- ----------------------------------------------------------------- FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NO. 001-02217 THE COCA-COLA COMPANY (Exact name of Registrant as specified in its charter) DELAWARE 58-0628465 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) ONE COCA-COLA PLAZA 30313 ATLANTA, GEORGIA (Zip Code) (Address of principal executive offices) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (404) 676-2121 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NAME OF EACH EXCHANGE ON TITLE OF EACH CLASS WHICH REGISTERED ------------------- ----------------------- COMMON STOCK, $.25 PAR VALUE NEW YORK STOCK EXCHANGE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [ ] INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K. [ ] THE AGGREGATE MARKET VALUE OF THE COMMON EQUITY HELD BY NON- AFFILIATES OF THE REGISTRANT (ASSUMING FOR THESE PURPOSES, BUT WITHOUT CONCEDING, THAT ALL EXECUTIVE OFFICERS AND DIRECTORS ARE "AFFILIATES" OF THE REGISTRANT) AS OF FEBRUARY 22, 1999, (BASED ON THE CLOSING SALE PRICE OF THE REGISTRANT'S COMMON STOCK AS REPORTED ON THE NEW YORK STOCK EXCHANGE ON SUCH DATE) WAS $138,062,055,742. THE NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK AS OF MARCH 15, 1999, WAS 2,467,005,172. DOCUMENTS INCORPORATED BY REFERENCE PORTIONS OF THE COMPANY'S ANNUAL REPORT TO SHARE OWNERS FOR THE YEAR ENDED DECEMBER 31, 1998, ARE INCORPORATED BY REFERENCE IN PARTS I, II and IV. PORTIONS OF THE COMPANY'S PROXY STATEMENT FOR THE ANNUAL MEETING OF SHARE OWNERS TO BE HELD ON APRIL 21, 1999, ARE INCORPORATED BY REFERENCE IN PART III. - ----------------------------------------------------------------- PART I ITEM 1. BUSINESS The Coca-Cola Company (together with its subsidiaries, the "Company") was incorporated in September 1919 under the laws of the State of Delaware and succeeded to the business of a Georgia corporation with the same name that had been organized in 1892. The Company is the largest manufacturer, distributor and marketer of soft drink concentrates and syrups in the world. Finished soft drink products bearing the Company's trademarks, sold in the United States since 1886, are now sold in nearly 200 countries and include the leading soft drink products in most of these countries. The Company also is the world's largest distributor and marketer of juice and juice-drink products. The Company is one of numerous competitors in the commercial beverages market. Of the approximately 48 billion beverage servings of all types consumed worldwide every day, beverages bearing the Company's trademarks ("Company Trademark Beverages") account for more than one billion. The business of the Company is nonalcoholic beverages -- principally soft drinks but also a variety of noncarbonated beverages. As used in this report, the term "soft drinks" refers to nonalcoholic carbonated beverages containing flavorings and sweeteners, excluding flavored waters and carbonated or noncarbonated teas, coffees and sports drinks. The Company's operating structure includes the following operating segments: the North America Group (including The Minute Maid Company); the Africa Group; the Greater Europe Group; the Latin America Group; the Middle & Far East Group; and Corporate. The North America Group includes the United States and Canada. Except to the extent that differences between these operating segments are material to an understanding of the Company's business taken as a whole, the description of the Company's business in this report is presented on a consolidated basis. Of the Company's consolidated net operating revenues and operating income for each of the past three years, the percentage represented by each operating segment (excluding Corporate) is as follows: North Greater Latin Middle & America Africa Europe America Far East ------- ------ ------- ------- -------- Net Operating Revenues 1998 37% 3% 26% 12% 22% 1997 35% 3% 29% 11% 22% 1996 33% 3% 32% 11% 21% Operating Income 1998 27% 4% 27% 18% 24% 1997 25% 3% 28% 18% 26% 1996 22% 3% 29% 18% 28% For additional financial information about the Company's operating segments and geographic areas, see Notes 1, 14 and 16 to the Consolidated Financial Statements, set forth on pages 45-46, 56-57 and 57-58, respectively, of the Company's Annual Report to Share Owners for the year ended December 31, 1998, incorporated herein by reference. The Company manufactures and sells soft drink and noncarbonated beverage concentrates and syrups, including fountain syrups, some finished beverages, and certain juice and juice-drink products. Syrups are composed of sweetener, water and flavoring concentrate. The concentrates and syrups for bottled and canned beverages are sold by the Company to authorized bottling and canning operations. The bottlers or canners of soft drink products either combine the syrup with carbonated water or combine the concentrate with sweetener, water and carbonated water to produce finished soft drinks. The finished soft drinks are packaged in authorized containers bearing the Company's trademarks -- cans, refillable and non- refillable glass and plastic bottles -- for sale to retailers or, in some cases, wholesalers. Fountain syrups are manufactured and sold by the Company, principally in 1 the United States, to authorized fountain wholesalers and some fountain retailers. (Outside the United States, fountain syrups typically are manufactured by authorized bottlers from concentrates sold to them by the Company.) Authorized fountain wholesalers (including certain authorized bottlers) sell fountain syrups to fountain retailers. The fountain retailers use dispensing equipment to mix the syrup with carbonated or still water and then sell finished soft drinks or noncarbonated beverages to consumers in cups and glasses. Finished beverages manufactured by the Company are sold by it to authorized bottlers or distributors, who in turn sell these products to retailers or, in some cases, wholesalers. Both directly and through a network of business partners that includes certain Coca-Cola bottlers, juice and juice-drink products are sold by the Company to retailers and wholesalers in the United States and more than 75 other countries. The Company's more than 160 beverage products, including bottled and canned beverages produced by independent and Company- owned bottling and canning operations, as well as concentrates and syrups, include Coca-Cola, Coca-Cola classic, caffeine free Coca-Cola, caffeine free Coca-Cola classic, diet Coke (sold under the trademark Coca-Cola light in many countries outside the United States), caffeine free diet Coke, Cherry Coke, diet Cherry Coke, Fanta brand soft drinks, Sprite, diet Sprite, Mr. PiBB, Mello Yello, TAB, Fresca, Barq's root beer and other flavors, Surge, Citra, POWERaDE, Fruitopia, Minute Maid flavors, Saryusaisai, Aquarius, Bonaqa, Lift, Thums Up, Hit and other products developed for specific countries, including Georgia brand ready-to-drink coffees, and numerous other brands. The Minute Maid Company, with operations primarily in the United States and Canada, produces, distributes and markets principally juice and juice-drink products, including Minute Maid brand products; Five Alive brand refreshment beverages; Bright & Early brand breakfast beverages; Bacardi brand tropical fruit mixers (manufactured and marketed under a license from Bacardi & Company Limited); and Hi-C brand ready-to-serve fruit drinks. Additionally, Coca-Cola Nestle Refreshments, the Company's joint venture with Nestle S.A., markets ready-to-drink teas and coffees in certain countries. In 1998, concentrates and syrups for beverages bearing the trademark "Coca-Cola" or including the trademark "Coke" accounted for approximately 67% of the Company's total gallon sales{1} of beverage concentrates and syrups. (Physical units of concentrate have been converted to their equivalents in gallons of syrup in all cases in this report where reference is made to "gallons" or "gallon sales" of beverage concentrates and syrups.) In 1998, gallon sales in the United States ("U.S. gallon sales") represented approximately 28% of the Company's worldwide gallon sales of beverage concentrates and syrups. In 1998, the Company's principal markets outside the United States, based on gallon sales, were Mexico, Brazil, Japan and Germany, which together accounted for approximately 26% of the Company's worldwide gallon sales. Approximately 65% of the Company's U.S. gallon sales for 1998 was attributable to sales of beverage concentrates and syrups to approximately 104 authorized bottler ownership groups in approximately 397 licensed territories. Those bottlers prepare and sell finished beverages bearing the Company's trademarks for the food store and vending machine distribution channels and for other distribution channels supplying home and immediate consumption. The remaining 35% of 1998 U.S. gallon sales was attributable to fountain syrups sold to fountain retailers and to approximately 700 authorized fountain wholesalers, some of whom are authorized bottlers. These fountain wholesalers in turn sell the syrups or deliver