the State of Delaware. To be timely, a shareholder's notice
must be delivered to or mailed and received at the principal executive offices
of the Company not later than the close of business on the one hundred twentieth
(120th) calendar day prior to the first anniversary of the preceding year's
annual meeting ; provided, however, that in the event no annual meeting was held
in the previous year or the date of the annual meeting has been changed by more
than thirty (30) days notice by the shareholder to be timely must be so received
not later than the close of business on the later of one hundred twenty (120)
calendar days in advance of such annual meeting or ten (10) calendar days
following the date on which public announcement of the date of the meeting is
first made. A shareholder's notice to the Secretary shall set forth as to each
matter the shareholder proposes to bring before the
3
<PAGE>
annual meeting: (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name and address, as they appear on the
Company's books, of the shareholder proposing such business, (iii) the class and
number of shares of the Company which are beneficially owned by the shareholder,
(iv) any material interest of the shareholder in such business, and (v) any
other information that is required to be provided by the shareholder pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the "1934
Act"), in his capacity as a proponent to a shareholder proposal. Notwithstanding
the foregoing, in order to include information with respect to a shareholder
proposal in the proxy statement and form of proxy for a shareholders' meeting,
shareholders must provide notice as required by the regulations promulgated
under the 1934 Act. Notwithstanding anything in these By-Laws to the contrary,
no business shall be conducted at any annual meeting except in accordance with
the procedures set forth in this Section 10. The chairman of the meeting shall,
if the facts warrant, determine and declare at the meeting that business was not
properly brought before the meeting and in accordance with the provisions of
this Section 10, and, if he should so determine, he shall so declare at the
meeting that any such business not properly brought before the meeting shall not
be transacted.
Section 11. Election of Directors. Only persons who are nominated in
accordance with the procedures set forth in this Section 11 shall be eligible
for election as directors. Nominations of persons for election to the Board of
Directors of the Company may be made (i) at an annual or special meeting of
shareholders by or at the direction of the Board of Directors or (ii) at an
annual meeting by any shareholder of the Company entitled to vote in the
election of directors at the meeting who complies with the notice procedures set
forth in this Section 11. Such nominations, other than those made by or at the
direction of the Board of Directors, shall be made pursuant to timely notice in
writing to the Secretary of the Company in accordance with the provisions of
Section 10. Such shareholder's notice shall set forth (i) as to each person, if
any, whom the shareholder proposes to nominate for election or re-election as a
director: (A) the name, age, business address and residence address of such
person, (B) the principal occupation or employment of such person, (C) the class
and number of shares of the Company which are beneficially owned by such person,
(D) a description of all arrangements or understandings between the shareholder
and each nominee or any other person or persons (naming such person or persons)
pursuant to which the nominations are to be made by the shareholder, and (E) any
other information relating to such person that is required to be disclosed in
solicitations of proxies for elections of directors, or is otherwise required,
in each case pursuant to Regulation 14A under the 1934 Act (including, without
limitation, such person's written consent to being named in the proxy statement,
if any, as a nominee and to serving as a director if elected); and (ii) as to
such shareholder giving notice, the information required to be provided pursuant
to Section 10. At the request of the Board
4
<PAGE>
of Directors, any person nominated by a shareholder for election as a director
shall furnish to the Secretary of the Company that information required to be
set forth in the shareholder's notice of nomination which pertains to the
nominee. No person shall be eligible for election as a director of the Company
unless nominated in accordance with the procedures set forth in this Section 11.
The chairman of the meeting shall, if the facts warrant, determine and declare
at the meeting that nomination was not made in accordance with the procedures
prescribed by these By-Laws, and if he should so determine, he shall so declare
at the meeting, and the defective nomination shall be disregarded.
ARTICLE II
DIRECTORS:
Section 1. Number and Term and Classes of Directors. The whole Board of
Directors shall consist of not less than ten (10) nor more than twenty (20)
members, the exact number to be set from time to time by the Board of Directors.
No decrease in the number of directors shall shorten the term of any incumbent
director. In absence of the Board of Directors setting the number of directors,
the number shall be 20. The Board of Directors shall be divided into three
classes of as nearly equal size as practicable. The term of office of the
members of each class shall expire at the third annual meeting of shareholders
following the election of such members, and at each annual meeting of
shareholders, directors shall be chosen for a term of three years to succeed
those whose terms expire; provided, whenever classes are or, after the next
annual meeting of shareholders, will be uneven, the shareholders, for the sole
purpose of making the number of members in such class as equal as practicable,
may elect one or more members of such class for less than 3 years.
Section 2. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such times as the Board of Directors may determine from time to
time.
Section 3. Special Meetings. Special meetings of the Board of Directors may
be called by the Chairman of the Board of Directors, the Secretary or by a
majority of the directors by written request to the Secretary.
Section 4. Notice of Meetings. The Secretary shall give notice of all
meetings of the Board of Directors by mailing the notice at least three days
before each meeting or by telegraphing or telephoning the directors not later
than one day before the meeting. The notice shall state the time, date and place
of the meeting, which shall be determined by the Chairman of the Board of
Directors, or, in absence of the Chairman, by the Secretary of the Company,
unless otherwise determined by the Board of Directors.
5
<PAGE>
Section 5. Quorum and Voting. A majority of the directors holding office
shall constitute a quorum for the transaction of business. Except as otherwise
specifically required by Delaware law or by the Certificate of Incorporation of
the Company or by these By-Laws, any action required to be taken shall be
authorized by a majority of the directors present at any meeting at which a
quorum is present.
Section 6. General Powers of Directors. The business and affairs of the
Company shall be managed under the direction of the Board of Directors.
Section 7. Chairman. At all meetings of the Board of Directors, the
Chairman of the Board of Directors shall preside and in the absence of, or in
the case of a vacancy in the office of, the Chairman of the Board of Directors,
a chairman selected by the Chairman of the Board of Directors or, if he fails to
do so, by the directors, shall preside. Section 8. Compensation of Directors.
Directors and members of any committee of the Board of Directors shall be
entitled to such reasonable compensation and fees for their services as shall be
fixed from time to time by resolution of the Board of Directors and shall also
be entitled to reimbursement for any reasonable expenses incurred in attending
meetings of the Board of Directors and any committee thereof, except that a
Director who is an officer or employee of the Company shall receive no
compensation or fees for serving as a Director or a committee member.
Section 9. Qualification of Directors. Each person who shall attain the age
of 74 shall not thereafter be eligible for nomination or renomination as a
member of the Board of Directors.
Any director who was elected or reelected because he or she was an officer
of the Company at the time of that election or the most recent reelection shall
resign as a member of the Board of Directors simultaneously when he or she
ceases to be an officer of the Company.
ARTICLE III
COMMITTEES OF THE BOARD OF DIRECTORS:
Section 1. Committees of the Board of Directors. The Board of Directors
shall designate an Executive Committee, a Finance Committee, an Audit Committee,
a Compensation Committee, a Committee on Directors and a Public Issues and
Diversity Review Committee, each of which shall have and may exercise the powers
and authority of the Board of Directors to the extent hereinafter provided. The
Board of Directors may designate one or more additional committees of the Board
of Directors with such powers as shall be specified in the resolution of the
Board of Directors. Each committee shall
6
<PAGE>
consist of such number of directors as shall be determined from time to time
by resolution of the Board of Directors.
Each committee shall keep regular minutes of its meetings. All action taken
by a committee shall be reported to the Board of Directors at its meeting next
succeeding such action and shall be subject to approval and revision by the
Board, provided that no legal rights of third parties shall be affected by such
revisions.
The Chairman of the Board shall have the power and authority of a committee
of the Board of Directors for purposes of taking any action which the Chairman
of the Board is authorized to take under the provisions of this Article.
Section 2. Election of Committee Members. The members of each committee
shall be elected by the Board of Directors and shall serve until the first
meeting of the Board of Directors after the annual meeting of shareholders and
until their successors are elected and qualified or until the members' earlier
resignation or removal. The Board of Directors may designate the Chairman and
Vice Chairman of each committee. Vacancies may be filled by the Board of
Directors at any meeting.
The Chairman of the Board may designate one or more directors to serve as
an alternate member or members at any committee meeting to replace any absent or
disqualified member, such alternate or alternates to serve for that committee
meeting only, and the Chairman of the Board may designate a committee member as
acting chairman of that committee, in the absence of the elected committee
chairman, to serve for that committee meeting only.
Section 3. Procedure/Quorum/Notice. The Committee Chairman, Vice Chairman
or a majority of any committee may call a meeting of that committee. A quorum of
any committee shall consist of a majority of its members unless otherwise
provided by resolution of the Board of Directors. The majority vote of a quorum
shall be required for the transaction of business. The secretary of the
committee or the chairman of the committee shall give notice of all meetings of
the committee by mailing the notice to the members of the committee at least
three days before each meeting or by telegraphing or telephoning the members not
later than one day before the meeting. The notice shall state the time, date and
place of the meeting. Each committee shall fix its other rules of procedure.
Section 4. Executive Committee. During the interval between meetings of the
Board of Directors, the Executive Committee shall have and may exercise the
powers of the Board of Directors, to act upon any matters which, in the opinion
of the Chairman of the Board, should not be postponed until the next previously
scheduled meeting of the Board of Directors; but, to the extent prohibited by
law, shall not have the power or authority of the Board of Directors in
reference to (1) approving or adopting, or
7
<PAGE>
recommending to the shareholders, any action or matter expressly required
by the Delaware General Corporation Law to be submitted to shareholders for
approval or (2) adopting, amending or repealing any By-Law of the Company.
Section 5. Finance Committee. The Finance Committee shall periodically
formulate and recommend for approval to the Board of Directors the financial
policies of the Company, including management of the financial affairs of the
Company and its accounting policies. The Finance Committee shall have prepared
for approval by the Board of Directors annual budgets and such financial
estimates as it deems proper; shall have oversight of the budget and of all the
financial operations of the Company and from time to time shall report to the
Board of Directors on the financial condition of the Company. All capital
expenditures of the Company shall be reviewed by the Finance Committee and
recommended for approval to the Board of Directors. The Finance Committee may
authorize another committee of the Board of Directors or one or more of the
officers of the Company to approve borrowings, loans, capital expenditures and
guarantees up to such specified amounts or upon such conditions as the Finance
Committee may establish, subject to the approval of the Board of Directors; and
to open bank accounts and designate those persons authorized to execute checks,
notes, drafts and other orders for payment of money on behalf of the Company.
Section 6. Audit Committee. The Audit Committee shall have the power to
recommend to the Board of Directors the selection and engagement of independent
accountants to audit the books and accounts of the Company and the discharge of
the independent accountants. The Audit Committee shall review the scope of the
audits as recommended by the independent accountants, the scope of the internal
auditing procedures of the Company and the system of internal accounting
controls and shall review the reports to the Audit Committee of the independent
accountants and the internal auditors.
Section 7. Compensation Committee. The Compensation Committee shall have
the powers and authorities vested in it by the incentive, stock option and
similar plans of the Company. The Compensation Committee shall have the power to
approve, disapprove, modify or amend all plans designed and intended to provide
compensation primarily for officers of the Company. There may be one or more
subcommittees of the Compensation Committee which shall have all of the power
and authority of the Compensation Committee to act on those matters as to which
there is any question concerning the propriety of action by the Compensation
Committee in the specific case because of any law, rule or regulation relating
to the status of its members. The members of each such subcommittee shall be
designated by the Board of Directors, the Compensation Committee or by the
Chairman of the Board and may include directors who are not members of the
Compensation Committee.
8
<PAGE>
Section 8. Committee on Directors. The Committee on Directors shall have
the power to recommend candidates for election to the Board of Directors and
shall consider nominees for directorships submitted by shareholders. The
Committee on Directors shall consider issues involving potential conflicts of
interest of directors and committee members and recommend and review all matters
relating to fees and retainers paid to directors, committee members and
committee chairmen.
Section 9. Public Issues and Diversity Review Committee. The Public Issues
and Diversity Review Committee shall have the power to review Company policy and
practice relating to (1) significant public issues of concern to the
shareholders, the Company, the business community and the general public; and
(2) the Company's progress toward its diversity goals, compliance with its
responsibilities as an equal opportunity employer, and compliance with any court
orders arising out of employment discrimination class action litigation. The
Committee may also review management's position on shareholder proposals
involving issues of public interest to be presented at annual or special
meetings of shareholders.
ARTICLE IV
NOTICE AND WAIVER OF NOTICE:
Section 1. Notice. Any notice required to be given to shareholders or
directors under these By-Laws, the Certificate of Incorporation or by law may be
given by mailing the same, addressed to the person entitled thereto, at such
person's last known post office address and such notice shall be deemed to be
given at the time of such mailing.
Section 2. Waiver of Notice. Whenever any notice is required to be given
under these By-Laws, the Certificate of Incorporation or by law, a waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of any regular or special meeting of the shareholders, directors
or a committee of directors need be specified in any written waiver of notice.
ARTICLE V
OFFICERS:
Section 1. Officers of the Company. The officers of the Company shall be
selected by the Board of Directors and shall be a Chairman of the Board of
Directors, one or more Vice Presidents, a Secretary and a Treasurer. The Board
of Directors may elect a
9
<PAGE>
Vice Chairman, President and a Controller and one or more of the following:
Senior Executive Vice President, Executive Vice President, Senior Vice
President, Assistant Vice President, Assistant Secretary, Associate Treasurer,
Assistant Treasurer, Associate Controller and Assistant Controller. Two or more
offices may be held by the same person.
The Company may have a General Counsel who shall be appointed by the Board
of Directors and shall have general supervision of all matters of a legal nature
concerning the Company, unless the Board of Directors has also appointed a
General Tax Counsel, in which event the General Tax Counsel shall have general
supervision of all tax matters of a legal nature concerning the Company.
The Company may have a Chief Financial Officer who shall be appointed by
the Board of Directors and shall have general supervision over the financial
affairs of the Company. The Company may also have a Chief of Internal Audits who
shall be appointed by the Board of Directors.
Section 2. Election of Officers. At the first meeting of the Board of
Directors after each annual meeting of shareholders, the Board of Directors
shall elect the officers. From time to time the Board of Directors may elect
other officers.
Section 3. Tenure of Office; Removal. Each officer shall hold office until
the first meeting of the Board of Directors after the annual meeting of
shareholders following the officer's election and until the officer's successor
is elected and qualified or until the officer's earlier resignation or removal.
Each officer shall be subject to removal at any time, with or without cause, by
the affirmative vote of a majority of the entire Board of Directors.
Section 4. Chairman of the Board of Directors. The Chairman of the Board of
Directors shall be the Chief Executive Officer of the Company and subject to the
overall direction and supervision of the Board of Directors and Committees
thereof shall be in general charge of the affairs of the Company; and shall
consult and advise with the Board of Directors and committees thereof on the
business and the affairs of the Company. The Chairman of the Board of Directors
shall have the power to make and execute contracts on behalf of the Company and
to delegate such power to others.
Section 5. President. The Board of Directors may select a President who
shall have such powers and perform such duties as may be assigned by the Board
of Directors or by the Chairman of the Board of Directors. In the absence or
disability of the President his or her duties shall be performed by such Vice
Presidents as the Chairman of the Board of Directors or the Board of Directors
may designate. The President shall also have the power to make and execute
contracts on the Company's behalf and to delegate such power to others.
10
<PAGE>
Section 6. Vice Presidents. Each Senior Executive Vice President, Executive
Vice President, Senior Vice President and Vice President shall have such powers
and perform such duties as may be assigned to the Officer by the Board of
Directors or by the Chairman of the Board of Directors or the President.
Section 7. Secretary. The Secretary shall keep minutes of all meetings of
the shareholders and of the Board of Directors, and shall keep, or cause to be
kept, minutes of all meetings of Committees of the Board of Directors, except
where such responsibility is otherwise fixed by the Board of Directors. The
Secretary shall issue all notices for meetings of the shareholders and Board of
Directors and shall have charge of and keep the seal of the Company and shall
affix the seal attested by the Secretary's signature to such instruments as may
properly require same. The Secretary shall cause to be kept such books and
records as the Board of Directors, the Chairman of the Board of Directors or the
President may require; and shall cause to be prepared, recorded, transferred,
issued, sealed and cancelled certificates of stock as required by the
transactions of the Company and its shareholders. The Secretary shall attend to
such correspondence and such other duties as may be incident to the office of
the Secretary or assigned by the Board of Directors, the Chairman of the Board
of Directors, or the President.
In the absence of the Secretary, an Assistant Secretary is authorized to
assume the duties herein imposed upon the Secretary.
Section 8. Treasurer. The Treasurer shall perform all duties and acts
incident to the position of Treasurer, shall have custody of the Company funds
and securities, and shall deposit all money and other valuable effects in the
name and to the credit of the Company in such depositories as may be designated
by the Board of Directors. The Treasurer shall disburse the funds of the Company
as may be authorized, taking proper vouchers for such disbursements, and shall
render to the Board of Directors, whenever required, an account of all the
transactions of the Treasurer and of the financial condition of the Company. The
Treasurer shall vote all of the stock owned by the Company in any corporation
and may delegate this power to others. The Treasurer shall perform such other
duties as may be assigned to the Treasurer and shall report to the Chief
Financial Officer or, in the absence of the Chief Financial Officer, to the
Chairman of the Board of Directors.
In the absence of the Treasurer, an Assistant Treasurer is authorized to
assume the duties herein imposed upon the Treasurer.
Section 9. Controller. The Board of Directors may select a Controller who
shall keep or cause to be kept in the books of the Company provided for that
purpose a true account of all transactions and of the assets and liabilities of
the Company. The Controller shall prepare and submit to the Chief Financial
Officer or, in the absence of the
11
<PAGE>
Chief Financial Officer to the Chairman of the Board of Directors, such
financial statements and schedules as may be required to keep the Chief
Financial Officer and the Chairman of the Board of Directors currently informed
of the operations and financial condition of the Company, and perform such other
duties as may be assigned by the Chief Financial Officer or the Chairman of the
Board.
In the absence of the Controller, an Assistant Controller is authorized to
assume the duties herein imposed upon the Controller.
Section 10. Chief of Internal Audits. The Board of Directors may select a
Chief of Internal Audits, who shall cause to be performed, and have general
supervision over, auditing activities of the financial transactions of the
Company, including the coordination of such auditing activities with the
independent accountants of the Company and who shall perform such other duties
as may be assigned to him from time to time. The Chief of Internal Audits shall
report to the Chief Financial Officer or, in the absence of the Chief Financial
Officer, to the Chairman of the Board of Directors. From time to time at the
request of the Audit Committee, the Chief of Internal Audits shall inform that
Committee of the auditing activities of the Company.
Section 11. Assistant Vice Presidents. The Company may have assistant vice
presidents who shall be appointed by a committee whose membership shall include
one or more executive officers of the Company (the "Committee"). Each such
assistant vice president shall have such powers and shall perform such duties as
may be assigned from time to time by the Committee, the Chairman of the Board of
Directors, the President or any Vice President, and which are not inconsistent
with the powers and duties granted and assigned by these By-Laws or the Board of
Directors. Assistant vice presidents appointed by the Committee shall be subject
to removal at any time, with or without cause, by the Committee. Annually the
Committee shall report to the Board of Directors who it has appointed to serve
as assistant vice presidents and their respective responsibilities.
ARTICLE VI
RESIGNATIONS: FILLING OF VACANCIES:
Section 1. Resignations. Any director, member of a committee, or officer
may resign at any time. Such resignation shall be made in writing and shall take
effect at the time specified therein, and, if no time be specified, at the time
of its receipt by the Chairman of the Board of Directors or the Secretary. The
acceptance of a resignation shall not be necessary to make it effective.
Section 2. Filling of Vacancies. If the office of any director becomes
vacant, the directors in office, although less than a quorum, or, if the number
of directors is
12
<PAGE>
increased, the directors in office, may elect any qualified person to fill
such vacancy. In the case of a vacancy in the office of a director caused by an
increase in the number of directors, the person so elected shall hold office
until the next annual meeting of shareholders, or until his successor shall be
elected and qualified. In the case of a vacancy in the office of a director
resulting otherwise than from an increase in the number of directors, the person
so elected to fill such vacancy shall hold office for the unexpired term of the
director whose office became vacant. If the office of any officer becomes
vacant, the Chairman of the Board of Directors may appoint any qualified person
to fill such vacancy temporarily until the Board of Directors elects any
qualified person for the unexpired portion of the term. Such person shall hold
office for the unexpired term and until the officer's successor shall be duly
elected and qualified or until the officer's earlier resignation or removal.
ARTICLE VII
INDEMNIFICATION:
Section 1. Indemnification of Directors and Officers; Insurance. The
Company shall indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Company) by reason of the fact that he is or was a
director, officer, employee, or agent of the Company, or is or was serving at
the request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the Company,
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interest of the Company, and with
respect to any criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful.
The Company shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Company to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the Company, or is or was serving at the request of the Company, as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys'
13
<PAGE>
fees) actually and reasonably incurred by him in connection with the defense
or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Company and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Company unless and only to the extent that the Court of Chancery
or the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
To the extent that a director, officer, employee or agent of the Company
has been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in the first two paragraphs of this Section or in defense
of any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
Any indemnification under the first two paragraphs of this Section (unless
ordered by a court) shall be made by the Company only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because the applicable
standard of conduct set forth in the first two paragraphs of this Section has
been met. Such determination shall be made (1) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceedings, or (2) if such a quorum is not obtainable, or, even
if obtainable, a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the shareholders.
Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the Company in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on behalf
of the director, officer, employee or agent to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the Company as
authorized by this Section.
The indemnification and advancement of expenses provided by or granted
pursuant to this Section shall not be deemed exclusive of any other rights to
which those indemnified or those who receive advances may be entitled under any
By-Law, agreement, vote of shareholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
The Company shall have power to purchase and maintain insurance on behalf
of any person who is or
14
<PAGE>
was a director, officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Company would
have the power to indemnify him against such liability under the provisions of
this Section.
The indemnification and advancement of expenses provided by, or granted
pursuant to, this section shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
ARTICLE VIII
CAPITAL STOCK:
Section 1. Form and Execution of Certificates. The certificates of shares
of the capital stock of the Company shall be in such form as shall be approved
by the Board of Directors. The certificates shall be signed by the Chairman of
the Board of Directors or the President, or a Vice President, and by the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer.
Each certificate of stock shall certify the number of shares owned by the
shareholder in the Company.
A facsimile of the seal of the Company may be used in connection with the
certificates of stock of the Company, and facsimile signatures of the officers
named in this Section may be used in connection with said certificates. In the
event any officer whose facsimile signature has been placed upon a certificate
shall cease to be such officer before the certificate is issued, the certificate
may be issued with the same effect as if such person was an officer at the date
of issue.
Section 2. Record Ownerships. All certificates shall be numbered
appropriately and the names of the owners, the number of shares and the date of
issue shall be entered in the books of the Company. The Company shall be
entitled to treat the holder of record of any share of stock as the holder in
fact thereof and accordingly shall not be bound to recognize any equitable or
other claim to or interest in any share on the part of any other person, whether
or not it shall have express or other notice thereof, except as required by the
laws of Delaware.
Section 3. Transfer of Shares. Upon surrender to the Company or to a
transfer agent of the Company of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment, or authority to
transfer, it shall be the duty of the Company, if it is satisfied that all
provisions of law regarding transfers of shares have been duly complied with, to
issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
15
<PAGE>
Section 4. Lost, Stolen or Destroyed Stock Certificates. Any person
claiming a stock certificate in lieu of one lost, stolen or destroyed shall give
the Company an affidavit as to such person's ownership of the certificate and of
the facts which go to prove that it was lost, stolen or destroyed. The person
shall also, if required by the Board of Directors, give the Company a bond,
sufficient to indemnify the Company against any claims that may be made against
it on account of the alleged loss, theft or destruction of any such certificate
or the issuance of such new certificate. Any Vice President or the Secretary or
any Assistant Secretary of the Company is authorized to issue such duplicate
certificates or to authorize any of the transfer agents and registrars to issue
and register such duplicate certificates.
Section 5. Regulations. The Board of Directors from time to time may make
such rules and regulations as it may deem expedient concerning the issue,
transfer and registration of shares.
Section 6. Transfer Agent and Registrar. The Board of Directors may appoint
such transfer agents and registrars of transfers as may be deemed necessary, and
may require all stock certificates to bear the signature of either or both.
ARTICLE IX
SEAL:
Section 1. Seal. The Board of Directors shall provide a suitable seal
containing the name of the Company, the year of its creation, and the words,
"CORPORATE SEAL, DELAWARE," or other appropriate words. The Secretary shall have
custody of the seal.
ARTICLE X
FISCAL YEAR:
Section 1. Fiscal Year. The fiscal year of the Company shall be the
calendar year.
ARTICLE XI
AMENDMENTS:
Section 1. Directors may Amend By-Laws. The Board of Directors shall have
the power to make, amend and repeal the By-Laws of the Company at any regular or
special meeting of the Board of Directors.
Section 2. By-Laws Subject to Amendment by Shareholders. All By-Laws shall
be subject to amendment, alteration, or repeal by the shareholders entitled to
vote at any annual meeting or at any special meeting.
16
<PAGE>
ARTICLE XII
EMERGENCY BY-LAWS:
Section 1. Emergency By-Laws. This Article XII shall be operative during
any emergency resulting from an attack on the United States or on a locality in
which the Company conducts its business or customarily holds meetings of its
Board of Directors or its stockholders, or during any nuclear or atomic disaster
or during the existence of any catastrophe or other similar emergency condition,
as a result of which a quorum of the Board of Directors or the Executive
Committee thereof cannot be readily convened (an "emergency"), notwithstanding
any different or conflicting provision in the preceding Articles of these
By-Laws or in the Certificate of Incorporation of the Company. To the extent not
inconsistent with the provisions of this Article, the By-Laws provided in the
preceding Articles and the provisions of the Certificate of Incorporation of the
Company shall remain in effect during such emergency, and upon termination of
such emergency, the provisions of this Article XII shall cease to be operative.
Section 2. Meetings. During any emergency, a meeting of the Board of
Directors, or any committee thereof, may be called by any officer or director of
the Company. Notice of the time and place of the meeting shall be given by any
available means of communication by the person calling the meeting to such of
the directors and/or Designated Officers, as defined in Section 3 hereof, as it
may be feasible to reach. Such notice shall be given at such time in advance of
the meeting as, in the judgment of the person calling the meeting, circumstances
permit.
Section 3. Quorum. At any meeting of the Board of Directors, or any
committee thereof, called in accordance with Section 2 of this Article XII, the
presence or participation of two directors, one director and a Designated
Officer or two Designated Officers shall constitute a quorum for the transaction
of business.
The Board of Directors or the committees thereof, as the case may be,
shall, from time to time but in any event prior to such time or times as an
emergency may have occurred, designate the officers of the Company in a numbered
list (the "Designated Officers") who shall be deemed, in the order in which they
appear on such list, directors of the Company for purposes of obtaining a quorum
during an emergency, if a quorum of directors cannot otherwise be obtained.
Section 4. By-Laws. At any meeting called in accordance with Section 2 of
this Article XII, the Board of Directors or the committees thereof, as the case
may be, may modify, amend or add to the provisions of this Article XII so as to
make any provision that may be practical or necessary for the circumstances of
the emergency.
17
<PAGE>
Section 5. Liability. No officer, director or employee of the Company
acting in accordance with the provisions of this Article XII shall be liable
except for willful misconduct.
Section 6. Repeal or Change. The provisions of this Article XII shall be
subject to repeal or change by further action of the Board of Directors or by
action of the shareholders, but no such repeal or change shall modify the
provisions of Section 5 of this Article XII with regard to action taken prior to
the time of such repeal or change.
18
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.8
<SEQUENCE>7
<FILENAME>x10-8.txt
<DESCRIPTION>1989 RESTRICTED STOCK AWARD PLAN, AS AMENDED 4-18-01
<TEXT>
EXHIBIT 10.8
THE COCA-COLA COMPANY
1989 RESTRICTED STOCK AWARD PLAN
(As Amended through April 18, 2001)
Section 1. Purpose
The purpose of the 1989 Restricted Stock Award Plan of The Coca-Cola
Company (the "Plan") is to advance the interest of The Coca-Cola Company (the
"Company") and its Related Companies (as defined in Section 4 hereof), by
encouraging and enabling the acquisition of a financial interest in the Company
by officers and other key employees through grants of restricted shares of
Company Common Stock (the "Awards", or singly, an "Award"). The Plan is intended
to aid the Company and its Related Companies in retaining officers and key
employees, to stimulate the efforts of such employees and to strengthen their
desire to remain in the employ of the Company and its Related Companies. In
addition, the Plan may also aid in attracting officers and key employees who
will become eligible to participate in the Plan after a reasonable period of
employment by the Company or its Related Companies.
Section 2. Administration
The Plan shall be administered by a committee (the "Committee") appointed
by the Board of Directors of the Company (the "Board") or in accordance with
Section 7, Article III of the By-Laws of the Company (as amended through October
17, 1996) from among its members and shall be comprised of not less than three
(3) members of the Board. Unless and until its members are not qualified to
serve on the Committee pursuant to the provisions of the Plan, the Compensation
Committee shall be members of the Board who are not eligible to participate in
the Plan for at least one year prior to the time they become members of the
Committee. Eligibility requirements for members of the Committee shall comply
with Rule 16b-3 promulgated pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act") or any successor rule or regulation. The Committee
shall determine the officers and key employees of the Company and its Related
Companies (including officers, whether or not they are directors) to whom, and
the time or times at which, Awards will be granted, the number of shares to be
awarded, the time or times within which the Awards may be subject to forfeiture,
and all other conditions of the Award. The provisions of the Awards need not be
the same with respect to each recipient.