them on the Company's behalf to restaurants and other fountain retailers. Coca-Cola Enterprises Inc. ("Coca-Cola Enterprises") and its bottling subsidiaries and divisions accounted for approximately 50% of the Company's U.S. gallon sales in 1998. At March 5, 1999 the Company held an ownership interest of approximately 40% in Coca-Cola Enterprises, which is the world's largest bottler of Company Trademark Beverages. - ------------------------------ {1} The Company measures sales volume in two ways: (1) gallon sales of concentrates and syrups and (2) unit cases of finished products. "Gallon sales" represents the primary business of the Company and measures the volume of concentrates and syrups sold by the Company to its bottling partners or customers. Most of the Company's revenues are based on this measure of "wholesale" activity. The Company also measures volume in unit cases. As used in this report, the term "unit case" means a unit of measurement equal to 192 U.S. fluid ounces of finished beverage (24 eight-ounce servings); and "unit case volume" of the Company, which refers to the number of unit cases sold by bottlers of Company Trademark Beverages to customers, includes Company products (excluding products distributed by The Minute Maid Company) reported as gallon sales, and certain other key products owned by such bottlers. The Company believes unit case volume more accurately measures the underlying strength of its business system because it measures trends at the retail level. The Company includes fountain syrups sold directly to its customers in both measures. 2 In addition to conducting its own independent advertising and marketing activities, the Company may choose to provide promotional and marketing services and/or funds and consultation to its bottlers and to fountain and bottle/can retailers. Also on a discretionary basis, the Company may develop and introduce new products, packages and equipment to assist its bottlers, fountain syrup wholesalers and fountain beverage retailers. The profitability of the Company's business outside the United States is subject to many factors, including governmental trade regulations and monetary policies, economic and political conditions in the countries in which such business is conducted and the risk of changes in currency exchange rates and regulations. BOTTLER'S AGREEMENTS AND DISTRIBUTION AGREEMENTS Separate contracts ("Bottler's Agreements") between the Company and each of its bottlers regarding the manufacture and sale of soft drinks, subject to specified terms and conditions and minor variations, generally authorize the bottler to prepare particular designated Company Trademark Beverages, to package the same in particular authorized containers, and to distribute and sell the same in (but generally only in) an identified territory. The bottler is obligated to purchase its entire requirement of concentrates or syrups for the designated Company Trademark Beverages from the Company or Company-authorized suppliers. The Company typically agrees to refrain from selling or distributing or from authorizing third parties to sell or distribute the designated Company Trademark Beverages throughout the identified territory in the particular authorized containers; however, the Company typically reserves for itself or its designee the right (i) to prepare and package such beverages in such containers in the territory for sale outside the territory and (ii) to prepare, package, distribute and sell such beverages in the territory in any other manner or form. The Bottler's Agreements between the Company and its authorized bottlers in the United States differ in certain respects from those in the other countries in which Company Trademark Beverages are sold. As hereinafter discussed, the principal differences involve the duration of the agreements; the inclusion or exclusion of canned beverage production rights; the inclusion or exclusion of authorizations to manufacture and distribute fountain syrups; in some cases, the degree of flexibility on the part of the Company to determine the pricing of syrups and concentrates; and the extent, if any, of the Company's obligation to provide marketing support. OUTSIDE THE UNITED STATES. The Bottler's Agreements between the Company and its authorized bottlers outside the United States generally are of stated duration, subject in some cases to possible extensions or renewals of the term of the contract. Generally, these contracts are subject to termination by the Company following the occurrence of certain designated events, including defined events of default and certain changes in ownership or control of the bottler. In certain parts of the world outside the United States, the Company has not granted canned beverage production rights to the bottlers. In such instances, the Company or its designee typically sells canned Company Trademark Beverages to the bottlers for sale and distribution throughout the designated territory under can distribution agreements, often on a non- exclusive basis. A majority of the Bottler's Agreements in force between the Company and bottlers outside the United States authorize the bottler to manufacture and distribute fountain syrups, usually on a non-exclusive basis. The Company generally has complete flexibility to determine the price and other terms of sale of concentrates and syrups to bottlers outside the United States and, although in its discretion it may determine to do so, the Company typically has no obligation under such Bottler's Agreements to provide marketing support to the bottlers. WITHIN THE UNITED STATES. In the United States, with certain very limited exceptions, the Company's Bottler's Agreements for Coca-Cola and other cola-flavored beverages have no stated expiration date and the contracts for other flavors are of stated duration, subject to bottler renewal rights. The Bottler's Agreements in the United States are subject to termination by the Company for nonperformance or upon the occurrence of certain defined events of default which may vary from contract to contract. The hereinafter described "1987 Contract" is terminable by the Company upon the occurrence of certain events including: (1) the bottler's insolvency, dissolution, receivership or the like; (2) any disposition by the bottler or any of its subsidiaries of any voting securities of any bottler subsidiary without the consent of the Company; (3) any material breach of any obligation of the bottler under the 1987 Contract; or (4) except in the case of certain bottlers, if a person or affiliated group acquires or obtains any right to 3 acquire beneficial ownership of more than 10% of any class or series of voting securities of the bottler without authorization by the Company. Under the terms of the Bottler's Agreements, bottlers in the United States are authorized to manufacture and distribute Company Trademark Beverages in bottles and cans, but generally are not authorized to manufacture fountain syrups. Rather, the Company manufactures and sells fountain syrups to approximately 700 authorized fountain wholesalers (including certain authorized bottlers) and some fountain retailers. The wholesalers in turn sell the syrups or deliver them on the Company's behalf to restaurants and other retailers. The wholesaler typically acts as such pursuant to a non-exclusive letter of appointment which neither restricts the pricing of fountain syrups by the Company nor the territory in which the wholesaler may resell in the United States. In the United States, the form of Bottler's Agreement for cola-flavored soft drinks that covers the largest amount of U.S. volume (the "1987 Contract") gives the Company complete flexibility to determine the price and other terms of sale of soft drink concentrates and syrups for cola-flavored Company Trademark Beverages ("Coca-Cola Trademark Beverages") and other Company Trademark Beverages. Bottlers operating under the 1987 Contract accounted for approximately 78% of the Company's total United States gallon sales for bottled and canned beverages ("U.S. bottle/can gallon sales") in 1998. Certain other forms of the U.S. Bottler's Agreement, entered into prior to 1987, provide for soft drink concentrates or syrups for certain Coca-Cola Trademark Beverages to be priced pursuant to a stated formula. The oldest such form of contract, applicable to bottlers accounting for approximately 1% of U.S. bottle/can gallon sales in 1998, provides for a fixed price for Coca-Cola syrup used in bottles and cans, subject to quarterly adjustments to reflect changes in the quoted price of sugar. Bottlers accounting for the remaining approximately 21% of U.S. bottle/can gallon sales in 1998 have contracts for certain Coca-Cola Trademark Beverages with pricing formulas generally providing for a baseline price that may be adjusted periodically by the Company, up to a maximum indexed ceiling price, and that is adjusted quarterly based upon changes in certain sugar or sweetener prices, as applicable. Standard contracts with bottlers in the United States for the sale of concentrates and syrups for non-cola-flavored soft drinks in bottles and cans permit flexible pricing by the Company. Under the 1987 Contract, the Company has no obligation to participate with bottlers in expenditures for advertising and marketing, but may, at its discretion, contribute toward such expenditures and undertake independent or cooperative advertising and marketing activities. Some U.S. Bottler's Agreements that pre-date the 1987 Contract impose certain marketing obligations on the Company with respect to certain Company Trademark Beverages. SIGNIFICANT EQUITY INVESTMENTS AND COMPANY BOTTLING OPERATIONS The Company has business relationships with three types of bottlers: (1) independently owned bottlers, in which the Company has no ownership interest; (2) bottlers in which the Company has invested and has a noncontrolling ownership interest; and (3) bottlers in which the Company has invested and has a controlling ownership interest. In 1998, independently owned bottling operations produced and distributed approximately 34% of the Company's worldwide unit case volume; cost or equity method investee bottlers in which the Company owns a noncontrolling ownership interest produced and distributed approximately 55% of such worldwide unit case volume; and controlled and consolidated bottling and fountain operations produced and distributed approximately 11% of such worldwide unit case volume. The Company makes equity investments in selected bottling operations with the intention of maximizing the strength and efficiency of the Coca-Cola business system's production, distribution and marketing systems around the world. These investments often result in increases in unit case volume, net revenues and profits at the bottler level, which in turn generate increased gallon sales for the Company's concentrate business. When this occurs, both the Company and the bottlers benefit from long-term growth in volume, improved cash flows and increased share-owner value. The level of the Company's investment generally depends on the bottler's capital structure and its available resources at the time of the investment. In certain situations, it can further the Company's business interests to acquire a controlling interest in a bottling operation. Although not the Company's primary long-term business strategy, owning a controlling interest and providing resources may compensate for limited local resources, help 4 focus the bottler's sales and marketing programs, assist in the development of the bottler's business and information systems, and assist in the establishment of appropriate capital structures. In 1998, the Company purchased additional Russian bottling operations from Inchcape plc and affiliated companies. Also in 1998, as part of the Company's strategy to achieve an integrated bottling system in India, the Company purchased 16 independent Indian bottling operations, bringing the total number purchased since January 1997 to 18. By providing capital and marketing expertise to newly acquired bottlers, the Company seeks to strengthen their ability to deliver Company Trademark Beverages to customers and consumers. In line with its long-term bottling strategy, the Company periodically considers options for reducing its ownership interest in a consolidated bottler. One such option is to combine the Company's bottling interests with the bottling interests of others to form strategic business alliances. Another option is to sell the Company's interest in a consolidated bottling operation to one of the Company's noncontrolled equity investee bottlers. In both of these situations, the Company continues participating in the previously consolidated bottler's earnings through its portion of the equity investee's income. In 1998, the Company contributed its wholly owned bottling interests in Norway and Finland to Coca-Cola Nordic Beverages ("CCNB"), an anchor bottler which also has bottling operations in Denmark and Sweden. The Company has an ownership interest in CCNB of 49%. In cases where the Company's investments in bottlers represent noncontrolling interests, the Company's intention is to provide expertise and resources to strengthen those businesses. During 1998, the Company increased its interest in Thai Pure Drinks Limited, a bottler headquartered in Thailand, from approximately 44% to approximately 49%; increased its interest in Embotelladoras Coca-Cola Polar S.A., a bottler headquartered in Chile, from approximately 19% to approximately 29%; and acquired an initial ownership interest of 20% in Embotelladoras Argos, S.A., a bottler headquartered in Mexico. Certain bottling operations in which the Company has a noncontrolling ownership interest are designated as "anchor bottlers" due to their level of responsibility and performance. Anchor bottlers are strongly committed to their own profitable growth which, in turn, helps the Company meet its strategic goals and furthers the interests of its worldwide production, distribution and marketing systems. Anchor bottlers tend to be large and geographically diverse with strong financial resources for long-term investment and strong management resources. In 1998, the Company's anchor bottlers produced and distributed approximately 43% of the Company's worldwide unit case volume. As of March 15, 1999, ten companies are designated as anchor bottlers, providing the Company with strong strategic business partners on every major continent. Coca-Cola Beverages plc ("CCB"), a publicly traded company on the London Stock Exchange, was designated as an anchor bottler in 1998. CCB was formed in 1998 via a spin-off by Coca-Cola Amatil Limited ("Coca-Cola Amatil") of its European operations. In June 1998, after the spin-off, the Company sold its bottling operations in northern and central Italy to CCB in exchange for consideration (including shares of CCB stock) valued at approximately U.S.$1 billion. At December 31, 1998, the Company had an ownership interest in CCB of approximately 50.5%. The Company's expectation is that its ownership position will reduce to less than 50% in 1999; therefore, the investment is accounted for by the equity method of accounting. The Company has substantial equity positions in approximately 46 unconsolidated bottling, canning and distribution operations for its products worldwide, including bottlers representing approximately 56% of the Company's total U.S. unit case volume in 1998. Of these, significant investee bottlers accounted for by the equity method include the following: COCA-COLA ENTERPRISES INC. The Company's ownership interest in Coca-Cola Enterprises was approximately 42% at December 31, 1998 and was approximately 40% as of March 5, 1999. Coca-Cola Enterprises is the world's largest bottler of the Company's beverage products. In 1998, net sales of concentrates and syrups by the Company to Coca-Cola Enterprises were approximately $3.1 billion, or approximately 16% of the Company's net operating revenues. Coca-Cola Enterprises also purchases high fructose corn syrup through the Company; however, related collections from Coca-Cola Enterprises and payments to suppliers are not included in the Company's consolidated statements of income. Coca-Cola Enterprises estimates that the territories in which it markets beverage products to retailers (which include portions of 46 states, the District of Columbia, the U.S. Virgin Islands, Canada, Great Britain, the Netherlands, France, Luxembourg and Belgium) contain approximately 69% of the United States population, 94% of the population of Canada, 98% of the population of Great Britain, 100% of the populations of the Netherlands, Luxembourg and Belgium and 92% of the population of France. 5 In 1998, approximately 63% of the unit case volume of Coca-Cola Enterprises (excluding products in post-mix (fountain) form) was Coca-Cola Trademark Beverages, approximately 25% of its unit case volume was other Company Trademark Beverages, and approximately 12% of its unit case volume was beverage products of other companies. Coca-Cola Enterprises' net sales of beverage products were approximately $13.4 billion in 1998. COCA-COLA AMATIL LIMITED. In 1998, Coca-Cola Amatil completed a spin-off of its European operations into a new publicly traded European bottler, CCB. After the spin-off, the Company sold its bottling operations in South Korea to Coca-Cola Amatil in exchange for shares of Coca-Cola Amatil stock. At December 31, 1998, the Company's ownership interest in Coca-Cola Amatil was approximately 43%. Coca-Cola Amatil is the largest bottler of the Company's beverage products in Australia and also has bottling and distribution rights, through direct ownership or joint ventures, in New Zealand, Fiji, Papua New Guinea, Indonesia, the Philippines and South Korea. Net concentrate sales by the Company to Coca-Cola Amatil were approximately U.S.$546 million in 1998. Coca-Cola Amatil estimates that the territories in which it markets beverage products contain approximately 99% of the population of Australia, 100% of the populations of New Zealand, Fiji, South Korea and the Philippines, 83% of the population of Papua New Guinea and 97% of the population of Indonesia. In 1998, Coca-Cola Amatil's net sales of beverage products were approximately U.S.