The Committee is authorized, subject to the provisions of the Plan, to
establish such rules and regulations as it deems necessary or advisable for the
proper administration of the Plan and to take such other action in connection
with or in relation to the Plan as it deems necessary or advisable. Each action
made or taken pursuant to the Plan, including interpretation of the Plan and the
Awards granted hereunder by the Committee, shall be
<PAGE>
final and conclusive for all purposes and upon all persons, including,
without limitation, the Company and its Related Companies, the Committee, the
Board, the Officers and the affected employees of the Company and/or its Related
Companies and their respective successors in interest.
Section 3. Stock
The stock to be issued under the Plan pursuant to Awards shall be shares of
Common Stock, $.25 par value, of the Company (the "Stock"). The Stock shall be
made available from treasury or authorized and unissued shares of Common Stock
of the Company. The total number of shares of Stock that may be issued pursuant
to Awards under the Plan, including those already issued, may not exceed
40,000,000 shares (subject to adjustment in accordance with Section 8), which
number represents the number of shares originally authorized in the Plan,
adjusted for 2-for-1 stock splits which occurred on May 1, 1990, May 1, 1992 and
May 1, 1996, less the number of shares already issued pursuant to the Plan as of
October 1, 1996. Shares of Stock previously granted pursuant to Awards, but
which are forfeited pursuant to Section 5, below, shall be available for future
Awards.
Section 4. Eligibility
Awards may be granted to officers and key employees of the Company and its
Related Companies who have been employed by the Company or a Related [Company]
(but only if the Related Company is one in which the Company owns on the grant
date, directly or indirectly, either (i) 50% or more of the voting stock or
capital where such entity is not publicly held, or (ii) an interest which causes
the Related Company's financial results to be consolidated with the Company's
financial results for financial reporting purposes) for a reasonable period of
time determined by the Committee. The term "Related Company" shall mean any
corporation or other business organization in which the Company owns, directly
or indirectly, 20 percent or more of the voting stock or capital at the
applicable time. No employee shall acquire pursuant to Awards granted under the
Plan more than twenty (20) percent of the aggregate number of shares of Stock
issuable pursuant to Awards under the Plan.
Section 5. Awards
Except as otherwise specifically provided in the grant of an Award, Awards
shall be granted solely for services rendered to the Company or any Related
Company by the employee prior to the date of the grant and shall be subject to
the following terms and conditions:
(a) The Stock subject to an Award shall be forfeited to the Company if the
employment of the employee by the Company or Related Company terminates for any
reason (including, but not limited to, termination by the Company, with or
without cause) other than death, "Retirement", as hereinafter defined, provided
that such Retirement occurs at least five (5) years from the date of grant of an
Award and also provided that the employee has attained the age of 62, or
disability (within the meaning of Section 22(e)(3)
2
<PAGE>
of the Internal Revenue Code of 1986, as amended), prior to a "Change in
Control" of the Company as hereinafter defined. "Retirement", as used herein,
shall mean an employee's voluntarily leaving the employ of the Company or a
Related Company on a date which is on or after the earliest date on which such
employee would be eligible for an immediately payable benefit pursuant to (i)
for those employees eligible for participation in the Company's Supplemental
Retirement Plan, the terms of that Plan and (ii) for all other employees, the
terms of the Employees Retirement Plan (the "ERP") assuming such employees were
eligible to participate in the ERP.
(b) If at any time the recipient Retires on a date which is at least five
(5) years from the date of grant of an Award and on or after the date on which
the employee has attained the age of 62, dies or becomes disabled, or in the
event of a "Change in Control" of the Company, as hereinafter defined, prior to
such Retirement, death or disability, such recipient shall be entitled to retain
the number of shares subject to the Award. A "Change in Control" shall 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 14A promulgated under the Exchange
Act as in effect on November 15, 1988, provided that such a change in control
shall 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, 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 shareholders of the Company approve any merger or
consolidation as a result of which the Common Stock shall 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 shareholders of
the Company approve any merger or consolidation to which the Company is a party
as a result of which the persons who were shareholders of the Company
immediately prior to the effective date of the merger or consolidation shall
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
shall 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.
(c) Awards may contain such other provisions, not inconsistent with the
provisions of the Plan, as the Committee shall determine appropriate from time
to time.
3
<PAGE>
(d) Performance-Based Awards.
1. The Restricted Stock Subcommittee of the Board which shall be comprised
of two or more outside directors meeting the requirements of Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code")(the "Subcommittee")
may select from time to time, in its discretion, executive officers, senior
vice-presidents and other key executives of the Company to receive awards of
restricted stock under the Plan, in such amounts as the Subcommittee may, in its
discretion, determine (subject to any limitations provided in the Plan), the
release of which will be conditioned upon the attainment of certain performance
targets ("Performance-Based Awards"). With respect to individuals residing in
countries other than in the United States, the Subcommittee may authorize
alternatives that deliver substantially the same value, including, but not
limited to, promises of future restricted stock awards provided that the grant
and subsequent release is contingent upon attainment of certain performance
targets under this section.
2. At the time of each grant, the Subcommittee shall determine the
performance targets and the Measurement Period (as defined below) that will be
applied with respect to such grant. Grants of Performance-Based Awards may be
made, and the performance targets applicable to such Performance-Based Awards
may be defined and determined, by the Subcommittee no later than ninety days
after the commencement of the Measurement Period. The performance criteria
applicable to Performance-Based Awards will be one or more of the following
criteria:
(i) average annual growth in earnings per share;
(ii) increase in share-owner value;
(iii) earnings per share;
(iv) net income;
(v) return on assets;
(vi) return on share-owners' equity;
(vii) increase in cash flow;
(viii) operating profit or operating margins;
(ix) revenue growth of the Company;
(x) operating expenses; and
(xi) quality as determined by the Company's Quality Index.
The Measurement Period will be a period of years, determined by the
Subcommittee in its discretion, commencing on January 1 of the first year of the
Measurement Period and ending on December 31 of the last year of the Measurement
Period. The Measurement Period will be subject to adjustment as the Subcommittee
may provide in the terms of each award.
4
<PAGE>
3. Except as otherwise provided in the terms of the award, shares awarded
in the form of Performance-Based Awards shall be eligible for release (the
"Release Date") on March 1 next following the completion of the Measurement
Period.
4. Shares awarded in the form of Performance-Based Awards will be released
only if the Controller of the Company and the Subcommittee certify that the
performance targets have been achieved during the Measurement Period.
5. Performance-Based Awards granted pursuant to this Section 5(d) are
intended to qualify as performance-based compensation under Section 162(m) of
the Code and shall be administered and construed accordingly.
Section 6. Nontransferability of Awards
Shares of Stock subject to Awards shall not be transferable and shall not
be sold, exchanged, transferred, pledged, hypothecated or otherwise disposed of
at any time prior to the first to occur of Retirement on a date which is at
least five (5) years from the date of grant of an Award and on or after the date
on which the employee has attained the age of 62, death or disability of the
recipient of an Award or a Change in Control.
Section 7. Rights as a Stockholder
An employee who receives an Award shall have rights as a stockholder with
respect to Stock covered by such Award to receive dividends in cash or other
property or other distributions or rights in respect to such Stock and to vote
such Stock as the record owner thereof.
Section 8. Adjustment in the Number of Shares Awarded
In the event there is any change in the Stock through the declaration of
stock dividends, through stock splits or through recapitalization or merger or
consolidation or combination of shares or otherwise, the Committee or the Board
shall make such adjustment, if any, as it may deem appropriate in the number of
shares of Stock thereafter available for Awards.
Section 9. Taxes
(a) If any employee properly elects, within thirty (30) days of the date on
which an Award is granted, to include in gross income for federal income tax
purposes an amount equal to the fair market value (on the date of grant of the
Award) of the Stock subject to the Award, such employee shall make arrangements
satisfactory to the Committee to pay to the Company in the year of such Award,
any federal, state or local taxes required to be withheld with respect to such
shares. If such employee shall fail to make such tax payments as are required,
the Company and its Related Companies shall, to the extent permitted by law,
have the right to deduct from any payment of any kind otherwise due to the
employee any federal, state or local taxes of any kind required by law to be
withheld with respect to the Stock subject to such Award.
5
<PAGE>
(b) Each employee who does not make the election described in paragraph (a)
of this Section shall, no later than the date as of which the restrictions
referred to in Section 5 and such other restrictions as may have been imposed as
a condition of the Award, shall lapse, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of any federal, state or local
taxes of any kind required by law to be withheld with respect to the Stock
subject to such Award, and the Company and its Related Companies shall, to the
extent permitted by law, have the right to deduct from any payment of any kind
otherwise due to the employee any federal, state, or local taxes of any kind
required by law to be withheld with respect to the Stock subject to such Award.
(c) The Committee may specify when it grants an Award that the Award is
subject to mandatory share withholding for satisfaction of tax withholding
obligations by employees. For all other Awards, whether granted before or after
this paragraph 9(c) was added to this Plan, tax withholding obligations of an
employee may be satisfied by share withholding, if permitted by applicable law,
at the written election of the employee prior to the date the restrictions on
the Award lapse. The shares withheld will be valued at the average of the high
and low market prices at which a share of Stock was sold on the date the
restrictions lapse (or, if such date is not a trading day, then the next trading
day thereafter), as reported on the New York Stock Exchange--Composite
Transactions listing.
Section 10. Restrictive Legend and Stock Power
Each certificate evidencing Stock subject to Awards shall bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such award. Any attempt to dispose of Stock in contravention of
such terms, conditions, and restrictions shall be ineffective. The Committee may
adopt rules which provide that the certificates evidencing such shares may be
held in custody by a bank or other institution, or that the Company may itself
hold such shares in custody until the restrictions thereon shall have lapsed and
may require, as a condition of any Award, that the recipient shall have
delivered a stock power endorsed in blank relating to the Stock covered by such
Award.
Section 11. Amendments, Modifications and Termination of Plan
The Board or the Committee may terminate the Plan, in whole or in part, may
suspend the Plan, in whole or in part from time to time, and may amend the Plan
from time to time, including the adoption of amendments deemed necessary or
desirable to qualify the Awards under the laws of various states (including tax
laws) and under rules and regulations promulgated by the Securities and Exchange
Commission with respect to employees who are subject to the provisions of
Section 16 of the Exchange Act, or to correct any defect or supply an omission
or reconcile any inconsistency in the Plan or in any Award granted thereunder,
without the approval of the stock holders of the Company; provided, however,
that no action shall be taken without the approval of the stockholders of the
Company which may increase the number of shares of Stock available for Awards or
withdraw administration from the Committee, or permit any person while a member
of the Committee to be eligible to receive an Award. Without limiting the
foregoing, the Board
6
<PAGE>
of Directors or the Committee may make amendments applicable or
inapplicable only to participants who are subject to Section 16 of the Exchange
Act. No amendment or termination or modification of the Plan shall in any manner
affect Awards therefore granted without the consent of the employee 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. The
Board or the Committee may modify or remove restrictions contained in Sections 5
and 6 on an Award or the Awards as a whole which have been previously granted
upon a determination that such action is in the best interest of the Company.
The Plan shall terminate when (a) all Awards authorized under the Plan have been
granted and (b) all shares of Stock subject to Awards under the Plan have been
issued and are no longer subject to forfeiture under the terms hereof unless
earlier terminated by the Board or the Committee.
Section 12. Governing Law
The Plan and all determinations made and actions taken pursuant thereto
shall be governed by the laws of the State of Georgia and construed in
accordance therewith.
7
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.21.1
<SEQUENCE>8
<FILENAME>x10-21a.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT - DEVAL L. PATRICK
<TEXT>
EXHIBIT 10.21.1
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of February 21, 2001, by and between Deval L. Patrick
(the "Executive"), and The Coca-Cola Company (the "Company").
WHEREAS, the parties desire to enter into this agreement setting forth the
terms and conditions of the employment relationship of the Executive with the
Company;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth below, the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive, and the
Executive hereby accepts such employment, on the terms and conditions
hereinafter set forth.
2. EMPLOYMENT PERIOD. The period during which the Executive is employed by
the Company hereunder (the "Employment Period") shall commence on April 2, 2001
(the "Effective Date") and shall end on the fifth anniversary thereof; provided,
however, that commencing on the fourth anniversary of the Effective Date and on
each subsequent anniversary of the Effective Date (each such anniversary, a
"Renewal Date"), the Employment Period shall automatically be extended for one
additional year unless, not later than the date which is four months prior to
such Renewal Date, the Company or the Executive shall have given notice not to
extend the Employment Period.
3. POSITION AND DUTIES; PLACE OF PERFORMANCE. (a) During the Employment
Period, the Executive shall serve as Executive Vice President and General
Counsel of the Company, subject to election by the Board of Directors of the
Company (the "Board"). The Executive shall report to the Chairman of the Board
and Chief Executive Officer of the Company (the "Chief Executive Officer").
During the Employment Period, the Executive shall have those powers and duties
consistent with his positions and assigned by the Chief Executive Officer,
including but not limited to managing the Company's worldwide legal affairs
(including law-related strategic and policy issues); organizing the hiring,
development, promotion and disposition of worldwide legal staff; and hiring and
firing outside counsel. During the Employment Period, the Executive shall be a
member of the Company's Executive Committee. The Executive agrees to devote
substantially all of his working time to the performance of his duties for the
Company. Notwithstanding the foregoing sentence, it shall not be a violation of
this Agreement for the Executive to
<PAGE>
serve on corporate, civic or charitable boards or committees; provided, however,
that his service on corporate boards or committees shall be subject to the
consent of the Company, which consent shall not be unreasonably withheld; and
provided further, however, that the Company shall be deemed to have given such
consent with respect to those boards and committees on which the Executive
serves as of the Effective Date.
(b) The principal place of employment of the Executive shall be at the
Company's principal executive offices in Atlanta, Georgia.
4. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY; MAKE-WHOLE PAYMENT; INCENTIVES. The Executive shall be
entitled to the following base salary, make-whole payment and incentives:
(i) BASE SALARY. As of the Effective Date, as compensation for the
performance by the Executive of his duties hereunder, the Company shall pay
the Executive a base salary at an annual rate of $475,000 (the base salary,
at the rate in effect from time to time, is hereinafter referred to as the
"Base Salary"). The Base Salary shall be payable in accordance with the
Company's normal payroll practice and may be increased from time to time at
the discretion of the Compensation Committee of the Board. The Base Salary
shall not be subject to reduction by the Company at any time during the
Employment Period.
(ii) MAKE-WHOLE PAYMENT. The Company shall pay to the Executive a
make-whole payment of $1,000,000, one-half of which shall be paid on the
Effective Date and the remainder of which shall be paid on the first
anniversary of the Effective Date.
(iii) ANNUAL INCENTIVE. So long as the Executive is employed by the
Company, he shall be eligible to receive annual cash incentive awards (the
"Annual Incentive") pursuant to and subject to the terms and conditions of
the Company's Annual Performance Incentive Plan or Executive Performance
Incentive Plan (or any successor plan). The Executive's Annual Incentive in
respect of 2001 shall in no event be less than 80% of his target bonus for
such year. The Executive's Annual Incentive in respect of 2001 and for each
year after 2001 shall in no event be targeted at a percentage less than the
2
<PAGE>
target percentage set for other similarly situated executive officers of
the Company (the "Peer Executives").
(iv) LONG-TERM INCENTIVE. So long as the Executive is employed by the
Company, he shall be eligible to receive long-term cash incentive awards
(the "Long-Term Incentive") pursuant to and subject to the terms and
conditions of the Company's Long Term Performance Incentive Plan (or any
successor plan). The target percentage for the Executive's Long-Term
Incentive for each performance period during the Employment Period shall in
no event be less than the target percentage set for the Peer Executives.
(b) EQUITY GRANTS.
(i) STOCK OPTIONS. The Chief Executive Officer shall recommend to the
Stock Option Subcommittee of the Board at its first meeting following the
Effective Date that the Company grant to the Executive a stock option (the
"Option"), pursuant to the Company's 1999 Stock Option Plan, to purchase a
number of shares of the Company's common stock, par value $0.25 per share
("Common Stock") having a Black-Scholes value equal to the Black-Scholes
value of the options to acquire shares of the Executive's employer (the
"Current Employer") held by the Executive on the date hereof. The
Black-Scholes value of the Option shall be calculated as of the Effective
Date using the same methodology and assumptions utilized by the Company in
valuing annual grants to all employees in 2000. The Black-Scholes value of
the options to acquire shares of the Current Employer held by the Executive
on the date hereof shall be calculated as of the Effective Date using the
same methodology (including the methodology used to determine assumptions)
utilized by the Company in valuing annual grants to all employees in 2000.
Any Black-Scholes calculation made pursuant to this Agreement shall be
delivered to the Executive reasonably in advance of the date of grant of
the Option. The Option grant shall be reflected in an option agreement
which, except as expressly provided in this Agreement, shall include the
terms of the Company's standard form of option agreement as in effect on
the date of grant of the Option.
(ii) RESTRICTED STOCK. The Chief Executive Officer shall recommend to
the Restricted Stock Subcommittee of the Board
3
<PAGE>
at its first meeting following the Effective Date that the Company
grant to the Executive, pursuant to the Company's 1989 Restricted Stock
Award Plan, a number of shares of Common Stock (the "Restricted Stock")
having a fair market value on the Effective Date equal to the sum of (A)
$2,000,000 and (B) the fair market value on the Effective Date of the
number of restricted shares of Current Employer common stock held by the
Executive on the date hereof. The Restricted Stock shall be reflected in a
restricted stock agreement which, except as expressly provided in this
Agreement, shall include the terms of the Company's standard form of
restricted stock agreement as in effect on the date of grant of the
Restricted Stock; provided, however, that the Restricted Stock shall be
released from restriction on the earlier of (1) the third anniversary of
the Effective Date or (2) certain terminations of employment, as set forth
in Section 6 hereof.
(iii) FUTURE EQUITY GRANTS. At such time(s) during each year of the
Employment Period that the Compensation Committee or a subcommittee thereof
approves annual stock option grants and/or other equity grants to senior
executives of the Company, and provided that the Executive is then still
employed by the Company, the Company shall grant to the Executive equity
awards according to the terms of the applicable plans, using ranges set for
the Peer Executives and based upon the Executive's performance. Such future
equity grants, in combination with the Option and the Restricted Stock,
shall be referred to herein as the "Equity Awards".
(c) EXPENSES. During the Employment Period, the Company shall reimburse the
Executive for all reasonable business expenses in accordance with applicable
policies and procedures then in force. The Company acknowledges that the
Executive's principal residence is located in Milton, MA and that the Executive
intends to commute on a regular basis from such principal residence to the
Company's headquarters in Atlanta, GA. Accordingly, for at least twelve months
following the Effective Date, the Company shall reimburse the Executive, on an
after-tax basis, for all travel costs and expenses incurred by the Executive in
connection with commuting from his principal residence to the Company's
principal executive offices. In addition, the Company shall provide for
relocating his home, family and personal belongings (including a reasonable
number of trips for the Executive's spouse) in the event that the Executive
determines to relocate to the vicinity of the Company's principal executive
offices, in accordance with the Company's current relocation policy.
4
<PAGE>
(d) PENSION CREDIT. So long as the Executive has remained in the employ of
the Company until the fifth anniversary of the Effective Date, he shall be
eligible for pension benefits equal to the amount that he would have earned
under the Company's Employee Retirement Plan and Supplemental Retirement Plan
(and any successor plans), if the Executive's service had been determined as if
he had been in the employ of the Company for a number of years equal to the sum
of (i) his actual number of years of service with the Company and (ii) ten (such
additional credit, the "Pension Credit"). Such Pension Credit shall be reduced
by the amounts actually paid under such plans in accordance with their terms.
The Company reserves the right to purchase annuities or such other vehicles as
it may determine to fund the Pension Credit and/or to pay to the Executive, at
the time of the Executive's retirement, death or Disability, a lump sum payment
equal to the present value of the Pension Credit, determined using the interest
rate prescribed by the Pension Benefit Guaranty Corporation for valuing
immediate annuities for plans terminating in the month in which the Executive's
retirement, death or Disability occurs.
(e) VACATION AND OTHER ABSENCES. The Executive shall be entitled to paid
vacation and other paid absences, whether for holidays, illness, personal time
or any similar purposes during the Employment Period, in accordance with
policies applicable generally to senior executives of the Company.
Notwithstanding the generality of the foregoing, the Executive shall be entitled
to a minimum of four weeks of paid vacation per year during the Employment
Period.
(f) OTHER BENEFITS. During the Employment Period, the Executive shall be
eligible to participate in such other employee benefit programs and perquisite
arrangements as are applicable generally to employees and/or made available to
senior executives of the Company (the "Benefit Plans"), in accordance with the
terms and conditions of such Benefit Plans and on a basis no less favorable than
the Peer Executives, but with all waiting periods waived to the maximum extent
permitted by such Benefit Plans.
5. TERMINATION. The Executive's employment hereunder may be terminated as
follows:
(a) DEATH. The Executive's employment shall terminate upon his death,
in which event the date of his death shall be the Date of Termination.
(b) DISABILITY. If, as a result of the Executive's incapacity due to
Disability (as defined in the Company's Long Term Disability Plan), the
Company shall have given the Executive a Notice of Termination for
Disability, and, within
5
<PAGE>
thirty days after such Notice of Termination is given, the Executive
shall not have returned to the full-time performance of the Executive's
duties, the Company may terminate the Executive's services hereunder, in
which event the Date of Termination shall be thirty days after Notice of
Termination is given.
(c) CAUSE. The Company may terminate the Executive's employment
hereunder for Cause. For purposes of this subsection, "Cause" shall mean
(i) the Executive's material breach of this Agreement, (ii) the Executive's
gross negligence in the performance or non-performance of any of his
material duties or responsibilities hereunder, (iii) the Executive's
dishonesty, fraud or willful misconduct with respect to, or disparagement
of, the business or affairs of the Company, (iv) the Executive's conviction
of a felony, (v) the Executive's being absent from work for five
consecutive days for any reason other than vacation, approved leave of
absence (such approval not to be unreasonably withheld) or disability or
illness pursuant to Company policy or law, which, in the case of clauses
(i), (ii), (iii) and (v), is demonstrably and materially injurious to the
Company or its subsidiaries, monetarily or otherwise. No act or failure to
act by the Executive shall be considered Cause unless the Company has given
detailed written notice thereof to the Executive and, where remedial action
is feasible, he has failed to remedy the act or omission within twenty
business days after receiving such notice.
(d) GOOD REASON. The Executive may terminate his employment hereunder
for Good Reason. For purposes of this Agreement, "Good Reason" shall mean
any material breach of this Agreement, the occurrence of which is not
remedied by the Company within five business days following receipt of the
Executive's Notice of Termination, including but not limited to the failure
by the Board to elect the Executive to the positions of Executive Vice
President and General Counsel at the first meeting of the Board held after
the Effective Date, but in no event later than April 18, 2001. In the event
of a termination for Good Reason, the Date of Termination shall be the date
specified in the Notice of Termination, which shall be not less than twenty
business days after the Notice of Termination is delivered.
(e) OTHER TERMINATIONS. The Company may terminate the Executive's
employment hereunder other than for Cause or Disability, and the Executive
may terminate his employment other than for Good Reason. If the Executive's
employment is terminated pursuant to this Section 5(e), the date on which a
Notice of Termination is given or any later date (within 30 days) set forth
in such Notice of Termination shall be the Date of Termination.
6
<PAGE>
(f) NOTICE OF TERMINATION. Any termination of the Executive's
employment hereunder by the Company or by the Executive (other than
termination pursuant to Section 5(a) hereof) shall be communicated by
written Notice of Termination to the other party hereto in accordance with
Section 15 hereof. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provision so
indicated.
6. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(a) DISABILITY PERIOD. During any portion of the Employment Period
during which the Executive fails to perform his duties hereunder as a
result of incapacity due to short term disability (as defined in the
applicable Company plan) prior to the commencement of Disability (the
"Disability Period"), the Executive shall continue to (i) receive his full
Base Salary, (ii) be eligible to receive the Annual Incentive and (iii)
participate in the Benefit Plans. Payments made to the Executive during the
Disability Period shall be reduced by the sum of the amounts, if any,
payable to the Executive at or prior to the time of any such payment under
disability benefit plans of the Company or under the Social Security
disability insurance program, to the extent such amounts were not
previously applied to reduce any such payment.
(b) DEATH; DISABILITY. If the Executive's employment hereunder is
terminated as a result of death or disability, then:
(i) the Company shall pay the Executive (or the Executive's
estate or designated beneficiary, as applicable) as soon as
practicable after the Date of Termination (A) any Base Salary and
reimbursable expenses, in each case accrued and owing the Executive
hereunder as of the Date of Termination and any incentive payments in
accordance with the relevant plans, (B) all benefits due and owing to
or in respect of the Executive under all Benefit Plans, in accordance
with the terms of such Benefit Plans and (C) the amounts described in
Section 4(a)(ii), to the extent not theretofore paid (the benefits
described in this clause (i) being hereinafter referred to
collectively as the "Accrued Benefits");
(ii) the Company shall continue to pay to the Executive or his
estate or designated beneficiary, for a period of two years
7
<PAGE>
following the Date of Termination, his Base Salary, offset by any
payments made to or in respect of the Executive under the Company's
Survivor's Benefit Program or Long Term Disability Plan;
(iii) the Option, Restricted Stock, and other Equity Awards shall
become vested or released from restriction, as applicable (and, where
relevant, remain exercisable) in accordance with the terms of the
applicable plans and individual agreements; and
(iv) the Executive shall be provided with the Pension Credit.
(c) CAUSE OR BY EXECUTIVE OTHER THAN FOR GOOD REASON. If the
Executive's employment hereunder is terminated by the Company for Cause or
by the Executive other than for Good Reason, then:
(i) the Company shall pay the Executive the Accrued Benefits;
(ii) the Option shall become fully vested and exercisable (and
shall remain exercisable in accordance with the applicable plans and
individual agreements); and
(iii) if the Date of Termination occurs prior to the third
anniversary of the Executive's election as an officer of the Company,
the Company shall pay to the Executive, as soon as practicable but no
later than 30 days following the Date of Termination, a lump sum cash
payment of $1,550,000.
(d) TERMINATION BY THE COMPANY OTHER THAN FOR CAUSE OR DISABILITY OR
BY THE EXECUTIVE FOR GOOD REASON. If the Executive's employment hereunder
is terminated by the Company other than for Cause or Disability or by the
Executive for Good Reason, then:
(i) the Company shall pay the Executive the Accrued Benefits;
(ii) the Company shall pay the Executive an Annual Incentive
payment determined, prorated and paid in accordance with the terms of
the applicable plan;
8
<PAGE>
(iii) the Company shall pay to the Executive, as soon as
practicable but no later than 30 days following the Date of
Termination, a lump sum amount equal to the sum of (A) two times the
Executive's then-current Base Salary and (B) the average of the Annual
Incentives paid or payable to the Executive for the three calendar
years immediately preceding the year in which the Date of Termination
occurs, or such lesser period during which the Executive was employed
by the Company, offset by any severance paid to the Executive pursuant
to any other severance pay plan or program of the Company;
(iv) (A) the Option shall become fully vested and exercisable
(and shall remain exercisable in accordance with the applicable plans
and individual agreements), (B) any other options to acquire Common
Stock granted to the Executive shall become vested and remain
exercisable in accordance with the terms of the applicable plans and
individual agreements and (C) the Restricted Stock shall be released
from restriction;
(v) the Company shall offer the Executive and his qualified
dependents continued coverage under the Company's insurance plans, as
required by the Consolidated Omnibus Budget Reconciliation Act
(COBRA), at the Company's cost, so long as the Executive or his
dependents are eligible for COBRA coverage; and
(vi) the Executive shall be provided with the Pension Credit.
7. MITIGATION. The Executive shall not be required to mitigate amounts
payable pursuant to Section 6 hereof by seeking other employment or otherwise,
nor shall such payments be reduced on account of any remuneration earned by the
Executive attributable to employment by another employer, by retirement
benefits, by offset against any amount claimed to be owed by the Executive to
the Company (other than any amounts owed by the Executive under Company benefit
plans and agreements and any expenses incurred by the Company on the Executive's
behalf and at the Executive's request) or otherwise.
8. INDEMNIFICATION. To the fullest extent permitted by law, the Company
shall indemnify the Executive (including the advancement of expenses) for any
judgments, fines, amounts paid in settlement and reasonable expenses, including
9
<PAGE>
attorneys' fees, incurred by the Executive in connection with the defense of any
lawsuit or other claim to which he is made a party by reason of being an
officer, director or employee of the Company or any of its subsidiaries. During
the Employment Period and for at least three years thereafter, the Company shall
use its reasonable best efforts to maintain customary director and officer
liability insurance covering the Executive for acts and omissions during the
Employment Period.
9. EXECUTIVE COVENANTS. (a) During the Employment Period, and for a period
of one year thereafter, the Executive shall not, either directly or indirectly,
for himself or on behalf of or in conjunction with any other person, company,
partnership, corporation, business, group or other entity (each, a "Person"):
(i) engage, as an officer, director, owner, partner, member, joint
venturer, or in a managerial capacity, whether as an employee, independent
contractor, consultant, advisor or sales representative, in any business
engaged in the manufacture, sale or distribution of non-alcoholic
beverages; or
(ii) solicit or attempt to solicit, recruit or attempt to recruit, any
employee, agent or contract worker of the Company with whom the Executive
had contact during the course of his employment with the Company, or
(b) For the purposes of this Section 9, references to "the Company" shall
mean the Company and its direct and indirect subsidiaries.
(c) The covenants in this Section 9 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. If any provision of this Section 9 relating to the time period
or geographic areas of the restrictive covenants shall be declared by a court of
competent jurisdiction to exceed the maximum time period or geographic area, as
applicable, that such court deems reasonable and enforceable, then this
Agreement shall automatically be considered to have been amended and revised to
reflect such determination.
(d) All of the covenants in this Section 9 shall be construed as an
agreement independent of any other provisions in this Agreement, and the
existence of any claim or cause of action the Executive may have against the
Company, whether predicated on this Agreement or otherwise, shall not constitute
a defense to the enforcement by the Company of such covenants.
10
<PAGE>
(e) The Executive has carefully read and considered the provisions of this
Section 9 and, having done so, agrees that the restrictive covenants in this
Section 9 impose a fair and reasonable restraint on the Executive and are
reasonably required to protect the interests of the Company and its officers,
directors, employees, and stockholders. The Executive covenants that he will not
challenge the enforceability of this Section 9 nor will he raise any equitable
defense to its enforcement.
10. TRADE SECRETS AND CONFIDENTIAL INFORMATION
(a) For purposes of this Section, "Confidential Information" means any data
or information, other than Trade Secrets, that is valuable to the Company and
not generally known to the public or to competitors of the Company. "Trade
Secret" means information including, but not limited to, any technical or
nontechnical data, formula, pattern, compilation program, device, method,
technique, drawing, process, financial data, financial plan, product plan, list
of actual or potential customers or suppliers or other information similar to
any of the foregoing, which (i) derives economic value, actual or potential,
from not being generally known to, and not being readily ascertainable by proper
means by, other persons who can derive economic value from its disclosure or use
and (ii) is the subject of efforts that are reasonable under the circumstances
to maintain its secrecy.
(b) The Executive acknowledges he is employed by the Company in a
confidential relationship wherein he, in the course of his employment with the
Company, has received or will receive and has had or will have access to
Confidential Information and Trade Secrets of the Company, including but not
limited to confidential and secret business and marketing plans, strategies and
studies, detailed client/customer lists and information relating to the
operations and business requirements of those clients/customers and accordingly,
he is willing to enter into the covenants contained in Sections 9 and 10 of this
Agreement in order to provide the Company with what he considers to be
reasonable protection for its interest.
(c) The Executive hereby agrees that during the Employment Period and
thereafter, he will hold in confidence all Confidential Information of the
Company and its direct or indirect subsidiaries that came into his knowledge
during his employment by the Company and shall not disclose, publish or make use
of such Confidential Information without the prior written consent of the
Company.
(d) The Executive shall hold in confidence all Trade Secrets of the Company
and its direct or indirect subsidiaries that came into his knowledge during
11
<PAGE>
his employment by the Company and shall not disclose, publish or make use of at
any time after the date hereof such Trade Secrets without the prior written
consent of the Company for as long as the information remains a Trade Secret.
(e) Notwithstanding the foregoing, the provisions of this Section will not
apply to (i) information required to be disclosed by the Executive in the
ordinary course of his duties hereunder or (ii) Confidential Information that
otherwise becomes generally known in the industry or to the public through no
act of the Executive or any person or entity acting by or on the Executive's
behalf, or which is required to be disclosed by court order or applicable law.
(f) The parties agree that the restrictions stated in this Section 10 are
in addition to and not in lieu of protections afforded to trade secrets and
confidential information under applicable state law. Nothing in this Agreement
is intended to or shall be interpreted as diminishing or otherwise limiting the
Company's right under applicable state law to protect its trade secrets and
confidential information.
11. INVENTIONS. The Executive agrees to promptly report and disclose to the
Company all developments, discoveries, methods, processes, designs, inventions,
ideas, or improvements (hereinafter collectively called "Work Product"),
conceived, made, implemented, or reduced to practice by the Executive, whether
alone or acting with others, during the Executive's employment with the Company,
that is developed (a) on the Company's time, or (b) while utilizing, directly or
indirectly, the Company's equipment, supplies, facilities, or trade secret
information. the Executive acknowledges and agrees that all Work Product is the
sole and exclusive property of the Company. The Executive agrees to assign, and
hereby automatically assigns, without further consideration, to the Company any
and all rights, title, and interest in and to all Work Product; provided
however, that this Section shall not apply to any Work Product for which no
equipment, supplies, facilities, or trade secret information of the Company was
used and which was developed entirely on the Executive's own time, unless the
Work Product (a) relates directly to the Company's business or its actual or
demonstrably anticipated research or development, or (b) results from any work
performed by the Executive for the Company. The Company, its successors and
assigns, shall have the right to obtain and hold in its or their own name
copyright registrations, trademark registrations, patents and any other
protection available to the work Product. The Executive agrees to perform, upon
the reasonable request of the Company, during or after employment, such further
acts as may be necessary or desirable to transfer, perfect, and defend the
Company's ownership of the Work Product.
12
<PAGE>
12. RETURN OF COMPANY PROPERTY. All records, designs, patents, business
plans, financial statements, manuals, memoranda, customer lists, customer
database, rolodex and other property delivered to or compiled by the Executive
by or on behalf of the Company (including the respective subsidiaries thereof)
or its representatives, vendors or customers which pertain to the business of
the Company (including the respective subsidiaries thereof) shall be and remain
the property of the Company, and be subject at all times to its discretion and
control. Upon the request of the Company and, in any event, upon the termination
of the Executive's employment with the Company, the Executive shall deliver all
such materials to the Company. Likewise, all correspondence, reports, records,
charts, advertising materials and other similar data pertaining to the business,
activities or future plans of the Company which are collected by the Executive
shall be delivered promptly to the Company without request by it upon
termination of the Executive's employment.
13. EQUITABLE REMEDY. Because of the difficulty of measuring economic
losses to the Company as a result of a breach of the covenants set forth in
Sections 9, 10, 11 and 12, and because of the immediate and irreparable damage
that would be caused to the Company for which monetary damages would not be a
sufficient remedy, it is hereby agreed that in addition to all other remedies
that may be available to the Company at law or equity, the Company shall be
entitled to specific performance and any injunctive or other equitable relief as
a remedy for my breach or threatened breach of the Executive's covenants.
14. SUCCESSORS; BINDING AGREEMENT.
(a) COMPANY'S SUCCESSORS. No rights or obligations of the Company under
this Agreement may be assigned or transferred by the Company except that such
rights or obligations may be assigned or transferred pursuant to a merger or
consolidation in which the Company is not the continuing entity, or the sale or
liquidation of all or substantially all of the business and/or assets of the
Company, provided that the assignee or transferee is the successor to all or
substantially all of the business and/or assets of the Company and such assignee
or transferee assumes the liabilities, obligations and duties of the Company, as
contained in this Agreement, either contractually or as a matter of law. Prior
to any such succession, the Company will require any such successor expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such succession had
taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and shall include any successor to its business and/or
assets as aforesaid which executes and
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<PAGE>
delivers the agreement provided for in this Section 9 or which otherwise becomes
bound by all the terms and provisions of this Agreement.
(b) EXECUTIVE'S SUCCESSORS. This Agreement shall not be assignable by the
Executive. This Agreement and all rights of the Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. Upon the Executive's death, all amounts to which he is
entitled hereunder, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executive's devisee, legatee,
or other designee or, if there be no such designee, to the Executive's estate.
15. NOTICE. For the purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Deval L. Patrick
Milton, MA
If to the Company:
The Coca-Cola Company
One Coca-Cola Plaza
Atlanta, GA 30313
Attention: Chief Executive Officer
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
16. MISCELLANEOUS. No provisions of this Agreement may be modified unless
such modification is agreed to in writing signed by the Executive and an
authorized officer of the Company. Any waiver or discharge must be in writing
and signed by the Executive or such an authorized officer of the Company, as
14
<PAGE>
the case may be. No waiver by either party hereto at any time of any breach by
the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Delaware without
regard to its conflicts of law principles.
17. WITHHOLDING. Any payments provided for in this Agreement shall be paid
net of any applicable withholding of taxes required under federal, state or
local law.
18. ARBITRATION; LEGAL FEES. Except as otherwise provided herein, all
controversies, claims or disputes arising out of or related to this Agreement
shall be settled in Atlanta, GA, under the rules of the American Arbitration
Association then in effect, and judgment upon such award rendered by the
arbitrator(s) may be entered in any court of competent jurisdiction. The costs
of the arbitration shall be borne by the Company. The Company shall pay the
reasonable legal fees and disbursements incurred by the Executive in connection
with the negotiation and preparation of this Agreement, subject to a maximum
amount of $25,000. In addition, the Company agrees to pay promptly as incurred,
to the fullest extent permitted by law, all legal fees and expenses which the
Executive may reasonably incur as a result of any contest by the Company, the
Executive or others of the validity or enforceability of, or liability under,
any provisions of this Agreement (including as a result of any contest initiated
by the Executive about the amount of any payment due pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended.
19. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
20. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
21. ENTIRE AGREEMENT. This Agreement (together with any option and
restricted stock agreements evidencing the awards contemplated hereby) set forth
the entire agreement of the parties hereto in respect of the subject matter
contained
15
<PAGE>
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by the
parties hereto in respect of the subject matter contained herein; and any prior
agreement of the parties hereto in respect of the subject matter contained
herein is hereby terminated and cancelled.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
February 21, 2001 to be effective as of the Effective Date.
THE COCA-COLA COMPANY
/s/ DOUGLAS N. DAFT
------------------------------------
Name: /S/ DOUGLAS N. DAFT
Title: Chairman and CEO
/S/ DEVAL L. PATRICK
------------------------------------
Executive
17
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.21.2
<SEQUENCE>9
<FILENAME>x10-21b.txt
<DESCRIPTION>LETTER TO DEVAL L. PATRICK, DATED 1-4-02
<TEXT>
EXHIBIT 21.2
January 4, 2002
Mr. Deval L. Patrick
The Coca-Cola Company
Atlanta, Georgia
Dear Deval:
As you are aware, as an executive of the Company you are
required to meet certain stock ownership requirements.
It is the Companys desire that you begin to take action to
satisfy those stock ownership requirements.
I am pleased to advise you that I recommended and the
Compensation Committee of the Board approved my
recommendation to accelerate from April 1, 2002 to January 15,
2002 the remaining Make-Whole Payment of $500,000
contemplated by your Employment Agreement.
Sincerely
/s/ Douglas N. Daft
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.22.1
<SEQUENCE>10
<FILENAME>x10-22a.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT - STEVEN J. HEYER
<TEXT>
EXHIBIT 10.22.1
THE COCA-COLA COMPANY
Coca-Cola Plaza
Atlanta, Georgia
ADDRESS REPLY TO
P.O. Drawer 1734
Atlanta, GA 30301
-----
404-676-2121
March 2, 2001
VIA HAND DELIVERY
Mr. Steven J. Heyer
Atlanta, GA
Dear Steve:
It is my pleasure to extend to you an offer of employment with The
Coca-Cola Company (the "Company") upon the terms set forth in the attached term
sheet. This offer will remain open for your acceptance until 6:00 p.m. (E.S.T.)
April 1, 2001, and anticipates your becoming an employee by April 18 , 2001.
Please signify your acceptance of such employment by signing as indicated below.
This letter agreement may be executed in counterparts.
/s/ DOUGLAS N. DAFT
--------------------------------------
Douglas N. Daft
Chairman of the Board of Directors and
Chief Executive Officer
/s/ STEVEN J. HEYER
- ---------------------------
Steven J. Heyer
Date: March 22, 2001
<PAGE>
Terms of
Employment between
Steven J. Heyer ("Executive") and
The Coca-Cola Company ("Company")
March 2, 2001
1. POSITION AND DUTIES; PLACE OF PERFORMANCE: (a) During the Employment Period
(as defined below), the Executive shall serve as Executive Vice President
of the Company and President, Coca-Cola Company Ventures, subject to
election by the Board of Directors of the Company (the "Board"). The
Executive shall report to the Chairman of the Board and Chief Executive
Officer of the Company (the "Chief Executive Officer"). During the
Employment Period, the Executive shall have those powers and duties
consistent with his positions and assigned by the Chief Executive Officer,
including, but not limited to leading Company joint venture or acquisition,
innovation and incubation activities and acting as a Coca-Cola Company
member of Boards of Company joint ventures. Working with the CEO and other
executive officers, the Executive will also lead and direct the Company's
marketing, long range planning and strategy development process. During the
Employment Period, the Executive shall be a member of the Company's
Executive Committee. The Executive agrees to devote substantially all of
his working time to the performance of his duties for the Company, provided
that Executive shall be entitled to serve on corporate, charitable and
civic boards to the extent such activities do not materially interfere with
the performance of his duties hereunder. Effective no later than the first
regularly-scheduled Company Board of Directors meeting which occurs on or
after the date of the commencement of Executive's employment, Executive
will be elected, designated or appointed to the foregoing.
2. EMPLOYMENT PERIOD: The period during which the Executive is employed by the
Company hereunder (the "Employment Period") is anticipated to commence no
later than April 18, 2001 (such commencement of employment, the "Effective
Date") and shall end on the fifth anniversary thereof; provided however,
that commencing on the fourth anniversary of the Effective Date (each such
anniversary, a "Renewal Date"), the Employment Period shall automatically
be extended for one additional year unless, no later than the date which is
four months prior to such Renewal Date, the Company or the Executive shall
have given notice not to extend the Employment Period.
2
<PAGE>
3. ANNUAL SALARY: $850,000 for 2001, subject to increase (but not decrease)
thereafter.
4. ANNUAL INCENTIVE: So long as the Executive is employed by the Company, he
shall be eligible to receive annual cash incentive awards (the "Annual
Incentive") pursuant to and subject to the terms and conditions of the
Company's Annual Performance Incentive Plan or Executive Performance
Incentive Plan (or any successor or companion plan). The Executive's Annual
Incentive paid in respect of 2001 shall in no event be less than 80% of his
target Annual Incentive for such year. The Executive's Annual Incentive in
respect of 2001 and for each year after 2001 shall be determined on the
basis of Company and individual performance and shall in no event be
targeted at a percentage less than the target percentage set for other
senior executive officers nor shall the target and opportunity for future
awards be less than the initial target and opportunity. In the event of
termination of employment for any reason other than a termination for Cause
or a resignation other than for Good Reason during any subsequent bonus
year, a pro rata portion of the annual performance bonus shall be paid
after qualifying Company performance has been certified.
5. ANNUAL PERFORMANCE LTIP AND EQUITY BASED INCENTIVE COMPENSATION:
(a) LONG-TERM INCENTIVE. So long as the Executive is employed by the
Company, he shall be eligible to receive long-term cash incentive
awards (the "Long-Term Incentive") pursuant to and subject to the
terms and conditions of the Company's Long Term Performance Incentive
Plan (or any successor or companion plan). The target percentage for
the Executive's Long-Term Incentive for each performance period during
the Employment Period shall in no event be less than the target
percentage set for senior executive officers nor shall the target and
opportunity for future awards be less than the initial target and
opportunity. In the event of termination of employment for any reason
other than a termination for Cause or a resignation other than for
Good Reason, a pro rata portion of the each on-going LTIP award shall
be paid after qualifying Company performance has been certified.
(b) FUTURE EQUITY GRANTS. At such time(s) during each year of the
Employment Period that the Compensation Committee or a subcommittee
thereof approves annual stock option grants to senior executive
officers of the Company, and provided that the Executive is then still
employed by the Company, the Chief Executive Officer shall recommend
to the Compensation Committee a grant for the Executive of stock
options (and/or other equity) according to the terms of the applicable
plans, within an award value range (based upon a Black Scholes
valuation) of $9 to $12 million subject to discretion of the
Compensation Committee. It is the Company's expectation that as long
as the
2
<PAGE>
performance of the Company and the Executive are within a reasonable
range, that awards within this range will be made.
(c) All performance and equity based awards and other benefits provided to
Executive shall vest, remain exercisable and/or become payable upon a
change in control as provided in the applicable plans, the provisions
shall be no less favorable to Executive than those applicable to other
senior executive officers.
6. GROUP/EXECUTIVE BENEFITS: During the Employment Period, the Executive shall
be eligible to participate in such other employee benefit programs and
perquisite arrangements as are applicable generally to employees and/or
made available to senior executives of the Company (the "Benefit Plans"),
in accordance with the terms and conditions of such Benefit Plans and on a
basis no less favorable than the other senior executive officers, but with
all waiting periods waived to the maximum extent permitted by such Benefit
Plans. Executive will generally have access to a Company plane for business
travel and Executive and Family will have access to a Company plane on an
"as available" basis for other than business travel, assuming all planes
are not needed for business purposes, with obligation to reimburse for
personal use based upon first class airfare.
7. SUPPLEMENTAL PENSION:
(a) The Executive shall be eligible for pension benefits equal to the
amount that he would have earned under the Company's Employee
Retirement Plan and Supplemental Retirement Plan (and any successor or
companion plans), if the Executive's service had been determined as if
he had been in the employ of the Company for a number of years equal
to the sum of (i) his actual number of years of service with the
Company and (ii) ten (10) (the "Pension Credit"). Such Pension Credit
shall be reduced by the amounts actually paid under such plans in
accordance with their terms. The Company reserves the right to
purchase annuities or such other vehicles as it may determine to fund
the Pension Credit and/or to pay to the Executive, at the time of the
Executive's retirement, death or Disability, a lump sum payment equal
to the present value of the Pension Credit, determined using the
interest rate prescribed by the Pension Benefit Guaranty Corporation
for valuing immediate annuities for plans terminating in the month in
which the Executive's retirement, death or Disability occurs.
(b) The Pension Credit shall not be payable under this item 7 if, prior to
the fifth anniversary of the commencement of employment, Executive's
employment is terminated by the Company for Cause or by the Executive
without Good Reason.
3
<PAGE>
8. HIRING INDUCEMENT; MAKE WHOLE.
(a) RESTRICTED STOCK. Executive shall receive a restricted stock award for
50,000 shares cliff vesting on the fifth anniversary of the date of
grant, subject to release in full in the event of termination of
employment for any reason other than a termination for Cause or a
resignation other than for Good Reason.
(b) PERFORMANCE GRANT. Executive shall receive a five-year performance
restricted stock award for 125,000 shares vesting in accordance with
established performance criteria. In the event of termination of
employment for any reason other than a termination for Cause or a
resignation other than for Good Reason, a pro rata portion of the
performance restricted stock shall be released after qualifying
Company performance has been certified.
(c) SIGN-ON. Executive shall be entitled to receive $1,000,000, of which
$500,000 shall be paid in cash no later than 10 business days after
commencement of employment and the remainder shall be paid on the
first anniversary of commencing employment (the "Deferred Sign-On
Payment"). In the event of termination of employment for any reason
other than a termination for Cause or a resignation other than for
Good Reason prior to payment of the $1,000,000 in full, any unpaid
amount shall be paid within five (5) business days of such
termination.
4
<PAGE>
(d) STOCK OPTIONS. The Chief Executive Officer shall recommend to the
Stock Option Subcommittee of the Board at its first meeting coinciding
with or next following the Effective Date that the Company grant to
the Executive a stock option (the "Option"), pursuant to the Company's
1999 Stock Option Plan, to purchase a number of shares of the
Company's common stock, par value $0.25 per share ("Common Stock")
having a Black-Scholes value equal to 1) the Black-Scholes value of
the unvested options to acquire shares of the Executive's employer
(the "Current Employer") held by the Executive on the date hereof and
2) the value of lost LTIP participation at his former employer. The
Black-Scholes value of the Option shall be calculated as of the
Effective Date using the same methodology and assumptions utilized by
the Company in valuing annual grants to all employees in 2000. The
Black-Scholes value of the options to acquire shares of the current
employer held by the Executive on the date hereof shall be calculated
as of the Effective Date using the same methodology (including the
methodology used to determine assumptions) utilized by the Company in
valuing annual grants to employees in 2000. Any Black-Scholes
calculation made pursuant to this Agreement shall be delivered to the
Executive reasonably in advance of the date of grant of the Option.
The Option grant shall be reflected in an option agreement which shall
include the terms of the Company's standard form of option agreement
as in effect on the date of grant of the Option.
9. TERMINATION FOR CAUSE OR BY EXECUTIVE OTHER THAN FOR GOOD REASON. If the
Executive's employment hereunder is terminated by the Company for Cause or
by the Executive other than for Good Reason, then the Option shall become
fully vested and exercisable for a period of six months in accordance with
the applicable plans and individual agreements and; other option awards
that are vested upon the termination date will remain exercisable for a
period of six months, as provided by the plan and applicable agreements.
10. TERMINATION BY THE COMPANY OTHER THAN FOR CAUSE OR DISABILITY OR BY THE
EXECUTIVE FOR GOOD REASON.: If the Executive's employment hereunder is
terminated by the Company other than for Cause or disability (as defined
under the Company's long-term disability plan) or by the Executive for Good
Reason, then:
(i) the Company shall pay the Executive an Annual Incentive payment
determined, prorated and paid in accordance with the terms of the
applicable plan(s);
(ii) the Company shall pay to the Executive, as soon as practicable
but no later than 30 days following the Date of Termination, a
lump sum amount equal to (A) any unpaid Deferred Sign-On Payment
plus (B)
5
<PAGE>
three times the sum of (1) the Executive's then-current Base
Salary and (2) the average of the Annual Incentives paid or
payable to the Executive for the three calendar years immediately
preceeding the year in which the Date of Termination occurs, or
such lesser period during which the Executive was employed by
the Company, offset by (C) any severance paid to the Executive
pursuant to any other severance pay plan or program of the
Company.
(iii)(A) the Option shall become fully vested and exercisable (and
shall remain exercisable in accordance with the applicable plans
and individual agreements), (B) any other options to acquire
Common Stock granted to the Executive shall become vested and
remain exercisable in accordance with the terms of the applicable
plans and individual agreements, (C) the 50,000 Restricted Stock
award shall be released from restriction and (D) other restricted
stock awards shall be considered in accordance with the terms of
the applicable plans and individual agreements;
(iv) the Company shall offer the Executive and his qualified
dependents continued coverage under the Company's insurance
plans, as required by the Consolidated Omnibus Budget
Reconciliation Act ("COBRA"), at the Company's cost, so long as
the Executive or his dependents are eligible for COBRA coverage;
and
(v) the Executive shall be provided with the Pension Credit,
provided, that for purposes thereof the amounts described in
clause 10(ii) above shall be deemed paid under a severance policy
and thereby taken into account in determining Executive's final
average compensation.
11. MITIGATION: The Executive shall not be required to mitigate any amounts
payable hereunder by seeking other employment or otherwise, nor shall such
payments be reduced on account of any remuneration earned by the Executive
attributable to employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by the Executive to the
Company (other than any amounts owed by the Executive under Company benefit
plans and agreements and any expenses incurred by the Company on the
Executive's behalf and at the Executive's request) or otherwise.
6
<PAGE>
12. TERMINATION BY EXECUTIVE: Executive may, by at least 30 days prior written
notice, voluntarily terminate this agreement without liability at any time
without Good Reason.
13. FEES AND EXPENSES: The Company will pay all reasonable legal fees not to
exceed $25,000 and related expenses incurred by Executive in connection
with the negotiation and preparation of the employment agreement. In
addition, the Company shall indemnify and hold harmless the Executive from
any reasonable attorneys fees, Executive may incur or be liable for as a
result of his resignation from his former employer to commence employment
with the Company. The Company shall also pay all reasonable attorneys fees
and expenses incurred by Executive in connection with any dispute between
the Company and Executive regarding the validity or enforceability of, or
liability under this Agreement.
14. BINDING OF SUCCESSORS: The Company will cause any successor to all or
substantially all of its business and/or assets expressly to assume and
agree to perform Executive's employment agreement in the same manner and to
the same extent that the Company is required to perform hereunder.
15. CAUSE. The Company may terminate the Executive's employment for Cause. For
purposes hereof, "Cause" shall mean (i) the Executive's material breach of
this Agreement, (ii) the Executive's gross negligence in the performance or
non-performance of any of his material duties or responsibilities
hereunder, (iii) the Executive's dishonesty, fraud or willful misconduct
with respect to, or willful disparagement of, the business or affairs of
the Company, (iv) the Executive's conviction of a felony, (v) the
Executive's being absent from work for twenty (20) consecutive days for any
reason other than vacation, approved leave of absence (such approval not to
be unreasonably withheld) or disability or illness pursuant to Company
policy or law. No act or failure to act by the Executive shall be
considered Cause unless the Company has given detailed written notice
thereof to the Executive and, where remedial action is feasible, he has
failed to remedy the act or omission within twenty (20) business days after
receiving such notice.
16. GOOD REASON. The Executive may terminate his employment for "Good Reason".
For this purpose, "Good Reason" shall mean, without Executive's consent,
(a) the assignment to Executive of any duties inconsistent in any material
respect with Executive's position, authority, duties or responsibilities as
contemplated hereunder, or any other action by the Company which results in
a significant diminution in such position, authority, duties or
responsibilities, excluding any isolated and inadvertent action not taken
in bad faith and which is remedied by the Company within ten (10) days
after receipt of notice thereof given by Executive; (b) any failure by the
7
<PAGE>
Company to comply with any of the provisions of terms of Executive's
employment other than an isolated and inadvertent failure not committed
in bad faith and which is remedied by the Company within ten (10) days
after receipt of notice thereof given by Executive; (c) Executive being
required to relocate to a principal place of employment more than
twenty-five (25) miles from Executive's current principal place of
employment; or (d) delivery by the Company of a notice discontinuing the
automatic extension feature of the term of Executive's employment as set
forth in Section 2 hereof.
17. EXECUTIVE COVENANTS. (a) During the Employment Period, and for a period of
one year thereafter, the Executive shall not, either directly or
indirectly, for himself or on behalf of or in conjunction with any other
person, company, partnership, corporation, business, group or other entity
(each, a "Person"):
(i) engage, as an officer, director, owner, partner, member, joint
venturer, or in a managerial capacity, whether as an employee,
independent contractor, consultant, advisor or sales representative,
in any business engaged in the manufacture, sale or distribution of
non-alcoholic beverages; or
(ii) solicit or attempt to solicit, recruit or attempt to recruit, any
employee, agent or contract worker of the Company with whom the
Executive had contact during the course of his employment with the
Company.
(b) For the purposes of this Section, references to "the Company" shall
mean the Company and its direct and indirect subsidiaries and/or any
Company joint ventures or incubators.
(c) The covenants in this Section are severable and separate, and the
unenforceability of any specific covenant shall not affect the
provisions of any other covenant. If any provision of this Section 1
relating to the time period or geographic areas of the restrictive
covenants shall be declared by a court of competent jurisdiction to
exceed the maximum time period or geographic area, as applicable, that
such court deems reasonable and enforceable, then this Agreement shall
automatically be considered to have been amended and revised to
reflect such determination.
(d) All of the covenants in this Section shall be construed as an
agreement independent of any other provisions in this Agreement, and
the existence of any claim or cause of action the Executive may have
against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the
Company of such covenants.
8
<PAGE>
(e) The Executive has carefully read and considered the provisions of this
Section and, having done so, agrees that the restrictive covenants in
this Section impose a fair and reasonable restraint on the Executive
and are reasonably required to protect the interests of the Company
and its officers, directors, employees, and stockholders. The
Executive covenants that he will not challenge the enforceability of
this Section nor will he raise any equitable defense to its
enforcement.
18. TRADE SECRETS AND CONFIDENTIAL INFORMATION
(a) For purposes of this Section, "Confidential Information" means any
data or information, other than Trade Secrets, that is valuable to the
Company and not generally known to the public or to competitors of the
Company. "Trade Secret" means information including, but not limited
to, any technical or nontechnical data, formula, pattern, compilation
program, device, method, technique, drawing, process, financial data,
financial plan, product plan, list of actual or potential customers or
suppliers or other information similar to any of the foregoing, which
(i) derives economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper
means by, other persons who can derive economic value from its
disclosure or use and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
(b) The Executive acknowledges he is employed by the Company in a
confidential relationship wherein he, in the course of his employment
with the Company, has received or will receive and has had or will
have access to Confidential Information and Trade Secrets of the
Company, including but not limited to confidential and secret business
and marketing plans, strategies and studies, detailed client/customer
lists and information relating to the operations and business
requirements of those clients/customers and accordingly, he is willing
to enter into the covenants contained in Sections 17 and 18 of this
Agreement in order to provide the Company with what he considers to be
reasonable protection for its interest.
(c) The Executive hereby agrees that during the Employment Period and
thereafter, he will hold in confidence all Confidential Information of
the Company and its direct or indirect subsidiaries that came into his
knowledge during his employment by the Company and shall not disclose,
publish or make use of such Confidential Information without the prior
written consent of the Company.
9
<PAGE>
(d) The Executive shall hold in confidence all Trade Secrets of the
Company and its direct or indirect subsidiaries that came into his
knowledge during his employment by the Company and shall not disclose,
publish or make use of at any time after the date hereof such Trade
Secrets without the prior written consent of the Company for as long
as the information remains a Trade Secret.
(e) Notwithstanding the foregoing, the provisions of this Section will not
apply to (i) information required to be disclosed by the Executive in
the ordinary course of his duties hereunder or (ii) Confidential
Information that otherwise becomes generally known in the industry or
to the public through no act of the Executive or any person or entity
acting by or on the Executive's behalf, or which is required to be
disclosed by court order or applicable law.
(f) The parties agree that the restrictions stated in this Section 18 are
in addition to and not in lieu of protections afforded to trade
secrets and confidential information under applicable state law.