$2.7 billion. In 1998, approximately 66% of the unit case volume of Coca-Cola Amatil was Coca-Cola Trademark Beverages, approximately 25% of its unit case volume was other Company Trademark Beverages, approximately 4% of its unit case volume was beverage products of Coca-Cola Amatil and approximately 5% of its unit case volume was beverage products of other companies. PANAMERICAN BEVERAGES, INC. ("PANAMCO"). At December 31, 1998, the Company owned an equity interest of approximately 24% in Panamco, a Panamanian holding company with bottling subsidiaries operating in a substantial part of central Mexico (excluding Mexico City), greater Sao Paulo, Campinas, Santos and Matto Grosso do Sul, Brazil, central Guatemala, most of Colombia, and all of Costa Rica, Venezuela and Nicaragua. Panamco estimates that the territories in which it markets beverage products contain approximately 19% of the population of Mexico, 15% of the population of Brazil, 98% of the population of Colombia, 46% of the population of Guatemala and 100% of the populations of Costa Rica, Venezuela and Nicaragua. In 1998, Panamco's net sales of beverage products were approximately U.S.$2.8 billion. In 1998, approximately 55% of the unit case volume of Panamco was Coca-Cola Trademark Beverages, approximately 23% of its unit case volume was other Company Trademark Beverages and approximately 22% of its unit case volume was beverage products of Panamco or other companies. COCA-COLA FEMSA, S.A. DE C.V. ("COCA-COLA FEMSA"). At December 31, 1998, the Company owned a 30% equity interest in Coca-Cola FEMSA, a Mexican holding company with bottling subsidiaries in the Valley of Mexico, Mexico's southeastern region and Buenos Aires, Argentina. Coca-Cola FEMSA estimates that the territories in which it markets beverage products contain approximately 24% of the population of Mexico and 35% of the population of Argentina. In 1998, Coca-Cola FEMSA's net sales of beverage products were approximately U.S.$1.3 billion. In 1998, approximately 77% of the unit case volume of Coca-Cola FEMSA was Coca-Cola Trademark Beverages, approximately 22% of its unit case volume was other Company Trademark Beverages, and approximately 1% of its unit case volume was beverage products of other companies. OTHER INTERESTS. Under the terms of the Coca-Cola Nestle Refreshments ("CCNR") joint venture involving the Company, Nestle S.A. and certain subsidiaries of Nestle S.A., the Company manages CCNR's ready-to-drink tea business and Nestle S.A. manages CCNR's ready-to-drink coffee business. The joint venture has sales in the United States and approximately 33 other countries. The Minute Maid Company and Groupe Danone are partners in a joint venture which produces, distributes and sells premium refrigerated ready-to-serve fruit juice products outside the United States and Canada, with an initial focus in Europe and Latin America. The Minute Maid Company has a 50% ownership interest in the joint venture. 6 The joint venture launched Minute Maid Premium juices in France, Spain, Portugal, Belgium and Luxembourg during 1997 and in Austria, the United Kingdom and Poland during 1998. OTHER DEVELOPMENTS In December 1997, the Company announced its intent to acquire from beverage company Pernod Ricard its Orangina brands, three bottling operations and one concentrate plant in France for approximately 5 billion French francs (approximately U.S.$890 million based on December 1998 exchange rates). This transaction is subject to approvals from regulatory authorities of the French government. In December 1998, the Company signed an agreement with Cadbury Schweppes plc to purchase beverage brands in countries around the world (except in the United States, France and South Africa) and its concentrate plants in Ireland and Spain for approximately U.S.$1.85 billion. These brands include Schweppes and Canada Dry mixers, such as tonic water, club soda and ginger ale; Crush; Dr Pepper; and certain regional brands. These transactions are subject to certain conditions including approvals from regulatory authorities in various countries. In January 1999, Kita Kyushu Coca-Cola Bottling Company, Ltd. and Sanyo Coca-Cola Bottling Company, Ltd. announced an agreement to merge. The merger will lead to the creation of Coca-Cola West Japan Company, Ltd., a publicly traded company in which the Company plans to hold approximately a 5% ownership interest. The Company intends to designate the new company as an "anchor bottler" of the Coca-Cola system. The transaction is subject to regulatory review and board and share owner approvals. In February 1999, the Company announced that it plans to launch its first bottled water brand in North America during the first half of 1999. The new product, called Dasani, is a purified, non-carbonated water enhanced with minerals. Internationally, the Company markets a bottled water brand, Bonaqa (in some countries, Bonaqua), in about 35 countries. SEASONALITY Soft drink and noncarbonated beverage sales are somewhat seasonal, with the second and third calendar quarters accounting for the highest sales volumes in the Northern Hemisphere. The volume of sales in the beverages business may be affected by weather conditions. COMPETITION The Company competes in the nonalcoholic beverages segment of the commercial beverages industry. That segment is highly competitive, consisting of numerous firms. These include firms that compete, like the Company, in multiple geographical areas as well as firms that are primarily local in operation. Competitive products include carbonates, packaged water, juices and nectars, fruit drinks and dilutables (including syrups and powdered drinks), sports and energy drinks, coffee and tea, still drinks and other beverages. Nonalcoholic beverages are sold to consumers in both ready-to-drink and not-ready-to-drink form. Most of the Company's beverages business currently is in soft drinks, as that term is defined in this report. The soft drink business, which is part of the nonalcoholic beverages segment, is itself highly competitive. The Company is the leading seller of soft drink concentrates and syrups in the world. Numerous firms, however, compete in that business. These consist of a range of firms, from local to international, that compete against the Company in numerous geographical areas. In many parts of the world in which the Company does business, demand for soft drinks is growing at the expense of other commercial beverages. Competitive factors with respect to the Company's business include pricing, advertising and sales promotion programs, product innovation, increased efficiency in production techniques, the introduction of new packaging, new vending and dispensing equipment and brand and trademark development and protection. 7 RAW MATERIALS The principal raw material used by the Company's business in the United States is high fructose corn syrup, a form of sugar, which is available from numerous domestic sources and is historically subject to fluctuations in its market price. The principal raw material used by the Company's business outside the United States is sucrose. The Company has a specialized sweetener procurement staff and has not experienced any difficulties in obtaining its requirements. In the United States and certain other countries, the Company has authorized the use of high fructose corn syrup in syrup for Coca-Cola and other Company Trademark Beverages for use in both fountain syrup and finished beverages in bottles and cans. Generally, raw materials utilized by the Company in its business are readily available from numerous sources. However, aspartame, which is usually used alone or in combination with either saccharin or acesulfame potassium in the Company's low- calorie soft drink products, is currently purchased by the Company primarily from The NutraSweet Kelco Company, a subsidiary of Monsanto Company, and from Holland Sweetener. Acesulfame potassium is currently purchased from Nutrinova Nutrition Specialties & Food Ingredients GmbH. With regard to juice and juice-drink products, the citrus industry is subject to the variability of weather conditions, in particular the possibility of freezes in central Florida, which may result in higher prices and lower consumer demand for orange juice throughout the industry. Due to the Company's long- standing relationship with a supplier of high-quality Brazilian orange juice concentrate, the supply of juice available that meets the Company's standards is normally adequate to meet demand. PATENTS, TRADE SECRETS, TRADEMARKS AND COPYRIGHTS The Company is the owner of numerous patents, copyrights and trade secrets, as well as substantial know-how and technology (herein collectively referred to as "technology"), which relate to its products and the processes for their production, the packages used for its products, the design and operation of various processes and equipment used in its business and certain quality assurance and financial software. Some of the technology is licensed to suppliers and other parties. The Company's soft drink and other beverage formulae are among the important trade secrets of the Company. The Company owns numerous trademarks which are very important to its business. Depending upon the jurisdiction, trademarks are valid as long as they are in use and/or their registrations are properly maintained and they have not been found to have become generic. Registrations of trademarks can generally be renewed indefinitely as long as the trademarks are in use. The majority of the Company's trademark license agreements are included in the Company's bottler agreements. The Company has registered and licenses the right to use its trademarks in conjunction with certain merchandise other than soft drinks. GOVERNMENTAL REGULATION The production, distribution and sale in the United States of many of the Company's products are subject to the Federal Food, Drug and Cosmetic Act; the Occupational Safety and Health Act; the Lanham Act; various environmental statutes; and various other federal, state and local statutes regulating the production, transportation, sale, safety, advertising, labeling and ingredients of such products. A California law requires that any person who exposes another to a carcinogen or a reproductive toxicant must provide a warning to that effect. Because the law does not broadly define quantitative thresholds below which a warning is not required, virtually all food and beverage manufacturers are confronted with the possibility of having to provide warnings on their food and beverage products due to the presence of trace amounts of defined substances. Regulations implementing the law exempt manufacturers from providing the required warning if it can be demonstrated that the defined substances occur naturally in the product or are present in municipal water used to manufacture the product. The Company has assessed the impact of the law and its implementing regulations on its products and has concluded that none currently requires a warning under the law. The Company cannot predict whether, or to what extent, food and beverage industry efforts to minimize the law's impact will succeed; nor can the Company predict what effect, either in terms of direct costs or diminished sales, imposition of the law will have. 8 Bottlers of the Company's beverage products presently offer non-refillable, recyclable containers in all areas of the United States and Canada. Some such bottlers also offer refillable containers, which are also recyclable, although overall U.S. sales in refillable containers are relatively limited. Measures have been enacted in various localities and states which require that a deposit be charged for certain non-refillable beverage containers. The precise requirements imposed by these measures vary. Deposit proposals have been introduced in other states and localities and in Congress, and the Company anticipates that similar legislation may be introduced in the future at both the state and the federal level. All of the Company's facilities in the United States are subject to federal, state and local environmental laws and regulations. Compliance with these provisions has not had, and the Company does not expect such compliance to have, any material adverse effect upon the Company's capital expenditures, net income or competitive position. EMPLOYEES As of December 31, 1998, the Company employed approximately 28,600 persons, down from approximately 29,500 in 1997 primarily due to sales of certain Company-owned bottling operations. Approximately 10,000 of these employees are located in the United States. The Company, through its divisions and subsidiaries, has entered into numerous collective bargaining agreements, and the Company has no reason to believe it will not be able to renegotiate any such agreements on satisfactory terms. The Company believes that its relations with its employees are generally satisfactory. ITEM 2. PROPERTIES The Company's worldwide headquarters is located on a 35-acre office complex in Atlanta, Georgia. The complex includes the approximately 621,000 square foot headquarters building, the approximately 870,000 square foot Coca-Cola USA building and the approximately 264,000 square foot Coca-Cola Plaza building. Also located in the complex are several other buildings, including the technical and engineering facilities, learning center and the Company's Reception Center. The Company leases approximately 278,000 square feet of office space at Ten Peachtree Place, Atlanta, Georgia, owned by a joint venture of which an indirect subsidiary of the Company is a partner. The Company also leases approximately 219,000 square feet of office space at One Atlantic Center, Atlanta, Georgia. The Company has facilities for administrative operations, manufacturing, processing, packaging, packing, storage and warehousing throughout the United States. The Company owns and operates 33 principal beverage concentrate and/or syrup manufacturing plants located throughout the world. The Company currently owns or holds a majority interest in 25 operations with 32 principal beverage bottling and canning plants located outside the United States. The Minute Maid Company, whose business headquarters is located in Houston, Texas, occupies its own office building, which contains approximately 330,000 square feet. The Minute Maid Company operates seven production facilities throughout the United States and Canada and utilizes a system of contract packers to produce and distribute certain products in areas where The Minute Maid Company does not have its own manufacturing centers or during periods when it experiences shortfalls in manufacturing capacity. The Company owns or leases additional real estate throughout the world, including a wholly owned office and retail building at 711 Fifth Avenue in New York, New York. This real estate is used by the Company as office space, bottling, warehouse or retail operations or, in the case of some owned property, is leased to others. Management believes that the facilities for the production of its products are suitable and adequate for the business conducted therein, that they are being appropriately utilized in line with past experience and that they have sufficient production capacity for their present intended purposes. The extent of utilization of such facilities varies based upon the seasonal demand for product. While it is not possible to measure with any degree of certainty or uniformity the productive capacity and extent of utilization of these facilities, management believes that additional production can be obtained at the existing facilities by the addition of personnel and capital equipment and, in some facilities, the addition of shifts of personnel or expansion of such facilities. The Company continuously reviews its anticipated requirements for facilities and, on the basis of that review, may from time to time acquire additional facilities and/or dispose of existing facilities. 9 ITEM 3. LEGAL PROCEEDINGS On January 30, 1997, the Brazilian Federal Revenue Service issued Notices of Assessment to Recofarma Industrias do Amazonas Ltda. ("Recofarma"), an indirect wholly owned subsidiary of the Company, for the period from January 1, 1992 to February 28, 1994. The assessments allege that Recofarma should have paid a Brazilian excise tax on intra-company transfers of product manufactured at its Manaus plant to its warehouse in Rio de Janeiro. Assessments of tax, interest and penalties total approximately $530 million as of the assessment date and accrue interest from such date. The transfer of product from the plant to the warehouse, which was discontinued in February 1994, was the subject of a favorable advance ruling issued by the Federal Revenue Service on September 24, 1990. In the Company's opinion, the ruling has continuing effect and Recofarma's operations conformed with the ruling. On March 3, 1997, Recofarma filed appeals with the Brazilian Federal Revenue Service contesting the assessments. On September 30, 1997, the Rio de Janeiro Branch of the Brazilian Federal Revenue Service dismissed the assessments against Recofarma. This determination is subject to an automatic ex officio appeal ("recurso ex-officio") on the Federal Revenue Service's behalf to the Taxpayers Council in Brazilia. This appeal is currently pending. The Company is involved in various other legal proceedings. The Company believes that any liability to the Company which may arise as a result of these proceedings, including the proceeding specifically discussed above, will not have a material adverse effect on the financial condition of the Company and its subsidiaries taken as a whole. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. ITEM X. EXECUTIVE OFFICERS OF THE COMPANY The following are the executive officers of the Company: M. Douglas Ivester, 52, is Chief Executive Officer and Chairman of the Board of Directors of the Company. In January 1985, Mr. Ivester was elected Senior Vice President and Chief Financial Officer of the Company and served in that capacity until June 1989, when he was appointed President of the European Community Group of the International Business Sector. He was appointed President of Coca-Cola USA in August 1990, and was appointed President of the North America Business Sector in September 1991. He served in the latter capacity until April 1993 when he was elected Executive Vice President of the Company and Principal Operating Officer/North America. In July 1994, he was elected President and Chief Operating Officer and a Director of the Company. Mr. Ivester was elected to his current positions in October 1997. James E. Chestnut, 48, is Senior Vice President and Chief Financial Officer of the Company. Mr. Chestnut joined the Company in 1972 in London. In 1984, he was named Finance Manager for the Philippine Region in Manila and, in 1987, Manager of International Treasury Services, Pacific Group, in Atlanta. He was named Finance Manager for the North Pacific Division of the International Business Sector in 1989 before being elected Vice President and Controller of the Company in 1993. He was elected to his current position in July 1994. Jack L. Stahl, 46, is Senior Vice President of the Company and President of the North America Group. In March 1985, Mr. Stahl was named Manager, Planning and Business Development and was appointed Assistant Vice President in April 1985. He was elected Vice President and Controller in February 1988 and served in that capacity until he was elected Senior Vice President and Chief Financial Officer in June 1989. He was appointed to his current position in July 1994. Douglas N. Daft, 56, is Senior Vice President of the Company and President of the Middle and Far East Group. In November 1984, Mr. Daft was appointed President of Coca-Cola Central Pacific Ltd. In October 10 1987, he was appointed Senior Vice President of the Pacific Group of the International Business Sector. In January 1989, he was named President of Coca-Cola (Japan) Company, Limited and President of the North Pacific Division of the International Business Sector. Effective 1991 he was elected Senior Vice President of the Company and named President of the Pacific Group of the International Business Sector. He was appointed to his current position, effective January 1995. Carl Ware, 55, is Senior Vice President of the Company and President of the Africa Group. In 1979, Mr. Ware was appointed Vice President, Special Markets, Coca-Cola USA. In March 1982, he was appointed Vice President, Urban Affairs, of the Company. He was elected Senior Vice President and Director, Corporate External Affairs in 1986 and became Deputy Group President of the Northeast Europe/Africa Group of the International Business Sector in July 1991, a position he held until he was named to his current position, effective January 1993. Timothy J. Haas, 52, is Senior Vice President of the Company and President of the Latin America Group. Mr. Haas was appointed Vice President, Sales, of Coca-Cola Foods in 1983 and Senior Vice President, Sales, of Coca-Cola Foods in 1985. In March 1991, he was appointed President and Chief Executive Officer of Coca-Cola Foods. In April 1991, he was elected Vice President of the Company. In 1995, he was named Executive Vice President of the Latin America Group and served in that capacity until he was appointed President of the Latin America Group, effective January 1, 1997. He was elected Senior Vice President in February 1997. Ralph H. Cooper, 59, is Senior Vice President of the Company and President and Chief Executive Officer of The Minute Maid Company, formerly known as Coca-Cola Foods. Mr. Cooper was appointed Senior Vice President of the Europe and Africa Group in July 1984 and was named Senior Vice President of Coca-Cola International and President of the Northwest European Division in January 1989. He was elected Senior Vice President of the Company and President of the European Community Group of the International Soft Drink Business Sector in August 1990. In January 1995, he was named Executive Vice President of Coca-Cola Foods and served in that capacity until he was appointed President and Chief Executive Officer in July 1995. William P. Casey, 58, is Senior Vice President of the Company and President of the Greater Europe Group. In 1985, Mr. Casey was appointed Executive Vice President, Bottler Operations, Coca-Cola USA. In 1992, he was elected President and Chief Executive Officer of Coca-Cola Beverages Ltd., a Canadian company in which the Company held an interest. Mr. Casey was elected to his current position in February 1998. Joseph R. Gladden, Jr., 56, is Senior Vice President and General Counsel of the Company. In October 1985, Mr. Gladden was elected Vice President. He was named Deputy General Counsel in October 1987 and served in that capacity until he was elected Vice President and General Counsel in April 1990. He was elected Senior Vice President in April 1991. Charles S. Frenette, 46, is Senior Vice President and Chief Marketing Officer of the Company. Mr. Frenette joined the Company in 1974. In 1986, he was appointed Senior Vice President and General Manager of Coca-Cola USA Fountain. In 1992, he was appointed Executive Vice President, Operations, of Coca-Cola USA. He was elected Vice President of the Company in 1995 and was appointed President of the South Africa Division in 1996. He was elected Senior Vice President in April 1998 and became Chief Marketing Officer in May 1998. Anton Amon, 55, is Senior Vice President of the Company and Manager of the Company's Product Integrity Division. Dr. Amon was named Senior Vice President of Coca-Cola USA in 1983. In 1988, he joined Coca-Cola Enterprises as Vice President, Operations. In September 1989, Dr. Amon returned to the Company as director, Corporate Quality Assurance. He was elected Vice President in October 1989. He became Manager, Product Integrity Division, in January 1992 and was elected to his current position in July 1992. George Gourlay, 57, is Senior Vice President of the Company and Manager of the Technical Operations Division. Mr. Gourlay was named Manager, Corporate Concentrate Operations in 1986, named Assistant Vice 11 President in 1988, and was elected Vice President in 1989. Mr. Gourlay became head of the Technical Operations Division in January 1992 and was elected to his current position in July 1992. Michael W. Walters, 52, is Vice President of the Company and Vice President of Human Resources. Mr. Walters joined the Company in 1972. In 1985, he was named Assistant Vice President, Compensation and Benefits. Mr. Walters was elected to his current position in April 1990. All executive officers serve at the pleasure of the Board of Directors. There is no family relationship between any of the executive officers of the Company. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHARE-OWNER MATTERS "Financial Review Incorporating Management's Discussion and Analysis" on pages 27 through 37, "Selected Financial Data" for the years 1997 and 1998 on page 38, "Stock Prices" on page 61 and "Common Stock", "Stock Exchanges" and "Dividends" under the heading "Share-Owner Information" on page 64 of the Company's Annual Report to Share Owners for the year ended December 31, 1998 (the "Company's 1998 Annual Report to Share Owners"), are incorporated herein by reference. During the fiscal year ended December 31, 1998, no equity securities of the Company were sold by the Company which were not registered under the Securities Act of 1933, as amended. ITEM 6. SELECTED FINANCIAL DATA "Selected Financial Data" for the years 1994 through 1998, on pages 38 and 39 of the Company's 1998 Annual Report to Share Owners, is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS "Financial Review Incorporating Management's Discussion and Analysis" on pages 27 through 37 of the Company's 1998 Annual Report to Share Owners, is incorporated herein by reference. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK "Financial Risk Management" on page 30 of the Company's 1998 Annual Report to Share Owners, is incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The following consolidated financial statements of the Company and its subsidiaries, included in the Company's 1998 Annual Report to Share Owners, are incorporated herein by reference: Consolidated Balance Sheets -- December 31, 1998 and 1997. Consolidated Statements of Income -- Years ended December 31, 1998, 1997 and 1996. Consolidated Statements of Cash Flows -- Years ended December 31, 1998, 1997 and 1996. Consolidated Statements of Share-Owners' Equity -- Years ended December 31, 1998, 1997 and 1996. Notes to Consolidated Financial Statements. 