Nothing in this Agreement is intended to or shall be interpreted as
diminishing or otherwise limiting the Company's right under applicable
state law to protect its trade secrets and confidential information.
19. INVENTIONS. The Executive agrees to promptly report and disclose to the
Company all developments, discoveries, methods, processes, designs,
inventions, ideas, or improvements (hereinafter collectively called "Work
Product"), conceived, made, implemented, or reduced to practice by the
Executive, whether alone or acting with others, during the Executive's
employment with the Company, that is developed (a) on the Company's time,
or (b) while utilizing, directly or indirectly, the Company's equipment,
supplies, facilities, or trade secret information. the Executive
acknowledges and agrees that all Work Product is the sole and exclusive
property of the Company. The Executive agrees to assign, and hereby
automatically assigns, without further consideration, to the Company any
and all rights, title, and interest in and to all Work Product; provided
however, that this Section shall not apply to any Work Product for which no
equipment, supplies, facilities, or trade secret information of the Company
was used and which was developed entirely on the Executive's own time,
unless the Work Product (a) relates directly to the Company's business or
its actual or demonstrably anticipated research or development, or (b)
results from any work performed by the Executive for the Company. The
Company, its successors and assigns, shall have the right to obtain and
hold in its or their own name copyright registrations, trademark
registrations, patents and any other protection available to the work
Product. The Executive agrees to perform, upon the reasonable request of
the Company, during or after employment, such further acts as may be
necessary or desirable to transfer, perfect, and defend the Company's
ownership of the Work Product.
10
<PAGE>
20. RETURN OF COMPANY PROPERTY. All records, designs, patents, business plans,
financial statements, manuals, memoranda, customer lists, customer
database, rolodex and other property delivered to or compiled by the
Executive by or on behalf of the Company (including the respective
subsidiaries thereof) or its representatives, vendors or customers which
pertain to the business of the Company (including the respective
subsidiaries thereof) shall be and remain the property of the Company, and
be subject at all times to its discretion and control. Upon the request of
the Company and, in any event, upon the termination of the Executive's
employment with the Company, the Executive shall deliver all such materials
to the Company. Likewise, all correspondence, reports, records, charts,
advertising materials and other similar data pertaining to the business,
activities or future plans of the Company which are collected by the
Executive shall be delivered promptly to the Company without request by it
upon termination of the Executive's employment.
21. EQUITABLE REMEDY. Because of the difficulty of measuring economic losses to
the Company as a result of a breach of the covenants set forth in Sections
17, 18, 19 and 20, and because of the immediate and irreparable damage that
would be caused to the Company for which monetary damages would not be a
sufficient remedy, it is hereby agreed that in addition to all other
remedies that may be available to the Company at law or equity, the Company
shall be entitled to specific performance and any injunctive or other
equitable relief as a remedy for my breach or threatened breach of the
Executive's covenants.
22. NOTICE. For the purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall
be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return
receipt re-quested, postage prepaid, addressed as follows:
If to the Executive:
Mr. Steven J. Heyer
Atlanta, Georgia
11
<PAGE>
If to the Company:
The Coca-Cola Company
One Coca-Cola Plaza
Atlanta, GA 30313
Attention: Chief Executive Officer
or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notices of change
of address shall be effective only upon receipt.
23. MISCELLANEOUS. No provisions of this Agreement may be modified unless such
modification is agreed to in writing signed by the Executive and an
authorized officer of the Company. Any waiver or discharge must be in
writing and signed by the Executive or such an authorized officer of the
Company, as the case may be. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of Delaware without regard to its
conflicts of law principles.
24. WITHHOLDING. Any payments provided for in this Agreement shall be paid net
of any applicable withholding of taxes required under federal, state or
local law.
25. VALIDITY. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force and
effect.
26. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together
will constitute one and the same instrument.
27. ENTIRE AGREEMENT. This Agreement (together with any option and restricted
stock agreements which may evidence the awards contemplated hereby) set
forth the entire agreement of the parties hereto in respect of the subject
matter contained herein and supersedes all prior agreements, promises,
covenants, arrangements, communications, representations or warranties,
whether oral or written, by the parties hereto in respect of the subject
matter contained herein; and any prior agreement of the parties hereto in
respect of the subject matter contained herein is hereby terminated and
canceled.
12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
March ___, 2001 to be effective as of the Effective Date.
THE COCA-COLA COMPANY
By: /s/ DOUGLAS N. DAFT
Name:-------------------
Title:------------------
/s/ STEVEN J. HEYER
- ------------------------
Executive
13
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.22.2
<SEQUENCE>11
<FILENAME>x10-22b.txt
<DESCRIPTION>LETTER TO STEVEN J. HEYER, DATED 1-4-02
<TEXT>
January 4, 2002
Mr. Steven J. Heyer
The Coca-Cola Company
Atlanta, Georgia
Dear Steve:
As you are aware, as an executive of the Company you are
required to meet certain stock ownership requirements.
It is the Company's desire that you begin to take action to
satisfy those stock ownership requirements.
I am pleased to advise you that I recommended and the
Compensation Committee of the Board approved my
recommendation to accelerate from April 1, 2002 to January 15,
2002 the Deferred Sign-On Payment of $500,000 contemplated
by your Employment Agreement.
Sincerely
/s/ Douglas N. Daft
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.24
<SEQUENCE>12
<FILENAME>x10-24.txt
<DESCRIPTION>LETTER AGREEMENT BETWEEN KO AND JOSEPH R. GLADDEN, JR.
<TEXT>
EXHIBIT 10.24
[LETTERHEAD OF THE COCA-COLA COMPANY]
June 12, 2001
PERSONAL AND CONFIDENTIAL
- -------------------------
Mr. Joseph R. Gladden, Jr.
Atlanta, GA
Dear Joe:
Thanks for our recent conversations. I believe we have reached an agreement
which accommodates the Company's interest in a clear transition, Deval's
interest in having access to you and your experience for his orientation, and
your interest in retaining the October 2000 option grant. This will confirm our
understandings.
The Company will extend your employment on a part-time basis through November 1,
2001. This will enable you to retain the options granted to you in October 2000,
which you would otherwise forfeit upon your original retirement date of June 1,
2001. You will be compensated at 50% of your current base salary from June 1
through October 31, 2001. You will continue to participate in all benefit
programs until October 31, 2001 and you will be considered for a prorated
incentive bonus for 2001 based on Company performance, personal performance and
contributions. Your retirement will be effective on November 1, 2001.
During your continued employment, your assignment will be to work with Deval as
needed to transition any activities or other work, and to assist him with his
orientation.
In exchange for the Company's agreement to continue your employment, you agree
not to disparage the Company, its officers or its employees. We will prepare for
your review and approval an appropriate amendment to the stock option agreement
memorializing this term and making the October 2000 option grant subject to
forfeiture in the event of disparagement.
<PAGE>
June 12, 2001
Page 2
The Company will provide whatever assistance you need to help you vacate your
office by June 20, 2001. At times when you are on site, the Company will provide
suitable office space and support. Through your extended employment, the Company
will also pay your normal work-related expenses, such as appropriate travel
expenses.
Upon your retirement, in accordance with the terms of the plans, all of the
other options that you hold will be fully vested and exercisable according to
their terms. In addition, your restricted stock will be released to you at that
time. The amendment we have discussed will apply only to the October 2000 grant.
If your services are required by the legal function after November 1, at the
discretion of the General Counsel, the Company would agree to a consulting
agreement at a daily rate of $1,500 for services rendered.
We appreciate your long and loyal service on behalf of The Coca-Cola Company.
Thank you for helping us accommodate all of the pertinent interests. We will get
you a draft amendment soon. Pat O'Neil and her staff will effect the other
necessary changes.
Sincerely,
/s/ James E. Chestnut
Accepted: /s/ Joseph R. Gladden, Jr.
--------------------------
Joseph R. Gladden, Jr.
Date: July 17, 2001
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.25
<SEQUENCE>13
<FILENAME>x10-25.txt
<DESCRIPTION>LETTER AGREEMENT BETWEEN KO AND CHARLES S. FRENETTE
<TEXT>
EXHIBIT 10.25
[LETTERHEAD OF THE COCA-COLA COMPANY]
August 22, 2001
Mr. Charles S. Frenette
Atlanta, Georgia
Dear Charlie:
This letter outlines the terms under which you will separate from
The Coca-Cola Company (the Company). You have resigned as
Executive Vice President of The Coca-Cola Company and as President
and Chief Operating Officer, Europe, Eurasia and Africa Group of
The Coca-Cola Export Corporation, effective immediately. You have
agreed to remain an employee of The Coca-Cola Company at your total
current rate of annual base salary as set by the Compensation Committee
("Base Salary") until October 31, 2001, (the "Separation Date").
The Board of Directors has accepted your resignation and the terms and
conditions described in this letter have been approved by the
Compensation Committee (or the appropriate Subcommittee) of the
Board.
Your repatriation to Atlanta, Georgia will be effective October 1, 2001.
Effective with your Separation Date, you will receive a lump sum payment
of two years Base Salary. Payments will be offset by all salary
continuation, severance payments and any other applicable payments due
to you as a result of your separation under the laws of any country.
You are eligible for a prorated Annual Incentive for 2001, payable in 2002,
based upon your performance and after results are certified under the
terms of the Executive Performance Incentive Program and the Executive
Incentive Plan.
You will also be paid prorated payments for performance periods in
progress under the Long Term Incentive Plan after results are certified,
according to plan terms.
Both annual incentive and LTI payments will be subject to applicable taxes
and may be subject to hypothetical tax withholdings. These payments will
be certified at the same time as awards for other officers (in February
2002) and paid to you within sixty (60) days after the awards are certified
under the terms of the plan, but in no event later than March 31, 2002.
<PAGE>
Mr. Charles S. Frenette
Atlanta, Georgia
August 22, 2001
Page 2
As soon as reasonably practical after your Separation Date, you will also
receive a payment of $1,500,000.
Related to your stock option grants, the following actions will be taken,
effective with your separation:
- The retention grant made in February 2000 will be forfeited.
- Options granted before 1997 are vested and will remain exercisable
according to their terms (i.e., six months to exercise after your
Separation Date).
- Options granted after 1996 will fully vest on your Separation Date and
will remain exercisable for the seven-year period beginning on the
Separation Date, unless the original term of option expires earlier.
In exchange for the treatment of your options as noted above, your option
agreements for the grant made in May 2001 is hereby amended as
follows:
"1 (a) (v) Notwithstanding anything to the contrary contained herein, in
the event that you should disparage the Company, its officers or employees
this option will be forfeited. Disparagement means negative oral statements
to the media which can be accurately demonstrated in fact to be
attributable to you or negative statements in publications which can be
accurately demonstrated in fact to be attributable to you."
Restrictions on your 72,500 shares of restricted stock will be released as of
your Separation Date, and shares will be delivered as soon as reasonably
practicable thereafter. The performance award, which could have resulted in a
future award of 125,000 restricted shares, will be forfeited.
<PAGE>
Mr. Charles S. Frenette
Atlanta, Georgia
August 22, 2001
Page 3
Your retirement benefits will consist only of those benefits already vested. As
soon as reasonably practicable after the Separation Date you will receive a lump
sum distribution of your Thrift Benefit under the Supplemental Plan according to
the terms of that plan. Also, your account in the Compensation Deferral and
Investment Program will be deferred in accordance with your irrevocable election
until you reach age 55, less elected early payments. At that time, you will
begin to receive monthly income from that program until age 80. Subject to your
elections and the terms and conditions of such plans, you will receive your
other vested benefits in the Thrift and Investment Plan, the Employee Retirement
Plan and the Supplemental Benefit Plan. You have been provided with a separate
letter detailing your vested pension and CDIP payments.
While you remain on payroll, your current benefits coverage will continue. The
Company will reimburse you for the cost of COBRA continuation of benefit
coverage for you, your spouse and your eligible dependents until the earlier of
the eighteen-month anniversary of your Separation Date or your obtaining
employment that provides medical coverage.
TAXES
- -----
You are entitled to a consultation with Ernst & Young, at no cost to you, to
discuss the implications of your repatriation and the Company's tax equalization
program. The Company will provide tax preparation through the services of Ernst
& Young for the current year's tax returns. You will remain in the tax
equalization program for the year of repatriation, and for 2002, if the annual
incentive or LTI payments described above are taxable in the UK or to collect
foreign tax credits. The Company will determine whether you remain in the tax
equalization program for subsequent years, in order to collect foreign tax
credits. As long as you are retained in the tax equalization program, the
Company will have Ernst & Young prepare your tax returns at Company expense.
However, you may be required to pay estimated U.S. federal and state taxes on
your income.
<PAGE>
Mr. Charles S. Frenette
Atlanta, Georgia
August 22, 2001
Page 4
TAXES (Continued)
- -----------------
Payments made under this agreement after your repatriation date will be subject
to applicable federal, state and local tax withholding and any estimated tax
due. Any UK tax on payments (excluding annual incentive and LTI as noted above)
under this agreement that arises due to i) your decision to remain in or return
to the UK following your repatriation date and/or ii) your bringing funds into
the UK is solely your responsibility, except that the Company will pay any
incremental UK tax on a reasonable amount (not to exceed 6,000 British pounds
per month) that is brought into the UK to cover living expenses through July
2002.
Should you exercise any stock options prior to your repatriation date, such
exercises will be subject to hypothetical tax withholding. When you exercise
stock options following your repatriation date, appropriate federal, state and
local tax will be withheld, and you will be personally liable for paying any
estimated federal, state or local taxes.
The manner in which hypothetical tax withholding and tax equalization works is
described in the International Service Program Guide.
INTERNATIONAL SERVICE PROGRAM
- -----------------------------
You have received a letter outlining the allowances and payments under the
International Service Program. In addition to those normal plan allowances, the
following exceptions to policy have been approved for you:
1) Your family will continue to be provided schooling and housing and other
appropriate expatriate provisions, including host country, utility and
automobile allowances, through the end of the 2001 - 2002 school year in
London. You will be grossed up for any incremental tax (after reduction for
applicable credits and exclusions) related to these allowances. This is
contingent upon your family meeting applicable legal requirements to remain
in the UK.
<PAGE>
Mr. Charles S. Frenette
Atlanta, Georgia
August 22, 2001
Page 5
INTERNATIONAL SERVICE PROGRAM (Continued)
- -----------------------------------------
2) Upon your return to the United States, Home Purchase Assistance will be
provided and Home Sale Assistance (both described in the International
Service Program Guide) of your Atlanta condominium, if it is sold.
RELEASE AND AGREEMENT ON CONFIDENTIALITY AND COMPETITION
- --------------------------------------------------------
The terms and conditions in this letter are contingent upon your signing
this letter and executing the attached Full and Complete Release and Agreement
on Confidentiality and Competition.
We appreciate your long and loyal service on behalf of
The Coca-Cola Company.
On behalf of the Board,
/s/ Cathleen P. Black /s/ James E. Chestnut
- -------------------------------- ----------------------------
Cathleen P. Black James E. Chestnut
Chairman, Compensation Committee Executive Vice President
The Board of Directors of The Coca-Cola Company
The Coca-Cola Company
Agreed and accepted this 29th day of August, 2001
/s/ Charles S. Frenette
- --------------------------------
Charles S. Frenette
<PAGE>
FULL AND COMPLETE RELEASE AND
AGREEMENT ON CONFIDENTIALITY AND COMPETITION
In consideration of the benefits provided by The Coca-Cola Company as set
forth in the letter agreement dated August 22,2001, the sufficiency of which is
hereby acknowledged, Charles S. Frenette ("Employee") and The Coca-Cola Company
agree as follows:
Section 1. Full and Complete Release.
- -------------------------------------
1.1. Employee, for himself, his heirs, executors, administrators and
assigns remises, releases and forever discharges The Coca-Cola Company and
its subsidiaries (collectively, the "Company"), and their respective
directors, officers and employees of and from all debts, claims, actions,
causes of actions (including, but not limited to, the Employee Retirement
Income Security Act of 1974, as amended, 29 U.S.C., Section 1001, et. seq.,
and those federal, state and foreign laws prohibiting employment
discrimination based on age, sex, race, color, national origin, religion,
handicap or veteran status such as the Age Discrimination in Employment
Act, 29 U.S.C. Section 621 et seq., as amended by the Older Workers Benefit
Protection Act, P.L. 101-433; Equal Pay Act of 1963, 9 U.S.C. Section 206
et seq.; Title VII of The Civil Rights Act of 1964, as amended, 42 U.S.C.
2000e et seq.; the Civil Rights Act of 1866, 42 U.S.C. 1981; Americans with
Disabilities Act, 42 U.S.C. 12101, et seq., Rehabilitation Act of 1973, 29
U.S.C. Section 791 et seq.; the Family and Medical Leave Act, 28 U.S.C.
2601 and 2611 et seq., the Georgia Age
<PAGE>
Discrimination Act, Ga. Code Ann. 34-1-2; the Georgia Fair Employment
Practices Act of 1978, Ga. Code Ann. 45-19-20 et seq.; and the Georgia
Equal Employment for the Handicapped Code, Ga. Code Ann. 34-6A-1 et seq.),
suits, dues, sums of money, accounts, reckonings, covenants, contracts,
claims for attorneys' fees, controversies, agreements, promises and all
liabilities of any kind or nature whatsoever, at law, in equity, or
otherwise which he ever had, now has, or which he, his heirs, executors,
administrators and assigns hereafter can, shall or may have, from the
beginning of his employment through the date he executes this Agreement,
including those associated with his employment and separation from
employment with the Company.
1.2. The Company represents and warrants that it is not aware of any
claims, other than receivables for taxes in the ordinary course of an
International Services Associate relationship, that it has against Employee
as of the date hereof.
1.3. Wherein Employee's spouse, child or other immediate family member
makes any claim for loss of consortium, or any other similar claim,
arising out of the employment relationship between the parties and its
termination thereof, Employee will indemnify and hold the Company harmless
from any liability, including costs and expenses (as well as reasonable
attorneys' ees) incurred by the Company as a result of any such claim.
2
<PAGE>
1.4. Employee understands and agrees:
(a) No rights or claims are waived that may arise after the date
Employee executes this Agreement;
(b) Employee is advised to consult with an attorney prior to
executing this Agreement;
(c) Employee has 21 days from the receipt of this Agreement within
which to consider the Agreement;
(d) Employee has 7 days following the execution of this Agreement to
revoke the Agreement; and
(e) The Agreement shall not become effective or enforceable until the
revocation period of 7 days has expired.
1.5. It is additionally understood and agreed that this Agreement is not
and shall not be construed to be an admission of liability of any kind on
the part of the party or parties hereby released.
Section 2. Trade Secrets and Confidential Information.
- ------------------------------------------------------
2.1. Employee will hold in confidence all trade secrets and confidential
information of the Company that came into his knowledge during his
employment with the Company and shall not disclose, publish or make use of
at any time after the date Employee executes this Agreement such trade
secrets or confidential information without the prior written consent of
the Chairman of the Board of Directors of The Coca-Cola Company.
3
<PAGE>
2.2. The terms and conditions of this Agreement and the accompanying Letter
Agreement dated August 22, 2001 (the "Letter Agreement") are deemed to be
confidential in nature and neither Employee nor his agents, employees,
representatives, or attorneys will divulge any of the terms and conditions
of these documents to anyone, other than legal, tax and financial advisors.
Section 3. Nondisparagement.
- ---------------------------------
Employee will not disparage the Company, its subsidiaries, or its officers
or employees. The Company will not disparage Employee. "Disparagement" means a
negative oral statement to the media that can be accurately demonstrated in fact
to be attributable to Employee or the Company (as applicable) or negative
statements in publications that can be accurately demonstrated in fact to be
attributable to Employee or the Company (as applicable).
Section 4. Non Compete and Non Solicitation.
- --------------------------------------------
4.1. NON COMPETE. Employee hereby covenants with the Company that he will
not, without the prior written consent of the Chairman of the Board of
Directors of The Coca-Cola Company, either directly or indirectly, for
himself or on behalf of or in conjunction with any other person, company,
partnership, corporation, business, group or other entity, engage, as an
officer, director, owner, partner, member, joint venture, or in any other
capacity, whether as an employee, independent contractor, consultant,
advisor or sales representative:
4
<PAGE>
(a) until October 31, 2003, in any business engaged in the
manufacture, sale or distribution of Non-alcoholic Beverages; or
(a) [sic] until October 31, 2004, in performing services for PepsiCo
or its subsidiaries (including but not limited to Pepsi Bottling
Group).
Notwithstanding the foregoing, Employee may:
--------------------------------------------
(i) perform services for any company (other than PepsiCo or its
subsidiaries, including but not limited to Pepsi Bottling
Group), which has a Competing Business Segment, provided
that Employee does not perform services directly for such
Competing Business Segment, and provided Employee notifies
the Chairman of the Board of Directors of The Coca-Cola
Company of the nature of such services (to the extent
consistent with any confidentiality or non-disclosure
obligations Employee may have) in writing prior to beginning
such services;
(ii) perform services for any entity which has an affiliation or
commercial relationship with the Company, provided Employee
notifies the Chairman of the Board of Directors of The
Coca-Cola Company of the nature of such services (to the
extent consistent with any confidentiality or non-
disclosure obligations Employee may have) in writing prior
to beginning such services; or
5
<PAGE>
(iii) have an ownership interest in any company engaged in the
manufacture, sale, or distribution of Non-alcoholic
Beverages, provided he is not performing services therefor.
For purposes hereof:
--------------------
"Competing Business Segment" means any segment of the business of
a company which manufactures, sells or distributes Non-alcoholic
Beverages; and "Non-Alcoholic Beverages" means ready to drink,
shelf-stable carbonated soft drinks, coffee, tea, water or
fruit-based beverages
4.2. NON SOLICITATION. Employee hereby covenants with the Company that he
will not, until October 31, 2004, without the prior written consent of the
Chairman of the Board of Directors of The Coca-Cola Company, solicit or
attempt to solicit for employment for or on behalf of any corporation,
partnership, venture or other business entity any person who, on the last
day of Employee's employment with the Company or within 12 months prior to
that date, was employed by the Company or its direct or indirect
subsidiaries as a manager or executive and with whom Employee had material
contact during the course of his employment with the Company (whether or
not such person would commit a breach of contract).
6
<PAGE>
Section 5. Reasonable and Necessary Restrictions.
- -------------------------------------------------
5.1 Employee acknowledges that during the course of his employment with the
Company he has received or will receive and has had or will have access to
confidential information and trade secrets of the Company, including but
not limited to confidential and secret business and marketing plans,
strategies, and studies, detailed client/customer lists and information
relating to the operations and business requirements of those
clients/customers and, accordingly, he is willing to enter into the
covenants contained in this Agreement in order to provide the Company with
what he considers to be reasonable protection for its interests.
5.2 Employee acknowledges that the restrictions, prohibitions and other
provisions hereof, are reasonable, fair and equitable in scope, terms and
duration, are necessary to protect the legitimate business interests of the
Company. Employee covenants that he will not challenge the enforceability
of this Agreement nor will he raise any equitable defense to its
enforcement.
Section 6. Severability.
- -------------------------
If fulfillment of any provision of this Agreement, at the time such
fulfillment shall be due, shall transcend the limit of validity prescribed by
law, then the obligation to be fulfilled shall be reduced to the limit of such
validity; and if any clause or provision contained in this Agreement operates or
would operate to invalidate this Agreement, in whole or in part, then such
clause or provision only shall be held ineffective, as though not herein
contained, and the remainder of this Agreement shall remain operative and in
full force and effect.
7
<PAGE>
Section 7. Indemnification.
- ----------------------------
To the fullest extent permitted by law, the Company shall indemnify
Employee (including the advancement of expenses) for any judgments, fines,
amounts paid in settlement and reasonable expenses, including attorneys fees,
incurred by Employee in connection with the defense of any lawsuit or other
claim for which the Employee is made a party by reason of his being an officer,
director or employee of the Company or any of its subsidiaries or as a result of
Employee being a director, at the Company's request, of any company in which the
Company has an equity interest, including without limitation, any such matters
which arise after Employee's separation. Through December 31, 2001 and for at
least three years thereafter, the Company shall use its reasonable best efforts
to maintain customary director and officer liability insurance covering Employee
for acts and omissions during the period he was employed by the Company.
Section 8. Dispute Resolution.
- ------------------------------
All controversies, claims or disputes arising out of or related to this
Agreement or the Letter Agreement shall be settled in Atlanta, Georgia, under
the rules of the American Arbitration Association then in effect, and judgment
upon such award rendered by the arbitrator(s) may be entered in any court of
competent jurisdiction. The arbitrators fees shall be split equally among the
parties. In the event that the Company and Employee enter into arbitration,
based upon the Company's assertion that Employee has violated his
non-disparagement obligations in the Letter Agreement, the Company will
reimburse Employee for all reasonable attorneys fees expended during the course
of the arbitration.
8
<PAGE>
Section 9. Governing Law.
- --------------------------
This Agreement and the accompanying Letter Agreement are the complete
understanding between Employee and The Coca-Cola Company in respect of the
subject matter of this Agreement and supersede all prior agreements relating to
the same subject matter. Employee acknowledges that he has not relied upon any
representations, promises or agreements of any kind except those set forth
herein and in the accompanying Letter Agreement in signing this Agreement.
Employee has read and reviewed this Agreement, fully understands it and
voluntarily signs same.
Date: 27/08/01
/s/ Charles S. Frenette
--------------------------------------
Charles S. Frenette
The Coca-Cola Company
/s/ James E. Chestnut
--------------------------------------
James E. Chestnut
Executive Vice President
9
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.26
<SEQUENCE>14
<FILENAME>x10-26.txt
<DESCRIPTION>LETTER AGREEMENT BETWEEN TCCEC AND CHARLES S. FRENETTE
<TEXT>
EXHIBIT 10.26
[LETTERHEAD OF THE COCA-COLA EXPORT CORPORATION]
August 22, 2001
Mr. Charles S. Frenette
London, England
Dear Charlie:
This letter outlines the terms under which you will separate from The Coca-Cola
Export Corporation ("Export Corporation"). You have resigned as President and
Chief Operating Officer, Europe, Eurasia and Africa Group effective immediately.
You will be entitled to your remuneration under your contract with the company
up to September 30, 2001 and will continue to receive all payments, allowances,
with benefits accrued up to that date under the International Service Program.
Your repatriation will be effective October 1, 2001. You should perform no work
in the United Kingdom after September 30, 2001
TAXES
- -----
You are entitled to a consultation with Ernst & Young, at no cost to you, to
discuss the implications of your repatriation and the companys tax equalization
program. Details regarding income taxes and tax equalization program have been
provided to you in a separate letter.
INTERNATIONAL SERVICE PROGRAM
- -----------------------------
This section outlines the relocation provisions applying to your repatriation
under the International Service Program.
Relocation
- ----------
The company will pay the expense of packing and moving normal personal and
household effects as well as any normal import duties for you and your family
from the host country to the home country. It will also pay the storage
expenses, if necessary, in transit. The company will cover storage fees, long
term or in transit up to 60 days after your household goods have arrived in the
home country. The company will also pay normal insurance coverage on household
effects while in transit. Please refer to the RELOCATION section of THE
INTERNATIONAL SERVICE PROGRAM GUIDE for further details. Since your family may
remain in London during the school year, the relocation provisions will be
available to you though August 31, 2002.
You will be provided a temporary living allowance for the transition back to the
United States of $8,950 net of tax, subject to U.S. Social Security.
<PAGE>
Mr. Charles S. Frenette
London, England
August 22, 2001
Page 2
Allowances
- ----------
All payments in this section are paid net of tax, subject to U. S. Social
Security. Relocation allowances will be paid following receipt of your signed
letter upon your repatriation date or after submission of documentation as
appropriate. You will be eligible for the following Repatriation Allowances:
- International Service Premium: $5,000
- Resettlement Allowance: $6,000
- Voltage Allowance: $2,000 with an additional $3,000 if two or more major
appliances must be purchased
- Car Purchase Assistance: $5,700 for primary car and $4,100 for secondary
car (documentation of purchase is needed to receive assistance)
- Car Disposal Assistance (documentation of purchase and sale is needed to
receive assistance).
Annual Leave
- ------------
Any unused annual leave account balance at the date of repatriation will be
forfeited. Your annual leave days will be pro-rated and the unused and accrued
portion will be liquidated in accordance with the International Service Program
Guide.
Citibank
- --------
If you participate in the Citibank PBOE program, the company will continue to
pay for the service fees associated with Citibank for 60 days following your
assignment termination date. After this time, you will be liable for any fees
associated with Citibank, should you decide to maintain this account.
Other
- -----
Should the company's policies and procedures affecting International Service
Associates generally change, such changes will apply to you. Please feel free to
contact Pat O'Neil at 404-676-7519 or Anne Fletcher at 404-676-2656 if you have
any questions regarding the terms and conditions.
Sincerely,
/s/ James E.Chestnut
--------------------------
James E. Chestnut
ACKNOWLEDGED:
/s/ Charles S. Frenette 29/08/01
- ------------------------- -----------------
Charles S. Frenette Date
cc: Ms. Coretha Rushing
Ms. Pat O'Neil
Ms. Anne Fletcher
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.27
<SEQUENCE>15
<FILENAME>x10-27.txt
<DESCRIPTION>LETTER AGREEMENT BETWEEN KO AND BRIAN G. DYSON
<TEXT>
EXHIBIT 10.27
[LETTERHEAD OF THE COCA-C0LA COMPANY
September 17, 2001
Mr. Brian G. Dyson
Atlanta, Georgia
Dear Brian:
It is my pleasure to confirm our discussion related to your employment and pay
as Vice Chairman and Chief Operating Officer. The elements of your compensation
noted below have been approved by the Compensation Committee of the Board of
Directors.