12 Report of Independent Auditors. "Quarterly Data (Unaudited)" on page 61 of the Company's 1998 Annual Report to Share Owners, is incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT For information on Directors of the Company, the subsections under the heading "Election of Directors" entitled "Board of Directors" and "Recommendation of the Board of Directors Concerning the Election of Directors" on pages 2 through 5 and under the heading "Section 16(a) Beneficial Ownership Reporting Compliance" on page 7 of the Company's Proxy Statement for the Annual Meeting of Share Owners to be held April 21, 1999 (the "Company's 1999 Proxy Statement"), is incorporated herein by reference. See Item X in Part I hereof for information regarding executive officers of the Company. ITEM 11. EXECUTIVE COMPENSATION The subsection under the heading "Election of Directors" entitled "Committees of the Board of Directors; Meetings and Compensation of Directors" on pages 8 through 10 and the portion of the section entitled "Executive Compensation" set forth on pages 11 through 15 and under the subsection "Compensation Committee Interlocks and Insider Participation" on page 21 of the Company's 1999 Proxy Statement, are incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The subsections under the heading "Election of Directors" entitled "Ownership of Equity Securities in the Company" on pages 6 and 7 and "Principal Share Owners" on page 8, and the subsection under the heading "Certain Investee Companies" entitled "Ownership of Securities in the Investee Companies" on page 22 of the Company's 1999 Proxy Statement, are incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The subsections under the heading "Election of Directors" entitled "Committees of the Board of Directors; Meetings and Compensation of Directors" and "Certain Transactions" on pages 8 through 10, the subsection under the heading "Executive Compensation" entitled "Compensation Committee Interlocks and Insider Participation" on page 21 and the section under the heading "Certain Investee Companies" on pages 21 and 22 of the Company's 1999 Proxy Statement, are incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K (a) 1. Financial Statements The following consolidated financial statements of The Coca-Cola Company and subsidiaries, included in the Company's 1998 Annual Report to Share Owners, are incorporated by reference in Part II, Item 8: 13 Consolidated Balance Sheets -- December 31, 1998 and 1997. Consolidated Statements of Income -- Years ended December 31, 1998, 1997 and 1996. Consolidated Statements of Cash Flows -- Years ended December 31, 1998, 1997 and 1996. Consolidated Statements of Share-Owners' Equity -- Years ended December 31, 1998, 1997 and 1996. Notes to Consolidated Financial Statements. Report of Independent Auditors. 2. The following consolidated financial statement schedule of The Coca-Cola Company and subsidiaries is included in Item 14(d): Schedule II -- Valuation and Qualifying Accounts. All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted. 3. Exhibits EXHIBIT NO. - ---------- 2.1 Amended and Restated Purchase Agreement, dated as of December 11, 1998, among the Company, Atlantic Industries and Cadbury Schweppes plc. 3.1 Certificate of Incorporation of the Company, including Amendment of Certificate of Incorporation, effective May 1, 1996 -- incorporated herein by reference to Exhibit 3 of the Company's Form 10-Q Quarterly Report for the quarter ended March 31, 1996. (With regard to applicable cross references in this report, the Company's Current, Quarterly and Annual Reports are filed with the Securities and Exchange Commission under File No. 1-2217.) 3.2 By-Laws of the Company, as amended and restated through December 17, 1997 -- incorporated herein by reference to Exhibit 3.2 of the Company's Form 10-K Annual Report for the year ended December 31, 1997. 4.1 The Company agrees to furnish to the Securities and Exchange Commission, upon request, a copy of any instrument defining the rights of holders of long-term debt of the Company and all of its consolidated subsidiaries and unconsolidated subsidiaries for which financial statements are required to be filed with the Securities and Exchange Commission. 10.1 The Key Executive Retirement Plan of the Company, as amended -- incorporated herein by reference to Exhibit 10.2 of the Company's Form 10-K Annual Report for the year ended December 31, 1995.* 14 EXHIBIT NO. - ----------- 10.2 Supplemental Disability Plan of the Company, as amended -- incorporated herein by reference to Exhibit 10.3 of the Company's Form 10-K Annual Report for the year ended December 31, 1991.* 10.3 Annual Performance Incentive Plan of the Company, as amended -- incorporated herein by reference to Exhibit 10.4 of the Company's Form 10-K Annual Report for the year ended December 31, 1995.* 10.4 1987 Stock Option Plan of the Company, as amended through October 15, 1998 -- incorporated herein by reference to Exhibit 10.1 of the Company's Form 10-Q Quarterly Report for the quarter ended September 30, 1998.* 10.5 1991 Stock Option Plan of the Company, as amended through October 15, 1998 -- incorporated herein by reference to Exhibit 10.2 of the Company's Form 10-Q Quarterly Report for the quarter ended September 30, 1998.* 10.6 1983 Restricted Stock Award Plan of the Company, as amended -- incorporated herein by reference to Exhibit 10.11 of the Company's Form 10-K Annual Report for the year ended December 31, 1991.* 10.7.1 1989 Restricted Stock Award Plan of the Company, as amended through October 17, 1996 -- incorporated herein by reference to Exhibit 10.11.1 of the Company's Form 10-K Annual Report for the year ended December 31, 1996.* 10.7.2 Resolutions, dated October 17, 1996, adopted by the Restricted Stock Subcommittee of the Compensation Committee of the Board of Directors of the Company -- incorporated herein by reference to Exhibit 10.11.2 of the Company's Form 10-K Annual Report for the year ended December 31, 1996.* 10.8.1 Compensation Deferral & Investment Program of the Company, as amended, including Amendment Number Four dated November 28, 1995 -- incorporated herein by reference to Exhibit 10.13 of the Company's Form 10-K Annual Report for the year ended December 31, 1995.* 10.8.2 Amendment Number 5 to the Compensation Deferral & Investment Program of the Company, effective as of January 1, 1998 -- incorporated herein by reference to Exhibit 10.8.2 of the Company's Form 10-K Annual Report for the year ended December 31, 1997.* 10.9 Special Medical Insurance Plan of the Company, as amended -- incorporated herein by reference to Exhibit 10.16 of the Company's Form 10-K Annual Report for the year ended December 31, 1995.* 10.10.1 Supplemental Benefit Plan of the Company, as amended -- incorporated herein by reference to Exhibit 10.17 of the Company's Form 10-K Annual Report for the year ended December 31, 1993.* 10.10.2 Amendment Number Five to the Supplemental Benefit Plan of the Company -- incorporated herein by reference to Exhibit 10.17.2 of the Company's Form 10-K Annual Report for the year ended December 31, 1996.* 10.11 Retirement Plan for the Board of Directors of the Company, as amended -- incorporated herein by reference to Exhibit 10.22 of the Company's Form 10-K Annual Report for the year ended December 31, 1991.* 10.12 Deferred Compensation Plan for Non-Employee Directors of the Company, adopted as of October 16, 1997 -- incorporated herein by reference to Exhibit 10.12 of the Company's Form 10-K Annual Report for the year ended December 31, 1997.* 15 EXHIBIT NO. - ----------- 10.13 Deferred Compensation Agreement for Officers or Key Executives of the Company -- incorporated herein by reference to Exhibit 10.20 of the Company's Form 10-K Annual Report for the year ended December 31, 1993.* 10.14 Long Term Performance Incentive Plan of the Company, as amended February 16, 1994 -- incorporated herein by reference to Exhibit 10.21 of the Company's Form 10-K Annual Report for the year ended December 31, 1993.* 10.15 Executive Performance Incentive Plan of the Company, as amended -- incorporated herein by reference to Exhibit 10.22 of the Company's Form 10-K Annual Report for the year ended December 31, 1994.* 10.16 Form of United States Master Bottle Contract, as amended, between the Company and Coca-Cola Enterprises Inc. ("Coca-Cola Enterprises") or its subsidiaries -- incorporated herein by reference to Exhibit 10.24 of Coca-Cola Enterprises' Annual Report on Form 10-K for the fiscal year ended December 30, 1988 (File No. 01-09300). 12.1 Computation of Ratios of Earnings to Fixed Charges for the years ended December 31, 1998, 1997, 1996, 1995 and 1994. 13.1 Portions of the Company's 1998 Annual Report to Share Owners expressly incorporated by reference herein: Pages 27 through 59, 61, 64 and 65 (definitions of "Dividend Payout Ratio," "Economic Profit," "Free Cash Flow," "Net Debt and Net Capital," "Return on Capital," "Return on Common Equity," "Total Capital" and "Total Market Value of Common Stock"). 21.1 List of subsidiaries of the Company as of December 31, 1998. 23.1 Consent of Independent Auditors. 24.1 Powers of Attorney of Officers and Directors signing this report. 27.1 Restated Financial Data Schedule for the year ended December 31, 1996, submitted to the Securities and Exchange Commission in electronic format. 27.2 Restated Financial Data Schedule for the year ended December 31, 1997, submitted to the Securities and Exchange Commission in electronic format. 27.3 Financial Data Schedule for the year ended December 31, 1998, submitted to the Securities and Exchange Commission in electronic format. 