- The term of your employment will be two years, beginning August 1, 2001
and ending July 31, 2003, and may be extended only by a further agreement
in writing signed by the Chairman of the Board of Directors of The
Coca-Cola Company.
- Your base salary will be $83,333.33 on a monthly basis beginning August
1, 2001. The monthly amount of $83,333.33, when annualized is $1,000,000.
Your first paycheck will be offset by the payments you or Chatham
International Corporation may have received after July 31, 2001 under the
Consulting Agreement the Company has with Chatham International
Corporation.
- The Consulting Agreement entered into between The Coca-Cola Company and
Chatham International Corporation on May 1, 2001 is terminated effective
July 31, 2001, and the Company owes no further consulting payments to you
or Chatham International Corporation under that Agreement.
- You will be eligible to participate in the Company's annual incentive
program. Your incentive target is 150% of your base salary. The range for
the incentive award, based on a target of 150%, would be 0% to 150% of
target ($0 to $2,250,000). Your first incentive award will be pro-rated
based on the number of months you participate and will be paid annually
in the first quarter after the close of the calendar year. Your
participation is contingent upon the Company's performance as well as
your individual performance.
- A recommendation for a special one-time stock option grant of 900,000
options will be made for you at the next meeting of the Stock Option
Subcommittee of the Company's Board of Directors following your
employment. This special one-time stock option award will have a
seven-year option term and 100% vesting on the earlier of 1) two years
from the grant date or 2) the date of your resumption of retirement
status from The Coca-Cola Company provided that the options have been
held for at least twelve months from the date of grant, or 3) as
otherwise provided in the 1999 Stock Option Plan.
- You will be eligible to participate in the Financial Planning and
Counseling Program offered to executives. The Program provides
reimbursement of $10,000 in financial planning and counseling services
during the first calendar year of participation and $4,500 each following
year for ongoing planning and counseling. This benefit will be subject to
all applicable taxes. In addition, you will receive a sum of $10,000 to
cover incidental expenses related to your reemployment.
- In accordance with Company policy, you will be eligible for Company-paid
membership and reimbursement of dues associated with one country club,
social club or similar club as long as the club use is for ordinary and
necessary business purposes. You will be required to track and report any
personal use of the Company-paid club membership and dues. Club use that
is personal is considered taxable income.
- With regard to the fractional ownership of the Hawker 800 XP aircraft,
during the term of your employment with the Company, the Company will
lease the aircraft at a rate of $6,778.13 per month to be used in the
Company's aviation fleet. The Management Agreement with Executive Jet
Aviation, Inc. will be assigned to the Company during the term of your
employment (contingent upon consent of Executive Jet Aviation, Inc.),
with the fees due thereunder paid by the Company.
- During the term of your employment, you will be provided an automobile
from the Company's existing automobile fleet as well as a driver.
- In accordance with the terms of the Employee Retirement Plan of The
Coca-Cola Company, your ERP benefit of $811 per month will be suspended
as of the effective date of your rehire with the Company. You will
receive a separate letter outlining the effect of your reemployment on
your pension payments.
- You will continue to receive your monthly payments under The Coca-Cola
Company Supplemental Benefit Plan, as well as your CCE qualified and non
qualified Plan benefits, during your reemployment.
- You will continue to receive the payments from the Compensation Deferral
and Investment Program during the term of your reemployment.
- As part of your return to work as an active employee, you will have the
same medical plan options and other employee benefit plan elections as
other active employees. You and your spouse will be eligible for the
options available to employees in Atlanta: SelectCare I and II, United
HealthCare HMO, Prudential HMO or Cigna HMO and the Supplemental Plan.
Upon retirement in the future, you will revert back to the Base Plan with
Medicare primary. A package of information for you to make these and
other benefit elections will be provided to you shortly.
- This letter constitutes the complete understanding between you and the
Company and supersedes any previous agreement, written or oral, relating
to the subject matter of this letter. Any dispute related to this letter
shall be resolved by arbitration at Atlanta, Georgia pursuant to the
Commercial Arbitration Rules of the American Arbitration Association.
As we discussed, I believe you have a great deal to contribute to The Coca-Cola
Company and that you will be a valuable addition to my team and the Company.
Please signify your acceptance of such employment by signing as indicated below.
Sincerely,
/s/ Douglas N. Daft
ACCEPTED: /S/ BRIAN G. DYSON
-----------------------------------
Brian G. Dyson
Individually, and as President of Chatham International Corporation
DATE: 9-18-01
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.28
<SEQUENCE>16
<FILENAME>x10-28.txt
<DESCRIPTION>LETTER AGREEMENT BETWEEN KO AND JAMES E. CHESTNUT
<TEXT>
EXHIBIT 10.28
October 17, 2001
James E. Chestnut
Atlanta, Georgia
Dear James:
This letter confirms the understanding that we have concerning your
upcoming assignment as President, Pacific Rim, based in Tokyo, Japan. You will
receive a letter of understanding outlining the terms of your assignment. This
letter covers additional items for your records.
Salary/Incentive/Long Term Incentive/Stock Options
While you are on assignment, your base salary, and the targets and
opportunities for future awards of annual and long-term incentive, stock options
and restricted stock awards shall not be less than your current targets and
opportunities.
Benefits
You will continue your participation in the Key Executive Retirement Plan.
You will continue to be eligible for the Financial Planning program, subject to
applicable tax withholdings.
International Service Program
1. The Company will reimburse you, net of taxes for the out-of-pocket expenses
you have incurred by paying and forfeiting partial tuition for the 2001 -
2002 school year in Atlanta.
2. The Company will reimburse you for Home Sale Assistance to cover general
expenses associated with selling your home. The Company will waive the
stated maximum for this coverage and will cover up to 7% of the documented
sales price, net of taxes for you. If you are unsuccessful in selling your
property, Home Purchase Buyout will be available.
3. At the end of your assignment, if that occurs prior to your son's
completion of high school, you and your family will continue to be provided
schooling and housing and other appropriate expatriate provisions through
the end of the school year at the host location.
<PAGE>
Page 2
October 17, 2001
4. At the end of your assignment, Home Purchase Assistance will be
provided.
5. At the end of your assignment, if repatriation without a job occurs,
salary continuation will be provided for twelve months. Any severance pay for
which you are eligible will be offset by the salary continuation.
.
Sincerely,
/s/ Douglas N. Daft
EXHIBIT A
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.29
<SEQUENCE>17
<FILENAME>x10-29.txt
<DESCRIPTION>COMPENSATION COMMITTEE RESOLUTIONS, RE. SANDY ALLAN
<TEXT>
EXHIBIT 10.29
COMPENSATION COMMITTEE
Mexico City, Mexico
October 17, 2001
Proposed resolution approving exceptions to the International Service
Program for an officer
RESOLVED, that A.R.C. (Sandy) Allan, who is on assignment in London, is covered
by the provisions, as an expatriate, of the International Service Program;
FURTHER RESOLVED, that the Committee agrees, in light of the dual nature of Mr.
Allan's role, to provide certain exception to policy related to that Program;
FURTHER RESOLVED, that the nature of the exceptions are as follows:
1) Mr. Allan and his family will continue to be provided schooling and
housing and other appropriate expatriate provisions through the end of
the school year in Hong Kong; and
2) Mr. Allan will be provided a Housing and Utilities Allowance less
Shelter Deduction for his primary residence in his new location;
FURTHER RESOLVED, that the appropriate officers for the Company be, and each of
them hereby is, authorized to take any and all action which they or any of them
deem necessary, convenient or appropriate in order to effectuate the purpose of
the proceeding resolution.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.30
<SEQUENCE>18
<FILENAME>x10-30.txt
<DESCRIPTION>DEFERRED COMPENSATION PLAN, ADOPTED 12-20-02
<TEXT>
EXHIBIT 10.30
THE COCA-COLA COMPANY
DEFERRED COMPENSATION PLAN
WHEREAS, the Company (as hereinafter defined) has set forth its desire
to establish The Coca-Cola Company Deferred Compensation Plan to provide (i) a
select group of management or highly compensated employees with a capital
accumulation opportunity by deferring compensation on a pre-tax basis and (ii)
the Company with a method of rewarding and retaining its highly compensated
executives and employees.
NOW, THEREFORE, as of the effective date set forth herein, this Plan
(as hereinafter defined) is hereby adopted to read as follows:
ARTICLE I
TITLE AND DEFINITIONS
1.1 Definitions.
Capitalized terms used in this Plan, shall have the meanings specified
below.
(a) "Account" or "Accounts" shall mean all of such subaccounts as are
specifically authorized for inclusion in this Plan.
(b) "Base Salary" shall mean a Participant's annual base salary,
including any salary continuation, excluding bonus, commissions, incentive and
all other remuneration for services rendered to the Company and prior to
reduction for any salary contributions to a plan established pursuant to Section
125 of the Code or qualified pursuant to Section 401(k) of the Code.
(c) "Beneficiary" or "Beneficiaries" shall mean the person or persons,
including a trustee, personal representative or other fiduciary, last designated
in writing by a Participant in accordance with procedures established by the
Committee to receive the benefits specified hereunder in the event of the
Participant's death. No beneficiary designation shall become effective until it
is filed with the Committee. Any designation shall be revocable at any time
through a written instrument filed by the Participant with the Committee with or
without the consent of the previous Beneficiary. No designation of a Beneficiary
other than the Participant's spouse shall be valid unless consented to in
writing by such spouse. If there is no such designation or if there is no
surviving designated Beneficiary, then the Participant's surviving spouse shall
be the Beneficiary. If there is no surviving spouse to receive any benefits
payable in accordance with the preceding sentence, the duly appointed and
currently acting personal representative of the Participant's estate (which
shall include either the Participant's probate estate or living trust) shall be
the Beneficiary. In any case where there is no such personal representative of
the Participant's estate duly appointed and acting in that capacity within 90
days after the Participant's death (or such extended period as the Committee
determines is reasonably necessary to allow such personal
<PAGE>
representative to be appointed, but not to exceed 180 days after the
Participant's death), then Beneficiary shall mean the person or persons who can
verify by affidavit or court order to the satisfaction of the Committee that
they are legally entitled to receive the benefits specified hereunder. In the
event any amount is payable under the Plan to a minor, payment shall not be made
to the minor, but instead be paid to such minor's legal guardian duly appointed
and currently acting to hold the funds for such minor. If no guardian of the
estate for the minor is duly appointed and currently acting within 60 days after
the date the amount becomes payable, payment shall be deposited with the court
having jurisdiction over the estate of the minor. Payment by Company pursuant to
any unrevoked Beneficiary designation, or to the Participant's estate if no such
designation exists, of all benefits owed hereunder shall terminate any and all
liability of Company.
(d) "Board of Directors" or "Board" shall mean the Board of Directors
of The Coca-Cola Company.
(e) "Bonuses" shall mean the bonuses earned as of the last day of the
Plan Year pursuant to any bonus plan or program approved by the Committee,
provided a Participant is in the employ of the Company on the last day of the
Plan Year.
(f) "Change of Control" shall 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 14A under the Exchange Act as in effect on January 1, 2002,
provided that such a change in control shall 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 as in effect on January 1, 2002) 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 (2) consecutive
years or less, individuals who at the beginning of such period constituted the
Board of Directors of the Company cease, 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 the Stock shall 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 shall 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 shall be
deemed to have occurred if, prior to such times as a Change in Control would
otherwise be deemed to have occurred, the Board of Directors determines
otherwise.
(g) "Code" shall mean the Internal Revenue Code of 1986, as amended.
-2-
<PAGE>
(h) "Committee" shall mean the Management Committee appointed by the
Compensation Committee to administer the Plan in accordance with Article VII.
(i) "Company" shall mean The Coca-Cola Company, a Delaware
corporation.
(j) "Company Discretionary Contribution Amount" shall mean such
discretionary amount, if any, contributed by the Company for a Participant for a
Plan Year. Such amount may differ from Participant to Participant both in
amount, including no contribution and as a percentage of Compensation.
(k) "Company Matching Contribution Amount" shall mean such amount
contributed by the Company, if any, for a Participant for a Plan Year. Such
amount may differ from Participant to Participant.
(l) "Company Discretionary Contribution Subaccount" shall mean the
bookkeeping account maintained by the Company for each Participant that is
credited with an amount equal to (i) the Company Discretionary Contribution
Amount, if any, paid by the Company and (ii) earnings and losses pursuant to
Section 4.1.
(m) "Company Matching Contribution Subaccount" shall mean the
bookkeeping account maintained by the Company for each Participant that is
credited with the number of Stock Units equal to the Company Matching
Contribution Amount, if any, and the Dividend Equivalent, if any, paid by the
Company.
(n) "Compensation" shall mean Base Salary and Bonus.
(o) "Compensation Committee" shall mean the Compensation Committee of
the Board of Directors of the Company or any subcommittee thereof.
(p) "Compensation Deferral Subaccount" shall mean the bookkeeping
account maintained by the Committee for each Participant that is credited with
amounts equal to (i) the portion of the Participant's Compensation that he or
she elects to defer, and (ii) earnings and losses attributable thereto pursuant
to Section 4.1.
(q) "Designated Employees" shall mean Eligible Employees designated by
the Committee as eligible to defer Stock Option Gains and Restricted Stock
Awards.
(r) "Disability" shall mean that the Participant meets the definition
of "disabled" under the terms of The Coca-Cola Company Long Term Disability
Income Plan in effect on the date in question, whether or not such Participant
is covered by such plan.
(s) "Distributable Amount" shall mean the vested balance in the
Participant's Accounts subject to distribution in a given Plan Year.
(t) "Dividend Equivalent" shall mean the amount of cash dividends or
other cash distributions paid by the Company on that number of shares equal to
the number of Stock Units credited to a Participant's Stock Unit Subaccount and
Company Matching Contribution Subaccount as of the applicable record date for
the dividend or other distribution, which amount
-3-
<PAGE>
shall be credited in the form of additional Stock Units to the Participant's
Stock Unit Subaccount and Company Matching Contribution Subaccount.
(u) "Early Distribution" shall mean an election by a Participant in
accordance with Section 6.2(d) to receive a withdrawal of amounts from his or
her Compensation Deferral Subaccount and any vested Company Discretionary
Contribution Subaccount prior to the time at which such Participant would
otherwise be entitled to such amounts.
(v) "Effective Date" shall be June 1, 2002.
(w) "Eligible Employee" shall mean a select group of management and/or
highly compensated employees specifically selected by the Management Committee
in accordance with the procedures set forth in Article II.
(x) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
(y) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(z) "Fund" or "Funds" shall mean, one or more of the investment funds
selected by the Committee pursuant to Section 3.2(a).
(aa) "Hardship Distribution" shall mean a severe financial hardship to
the Participant resulting from a sudden and unexpected illness or accident of
the Participant or of his or her Dependent (as defined in Section 152(a) of the
Code), loss of a Participant's property due to casualty, or other similar or
extraordinary and unforseeable circumstances arising as a result of events
beyond the control of the Participant.
(bb) "Initial Election Period" shall mean the time period associated
with the first enrollment period of the Plan or the first enrollment period of
an eligible participant.
(cc) "Investment Rate" shall mean, for each Fund, an amount equal to
the net gain or loss on the assets of such Fund during each month.
(dd) "Participant" shall mean any Eligible Employee who becomes a
Participant in this Plan in accordance with Article II.
(ee) "Participating Subsidiary" means a subsidiary of the Company
which the Committee has designated as such and whose employees are eligible to
participate in the Plan; provided that such employee is an Eligible Employee.
(ff) "Payment Date" shall mean:
(i) With respect to Distributable Amounts payable in a lump
sum, as soon as practicable following the end of the calendar quarter in which
termination occurs; and
(ii) With respect to Distributable Amounts payable in annual
installments, each February following the Plan Year in which termination occurs,
beginning with
-4-
<PAGE>
the year following termination in which the Participant has elected to begin
receiving distributions.
(gg) "Plan" shall mean The Coca-Cola Company Deferred Compensation
Plan.
(hh) "Plan Year" shall mean January 1 to December 31 of each year.
(ii) "Related Company" shall mean any entity in which the Company
owns, directly or indirectly, at least 20% of the outstanding voting stock or
capital at the relevant time.
(jj) "Restricted Stock" shall mean shares of Stock issued under the
Restricted Stock Plan which are subject to forfeiture based upon non-compliance
with certain enumerated criteria.
(kk) "Restricted Stock Award" shall mean any award of Restricted Stock
under the Restricted Stock Plan.
(ll) "Restricted Stock Plan" shall mean the 1989 Restricted Stock
Award Plan of The Coca-Cola Company.
(mm) "Retirement" shall mean any time that is at least five (5) years
prior to the earliest permissible retirement date under The Coca-Cola Company
Employee Retirement Plan.
(nn) "Scheduled Withdrawal Date" shall mean the distribution date
elected by the Participant for a withdrawal of amounts from such Accounts
deferred in a given Plan Year, and earnings and losses attributable thereto, as
set forth on the election form for such Plan Year.
(oo) "Stock" shall mean the common stock, $.25 par value of The
Coca-Cola Company.
(pp) "Stock Unit" means a unit of value, equal at any relevant time to
the value of a share of Stock or Restricted Stock, as applicable, established by
the Committee as a means of measuring value of the Stock-related portion of an
Account under the Plan.
(qq) "Stock Unit Subaccount" means the bookkeeping account maintained
by the Committee on behalf of each Participant who is credited with Stock Units
and Dividend Equivalents thereon pursuant to Sections 4.2 and 4.3.
(rr) "Stock Option Gain" shall mean the gains on a Designated
Employee's stock options that have been granted by the Company and designated as
eligible for deferral under the Plan by the Committee pursuant to Section
3.1(c). With respect to any options granted to Designated Employees that are
made subject to a Stock Option Gain deferral election, the gains on such options
shall be determined through a deemed sale of related shares of the underlying
shares net of the exercise price of the options.
-5-
<PAGE>
ARTICLE II
PARTICIPATION
2.1 Determination of Eligible Employee
The Committee shall, from time to time, determine which employees are
Eligible Employees under the Plan.
2.2 Enrollment
An Eligible Employee shall become a Participant in the Plan by electing to
make deferrals in accordance with Section 3.1, in accordance with such
procedures as may be established from time to time by the Committee. An
individual who, at any time, ceases to be an Eligible Employee, as determined in
the sole discretion of the Committee, other than an Eligible Employee who (i)
becomes employed by a Related Company, which is not a Participating Subsidiary
or (ii) is transferred to an international assignment, shall continue to be
eligible to make deferrals until the end of the Plan Year in which the employee
ceases to be an Eligible Employee, and no future deferrals will be allowed until
such time as the individual again becomes an Eligible Employee. In such case,
the individual may remain a Participant in the Plan with respect to amounts
already deferred.
2.3 Transferred Employees
An Eligible Employee who (i) becomes employed by a Related Company, which
is not a Participating Subsidiary or (ii) is transferred to an international
assignment, shall not be eligible to make any further deferrals under the Plan,
however, such individual shall remain a participant in the Plan with respect to
amounts already deferred. Any deferrals for the current Plan Year shall
terminate as of the date of transfer.
2.4 Amendment of Eligibility Criteria
The Committee may, in its discretion, change the criteria for eligibility
to comply with all applicable laws relating to salary grade and compensation
levels; provided, however, that no change in the criteria for eligibility of any
officer of the Company shall be effected unless such changes are (i) within
parameters established by the Compensation Committee or (ii) approved by the
Compensation Committee.
-6-
<PAGE>
ARTICLE III
DEFERRAL ELECTIONS
3.1 Elections to Defer Compensation.
(a) Initial Election Period. Subject to the provisions of Article II,
each Eligible Employee may elect to defer Compensation, earned after the
election period, by filing with the Committee an election that conforms to the
requirements of this Section 3.1, on a form provided by the Committee, no later
than the last day of his or her Initial Election Period.
(b) Deferral of Base Salary and Bonus. The amount of Base Salary and
Bonus which an Eligible Employee may elect to defer is such Base Salary and
Bonus earned on or after the time at which the Eligible Employee elects to defer
in accordance with Sections 1.1(y) and 3.1(a). The Eligible Employee may elect
to defer up to 80% of the Eligible Employee's Base Salary and up to 100% of the
Eligible Employee's Bonus, provided that the total amount deferred by a
Participant shall be limited in any calendar year, if necessary, to satisfy
Social Security Tax (including Medicare), income tax withholding for
compensation that cannot be deferred and employee benefit plan withholding
requirements as determined in the sole and absolute discretion of the Committee.
The minimum contribution from Base Salary which must be made in any Plan Year by
an Eligible Employee shall not be less than $5,000. The minimum contribution
from the Bonus which must be made in any Plan Year by an Eligible Employee shall
not be less than 10% of such Bonus.
(c) Deferral of Stock Option Gain.
A Designated Employee may elect to defer all or any portion of Stock
Option Gains attributable to nonqualified stock options and receive a credit of
Stock Units. Any Deferral election must occur in a time period designated by the
Committee from time to time and in accordance with Sections 3.1(e) and 3.1(f),
below. The Designated Employee must attest to ownership Stock equal in value to
the total amount of the option exercise price and the Stock used for this
purpose must have been held by the Designated Employee for at least the period
of time required by the applicable Stock Option Plan. All such deferrals shall
be invested and held only in Stock Units as provided in Section 3.2(b).
(d) Deferral of Restricted Stock. A Designated Employee may elect to
defer all or any portion of Restricted Stock awarded pursuant to a Restricted
Stock Award and receive a credit of Stock Units. Any such deferral election must
be made in a time period designated by the Committee from time to time and in
accordance with Sections 3.1(e) and (f). All such deferrals shall be invested
and held in Stock Units as provided in Section 3.2(b).
(e) Duration of Deferral Election. An Eligible Employee's election to
defer Compensation for any Plan Year is to be effective with respect to: (i)
Base Salary and Bonus earned after such deferral election is processed, (ii)
Stock Option Gains realized after such election is processed and (iii)
Restricted Stock vesting at least one year after such election is processed.
Elections to defer Base Salary and Bonus are
-7-
<PAGE>
irrevocable for the Plan Year and cease to be effective at the end of the Plan
Year. A Participant may increase, decrease or terminate a deferral election with
respect to Base Salary and Bonus for any subsequent Plan Year by filing a new
election by a date determined by the Committee prior to the beginning of the
next Plan Year, which election shall be effective on the first day of the next
following Plan Year. Elections to defer Stock Option Gains and Restricted Stock
are irrevocable.
(f) Elections other than Elections during the Initial Election Period.
Subject to the limitations of Sections 3.1(b), 3.1(c) and 3.1(d) above, an
Eligible Employee may elect to defer Compensation and a Designated Employee may
elect to defer Compensation, Stock Option Gains and Restricted Stock by filing
an election on a form provided by the Committee, or, if allowed by the
Committee, via voice response, internet or other approved technology. Such
election must be filed, if permitted, or, made electronically by a date
determined by the Committee and will be effective with the first pay period of
the following Plan Year. An election to defer Compensation, Stock Option Gains
and Restricted Stock must be filed, if permitted, or, made electronically in a
timely manner in accordance with Section 3.1(e).
3.2 Deemed Investment Elections.
(a) Deferrals of Base Salary and, Bonus.
(i) At the time of making the deferral elections described in
Section 3.1(b), the Participant shall designate, on a form provided by the
Committee, or, if allowed by the Committee, via voice response, internet or
other approved technology, the types of investment funds in which the
Participant's Compensation Deferral Subaccount will be deemed to be invested for
purposes of determining the amount of earnings or losses to be credited to that
subaccount. In making the designation pursuant to this Section 3.2, the
Participant may specify that all or any multiple of his or her Compensation
Deferral Subaccount be deemed to be invested, in whole percentage increments, in
one or more of the types of investment funds provided under the Plan as
communicated from time to time by the Committee. Effective as of the first
Business Day of the following calendar month, a Participant may change the
designation made under this Section 3.2 by filing an election, on a form
provided by the Committee, or, if allowed by the Committee, via voice response,
internet or other approved technology, by the 25th day of such month. If a
Participant fails to elect a type of Fund under this Section 3.2, he or she
shall be deemed to have elected the Money Market type of investment fund.
(ii) Although the Participant may designate the specific fund
within each type of investment, the Committee shall not be bound by such
designation. The Committee shall select from time to time, in its sole and
absolute discretion, commercially available investments of each of the types
communicated by the Committee to the Participant pursuant to
-8-
<PAGE>
Section 3.2(a)(i). The Investment Rate of each such commercially available
investment fund shall be used to determine the amount of earnings or losses to
be credited to Participant's Compensation Deferral Subaccount under Article IV.
(b) Deferrals of Stock Option Gains and Restricted Stock Awards. At
the time Stock Option Gains are realized and Restricted Stock vests, a
Participant's Stock Unit Subaccount shall be credited with the number of Stock
Units equal in number to the amount of Stock Option Gains and shares of
Restricted Stock.
ARTICLE IV
DEFERRAL ACCOUNTS
4.1 Compensation Deferral Subaccount.
The Committee shall establish and maintain a Compensation Deferral
Subaccount for each Participant under the Plan. Each Participant's Compensation
Deferral Subaccount shall be further divided into separate subaccounts
("investment fund subaccounts"), each of which corresponds to an investment fund
elected by the Participant pursuant to Section 3.2(a). A Participant's
Compensation Deferral Subaccount shall be credited as follows:
(a) On the second business day after amounts are withheld and/or
deferred from a Participant's Compensation, the Committee shall credit the
investment fund subaccounts of the Participant's Compensation Deferral
Subaccount with an amount equal to Compensation deferred by the Participant in
accordance with the Participant's election under Section 3.2(a);
(b) Each business day, each investment fund subaccount of a
Participant's Compensation Deferral Subaccount shall be credited with earnings
or losses in an amount equal to that determined by multiplying the balance
credited to such investment fund subaccount as of the prior day plus
contributions credited that day to the investment fund subaccount by the
Investment Rate for the corresponding Fund selected by the Company pursuant to
Section 3.2(a)(ii).
(c) In the event that a Participant elects for a given Plan Year's
deferral of Compensation to have a Scheduled Withdrawal Date, all amounts
attributed to the deferral of Compensation for such Plan Year shall be accounted
for in a manner which allows separate accounting for the deferral of
Compensation and investment gains and losses associated with such Plan Year's
deferral of Compensation.
4.2 Company Discretionary Contribution Subaccount.
The Committee shall establish and maintain a Company Discretionary
Contribution Subaccount for each Participant under the Plan. Each Participant's
Company Discretionary Contribution Subaccount shall be further divided into
separate subaccounts, each of which corresponds to a Fund elected by the
Participant pursuant to Section 3.2(a). A Participant's Company Discretionary
Contribution Subaccount shall be credited as follows:
-9-
<PAGE>
(a) The Committee shall credit the investment fund subaccounts of the
Participant's Company Discretionary Contribution Subaccount with an amount equal
to the Company Discretionary Contribution Amount, if any, applicable to that
Participant two business days after such amount is contributed;
(b) Each business day, each investment fund subaccount of a
Participant's Company Discretionary Contribution Account shall be credited with
earnings or losses in an amount equal to that determined by multiplying the
balance credited to such investment fund subaccount as of the prior day plus
contributions credited that day to the investment fund subaccount by the
Investment Rate for the corresponding Fund, selected by the Company pursuant to
Section 3.2(a)(ii).
4.3 Company Matching Contribution Subaccount.
The Committee shall establish and maintain a Company Matching
Contribution Subaccount for each Participant eligible to defer Restricted Stock
and/or Stock Option Gains under the Plan. A Participant's Company Matching
Contribution Subaccount shall be credited as follows:
(a) The Committee shall credit the investment fund subaccounts of the
Participant's Company Matching Contribution Subaccount with an amount equal to
the Company Discretionary Contribution Amount, if any, applicable to that
Participant two business days after such amount is contributed;
(b) Each business day, each investment fund subaccount of a
Participant's Company Matching Contribution Account shall be credited with
earnings or losses in an amount equal to that determined by multiplying the
balance credited to such investment fund subaccount as of the prior day plus
contributions credited that day to the investment fund subaccount by the
Investment Rate for the corresponding Fund, selected by the Company pursuant to
Section 3.2(a)(ii).
ARTICLE V
VESTING
5.1 Vesting
A Participant shall be 100% vested in his or her Compensation Deferral
Subaccount and Stock Unit Subaccount. A Participant shall be vested in
accordance with any schedule that the Committee may establish with respect to
his or her Company Discretionary Contribution Amount, and Company Matching
Contribution Subaccount, if any.
5.2 Vesting Upon Death/Change of Control
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<PAGE>
Upon death of a Participant, or in the event of a Change of Control,
the Participant shall be 100% vested in his or her Company Discretionary
Contribution Subaccount and Company Matching Contribution Subaccount.
ARTICLE VI
DISTRIBUTIONS
6.1 Form of Payment.
Distributions of Compensation Deferral Subaccounts and Company
Discretionary Contribution Subaccounts, and earnings thereon, shall be made in
cash. Distributions of Stock Unit Subaccounts and Company Matching Contribution
Subaccounts shall be made in Stock, with one share distributed for each Stock
Unit. All fractional shares of Stock shall be payable in cash. All unpaid
Account balances shall be distributed in a lump sum in the February following a
Participant's 85th birthday.
6.2 Distributions of Accounts.
(a) Distribution Due to Termination on Account of Retirement. In the
case of a Participant who terminates employment with the Company due to
Retirement, and has an Account balance of $50,000 or more, the Distributable
Amount shall be paid to the Participant in substantially equal annual
installments over ten (10) years beginning on the Participant's Payment Date. An
optional form of benefit may be elected by the Participant, on a form provided
by the Company, or, if permitted by the Committee, via voice response, internet
or other approval technology, during an election period, from among the
following:
(i) A lump sum distribution on the Participant's Payment Date;
(ii) Substantially equal annual installments over five (5) years
beginning on the Participant's Payment Date;
(iii) Substantially equal annual installments over fifteen (15)
years beginning on the Participant's Payment Date;
A Participant may modify the form of benefit that he or she has
previously elected, provided such modification occurs at least one (1) year
before the Participant terminates employment with Company due to Retirement.
A Participant may delay the Payment Date for any Plan Year to a
date after his or her Retirement, but in no event later than the date he or she
turns age 85, provided such extension occurs at least one year before the
Participant's Retirement Date. The Participant may delay his or her Payment Date
only once.
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<PAGE>
In the case of a Participant who has an Account of less than
$50,000, the Distributable Amount shall be paid to the Participant (and after
his or her death to his or her Beneficiary) in a lump sum distribution on the
Participant's Payment Date.
If any distribution from the Plan shall have the effect of
reducing disability benefits receivable by the Participant under any other
policy, plan, program or arrangement, such distribution may be postponed, in the
sole discretion of the Committee, upon application by the Participant. The
Participant's Account shall continue to be credited with earnings pursuant to
Article IV of the Plan until all amounts credited to his or her Account under
the Plan have been distributed.
(b) Distribution Due to Termination on Account of Disability. In the
case of a Participant who terminates employment with the Company due to
Disability, the Account Balance shall be paid to the Participant in a lump sum.
In the case of such a Participant whose Account balance is $50,000 or more, an
optional form of benefit may be elected by the Participant, on a form provided
by the Company, or, if permitted by the Committee, via voice response, internet
or other approved technology, during a Participant's first election period, from
among the following:
(i) Substantially equal annual installments over five (5) years
beginning on the Participant's Payment Date;
(ii) Substantially equal annual installments over ten (10) years
beginning on the Participant's Payment Date;
(iii) Substantially equal annual installments over fifteen (15)
years beginning on the Participant's Payment Date;
If any distribution from the Plan shall have the effect of reducing
disability benefits receivable by the Participant under any other policy, plan,
program or arrangement, such distribution may be postponed, in the sole
discretion of the Committee, upon application by the Participant. However, a
Participant may not modify the form or timing of the benefit that he or she
previously elected, during the initial election period.
The Participant's Account shall continue to be credited with
earnings pursuant to Article IV of the Plan until all amounts credited to his or
her Account under the Plan have been distributed.
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<PAGE>
(c) Distribution Due to Voluntary Termination or
Termination-For-Cause. In the case of a Participant who voluntarily terminates
his or her employment from the Company or is terminated for-cause (as determined
in the sole discretion of the Committee) from his or her employment with the
Company, the Participant's Account balance shall be paid to the Participant in a
lump sum beginning on the Participant's Payment Date.
(d) Distribution Due to Involuntary Termination. In the case of a
Participant who is involuntarily terminated from his or her employment with the
Company other than for cause, as determined in the sole discretion of the
Committee, the Participant's Account balance shall be paid to the Participant in
a lump sum on the Participant's Payment Date. In the case of such a Participant
whose Account balance is $50,000 or more, an optional form of benefit may be
elected by the Participant, on a form provided by the Committee, or, if
permitted by the Committee, via voice response, internet or other approved
technology during an election period, from among the following:
(i) Substantially equal annual installments over five (5) years
beginning on the Participant's Payment Date;
(ii) Substantially equal annual installments over ten (10) years
beginning on the Participant's Payment Date;
The Participant's Account shall continue to be credited with
earnings pursuant to Article IV of the Plan until all amounts credited to his or
her Account under the Plan have been distributed.
A Participant may not modify the form of timing of the benefit
that he or she previously elected during the Initial Election Period
(e) Distribution With Scheduled Withdrawal Date.
In the case of a Participant who has elected a Scheduled Withdrawal,
such Participant shall receive his or her Distributable Amount in a lump sum,
but only with respect to those deferrals of Compensation, vested Company
Discretionary Contribution Amounts and vested Company Matching Contribution
Amounts and earnings or losses attributable thereto, as shall have been elected
by the Participant to be subject to the Scheduled Withdrawal Date in accordance
with Section 1.2(nn) of the Plan.
-13-
<PAGE>
In the case of a Participant who has a Distributable Amount of $25,000
or more, the Participant may elect to receive his or her Distributable Amount on
a form provided by the Committee, or, if permitted by the Committee, via voice
response, internet or other approved technology during an election period, in
substantially equal annual installments over two (2) to five (5) years. A
Participant may modify the form of benefit that he or she has previously
elected, provided such modification occurs at least one (1) year before the
Scheduled Withdrawal Date.
A Participant's Scheduled Withdrawal Date in a given Plan Year may be
no earlier than three years from the last day of the Plan Year for which the
deferrals of Compensation, Stock Option Gains, Restricted Stock, Company
Discretionary Contribution Amounts and Company Matching Contribution Amounts are
made, or such other time as may be permitted by applicable Treasury Regulations
or Internal Revenue Service guidance. A Participant may extend the Scheduled
Withdrawal Date for any Plan Year, provided such extension occurs at least one
year before the Scheduled Withdrawal Date and is for a period of not less than
two years from the Scheduled Withdrawal Date. The Participant may modify any
Scheduled Withdrawal Date in the manner set forth above, no more than two (2)
times.
In the event a Participant terminates employment with the Company
prior to a Scheduled Withdrawal Date, other than by reason of death or
Retirement, the portion of the Participant's Account associated with a Scheduled
Withdrawal Date, which has not occurred prior to such termination, shall be
distributed in accordance with the election made by the Participant on his or
her initial election form.
Distributable Amounts subject to a Scheduled Withdrawal Date shall be
paid in February of the Plan Year in which the Scheduled Withdrawal Date falls.
(f) Distribution for Termination of Employment due to Death. In the
case of the death of a Participant while employed by the Company, the
Participant's Account balance shall be distributed to the Participant's
Beneficiary, in a lump sum as soon as practicable following the end of the
calendar quarter in which death occurs. In the event a Participant dies after
his or her termination of employment and while receiving installment payments,
the remaining installments shall be paid to the Participant's Beneficiary in a
lump sum as soon as practicable following the end of the calendar quarter in
which death occurs.
6.3 Early Non-Scheduled Distributions.
A Participant shall be permitted to elect an Early Distribution from
his or her Account prior to the Payment Date, subject to the following
restrictions:
(a) The election to take an Early Distribution shall be made by filing
a form provided by and filed with the Committee or, if permitted by the
Committee, via voice response, internet or other approved technology prior to
the end of any calendar month.
(b) The amount of the Early Distribution shall equal up to 90% of the
Participant's vested Account balance. Notwithstanding anything to the contrary
in the Plan, amounts credited to the Stock Unit Sub-account Option Gains,
Restricted Stock Awards and Company Matching Contribution Sub-account shall not
be eligible for an Early Distribution.
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<PAGE>
(c) The amount described in subsection (b) above shall be paid in a
cash lump sum as soon as practicable after the end of the calendar month in
which the Early Distribution election is made.
(d) If a Participant requests an Early Distribution of his or her
entire vested Account, the remaining balance of his or her Account (10% of the
Account) shall be permanently forfeited and the Company shall have no obligation
to the Participant or his or her Beneficiary with respect to such forfeited
amount. If a Participant receives an Early Distribution of less than
his or her entire vested Account, such Participant shall forfeit 10% of the
gross amount to be distributed from the Participant's Account and the Company
shall have no obligation to the Participant or his or her Beneficiary with
respect to such forfeited amount.
(e) If a Participant receives an Early Distribution of either all or a
part of his or her Account, the Participant will be ineligible to participate in
the Plan for the balance of the Plan Year and the following Plan Year; provided,
however, that such individual shall remain an Participant in the Plan with
respect to amounts already deferred.
6.4 Hardship Distribution.
(a) Except with respect to a Participant's Stock Unit Subaccount and
Company Contribution Matching Subaccount, a Participant shall be permitted to
elect a Hardship Distribution from his or her Deferral Compensation Subaccount
and vested Company Discretionary Contribution Subaccounts prior to the Payment
Date, subject to the following restrictions:
(b) The election to take a Hardship Distribution shall be made by
filing a form provided by and filed with Committee prior to the end of any
calendar month.
(c) The Committee shall have made a determination, in its sole
discretion, that the requested distribution constitutes a Hardship Distribution
in accordance with Section 1.2(aa) of the Plan.
(d) The amount determined by the Committee as a Hardship Distribution
shall be paid in a cash lump sum as soon as practicable after the Hardship
Distribution election is made and approved by the Committee.
(e) Notwithstanding anything to the contrary, no Hardship Distribution
may be made to the extent that such hardship is or may be relieved (i) through
reimbursement or compensation by insurance or otherwise, (ii) by liquidation of
the Participant's assets, to the extent the liquidation of assets would not
itself cause severe financial hardship, or (iii) by cessation of deferrals under
this Plan.
6.5 Inability to Locate Participant.
In the event that the Committee is unable to locate a Participant or
Beneficiary within two years following the required Payment Date, the amount
allocated to the Participant's Account shall be forfeited. If, after such
forfeiture, the Participant or Beneficiary later claims such benefit, such
benefit shall be reinstated without additional interest or earnings.
-15-
<PAGE>
ARTICLE VII
ADMINISTRATION
7.1 Committee.
A Committee shall be appointed by, and serve at the pleasure of, the
Compensation Committee. The number of members comprising the Committee shall be
determined by the Compensation Committee, which may from time to time vary the
number of members. A member of the Committee may resign by delivering a written
notice of resignation to the Compensation Committee. The Compensation Committee
may remove any member by delivering a certified copy of its resolution of
removal to such member. Vacancies in the membership of the Committee shall be
filled promptly by the Compensation Committee.
7.2 Committee Action.
The Committee shall act at meetings by affirmative vote of a majority
of the members of the Committee. Any action permitted to be taken at a meeting
may be taken without a meeting if, prior to such action, a written consent to
the action is signed by all members of the Committee and such written consent is
filed with the minutes of the proceedings of the Committee. A member of the
Committee shall not vote or act upon any matter which relates solely to himself
or herself as a Participant. The Chairman or any other member or members of the
Committee designated by the Chairman may execute any certificate or other
written direction on behalf of the Committee.
7.3 Powers and Duties of the Committee.
The Committee, on behalf of the Participants and their Beneficiaries,
shall enforce the Plan in accordance with its terms, shall be charged with the
general administration of the Plan, and shall have all powers necessary to
accomplish its purposes, including, but not limited to, the following:
(i) To select the Funds in accordance with Section 3.2(a) hereof;
(ii) To construe and interpret the terms and provisions of this
Plan;
(iii) To compute and certify to the amount and kind of benefits
payable to Participants and their Beneficiaries;
(iv) To maintain all records that may be necessary for the
administration of the Plan;
(v) To provide for the disclosure of all information and the
filing or provision of all reports and statements to Participants, Beneficiaries
or governmental agencies as shall be required by law;
(vi) To make and publish such rules for the regulation of the
Plan and procedures for the administration of the Plan as are not inconsistent
with the terms hereof;
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<PAGE>
(vii) To appoint a Plan administrator or any other agent, and to
delegate to them such powers and duties in connection with the administration of
the Plan as the Committee may from time to time prescribe; and
(viii) To take all actions necessary for the administration of
the Plan.
7.4 Construction and Interpretation.
The Committee shall have full discretion to construe and interpret the
terms and provisions of this Plan, which interpretations or construction shall
be final and binding on all parties, including but not limited to the Company
and any Participant or Beneficiary. The Committee shall administer such terms
and provisions in a uniform and nondiscriminatory manner and in full accordance
with any and all laws applicable to the Plan.
7.5 Information.
To enable the Committee to perform its functions, the Company shall
supply full and timely information to the Committee on all matters relating to
the Compensation of all Participants, their death or other events which cause
termination of their participation in this Plan, and such other pertinent facts
as the Committee may require.
7.6 Compensation, Expenses and Indemnity.
(a) The members of the Committee shall serve without compensation for
their services hereunder.
(b) The Committee is authorized at the expense of the Company to
employ such legal counsel as it may deem advisable to assist in the performance
of its duties hereunder. Expenses and fees in connection with the administration
of the Plan shall be paid by the Company.
(c) To the extent permitted by applicable state law, the Company shall
indemnify and hold harmless the Committee and each member thereof, the Board of
Directors and any delegate of the Committee who is an employee of the Company
against any and all expenses, liabilities and claims, including legal fees to
defend against such liabilities and claims arising out of their discharge in
good faith of responsibilities under or incident to the Plan, other than
expenses and liabilities arising out of willful misconduct. This indemnity shall
not preclude such further indemnities as may be available under insurance
purchased by the Company or provided by the Company under any bylaw, agreement
or otherwise, as such indemnities are permitted under state law.
7.7 Quarterly Statements.
Under procedures established by the Committee, a Participant shall
receive a statement with respect to such Participant's Accounts on a quarterly
basis.
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<PAGE>
7.8 Disputes.
(a) Claim.
A person who believes that he or she is being denied a benefit to
which he or she is entitled under this Plan (hereinafter referred to as
"Claimant") must file a written request for such benefit with the Company,
setting forth his or her claim within 90 days of the date such Claimant believes
he or she was entitled to benefits under the Plan. The request must be addressed
to the President of the Company at its then principal place of business.
-16-
<PAGE>
(b) Claim Decision.
Upon receipt of a claim, the Company shall advise the Claimant that a
reply will be forthcoming within ninety (90) days and shall, in fact, deliver
such reply within such period. The Company may, however, extend the reply period
for an additional ninety (90) days for special circumstances.
If the claim is denied in whole or in part, the Company shall inform
the Claimant in writing, setting forth: (i) the specified reason or reasons for
such denial; (ii) the specific reference to pertinent provisions of this Plan on
which such denial is based; (iii) a description of any additional material or
information necessary for the Claimant to perfect his or her claim and an
explanation of why such material or such information is necessary; (iv)
appropriate information as to the steps to be taken if the Claimant wishes to
submit the claim for review; and (v) the time limits for requesting a review
under subsection (c).
(c) Request For Review.
Within sixty (60) days after the receipt by the Claimant of the
written opinion described above, the Claimant may request in writing that the
Committee review the determination of the Company. Such request must be
addressed to the Secretary of the Company, at its then principal place of
business. The Claimant or his or her duly authorized representative may, but
need not, review the pertinent documents and submit issues and comments in
writing for consideration by the Committee. If the Claimant does not request a
review within such sixty (60) day period, he or she shall be barred and estopped
from challenging the Company's determination.
(d) Review of Decision.
Within sixty (60) days after the Committee's receipt of a request for
review, after considering all materials presented by the Claimant, the Committee
will inform the Claimant in writing, the decision setting forth the specific
reasons for the decision containing specific references to the pertinent
provisions of this Plan on which the decision is based. If special circumstances
require that the sixty (60) day time period be extended, the Committee will so
notify the Claimant and will render the decision as soon as possible, but no
later than one hundred twenty (120) days after receipt of the request for
review.
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<PAGE>
ARTICLE VIII
MISCELLANEOUS
8.1 Unsecured General Creditor.
Participants and their Beneficiaries, heirs, successors, and assigns
shall have no legal or equitable rights, claims, or interest in any specific
property or assets of the Company. No assets of the Company shall be held in any
way as collateral security for the fulfilling of the obligations of the Company
under this Plan. Any and all of the Company's assets shall be, and remain, the
general unpledged, unrestricted assets of the Company. The Company's obligation
under the Plan shall be merely that of an unfunded and unsecured promise of the
Company to pay money in the future, and the rights of the Participants and
Beneficiaries shall be no greater than those of unsecured general creditors. It
is the intention of the Company that this Plan be unfunded for purposes of the
Code and for purposes of Title 1 of ERISA.
8.2 Restriction Against Assignment.
The Company shall pay all amounts payable hereunder only to the person
or persons designated by the Plan and not to any other person or corporation. No
part of a Participant's Accounts shall be liable for the debts, contracts, or
engagements of any Participant, his or her Beneficiary, or successors in
interest, nor shall a Participant's Accounts be subject to execution by levy,
attachment, or garnishment or by any other legal or equitable proceeding, nor
shall any such person have any right to alienate, anticipate, sell, transfer,
commute, pledge, encumber, or assign any benefits or payments hereunder in any
manner whatsoever. If any Participant, Beneficiary or successor in interest is
adjudicated bankrupt or purports to anticipate, alienate, sell, transfer,
commute, assign, pledge, encumber or charge any distribution or payment from the
Plan, voluntarily or involuntarily, the Committee, in its discretion, may cancel
such distribution or payment (or any part thereof) to or for the benefit of such
Participant, Beneficiary or successor in interest in such manner as the
Committee shall direct.
8.3 Withholding.
Subject to Article II, There shall be deducted from each payment made
under the Plan or any other Compensation payable to the Participant (or
Beneficiary) all taxes which are required to be withheld by the Company in
respect to such payment or this Plan. The Company shall have the right to reduce
any payment (or compensation) by the amount of cash sufficient to provide the
amount of said taxes.
8.4 Amendment, Modification, Suspension or Termination.
The Committee may amend, modify, suspend or terminate the Plan in
whole or in part, except that no amendment, modification, suspension or
termination shall have any retroactive effect to reduce any amounts allocated to
a Participant's Accounts. In the event that this Plan is terminated, the amounts
allocated to a Participant's Accounts shall be distributed to
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<PAGE>
the Participant or, in the event of his or her death, his or her Beneficiary in
a lump sum within thirty (30) days following the date of termination.
8.5 Governing Law.
This Plan shall be construed, governed and administered in accordance
with the laws of the State of Delaware without regard to the conflicts of law
principles thereof.
8.6 Receipt or Release.
Any payment to a Participant or the Participant's Beneficiary in
accordance with the provisions of the Plan shall, to the extent thereof, be in
full satisfaction of all claims against the Committee and the Company. The
Committee may require such Participant or Beneficiary, as a condition precedent
to such payment, to execute a receipt and release to such effect.
8.7 Payments on Behalf of Persons Under Incapacity.
In the event that any amount becomes payable under the Plan to a
person who, in the sole judgment of the Committee, is considered by reason of
physical or mental condition to be unable to give a valid receipt therefore, the
Committee may direct that such payment be made to any person found by the
Committee, in its sole judgment, to have assumed the care of such person. Any
payment made pursuant to such determination shall constitute a full release and
discharge of the Committee and the Company.
8.8 Limitation of Rights and Employment Relationship
Neither the establishment of the Plan nor any modification thereof,
nor the creating of any fund or account, nor the payment of any benefits shall
be construed as giving to any Participant, or Beneficiary or other person any
legal or equitable right against the Company except as provided in the Plan; and
in no event shall the terms of employment of any Employee or Participant be
modified or in any way be affected by the provisions of the Plan.
8.9 Headings.
Headings and subheadings in this Plan are inserted for convenience of
reference only and are not to be considered in the construction of the
provisions hereof.
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12.1
<SEQUENCE>19
<FILENAME>x12-1.txt
<DESCRIPTION>COMPUTATION OF 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>
Year Ended December 31,
------------------------------------------------
2001 2000 1999 1998 1997
------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C>
Earnings:
Income from continuing operations
before income taxes and changes
in accounting principles $ 5,670 $ 3,399 $ 3,819 $ 5,198 $ 6,055
Fixed charges 327 489 386 320 300
Less: Capitalized interest, net (8) (11) (18) (17) (17)
Equity income or loss,
net of dividends (54) 380 292 31 (108)
------------------------------------------------
Adjusted earnings $ 5,935 $ 4,257 $ 4,479 $ 5,532 $ 6,230
================================================
Fixed charges:
Gross interest incurred $ 297 $ 458 $ 355 $ 294 $ 275
Interest portion of rent expense 30 31 31 26 25
------------------------------------------------
Total fixed charges $ 327 $ 489 $ 386 $ 320 $ 300
================================================
Ratios of earnings to fixed charges 18.1 8.7 11.6 17.3 20.8
================================================
<FN>
The Company is contingently liable for guarantees of indebtedness owed by third
parties in the amount of $436 million, of which $10 million related to the
Company's equity investee bottlers. 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.
</FN>
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13.1
<SEQUENCE>20
<FILENAME>x13-1.txt
<DESCRIPTION>PORTIONS OF 2001 ANNUAL REPORT TO SHARE OWNERS
<TEXT>
EXHIBIT 13.1
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
The Coca-Cola Company and Subsidiaries
The Coca-Cola Company, together with its subsidiaries, (the Company or our
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. In order to serve and create value for these
constituents, The Coca-Cola Company executes a business strategy to drive growth
focused on the following priorities: (1) accelerate carbonated soft-drink
growth, led by Coca-Cola; (2) selectively broaden our family of beverage brands
to drive profitable growth; (3) grow system profitability and capability
together with our bottling partners; (4) serve customers with creativity and
consistency to generate growth across all channels; (5) direct investments to
highest potential areas across markets; and (6) drive efficiency and
cost-effectiveness everywhere. Underlying these priorities are our objectives of
increasing revenue by volume growth, expanding our share of worldwide
nonalcoholic ready-to-drink beverage sales, maximizing our long-term cash flows
and 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.
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
between 10 and 11 percent.
Because it has consistently generated high returns, we consider the beverage
business to be 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.
We pursue our strategic investment priorities in a way that capitalizes on
the combination of our most fundamental and enduring attributes -- our brands,
our people and our bottling partners. There are over 6 billion people in the
world who represent potential consumers of our Company's products. As we
increase consumer demand for our family of brands, we produce growth throughout
the Coca-Cola system.
Our 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 -- nearly 300
in all. These include carbonated 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 offerings.
Employing our localized business strategy with a special focus on brand
Coca-Cola, the Company seeks to build its existing brands and, at the same time,
to profitably broaden its historical family of brands. To meet our long-term
growth objectives, we make significant investments to support our brands. This
process involves investments to support existing brands, to develop new global
or local brands, and to acquire global or local brands, when appropriate.
Our Company introduced a variety of new brands in 2001, including diet Coke
with lemon, Simply Orange, Minute Maid Lemonade, Minute Maid Fruit Punch,
Marocha Green Tea in Japan, Senzao in Mexico, and a reformulated POWERade. Our
Company acquired brands during 2001 such as Odwalla, Planet Java and Mad River.
We also introduced existing brands in additional markets, such as the
introduction of Qoo in Korea and Singapore.
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.
Our People
Our people -- the employees of The Coca-Cola Company who work with our bottling
partners and other key constituents -- are essential to our success. 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
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FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
The Coca-Cola Company and Subsidiaries
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 Company's work environment. Our Company values the
uniqueness of all employees and the contributions they make, and we put the
responsibility and accountability for ensuring local relevance and maximizing
business performance in the hands of those closest to the market. Additionally,
we have made innovation an explicit priority for all of our associates. Our
associates work together with bottling partners to understand markets and what
consumers want. Then we meet that need by delivering product through our
unparalleled system.
Our Bottling Partners
The financial health and success of our bottling partners are critical
components of the Company's ability to deliver leading brands. Our people work
with our bottling partners to continuously look for ways to improve system
economics. 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 non-controlling ownership
interest; and (3) bottlers in which we have invested and have a controlling
ownership interest.
The independently owned bottling operations and the bottlers in which we own
a non-controlling interest generally have significant funding from majority
owners and other financing sources that are otherwise unrelated to our Company.
The terms of sales to these bottling partners are arms-length transactions.
During 2001, independently owned bottling operations produced and distributed
approximately 23 percent of our worldwide unit case volume. Bottlers in which we
own a non-controlling ownership interest produced and distributed approximately
61 percent of our 2001 worldwide unit case volume. Controlled bottling, fountain
operations and The Minute Maid Company produced and distributed approximately 16
percent.
In July 2001, our Company and San Miguel Corporation (San Miguel) acquired
Coca-Cola Bottlers Philippines, Inc. (CCBPI) from Coca-Cola Amatil Limited
(Coca-Cola Amatil). Upon completion of this transaction, our Company owned 35
percent of the common shares and 100 percent of the Preferred B shares, and San
Miguel owned 65 percent of the common shares of CCBPI. Additionally, as a result
of this transaction, our Company's interest in Coca-Cola Amatil was reduced from
approximately 38 percent to approximately 35 percent.
During 2000, the Company entered into a joint venture in China with China
National Oils and Foodstuffs Imports/Exports Corporation (COFCO), completion of
which occurred in 2001. COFCO contributed to the joint venture its minority
equity interests in 11 Chinese bottlers. Our Company contributed its equity
interests in two Chinese bottlers plus cash in exchange for a 35 percent equity
interest in the venture.
On December 31, 1999, we owned approximately 50.5 percent of Coca-Cola
Beverages plc (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 non-cash gain in the
third quarter of 2000.
In 1999, two Japanese bottlers, Kita Kyushu Coca-Cola Bottling Company Ltd.
and Sanyo Coca-Cola Bottling Company Ltd., merged to become a new, publicly
traded bottling company, Coca-Cola West Japan Company Ltd. We own approximately
5 percent of this bottler.
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 non-controlling 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 equity investee companies. In 2001, our Company's
share of income from equity method investments totaled $152 million.
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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>
2001
Coca-Cola Enterprises Inc. $ 3,200 $ 788 $ 2,412
Coca-Cola Amatil Limited 748 432 316
Coca-Cola HBC S.A. 811 791 20
Coca-Cola FEMSA,
S.A. de C.V. 858 316 542
Panamerican Beverages, Inc. 455 484 (29)
Grupo Continental, S.A. 231 160 71
Coca-Cola Bottling
Company Consolidated 94 62 32
Coca-Cola Embonor S.A. 114 187 (73)
Embotelladoras Polar S.A. 33 51 (18)
- --------------------------------------------------------------------------------
$ 3,273
================================================================================
<FN>
(1) In instances where carrying value exceeds fair value, the decline in value
is considered to be temporary.
</FN>
</TABLE>
Historically, in certain situations, we have viewed it to be advantageous for
our Company to acquire a controlling interest in a bottling operation, often on
a temporary basis. 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 February 2001, our Company reached agreement with Carlsberg A/S
(Carlsberg) for the dissolution of Coca-Cola Nordic Beverages (CCNB), a joint
venture in which our Company had a 49 percent ownership. At that time, CCNB had
bottling operations in Sweden, Norway, Denmark, Finland and Iceland. Under this
agreement with Carlsberg, our Company acquired CCNB's Sweden and Norway bottling
operations in June 2001, increasing our Company's ownership in those bottlers to
100 percent. Carlsberg acquired CCNB's Denmark and Finland bottling operations,
increasing Carlsberg's ownership in those bottlers to 100 percent. Pursuant to
the agreement, CCNB sold its Iceland bottling operations to a third-party group
of investors in May 2001.
In 2001, our Company concluded negotiations regarding the terms of a Control
and Profit and Loss (CPL) agreement with certain other share owners of Coca-Cola
Erfrischungsgetraenke AG (CCEAG), the largest bottler in Germany, in which the
Company has an approximate 41 percent ownership interest. Under the terms of the
CPL agreement, the Company obtained management control of CCEAG for a period of
up to five years. In return for the management control of CCEAG, the Company
guaranteed annual payments in lieu of dividends by CCEAG to all other CCEAG
share owners. Additionally, all other CCEAG share owners entered into either a
put or a put/call option agreement with the Company, exercisable at the end of
the term of the CPL agreement at agreed prices. In early 2002, the Company
assumed control of CCEAG. This transaction will be accounted for as a business
combination. The present value of the total amount likely to be paid by our
Company to all other CCEAG share owners, including the put or put/call payments
and the guaranteed annual payments in lieu of dividends, is approximately $600
million. In 2001, CCEAG's revenues were approximately $1.7 billion.
Additionally, our Company's debt will increase between $700 million and $800
million once this business combination is completed.
During the first half of 2001, in separate transactions, our Company
purchased two bottlers in Brazil: Refrescos Guararapes Ltda. and Sucovalle Sucos
e Concentrados do Vale S.A. In separate transactions during the first half of
2000, our Company purchased two other 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, following
the completion of the tender offer, we owned 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 consider alternatives for
reducing our ownership interest in a bottler. One alternative is to combine our
bottling interests with the bottling interests of others to form
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The Coca-Cola Company and Subsidiaries
strategic business alliances. Another alternative is to sell our interest in a
bottling operation to one of our equity investee bottlers. In both of these
situations, we continue to participate in the bottler's results of operations
through our share of the equity investee's earnings or losses.
In November 2001, our Company sold nearly all of its ownership interests in
various Russian bottling operations to CCHBC for approximately $170 million in
cash and notes receivable, of which $146 million in notes receivable remained
outstanding as of December 31, 2001. These interests consisted of the Company's
40 percent ownership interest in a joint venture with CCHBC that operates
bottling territories in Siberia and parts of Western Russia, together with our
Company's nearly 100 percent interests in bottling operations with territories
covering the remainder of Russia.
For additional information about transactions with our bottling partners,
refer to Notes 2, 17 and 18 in our Consolidated Financial Statements.
FINANCIAL STRATEGIES
The following strategies are intended 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-owners'
equity.
As of December 31, 2001, our long-term debt was rated "A+" by Standard &
Poor's and "Aa3" by Moody's, and our commercial paper program was rated "A-1"
and "P-1" by Standard & Poor's and Moody's, respectively. In assessing our
credit strength, both Standard & Poor's and Moody's consider our capital
structure and financial policies as well as aggregated balance sheet and other
financial information for the Company and certain bottlers including Coca-Cola
Enterprises Inc. (Coca-Cola Enterprises) and CCHBC. While the Company has no
legal obligation for the debt of these bottlers, the rating agencies believe the
strategic importance of the bottlers to the Company's business model provides
the Company with an incentive to keep these bottlers viable. If the credit
ratings were reduced by the rating agencies, our interest expense could
increase.
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, 2001 2000 1999
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net debt (in billions) $ 3.3 $ 3.9 $ 4.5
Net debt-to-net capital 23% 29% 32%
Free cash flow to net debt 95% 72% 52%
Interest coverage 20x 12x 14x
Ratio of earnings to
fixed charges 18.1x 8.7x 11.6x
===============================================================================
</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 2001,
we repurchased approximately 5 million shares under the 1996 plan.
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 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, 2001, 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 $12.64.
We expect that the Company's share repurchases will be increased in 2002 and
are currently estimating a range of $750 million to $1 billion of repurchases
during the year.
Dividend Policy
At its February 2002 meeting, our Board of Directors again increased our
quarterly dividend, raising it to
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FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
The Coca-Cola Company and Subsidiaries
$.20 per share. This is equivalent to a full-year dividend of $.80 in 2002, our
40th consecutive annual increase. Our annual common stock dividend was $.72 per
share, $.68 per share and $.64 per share in 2001, 2000 and 1999, respectively.
In 2001, our dividend payout ratio was approximately 45 percent of our net
income. 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.
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. Virtually all of our derivatives are straightforward
over-the-counter instruments with liquid markets.
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 77 percent of 2001 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 contracts and purchases currency options
(principally euro and Japanese yen) to hedge certain portions of forecasted cash
flows denominated in foreign currencies. Additionally, the Company enters into
forward exchange contracts to offset the earnings impact relating to exchange
rate fluctuations on certain monetary assets and liabilities. The Company enters
into forward exchange contracts as hedges of net investments in international
operations.
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.
Value at Risk
Our Company monitors our exposure to financial market risks using several
objective measurement systems, including value-at-risk models. Our value-at-risk
calculations use a historical simulation model to estimate potential future
losses in the fair value of our derivatives and other financial instruments that
could occur 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 calculation. We examined historical
weekly returns over the previous 10 years to calculate our value at risk. The
average value at risk represents the simple average of quarterly amounts over
the past year. As a result of our foreign currency value-at-risk calculation, we
estimate with 95 percent confidence that the fair values of our foreign currency
derivatives and other financial instruments, over a one-week period, would
decline by less than $43 million using 2001 average fair values and by less than
$37 million using December 31, 2001 fair values. On December 31, 2000, we
estimated the fair value would decline by less than $37 million. According to
our interest rate value-at-risk calculations, we estimate with 95 percent
confidence that any increase in our net interest expense due to an adverse move
in our 2001 average or in our December 31, 2001 interest rates over a one-week
period would not have a material impact on our Consolidated Financial
Statements. Our December 31, 2000 estimate also was not material to our
Consolidated Financial Statements.
For additional discussion of financial risk management related to hedging
transactions and derivative financial instruments, refer to Note 9 in our
Consolidated Financial Statements.
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,
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The Coca-Cola Company and Subsidiaries
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) gallons and (2) unit cases of
finished products. Gallons represent our primary business and measure the volume
of concentrates, syrups and other beverage products (expressed in equivalent
gallons of syrup) included by the Company in unit case volume. Most of our
revenues are based on this measure of "wholesale" activity.
We also measure 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
number of unit cases (or unit case equivalents) of Company trademark or licensed
beverage products directly or indirectly sold by the Coca-Cola bottling system
or by the Company to customers, including (i) beverage products bearing
trademarks licensed to the Company and (ii) certain key products (which are not
material) owned by our bottlers and for which the Company provides marketing
support and derives profit from the sales.
Our worldwide unit case volume increased 4 percent in 2001, on top of a 4
percent increase in 2000. The increase in unit case volume reflects consistent
performance across certain key operations despite difficult global economic
conditions. Our business system sold 17.8 billion unit cases in 2001.
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.
CRITICAL ACCOUNTING POLICIES
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. All majority-owned entities in which our Company's control is
considered other than temporary are consolidated. For 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, such entities are accounted for by the equity method. Our
judgments regarding the level of influence or control of each equity method
investment include considering key factors such as our ownership interest,
representation on the board of directors, participation in policy making
decisions and material intercompany transactions. Our investments in other
companies that we do not control and for which we do not have the ability to
exercise significant influence as discussed above are carried at cost or fair
value, as appropriate. All significant intercompany accounts and transactions,
including transactions with equity method investees, are eliminated from our
financial results.
Recoverability of Investments
Management periodically assesses the recoverability of our Company's
investments. The significant judgment required in management's recoverability
assessment is the determination of the fair value of the investment. For
publicly traded investments, the fair value of our Company's investment is
readily determinable based on quoted market prices. For non-publicly traded
investments, management's assessment of fair value is based on our analysis of
the investee's estimates of future operating results and the resulting cash
flows. Management's ability to accurately predict future cash flows, especially
in emerging and developing markets such as the Middle East and Latin America,
may impact the determination of fair value.
In the event a decline in fair value of an investment occurs, management may
be required to make a determination as to whether the decline in market value is
other than temporary. Management's assessment as to the nature of a decline in
fair value is largely based on our estimates of future operating results, the
resulting cash flows and intent to hold the investment. If an investment is
considered to be impaired and the decline in value is considered to be other
than temporary, an appropriate write-down is recorded.
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The Coca-Cola Company and Subsidiaries
Other Assets
Our Company invests in infrastructure programs with our bottlers that are
directed at strengthening our bottling system and increasing unit case sales.
Additionally, our Company advances payments to certain customers for marketing
to fund activities intended to generate volume. Advance payments are also made
to certain customers for distribution rights. Payments under these programs are
generally capitalized as other assets on the Consolidated Balance Sheets.
Management periodically evaluates the recoverability of these assets by
preparing estimates of sales volume, the resulting gross profit, cash flows and
other factors. Accuracy of our recoverability assessments is based on
management's ability to accurately predict certain key variables such as sales
volume, prices, marketing spending and other economic factors. Predicting these
key variables involves uncertainty about future events; however, the assumptions
used are consistent with our internal planning. If the assets are assessed to be
recoverable, they are amortized over the periods benefited. If the carrying
value of these assets is considered to be not recoverable, such assets are
written down as appropriate.
Trademarks and Other Intangible Assets
Trademarks 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). Other intangible assets
consist primarily of bottling and distribution rights in specific territories.
Trademarks and other intangible assets are periodically reviewed for impairment
whenever events or changes occur that indicate the carrying value may not be
recoverable. When such events or changes occur, management estimates the future
cash flows expected to result from the use and, if applicable, the eventual
disposition of the assets. The key variables which management must estimate
include sales volume, prices, marketing spending and other economic factors.
Significant management judgment is involved in estimating these variables, and
they include inherent uncertainties; however, the assumptions used are
consistent with our internal planning. Therefore, management periodically
evaluates and updates the estimates based on the conditions that influence these
variables. If such assets are considered impaired, they are written down to fair
value as appropriate.
The assumptions and conditions for "Recoverability of Investments," "Other
Assets" and "Trademarks and Other Intangible Assets" reflect management's best
assumptions and estimates, but these items involve inherent uncertainties as
described above, which may or may not be controllable by management. As a
result, the accounting for such items could result in different amounts if
management used different assumptions or if different conditions occur in future
periods.
Other Policies
The Company has adopted or will adopt the following new accounting standards:
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended by SFAS No. 137 and
SFAS No. 138; SFAS No. 141, "Business Combinations"; and SFAS No. 142, "Goodwill
and Other Intangible Assets." These standards are considered to be critical
accounting policies and are explained under the heading "New Accounting
Standards."
For further information concerning accounting policies, refer to Note 1 of
our Consolidated Financial Statements.
OPERATIONS
Net Operating Revenues and Gross Margin
In 2001, on a consolidated basis, our net operating revenues and our gross
profit grew 1 percent and 3 percent, respectively. The growth in net operating
revenues was primarily due to an increase in gallon shipments, price increases
in selected countries and the consolidation of the Nordic and Brazilian bottling
operations. These gains were offset by the negative impact of a stronger U.S.
dollar and the sale of our previously owned vending operations in Japan and
canning operations in Germany. Our gross profit margin increased to 69.9 percent
in 2001 from 68.8 percent in 2000, primarily due to the sale in 2001 of our
Japan vending and German canning operations, partially offset by the
consolidation in 2001 of the Nordic and Brazilian bottling operations.
Generally, bottling and vending operations produce higher net revenues but lower
gross margins compared to concentrate and syrup operations.
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
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FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
The Coca-Cola Company and Subsidiaries
impact of a stronger U.S. dollar and the inventory reduction by certain
bottlers. Our gross profit margin of 68.8 percent remained unchanged in 2000
compared to 1999.
Selling, Administrative and General Expenses
Selling expenses totaled $6,930 million in 2001,$6,863 million in 2000 and
$6,745 million in 1999.
During the first quarter of 2001, the Company announced plans to implement
incremental strategic marketing initiatives in order to accelerate the Company's
business strategies. During 2001, the Company invested $298 million of
incremental marketing in the United States, Japan and Germany.
The increase in 2001 was primarily due to higher marketing in line with the
Company's unit case volume growth, incremental marketing expenses discussed
above and the consolidation in 2001 of the Nordic and Brazilian bottling
operations. Such increases were partially offset by the sale in 2001 of our
Japan vending and German canning operations and the impact of a stronger U.S.
dollar. The increase in 2000 was primarily due to higher marketing expenditures
in line with 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.
Administrative and general expenses totaled $1,766 million in 2001, $1,688
million in 2000 and $1,735 million in 1999. The increase in 2001 is due to the
consolidation in 2001 of the Nordic and Brazilian bottling operations, partially
offset by the sale in 2001 of our Japan vending and German canning operations
and the impact of a stronger U.S. dollar. 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.
Administrative and general expenses, as a percentage of net operating
revenues, totaled approximately 9 percent in 2001, 8 percent in 2000 and 9
percent in 1999.
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.
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 were separated from almost all functional areas of the Company's
operations, and certain activities were 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
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FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
The Coca-Cola Company and Subsidiaries
the Realignment. During 2000, 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 included 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. In 2001, our Company paid out substantially all of this
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 strategy, management intended to
sell the assets of our vending operations in Japan and our bottling operations
in the Baltics. On December 22, 2000, the Company signed a definitive agreement
to sell the assets of our vending operations in Japan, and this sale was
completed in 2001. The proceeds from the sale of the assets were approximately
equal to the carrying value of the long-lived assets less the cost to sell.
In December 2000, the Company announced it had intended to sell its bottling
operations in the Baltics to one of our strategic business partners. However,
that partner was in the process of an internal restructuring and no longer
planned to purchase the Baltics bottling operations. At that time, another
suitable buyer was not identified so the Company continued to operate the
Baltics bottlers as consolidated operations until a new buyer was identified.
Subsequently, in January 2002, our Company reached an agreement to sell our
bottling operations in the Baltics to CCHBC in early 2002. The expected proceeds
from the sale of the Baltics bottlers are approximately equal to the current
carrying value of the investment.
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, Eurasia and Middle East, Latin America
and Corporate segments. These charges were incurred during the fourth quarter of
1999.
Operating Income and Operating Margin
On a consolidated basis, our operating income increased 45 percent in 2001 to
$5,352 million. This follows a decline of 7 percent in 2000 to $3,691 million.
The 2001 results reflect an increase in gallon shipments, price increases in
selected countries, the impact of nonrecurring charges in 2000 as previously
discussed under the heading "Other Operating Charges" and the consolidation of
the Nordic and Brazilian bottling operations. This is offset by the negative
impact of a stronger U.S. dollar and the sale of our previously owned vending
operations in Japan and canning operations in Germany. 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. Our consolidated
operating margin was 26.6 percent in 2001, 18.6 percent in 2000 and 20.6 percent
in 1999.
Page 49
<PAGE>
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
The Coca-Cola Company and Subsidiaries
<TABLE>
<CAPTION>
MARGIN ANALYSIS (Chart converted to table)
2001 2000 1999
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Operating Revenues
(in billions) $ 20.1 $ 19.9 $ 19.3
Gross Margin 69.9% 68.8% 68.8%
Operating Margin 26.6% 18.6% 20.6%
- ------------------------------------------------------------------------------
</TABLE>
Interest Income and Interest Expense
In 2001, our interest income decreased 6 percent due primarily to lower interest
rates. In 2000, our interest income increased 33 percent due primarily to higher
average cash balances and higher interest rates. Interest expense decreased 35
percent in 2001 due to both a decrease in average commercial paper debt balances
and lower interest rates. In 2001, the Company used free cash flow to reduce
commercial paper debt balances. Interest expense increased 33 percent in 2000
due primarily to both an increase in average commercial paper debt balances and
higher interest rates throughout the period. Average 2000 commercial paper 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."
In 2001, interest income exceeded interest expense. Interest income benefited
from cash invested in locations outside the United States earning higher rates
of interest than could be obtained within the United States. Our interest
expense is primarily incurred on borrowings in the United States.
Equity Income (Loss)
In 2001, our Company's share of income from equity method investments totaled
$152 million. The increase in our Company's share of income from equity method
investments was due primarily to the continued improvement in operating
performance by the majority of our equity investees and the impact of impairment
charges on equity investees in 2000 as discussed below.
As of January 1, 2001, Coca-Cola Enterprises changed its method of accounting
for infrastructure development payments received from the Company. Prior to this
change, Coca-Cola Enterprises recognized these payments as offsets to
incremental expenses of the programs in the periods in which they were incurred.
Coca-Cola Enterprises now recognizes the infrastructure development payments
received from the Company as obligations under the contracts are performed.
Because the Company eliminates the financial effect of significant intercompany
transactions (including transactions with equity method investees), this change
in accounting method has no impact on the Consolidated Financial Statements of
our Company. For a more complete description of these transactions, refer to
Note 2 in our Consolidated Financial Statements.
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 an overall improvement
in operating performance by our portfolio of bottlers and the positive impact of
lower tax rates on current and deferred taxes at CCEAG.
Other Income-Net
In 2001, other income-net declined to $39 million from $99 million in 2000,
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 non-cash gain of approximately $118 million was
recognized. In 2000, this gain was partially offset by exchange losses
recognized versus exchange gains in 1999 attributable to the hedging of our
resources in Brazil.
Page 50
<PAGE>
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 issues 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. In July 2001, Coca-Cola
Enterprises completed its acquisition of Hondo Incorporated and Herbco
Enterprises, Inc., collectively known as Herb Coca-Cola. The transaction was
valued at approximately $1.4 billion, with approximately 30 percent of the
transaction funded with the issuance of approximately 25 million shares of
Coca-Cola Enterprises common stock, and the remaining portion funded through
debt and assumed debt. The issuance of shares resulted in a one-time non-cash
pretax gain for our Company of approximately $91 million. This gain represents
the increase in our Company's equity in the underlying net assets of the related
investee. No gains on issuances of stock by equity investees were recorded to
the Consolidated Statements of Income during 2000 or 1999. For a more complete
description of these transactions, refer to Note 3 in our Consolidated Financial
Statements.
Income Taxes
Our effective tax rates were 29.8 percent in 2001, 36.0 percent in 2000 and 36.3
percent in 1999. Our ongoing 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. The decrease in our effective
tax rate in 2001 was primarily due to effective tax planning and the impact that
the impairment charges recorded in 2000 had on the 2000 effective tax rate. 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
recorded 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 related to the merger of Coca-Cola Beverages and
Coca-Cola Hellenic Bottling Company S.A., previously discussed under the heading
"Other Income - Net." 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
utilized on our U.S. income tax return. The majority of the offsetting tax
credits will be realized by the end of the first quarter of 2002.
Management estimates that the effective tax rate for the year ending December
31, 2002 will be approximately 27.5 percent.
Income Per Share
Our basic net income per share increased by 82 percent in 2001, compared to a 10
percent decline in 2000. Diluted net income per share increased by 82 percent in
2001, compared to a 10 percent decline in 2000.
Recent Developments
In November 2001, our Company and CCBPI entered into a sale and purchase
agreement with RFM Corp. to acquire its 83.2 percent interest in Cosmos Bottling
Corporation (CBC), a publicly traded Philippine beverage company. As of the date
of the agreement, the Company began supplying concentrate for this operation.
The transaction valued CBC at 14 billion Philippine pesos, or approximately $270
million. The purchase of RFM's interest was finalized on January 3, 2002 with
our Company receiving direct and indirect ownership totaling approximately 62.3
percent. A subsequent tender offer was made to the remaining minority share
owners and is expected to close in March 2002. The Company and CCBPI have agreed
to restructure the operations of CBC upon completion of the acquisition. The
restructuring will result in the Company owning all acquired trademarks and
CCBPI owning all the acquired bottling assets. No gain or loss is expected upon
completion of this restructuring.
In early 2002, the Company entered into an agreement with Coca-Cola
Enterprises designed to support profitable volume growth of Company brands
within Coca-Cola Enterprises' territories. Under the terms of the agreement,
Coca-Cola Enterprises will earn cash funding as they achieve mutually
established unit
Page 51
<PAGE>
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
The Coca-Cola Company and Subsidiaries
case volume growth targets. The total cash support expected to be paid to
Coca-Cola Enterprises under this agreement is $150 million in 2002 and $250
million in 2003. Beginning in 2004, the expected annual cash support to be paid
to Coca-Cola Enterprises under this agreement will be reduced each year through
2009 when the annual cash support expected to be paid to Coca-Cola Enterprises
will be $80 million. Beginning in 2009 and for each year thereafter, the support
expected to be paid is $80 million annually. The Company will expense the
funding as it is earned by Coca-Cola Enterprises. The agreement can be cancelled
by either party at the end of a fiscal year with at least six months notice.
During 2001, the Company also entered into an agreement to provide financial
support to Coca-Cola Enterprises for introducing certain Company brands within
Coca-Cola Enterprises' recently acquired Herb Coca-Cola territories. Under the
terms of this agreement, the Company expects to pay Coca-Cola Enterprises $14
million annually in the years 2002 through 2008 and $11 million in 2009.
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 2002 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, 2001 2000 1999
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows provided by (used in):
Operations $ 4,110 $ 3,585 $ 3,883
Business reinvestment (963) (779) (1,551)
- -------------------------------------------------------------------------------
Free Cash Flow 3,147 2,806 2,332
Cash flows (used in) provided by:
Acquisitions,
net of disposals (225) (386) (1,870)
Share repurchases (277) (133) (15)
Dividends (1,791) (1,685) (1,580)
Other financing activities (762) (254) 1,124
Exchange (45) (140) (28)
- -------------------------------------------------------------------------------
Increase (decrease) in cash $ 47 $ 208 $ (37)
===============================================================================
</TABLE>
In 2001, cash provided by operations amounted to $4,110 million, a 15 percent
increase from 2000. The increase was primarily due to solid 2001 business
results partially offset by a stronger U.S. dollar, 2000 being unfavorably
impacted by the previously mentioned planned inventory reduction by certain
bottlers as discussed under the heading "Volume," cash payments made to
separated employees under the Realignment, as well as additional Japanese tax
payments made pursuant to the terms of the APA entered into by the United States
and Japan taxing authorities. Cash provided by operations in 2000 amounted to
$3,585 million, an 8 percent decrease from 1999. The decrease was primarily due
to 2000 being unfavorably impacted by the items mentioned above.
In 2001, net cash used in investing activities increased by $23 million
compared to 2000. The increase was primarily the result of increased purchases
of property, plant and equipment; the acquisition of the Nordic bottling
operations and other investing activities such as the acquisitions of Odwalla,
Inc. and Brazilian bottling operations. This was offset by proceeds received
from the sale of our Japan Vending operations.
In 2000, net cash used in investing activities decreased by $2,256 million
compared to 1999. The decrease was primarily the result of brand and bottler
acquisitions during 1999.
Page 52
<PAGE>
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
The Coca-Cola Company and Subsidiaries
Total capital expenditures for property, plant and equipment (including our
investments in information technology) and the percentage distribution by
operating segment for 2001, 2000 and 1999 are as follows (in millions):
<TABLE>
<CAPTION>
Year Ended December 31, 2001 2000 1999
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital expenditures $ 769 $ 733 $ 1,069
- -------------------------------------------------------------------------------
North America (1) 44% 35% 25%
Africa 1% 1% 2%
Europe, Eurasia
& Middle East 14% 27% 21%
Latin America 5% 2% 6%
Asia 14% 18% 30%
Corporate 22% 17% 16%
===============================================================================
<FN>
(1) Includes The Minute Maid Company
</FN>
</TABLE>
Financing Activities, Contractual Obligations and
Commercial Commitments
Our financing activities include net borrowings, dividend payments and share
issuances and repurchases. Net cash used in financing activities totaled $2,830
million in 2001, $2,072 million in 2000 and $471 million in 1999. The changes
between 2001 and 2000 as well as between 2000 and 1999 were primarily due to the
use of free cash flow to pay down outstanding debt.
Cash used to purchase common stock for treasury under the 1996 share
repurchase plan and employee stock award programs totaled $277 million in 2001,
$133 million in 2000 and $15 million in 1999. In 2000 and in 1999, we did not
repurchase any shares under the 1996 share repurchase plan. As previously
mentioned, we expect that the Company's share repurchases will be increased in
2002, and we are currently estimating a range of $750 million to $1 billion of
repurchases during the year.
Commercial paper is our primary source of short-term financing. On December
31, 2001, we had $3,361 million outstanding in commercial paper borrowings
compared to $4,549 million outstanding at the end of 2000, a $1,188 million
decrease in borrowings. The 2001 decrease in commercial paper was due to the use
of free cash flow to pay down outstanding debt. 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. On December 31,
2001, we had $2,468 million in lines of credit and other short-term credit
facilities available, of which approximately $382 million was outstanding.
On December 31, 2001, we had $1,219 million outstanding in long-term debt,
compared to $835 million outstanding at the end of 2000, a $384 million increase
in borrowings. These increased borrowings were a result of the Company issuing
$500 million in 10-year global notes in March 2001. This debt was incurred in
order to obtain funds at attractive rates available in 2001. Current maturities
of long-term debt were $156 million as of December 31, 2001 compared to $21
million as of December 31, 2000, an increase of $135 million.
The Company's contractual obligations and commercial commitments are as
follows (in millions):
<TABLE>
<CAPTION>
December 31, 2001
- -------------------------------------------------------------------------------
<S> <C>
Short-term loans and notes payable:
Commercial paper borrowings $ 3,361
Lines of credit and other
short-term borrowings 382
Current maturities of long-term debt 156
Long-term debt 1,219
Marketing commitments 1,326
- -------------------------------------------------------------------------------
Contractual obligations $ 6,444
===============================================================================
Contingent liability for guarantees of
indebtedness owed to third parties $ 436
===============================================================================
</TABLE>
For the year ended December 31, 2001, our Company generated cash flows
provided by operating activities of $4,110 million. Management's expectations
are that future cash flows provided by operating activities will be sufficient
to meet the Company's contractual obligations. For further discussion of the
above contractual obligations and commercial commitments, refer to Notes 5, 6
and 10 of the Consolidated Financial Statements.
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.
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FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
The Coca-Cola Company and Subsidiaries
We use approximately 59 functional currencies. Due to our global operations,
weaknesses in some of these currencies are often offset by strengths in others.
In 2001, 2000 and 1999, the weighted-average exchange rates for foreign
currencies in which the Company conducts operations (all operating currencies),
and for certain individual currencies, strengthened (weakened) against the U.S.
dollar as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 2001 2000 1999
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
All operating currencies (8)% (5)% Even
- -----------------------------------------------------------------------------
Australian dollar (13)% (8)% 3 %
British pound (5)% (7)% (2)%
Canadian dollar (4)% Even Even
French franc (5)% (14)% (2)%
German mark (5)% (14)% (2)%
Japanese yen (11)% 4 % 15 %
=============================================================================
</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 is designed to
mitigate 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 5 percent in 2001 and approximately 4 percent in 2000.
The negative trend from currencies on our 2002 operating income, including the
recent devaluation in Argentina, is expected to continue.
Exchange gains (losses)-net amounted to $(9) million in 2001, $(12) million
in 2000 and $87 million in 1999, and were recorded in other income-net in the
Consolidated Statements of Income. 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.
Off Balance Sheet Arrangements
The Company does not have transactions, arrangements or relationships with
"special purpose" entities, and the Company does not have any off balance sheet
debt.
FINANCIAL POSITION
Comparing 2001 to 2000, the increase in prepaid expenses and other assets was
primarily due to the change in the carrying value of derivatives and hedging
instruments and amounts due from CCHBC of $146 million related to the sale of
the Russian bottling operations. For further discussion, refer to Note 2 of the
Consolidated Financial Statements. The decrease in cost method investments was
primarily due to the consolidation of our recently purchased Brazilian bottling
operations that had been classified as temporary cost method investments. The
increase in other assets was due to a higher cash surrender value of insurance
due to the pay off of policy loans. The increase in trademarks and other
intangible assets was due primarily to acquisitions of brands and bottling
operations during 2001.
Comparing 2000 to 1999, 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 other assets in 2000 is primarily due to an increase in marketing
prepayments. The increase in accounts payable and accrued expenses in 2000 is
due primarily to the accrual for the Realignment expenses.
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 was
phased in over a period ended January 1, 2002, when euro notes and coins came
into circulation. The replacement of other currencies with the euro did not have
and is not expected to have a material impact on our operations or our
Consolidated Financial Statements.
Page 54
<PAGE>
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
The Coca-Cola Company and Subsidiaries
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 majority of the
inflationary effects of increasing costs and to generate sufficient cash flows
to maintain our productive capability.
NEW ACCOUNTING STANDARDS
Effective January 1, 2001, the Company adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended by SFAS No. 137 and
SFAS No. 138. As discussed further in Note 9, the 2001 Consolidated Financial
Statements were prepared in accordance with the provisions of SFAS No. 133.
Prior years' financial statements have not been restated. The 2000 and 1999
Consolidated Financial Statements were prepared in accordance with the
applicable professional literature for derivatives and hedging instruments in
effect at that time.
Effective January 1, 2001, our Company adopted the provisions of Emerging
Issues Task Force (EITF) Issue No. 00-14, "Accounting for Certain Sales
Incentives," and EITF Issue No. 00-22, "Accounting for 'Points' and Certain
Other Time-Based or Volume-Based Sales Incentive Offers, and Offers for Free
Products or Services to be Delivered in the Future." Both of these EITF Issues
provide additional guidance relating to the income statement classification of
certain sales incentives. The adoption of these EITF Issues resulted in the
Company reducing both net operating revenues and selling, administrative and
general expenses by approximately $580 million in 2001, $569 million in 2000 and
$521 million in 1999. These reclassifications have no impact on operating
income.
In April 2001, the EITF reached a consensus on EITF Issue No. 00-25, "Vendor
Income Statement Characterization of Consideration Paid to a Reseller of the
Vendor's Products." EITF Issue No. 00-25, which is effective for the Company
beginning January 1, 2002, will require certain selling expenses incurred by the
Company to be classified as deductions from revenue. With the adoption of this
EITF Issue, we estimate that approximately $2.6 billion of our payments to
bottlers and customers that are currently classified within selling,
administrative and general expenses will be reclassified as deductions from
revenue. In our 2002 Consolidated Financial Statements, all comparative periods
will be reclassified.
In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No.
141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 142 is effective for the Company as of January 1, 2002. Under
the new rules, goodwill and indefinite lived intangible assets will no longer be
amortized but will be reviewed annually for impairment. Intangible assets that
are not deemed to have an indefinite life will continue to be amortized over
their useful lives.
The adoption of SFAS No. 142 requires that an initial impairment assessment
be performed on all goodwill and indefinite lived intangible assets. To complete
this assessment, the Company will compare the fair value to the current carrying
value of trademarks and other intangible assets. Fair values will be derived
using cash flow analysis. The assumptions used in this cash flow analysis will
be consistent with our internal planning. Any impairment charge resulting from
this initial assessment will be recorded as a cumulative effect of an accounting
change. The Company estimates the cumulative effect of adopting this standard
will result in a non-cash charge in the first quarter of 2002 of approximately
$1 billion on a pretax basis. This amount reflects intangible assets for both
the Company and the Company's proportionate share of its equity method
investees. The adoption of this new standard will also benefit earnings
beginning in 2002 by approximately $60 million in reduced amortization from
Company-owned intangible assets and approximately $150 million of increased
equity income relating to the Company's share of amortization savings from
equity method investees.
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.
FORWARD-LOOKING STATEMENTS
Certain written and oral statements made by our Company and subsidiaries or with
the approval of an
Page 55
<PAGE>
FINANCIAL REVIEW INCORPORATING MANAGEMENT'S DISCUSSION AND ANALYSIS
The Coca-Cola Company and Subsidiaries
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:
- Foreign currency rate fluctuations, interest rate fluctuations and other
capital market conditions. Most of our exposures to capital markets,
including foreign currency and interest rates, 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 capital market exposures.
- Changes in the nonalcoholic beverages business environment. These include,
without limitation, changes in consumer preferences, 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.
- Adverse weather conditions, which could reduce demand for Company products.
- Our ability to generate sufficient cash flows to support capital expansion
plans, share repurchase programs and general operating activities.
- 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.
- The effectiveness of our advertising, marketing and promotional programs.
- 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.
- 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 uncertainties of litigation, as well as other risks and uncertainties
detailed from time to time in our Company's Securities and Exchange
Commission filings.
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 57 through 84 of
this report. Additional information concerning our operating segments is
presented on pages 81 through 83.
Page 56
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
The Coca-Cola Company and Subsidiaries
<TABLE>
<CAPTION>
Year Ended December 31, 2001 2000 1999
- --------------------------------------------------------------------------------
(In millions except per share data)
<S> <C> <C> <C>
NET OPERATING REVENUES $ 20,092 $ 19,889 $ 19,284
- ----------------------
Cost of goods sold 6,044 6,204 6,009
- --------------------------------------------------------------------------------
GROSS PROFIT 14,048 13,685 13,275
- ------------
Selling, administrative and general
expenses 8,696 8,551 8,480
Other operating charges - 1,443 813
- --------------------------------------------------------------------------------
OPERATING INCOME 5,352 3,691 3,982
- ----------------
Interest income 325 345 260
Interest expense 289 447 337
Equity income (loss) 152 (289) (184)
Other income-net 39 99 98
Gains on issuances of stock by
equity investees 91 - -
- --------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE 5,670 3,399 3,819
- ---------------------------------------
Income taxes 1,691 1,222 1,388
- --------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 3,979 2,177 2,431
- -------------------------------
Cumulative effect of accounting
change, net of income taxes (10) - -
- --------------------------------------------------------------------------------
NET INCOME $ 3,969 $ 2,177 $ 2,431
================================================================================
BASIC NET INCOME PER SHARE
- --------------------------
Before accounting change $ 1.60 $ .88 $ .98
Cumulative effect of accounting change - - -
- --------------------------------------------------------------------------------
$ 1.60 $ .88 $ .98
- --------------------------------------------------------------------------------
DILUTED NET INCOME PER SHARE
- ----------------------------
Before accounting change $ 1.60 $ .88 $ .98
Cumulative effect of accounting change - - -
- --------------------------------------------------------------------------------
$ 1.60 $ .88 $ .98
- --------------------------------------------------------------------------------
AVERAGE SHARES OUTSTANDING 2,487 2,477 2,469
- --------------------------
Dilutive effect of stock options - 10 18
- --------------------------------------------------------------------------------
AVERAGE SHARES OUTSTANDING
ASSUMING DILUTION 2,487 2,487 2,487
================================================================================
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
Page 57
<PAGE>
CONSOLIDATED BALANCE SHEETS
The Coca-Cola Company and Subsidiaries
<TABLE>
<CAPTION>
December 31, 2001 2000
- --------------------------------------------------------------------------------
(In millions except share data)
<S> <C> <C>
ASSETS
- ------
CURRENT
- -------
Cash and cash equivalents $ 1,866 $ 1,819
Marketable securities 68 73
- --------------------------------------------------------------------------------
1,934 1,892
Trade accounts receivable, less allowances
of $59 in 2001 and $62 in 2000 1,882 1,757
Inventories 1,055 1,066
Prepaid expenses and other assets 2,300 1,905
- --------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 7,171 6,620
- --------------------------------------------------------------------------------
INVESTMENTS AND OTHER ASSETS
- ----------------------------
Equity method investments
Coca-Cola Enterprises Inc. 788 707
Coca-Cola Amatil Limited 432 617
Coca-Cola HBC S.A. 791 758
Other, principally bottling companies 3,117 3,164
Cost method investments, principally
bottling companies 294 519
Other assets 2,792 2,364
- --------------------------------------------------------------------------------
8,214 8,129
- --------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT
- -----------------------------
Land 217 225
Buildings and improvements 1,812 1,642
Machinery and equipment 4,881 4,547
Containers 195 200
- --------------------------------------------------------------------------------
7,105 6,614
Less allowances for depreciation 2,652 2,446
- --------------------------------------------------------------------------------
4,453 4,168
- --------------------------------------------------------------------------------
TRADEMARKS AND OTHER INTANGIBLE ASSETS 2,579 1,917
- --------------------------------------------------------------------------------
$ 22,417 $ 20,834
================================================================================
</TABLE>
Page 58
<PAGE>
The Coca-Cola Company and Subsidiaries
<TABLE>
<CAPTION>
December 31, 2001 2000
- --------------------------------------------------------------------------------
LIABILITIES AND SHARE-OWNERS' EQUITY
- ------------------------------------
<S> <C> <C>
CURRENT
- -------
Accounts payable and accrued expenses $ 3,679 $ 3,905
Loans and notes payable 3,743 4,795
Current maturities of long-term debt 156 21
Accrued income taxes 851 600
- --------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 8,429 9,321
- --------------------------------------------------------------------------------
LONG-TERM DEBT 1,219 835
- --------------------------------------------------------------------------------
OTHER LIABILITIES 961 1,004
- --------------------------------------------------------------------------------
DEFERRED INCOME TAXES 442 358
- --------------------------------------------------------------------------------
SHARE-OWNERS' EQUITY
- --------------------
Common stock, $.25 par value
Authorized: 5,600,000,000 shares
Issued: 3,491,465,016 shares in 2001;
3,481,882,834 shares in 2000 873 870
Capital surplus 3,520 3,196
Reinvested earnings 23,443 21,265
Accumulated other comprehensive income and
unearned compensation on restricted stock (2,788) (2,722)
- --------------------------------------------------------------------------------
25,048 22,609
Less treasury stock, at cost
(1,005,237,693 shares in 2001;
997,121,427 shares in 2000) 13,682 13,293
- --------------------------------------------------------------------------------
11,366 9,316
- --------------------------------------------------------------------------------
$ 22,417 $ 20,834
================================================================================
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
Page 59
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
The Coca-Cola Company and Subsidiaries
<TABLE>
<CAPTION>
Year Ended December 31, 2001 2000 1999
- --------------------------------------------------------------------------------
(In millions)
<S> <C> <C> <C>
OPERATING ACTIVITIES
- --------------------
Net income $ 3,969 $ 2,177 $ 2,431
Depreciation and amortization 803 773 792
Deferred income taxes 56 3 97
Equity income or loss, net of dividends (54) 380 292
Foreign currency adjustments (60) 196 (41)
Gains on issuances of stock by equity
investees (91) - -
Gains on sales of assets, including
bottling interests (85) (127) (49)
Other operating charges - 916 799
Other items 34 119 119
Net change in operating assets and
liabilities (462) (852) (557)
- --------------------------------------------------------------------------------
Net cash provided by operating
activities 4,110 3,585 3,883
- --------------------------------------------------------------------------------
INVESTING ACTIVITIES
- --------------------
Acquisitions and investments,
principally trademarks
and bottling companies (651) (397) (1,876)
Purchases of investments and other
assets (456) (508) (518)
Proceeds from disposals of investments
and other assets 455 290 176
Purchases of property, plant and
equipment (769) (733) (1,069)
Proceeds from disposals of property,
plant and equipment 91 45 45
Other investing activities 142 138 (179)
- --------------------------------------------------------------------------------
Net cash used in investing activities (1,188) (1,165) (3,421)
- --------------------------------------------------------------------------------
FINANCING ACTIVITIES
- --------------------
Issuances of debt 3,011 3,671 3,411
Payments of debt (3,937) (4,256) (2,455)
Issuances of stock 164 331 168
Purchases of stock for treasury (277) (133) (15)
Dividends (1,791) (1,685) (1,580)
- --------------------------------------------------------------------------------
Net cash used in financing activities (2,830) (2,072) (471)
- --------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS (45) (140) (28)
- --------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
- -------------------------
Net increase (decrease) during the year 47 208 (37)
Balance at beginning of year 1,819 1,611 1,648
- --------------------------------------------------------------------------------
Balance at end of year $ 1,866 $ 1,891 $ 1,611
================================================================================
<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
Page 60
<PAGE>
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, 2001 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, 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 (loss) 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
Restricted stock and other stock |
plans, less amortizatization of |
$27 - | - 5 - 25 - - 30
Stock issued by an equity |
investee - | - 146 - - - - 146
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 (loss) 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
Restricted stock and other stock |
plans, less amortizatization of |
$24 3 | 1 167 - (136) - - 32
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
- ------------------------- |
COMPREHENSIVE INCOME: |
Net income - | - - 3,969 - - - 3,969
Translation adjustments - | - - - - (207) - (207)
Cumulative effect of SFAS No. 133 - | - - - - 50 - 50
Net gain (loss) on derivatives - | - - - - 92 - 92
Net change in unrealized gain |
(loss) on securities - | - - - - (29) - (29)
Minimum pension liability - | - - - - (17) - (17)
|
| ------
COMPREHENSIVE INCOME | 3,858
Stock issued to employees |
exercising stock options 7 | 2 162 - - - - 164
Tax benefit from employees' |
stock option and restricted |
stock plans - | - 58 - - - - 58
Restricted stock and other |
stock plans, less cancellations - | 1 132 - (24) - (112) (3)
Amortization of restricted stock - | - - - 41 - - 41
Unearned restricted stock |
adjustment - | - (28) - 28 - - -
Purchases of stock for treasury (6)(1)| - - - - - (277) (277)
Dividends (per share -- $.72) - | - - (1,791) - - - (1,791)
- -----------------------------------------|------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 2001 2,486 | $ 873 $ 3,520 $ 23,443 $ (150) $ (2,638) $ (13,682) $ 11,366
====================================================================================================================================
<FN>
(1) Common stock purchased from employees exercising stock options numbered .3
million, 2.2 million and .3 million shares for the years ended December 31,
2001, 2000 and 1999, respectively.
</FN>
</TABLE>
See Notes to Consolidated Financial Statements.
Page 61
<PAGE>
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, together with its subsidiaries, (the Company or 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 bottling partners or our customers.
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, including transactions with
equity method investees, are eliminated from our financial results.
Recoverability of Investments
Management periodically assesses the recoverability of our Company's
investments. For publicly traded investments, the fair value of our Company's
investment is readily determinable based on quoted market prices. For
non-publicly traded investments, management's assessment of fair value is based
on our analysis of the investee's estimates of future operating results and the
resulting cash flows. If an investment is considered to be impaired and the
decline in value is other than temporary, an appropriate write-down is recorded.
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 non-cash gain or loss on the issuance. This non-cash 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 $1,970
million in 2001, $1,655 million in 2000 and $1,609 million in 1999. As of
December 31, 2001 and 2000, advertising production costs of approximately $52
million and $69 million, respectively, were recorded primarily in prepaid
expenses and other assets and noncurrent 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.
Page 62
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
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.
Additionally, our Company advances payments to certain customers for marketing
to fund activities intended to generate volume. Advance payments are also made
to certain customers for distribution rights. The costs of these programs are
recorded in other assets and are subsequently amortized over the periods to be
directly benefited. Management periodically evaluates the recoverability of
these assets by preparing estimates of sales volume, the resulting gross profit,
cash flows and other factors.
Trademarks and Other Intangible Assets
Trademarks 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). Trademarks 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 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 applicable, an appropriate interest rate is
utilized, based on location-specific economic factors. Accumulated amortization
was approximately $285 million and $192 million on December 31, 2001 and 2000,
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
Effective January 1, 2001, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended by SFAS No. 137 and SFAS No. 138. As discussed further
in Note 9, the 2001 Consolidated Financial Statements were prepared in
accordance with the provisions of SFAS No. 133. Prior years' financial
statements have not been restated. As required by SFAS No. 133, the 2000 and
1999 Consolidated Financial Statements were prepared in accordance with the
applicable professional literature for derivatives and hedging instruments in
effect at that time.
Effective January 1, 2001, our Company adopted the provisions of Emerging
Issues Task Force (EITF) Issue No. 00-14, "Accounting for Certain Sales
Incentives," and EITF Issue No. 00-22, "Accounting for 'Points' and Certain
Other Time-Based or Volume-Based Sales Incentive Offers, and Offers for Free
Products or Services to be Delivered in the Future." Both of these EITF Issues
provide additional guidance relating to the income statement classification of
certain sales incentives. The adoption of these EITF Issues resulted in the
Company reducing both net operating revenues and selling, administrative and
general expenses by approximately $580 million in 2001, $569 million in 2000 and
$521 million in 1999. These reclassifications have no impact on operating
income.
In April 2001, the EITF reached a consensus on EITF Issue No. 00-25, "Vendor
Income Statement Characterization of Consideration Paid to a Reseller of the
Vendor's Products." EITF Issue No. 00-25, which is effective for the Company
beginning January 1, 2002, will require certain selling expenses incurred by the
Company to be classified as deductions from revenue. With the adoption of this
EITF Issue, we estimate that approximately $2.6 billion of our payments to
bottlers and customers that are currently classified within selling,
administrative and general expenses will be reclassified as deductions from
revenue. In our 2002 Consolidated Financial Statements, all comparative periods
will be reclassified.
In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No.
141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 142 is effective for the Company as of January 1, 2002. Under
the new rules, goodwill and indefinite lived intangible assets will no
Page 63
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
longer be amortized but will be reviewed annually for impairment. Intangible
assets that are not deemed to have an indefinite life will continue to be
amortized over their useful lives.
The adoption of SFAS No. 142 requires that an initial impairment assessment
is performed on all goodwill and indefinite lived intangible assets. To complete
this assessment, the Company will compare the fair value to the current carrying
value of trademarks and other intangible assets. Fair values will be derived
using cash flow analysis. The assumptions used in this cash flow analysis will
be consistent with our internal planning. Any impairment charge resulting from
this initial assessment will be recorded as a cumulative effect of an accounting
change. The Company estimates the cumulative effect of adopting this standard
will result in a non-cash charge in the first quarter of 2002 of approximately
$1 billion on a pretax basis. This amount reflects intangible assets for both
the Company and the Company's proportionate share of its equity method
investees. The adoption of this new standard will also benefit earnings
beginning in 2002 by approximately $60 million in reduced amortization from
Company-owned intangible assets and approximately $150 million of increased
equity income relating to the Company's share of amortization savings from
equity method investees.
NOTE 2: BOTTLING INVESTMENTS
Coca-Cola Enterprises Inc.
Coca-Cola Enterprises Inc. (Coca-Cola Enterprises) is the largest soft-drink
bottler in the world, operating in eight countries. On December 31, 2001, our
Company owned approximately 38 percent of the outstanding common stock of
Coca-Cola Enterprises, and accordingly, we account for our investment by the
equity method of accounting. As of December 31, 2001, our proportionate share of
the net assets of Coca-Cola Enterprises exceeded our investment by approximately
$283 million. This excess is amortized over a period consistent with the
applicable useful life of the underlying transactions.
A summary of financial information for Coca-Cola Enterprises is as follows
(in millions):
<TABLE>
<CAPTION>
December 31, 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C>
Current assets $ 2,876 $ 2,631
Noncurrent assets 20,843 19,531
- --------------------------------------------------------------------------------
Total assets $ 23,719 $ 22,162
================================================================================
Current liabilities $ 4,522 $ 3,094
Noncurrent liabilities 16,377 16,234
- --------------------------------------------------------------------------------
Total liabilities $ 20,899 $ 19,328
================================================================================
Share-owners' equity $ 2,820 $ 2,834
================================================================================
Company equity investment $ 788 $ 707
================================================================================
Year Ended December 31, 2001 2000 1999
- --------------------------------------------------------------------------------
Net operating revenues $ 15,700 $ 14,750 $ 14,406
Cost of goods sold 9,740 9,083 9,015
- --------------------------------------------------------------------------------
Gross profit $ 5,960 $ 5,667 $ 5,391
================================================================================
Operating income $ 601 $ 1,126 $ 839
================================================================================
Cash operating profit (1) $ 1,954 $ 2,387 $ 2,187
================================================================================
Cumulative effect of
accounting change $ 302 $ - $ -
================================================================================
Net income (loss) $ (321) $ 236 $ 59
================================================================================
Net income (loss) available
to common share owners $ (324) $ 233 $ 56
================================================================================
<FN>
(1) Cash operating profit is defined as operating income plus depreciation
expense, amortization expense and other non-cash operating expenses.
</FN>
</TABLE>
Our net concentrate and syrup sales to Coca-Cola Enterprises were $3.9
billion in 2001, $3.5 billion in 2000 and $3.3 billion in 1999, or approximately
19 percent, 18 percent and 17 percent of our 2001, 2000 and 1999 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 $295 million in 2001, $298 million in 2000 and $308
million in 1999. We also provide certain administrative and other services to
Coca-Cola Enterprises under negotiated fee arrangements.
Cash payments made directly to Coca-Cola Enterprises for support of certain
marketing activities and participation with them in cooperative advertising and
other marketing programs amounted to approximately $606 million, $533 million
and $525 million in 2001, 2000 and 1999, respectively. Cash payments made
directly to Coca-Cola Enterprises' customers for support of certain marketing
activities and programs amounted to approximately $282 million,
Page 64
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
$221 million and $242 million in 2001, 2000 and 1999, respectively. Pursuant to
cooperative advertising and trade agreements with Coca-Cola Enterprises, we
received approximately $252 million, $195 million and $243 million in 2001, 2000
and 1999, respectively, from Coca-Cola Enterprises for local media and marketing
program expense reimbursements.
Our Company enters into programs with Coca-Cola Enterprises designed to
assist their development of the cold drink infrastructure. Under these programs,
our Company made payments to Coca-Cola Enterprises for a portion of the cost of
developing the infrastructure necessary to support accelerated placements of
cold drink equipment. These payments support a common objective of increased
sales of Coca-Cola beverages from increased availability and consumption in the
cold drink channel. In connection with these programs, Coca-Cola Enterprises
agrees to: (1) purchase and place specified numbers of vendors/coolers or cold
drink equipment each year through 2008; (2) maintain the equipment in service,
with certain exceptions, for a period of at least 12 years after placement; (3)
maintain and stock the equipment in accordance with specified standards; and (4)
report to our Company minimum average annual unit case sales volume throughout
the economic life of the equipment.
Coca-Cola Enterprises must achieve minimum average unit case sales volume for
a 12-year period following the placement of equipment. These minimum average
unit case sales volume levels ensure adequate gross profit from sales of
concentrate to fully recover the capitalized costs plus a return on the
Company's investment. Should Coca-Cola Enterprises fail to purchase the
specified numbers of vendors/coolers or cold drink equipment for any calendar
year through 2008, the parties agree to mutually develop a reasonable solution.
Should no mutually agreeable solution be developed, or in the event that
Coca-Cola Enterprises otherwise breaches any material obligation under the
contracts and such breach is not remedied within a stated period, then Coca-Cola
Enterprises would be required to repay a portion of the support funding as
determined by our Company. No repayments by Coca-Cola Enterprises have ever been
made under these programs. Our Company paid or committed to pay approximately
$159 million, $223 million and $338 million in 2001, 2000 and 1999,
respectively, to Coca-Cola Enterprises in connection with these infrastructure
programs. These payments are recorded as other assets and amortized as a charge
to earnings over the 12-year period following the placement of the equipment.
Amounts recorded in other assets were approximately $931 million as of December
31, 2001. For 2002 and thereafter, the Company has no further commitments under
these programs.
As of January 1, 2001, Coca-Cola Enterprises changed its method of accounting
for infrastructure development payments received from the Company. Prior to this
change, Coca-Cola Enterprises recognized these payments as offsets to
incremental expenses of the programs in the periods in which they were incurred.
Coca-Cola Enterprises now recognizes the infrastructure development payments
received from the Company as obligations under the contracts are performed.
Because the Company eliminates the financial effect of significant intercompany
transactions (including transactions with equity method investees), this change
in accounting method has no impact on the Consolidated Financial Statements of
our Company.
Our Company and Coca-Cola Enterprises reached an agreement in 2000 to
transfer all responsibilities and the associated staffing for major customer
marketing (CMG) efforts to Coca-Cola Enterprises from our Company and for local
media activities from Coca-Cola Enterprises to our Company. Under the agreement,
our Company reimburses Coca-Cola Enterprises for the CMG staffing costs
transferred to Coca-Cola Enterprises, and Coca-Cola Enterprises reimburses our
Company for the local media staffing costs transferred to our Company. Amounts
reimbursed to Coca-Cola Enterprises by our Company for CMG staffing expenses
were $25 million and $3 million for 2001 and 2000, respectively. Amounts
reimbursed to our Company for local media staffing expenses were $16 million for
2001.
The difference between our proportionate share of Coca-Cola Enterprises'
income available to common share owners and the Company's equity income in
Coca-Cola Enterprises is primarily related to the elimination of the financial
effect of intercompany transactions between the two companies.
If valued at the December 31, 2001, quoted closing price of Coca-Cola
Enterprises shares, the value of our investment in Coca-Cola Enterprises
exceeded its carrying value by approximately $2.4 billion.
Page 65
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
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, 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C>
Current assets $ 6,013 $ 5,985
Noncurrent assets 17,879 19,030
- --------------------------------------------------------------------------------
Total assets $ 23,892 $ 25,015
================================================================================
Current liabilities $ 5,085 $ 5,419
Noncurrent liabilities 7,806 8,357
- --------------------------------------------------------------------------------
Total liabilities $ 12,891 $ 13,776
================================================================================
Share-owners' equity $ 11,001 $ 11,239
================================================================================
Company equity investment $ 4,340 $ 4,539
================================================================================
Year Ended December 31, 2001 2000 1999
- --------------------------------------------------------------------------------
Net operating revenues (1) $ 19,955 $ 21,423 $ 19,605
Cost of goods sold 11,413 13,014 12,085
- --------------------------------------------------------------------------------
Gross profit (1) $ 8,542 $ 8,409 $ 7,520
================================================================================
Operating income (loss) $ 1,770 $ (24) $ 809
================================================================================
Cash operating profit (2) $ 3,171 $ 2,796 $ 2,474
================================================================================
Net income (loss) $ 735 $ (894) $ (134)
================================================================================
<FN>
Equity investments include non-bottling investees.
(1) 2000 and 1999 Net operating revenues and Gross profit have been reclassified
for EITF Issue No. 00-14 and EITF Issue No. 00-22.
(2) Cash operating profit is defined as operating income plus depreciation
expense, amortization expense and other non-cash operating expenses.
</FN>
</TABLE>
Net sales to equity investees other than Coca-Cola Enterprises were $3.7
billion in 2001, $3.5 billion in 2000 and $3.2 billion in 1999. Total support
payments, primarily marketing, made to equity investees other than Coca-Cola
Enterprises, the majority of which are located outside the United States, were
approximately $636 million, $663 million and $685 million for 2001, 2000 and
1999, respectively.
In February 2001, the Company reached an agreement with Carlsberg A/S
(Carlsberg) for the dissolution of Coca-Cola Nordic Beverages (CCNB), a joint
venture bottler in which our Company had a 49 percent ownership. In July 2001,
our Company and San Miguel Corporation (San Miguel) acquired Coca-Cola Bottlers
Philippines (CCBPI) from Coca-Cola Amatil Limited (Coca-Cola Amatil).
In November 2001, our Company sold nearly all of its ownership interests in
various Russian bottling operations to Coca-Cola HBC S.A. (CCHBC) for
approximately $170 million in cash and notes receivable, of which $146 million
in notes receivable remained outstanding as of December 31, 2001. These
interests consisted of the Company's 40 percent ownership interest in a joint
venture with CCHBC that operates bottling territories in Siberia and parts of
Western Russia, together with our Company's nearly 100 percent interests in
bottling operations with territories covering the remainder of Russia.
In July 2000, a merger of Coca-Cola Beverages plc (Coca-Cola Beverages) and
Hellenic Bottling Company S.A. was completed to create CCHBC. This merger
resulted in a decrease in our Company's equity ownership interest from
approximately 50.5 percent of Coca-Cola Beverages to approximately 24 percent of
the combined entity, CCHBC.
In July 1999, we acquired from Fraser and Neave Limited its ownership
interest in F&N Coca-Cola Pte Limited.
If valued at the December 31, 2001, quoted closing prices of shares actively
traded on stock markets, the value of our equity investments in publicly traded
bottlers other than Coca-Cola Enterprises exceeded our carrying value by
approximately $800 million.
NOTE 3: ISSUANCES OF STOCK BY
EQUITY INVESTEES
In July 2001, Coca-Cola Enterprises completed its acquisition of Hondo
Incorporated and Herbco Enterprises, Inc., collectively known as Herb Coca-Cola.
The transaction was valued at approximately $1.4 billion, with approximately 30
percent of the transaction funded with the issuance of approximately 25 million
shares of Coca-Cola Enterprises common stock, and the remaining portion funded
through debt and assumed debt. 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. The shares issued combined with other share issuances
exceeded the amount of repurchased shares under Coca-Cola Enterprises' share
repurchase plan. As a result, the issuance of these shares resulted in a
one-time non-cash pretax gain for our Company of approximately $91 million. We
provided deferred taxes of approximately $36 million on this gain. This
transaction reduced our ownership in Coca-Cola Enterprises from approximately 40
percent to approximately 38 percent.
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
Page 66
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
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.
NOTE 4: ACCOUNTS PAYABLE AND
ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following (in millions):
<TABLE>
<CAPTION>
December 31, 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C>
Accrued marketing $ 1,160 $ 1,163
Container deposits 84 58
Accrued compensation 202 141
Sales, payroll and other taxes 148 166
Accrued realignment expenses 59 254
Accounts payable and
other accrued expenses 2,026 2,123
- --------------------------------------------------------------------------------
$ 3,679 $ 3,905
================================================================================
</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, 2001, we had approximately $3,361 million
outstanding in commercial paper borrowings. In addition, we had $2,468 million
in lines of credit and other short-term credit facilities available, of which
approximately $382 million was outstanding. Our weighted-average interest rates
for commercial paper outstanding were approximately 1.9 percent and 6.7 percent
at December 31, 2001 and 2000, 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):
<TABLE>
<CAPTION>
December 31, 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C>
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
5 3/4% U.S. dollar notes due 2011 498 -
7 3/8% U.S. dollar notes due 2093 116 116
Other, due 2002 to 2013 62 41
- --------------------------------------------------------------------------------
1,375 856
Less current portion 156 21
- --------------------------------------------------------------------------------
$ 1,219 $ 835
================================================================================
</TABLE>
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 $1,262 million and $113 million on December 31, 2001, and $706
million and $150 million on December 31, 2000. The weighted-average interest
rate on our Company's long-term debt was 5.8 percent and 5.9 percent for the
years ended December 31, 2001 and 2000, respectively. Total interest paid was
approximately $304 million, $458 million and $314 million in 2001, 2000 and
1999, respectively. For a more complete discussion of interest rate management,
refer to Note 9.
Maturities of long-term debt for the five years succeeding December 31, 2001,
are as follows (in millions):
<TABLE>
<CAPTION>
2002 2003 2004 2005 2006
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 156 $ 155 $ 2 $ 1 $ 1
================================================================================
</TABLE>
The above notes include various restrictions, none of which is presently
significant to our Company.
NOTE 7: COMPREHENSIVE INCOME
Accumulated other comprehensive income (AOCI) consists of the following (in
millions):
<TABLE>
<CAPTION>
December 31, 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C>
Foreign currency
translation adjustment $ (2,682) $ (2,475)
Accumulated derivative net gains 142 -
Unrealized gain (loss) on
available-for-sale securities (55) (26)
Minimum pension liability (43) (26)
- --------------------------------------------------------------------------------
$ (2,638) $ (2,527)
================================================================================
</TABLE>
Page 67
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
A summary of the components of other comprehensive income for the years ended
December 31, 2001, 2000 and 1999, is as follows (in millions):
<TABLE>
<CAPTION>
Before-Tax Income After-Tax
December 31, Amount Tax Amount
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
2001
- ----
Net foreign currency
translation $ (285) $ 78 $ (207)
Cumulative effect of
adopting SFAS
No. 133, net 83 (33) 50
Net gain (loss) on
derivative financial
instruments 151 (59) 92
Net change in
unrealized gain (loss)
on available-for-sale
securities (39) 10 (29)
Minimum pension
liability (27) 10 (17)
- --------------------------------------------------------------------------------
Other comprehensive
income (loss) $ (117) $ 6 $ (111)
================================================================================
Before-Tax Income After-Tax
December 31, Amount Tax Amount
- --------------------------------------------------------------------------------
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)
================================================================================
</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. Fair values for our derivative financial instruments are 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, 2001 and 2000, 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 AOCI. Debt securities categorized as held-to-maturity
are stated at amortized cost.
Page 68
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
On December 31, 2001 and 2000, 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>
2001
- ----
Available-for-sale
securities
Equity securities $ 251 $ 43 $ (116) $ 178
Collateralized
mortgage
obligations 13 - (1) 12
Other debt
securities 19 - - 19
- --------------------------------------------------------------------------------
$ 283 $ 43 $ (117) $ 209
================================================================================
Held-to-maturity
securities
Bank and
corporate debt $ 978 $ - $ - $ 978
Other debt
securities 8 - - 8
- --------------------------------------------------------------------------------
$ 986 $ - $ - $ 986
================================================================================
Gross Gross Estimated
Unrealized Unrealized Fair
December 31, Cost Gains Losses Value
- --------------------------------------------------------------------------------
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
================================================================================
On December 31, 2001 and 2000, these investments were included in the
following captions in our Consolidated Balance Sheets (in millions):
Available- Held-to-
for-Sale Maturity
December 31, Securities Securities
- --------------------------------------------------------------------------------
2001
- ----
Cash and cash equivalents $ - $ 976
Current marketable securities 66 2
Cost method investments,
principally bottling companies 127 -
Other assets 16 8
- --------------------------------------------------------------------------------
$ 209 $ 986
================================================================================
2000
- ----
Cash and cash equivalents $ - $ 1,113
Current marketable securities 71 2
Cost method investments,
principally bottling companies 151 -
Other assets 31 -
- --------------------------------------------------------------------------------
$ 253 $ 1,115
================================================================================
The contractual maturities of these investments as of December 31, 2001, were
as follows (in mill