99.1 Cautionary Statement Relative to Forward-Looking Statements. - ------------------- * Management contracts and compensatory plans and arrangements required to be filed as exhibits pursuant to Item 14(c) of this report. 16 (b) Reports on Form 8-K. The Company filed a report on Form 8-K on December 15, 1998. Item 5. Other Events -- On December 11, 1998, the Company and Cadbury Schweppes plc announced that they signed an agreement for the Company to acquire beverage brands of Cadbury Schweppes in countries around the world (except in the United States, France and South Africa), plus concentrate plants in Ireland and Spain, for approximately $1.85 billion. On December 11, 1998, the Company also announced its expectations for fourth-quarter worldwide volume and earnings trends. Item 7. Financial Statements and Exhibits - Exhibits 99.1 and 99.2: Press releases of the Company issued December 11, 1998. (c) Exhibits -- The response to this portion of Item 14 is submitted as a separate section of this report. (d) Financial Statement Schedule -- The response to this portion of Item 14 is submitted as a separate section of this report. 17 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. THE COCA-COLA COMPANY (Registrant) By: /s/ M. DOUGLAS IVESTER ---------------------- M. DOUGLAS IVESTER Chairman, Board of Directors, Chief Executive Officer and a Director Date: March 29, 1999 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/ M. DOUGLAS IVESTER * - ---------------------- ---------------------- M. DOUGLAS IVESTER CATHLEEN P. BLACK Chairman, Board of Directors, Director Chief Executive Officer and a Director (Principal Executive Officer) March 29, 1999 March 29, 1999 /s/ JAMES E. CHESTNUT * - ---------------------- ---------------------- JAMES E. CHESTNUT WARREN E. BUFFETT Senior Vice President and Director Chief Financial Officer (Principal Financial Officer) March 29, 1999 March 29, 1999 /s/ GARY P. FAYARD * - ---------------------- ---------------------- GARY P. FAYARD SUSAN B. KING Vice President and Controller Director (Principal Accounting Officer) March 29, 1999 March 29, 1999 * * - ---------------------- ---------------------- HERBERT A. ALLEN DONALD F. MCHENRY Director Director March 29, 1999 March 29, 1999 * * - ---------------------- ---------------------- RONALD W. ALLEN SAM NUNN Director Director March 29, 1999 March 29, 1999 18 * * - ---------------------- ---------------------- PAUL F. OREFFICE PETER V. UEBERROTH Director Director March 29, 1999 March 29, 1999 * * - ---------------------- ---------------------- JAMES D. ROBINSON III JAMES B. WILLIAMS Director Director March 29, 1999 March 29, 1999 * By: /s/ CAROL C. HAYES ------------------ CAROL C. HAYES Attorney-in-fact March 29, 1999 19 ANNUAL REPORT ON FORM 10-K ITEM 14(d) FINANCIAL STATEMENT SCHEDULE YEAR ENDED DECEMBER 31, 1998 THE COCA-COLA COMPANY AND SUBSIDIARIES SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS THE COCA-COLA COMPANY AND SUBSIDIARIES Year ended December 31, 1998 (in millions)
- ----------------------------------------------------------------------------------------- COL. A COL. B COL. C COL. D COL. E - ----------------------------------------------------------------------------------------- Additions ------------------ (1) (2) Balance at Charged to Charged Balance Beginning of Costs and to Other Deductions at End Description Period Expenses Accounts (Note 1) of Period - ----------- ------------ ---------- -------- ---------- --------- RESERVES DEDUCTED IN THE BALANCE SHEET FROM THE ASSETS TO WHICH THEY APPLY Allowance for losses on: Trade accounts receivable.. $ 23 $ 3 $ - $ 16 $ 10 Miscellaneous investments and other assets........... 301 76 - 102 275 Deferred tax assets........ 21 - - 3 18 ---- --- --- ---- ---- $ 345 $ 79 $ - $ 121 $ 303 ==== === === ==== ====
- -------------------------- Note 1 - The amounts shown in Column D consist of the following:
Trade Miscellaneous Deferred Accounts Investments Tax Receivable and Other Assets Assets Total ---------- ---------------- -------- ----- Charge off of uncollectible accounts.. $ 6 $ 23 $ - $ 29 Write-off of impaired assets.......... - 70 - 70 Other transactions.................... 10 9 3 22 --- ---- --- ---- $ 16 $ 102 $ 3 $ 121 === ==== === ====
F-1 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS THE COCA-COLA COMPANY AND SUBSIDIARIES Year ended December 31, 1997 (in millions)
- ----------------------------------------------------------------------------------------- COL. A COL. B COL. C COL. D COL. E - ----------------------------------------------------------------------------------------- Additions ------------------- (1) (2) Balance at Charged to Charged Balance Beginning of Costs and to Other Deductions at End Description Period Expenses Accounts (Note 1) of Period - ----------- ------------ ---------- -------- ---------- --------- RESERVES DEDUCTED IN THE BALANCE SHEET FROM THE ASSETS TO WHICH THEY APPLY Allowance for losses on: Trade accounts receivable.. $ 30 $ 4 $ - $ 11 $ 23 Miscellaneous investments and other assets........... 339 41 - 79 301 Deferred tax assets........ 18 3 - - 21 ---- --- --- --- ---- $ 387 $ 48 $ - $ 90 $ 345 ==== === === === ====
- -------------------------- Note 1 - The amounts shown in Column D consist of the following:
Trade Miscellaneous Deferred Accounts Investments Tax Receivable and Other Assets Assets Total ---------- ---------------- -------- ----- Charge off of uncollectible accounts.. $ 4 $ - $ - $ 4 Write-off of impaired assets.......... - 65 - 65 Other transactions.................... 7 14 - 21 --- --- --- --- $ 11 $ 79 $ - $ 90 === === === ===
F-2 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS THE COCA-COLA COMPANY AND SUBSIDIARIES Year ended December 31, 1996 (in millions)
- ----------------------------------------------------------------------------------------- COL. A COL. B COL. C COL. D COL. E - ----------------------------------------------------------------------------------------- Additions ------------------- (1) (2) Balance at Charged to Charged Balance Beginning of Costs and to Other Deductions at End Description Period Expenses Accounts (Note 1) of Period - ----------- ------------ ---------- -------- ---------- --------- RESERVES DEDUCTED IN THE BALANCE SHEET FROM THE ASSETS TO WHICH THEY APPLY Allowance for losses on: Trade accounts receivable.. $ 34 $ 9 $ - $ 13 $ 30 Miscellaneous investments and other assets........... 55 287 - 3 339 Deferred tax assets........ 42 - - 24 18 ---- ---- --- --- ---- $ 131 $ 296 $ - $ 40 $ 387 ==== ==== === === ====
- -------------------------- Note 1 - The amounts shown in Column D consist of the following:
Trade Miscellaneous Deferred Accounts Investments Tax Receivable and Other Assets Assets Total ---------- ---------------- -------- ----- Charge off of uncollectible accounts.. $ 6 $ - $ - $ 6 Foreign exchange adjustments.......... 1 - - 1 Other transactions.................... 6 3 24 33 --- --- --- --- $ 13 $ 3 $ 24 $ 40 === === === ===
F-3 EXHIBIT INDEX DESCRIPTION EXHIBIT NO. - ----------- 2.1 Amended and Restated Purchase Agreement, dated as of December 11, 1998, among the Company, Atlantic Industries and Cadbury Schweppes plc. 3.1 Certificate of Incorporation of the Company, including Amendment of Certificate of Incorporation, effective May 1, 1996 -- incorporated herein by reference to Exhibit 3 of the Company's Form 10-Q Quarterly Report for the quarter ended March 31, 1996. (With regard to applicable cross references in this report, the Company's Current, Quarterly and Annual Reports are filed with the Securities and Exchange Commission under File No. 1-2217.) 3.2 By-Laws of the Company, as amended and restated through December 17, 1997 -- incorporated herein by reference to Exhibit 3.2 of the Company's Form 10-K Annual Report for the year ended December 31, 1997. 4.1 The Company agrees to furnish to the Securities and Exchange Commission, upon request, a copy of any instrument defining the rights of holders of long-term debt of the Company and all of its consolidated subsidiaries and unconsolidated subsidiaries for which financial statements are required to be filed with the Securities and Exchange Commission. 10.1 The Key Executive Retirement Plan of the Company, as amended -- incorporated herein by reference to Exhibit 10.2 of the Company's Form 10-K Annual Report for the year ended December 31, 1995.* 10.2 Supplemental Disability Plan of the Company, as amended -- incorporated herein by reference to Exhibit 10.3 of the Company's Form 10-K Annual Report for the year ended December 31, 1991.* 10.3 Annual Performance Incentive Plan of the Company, as amended -- incorporated herein by reference to Exhibit 10.4 of the Company's Form 10-K Annual Report for the year ended December 31, 1995.* 10.4 1987 Stock Option Plan of the Company, as amended through October 15, 1998 -- incorporated herein by reference to Exhibit 10.1 of the Company's Form 10-Q Quarterly Report for the quarter ended September 30, 1998.* EXHIBIT NO. - ----------- 10.5 1991 Stock Option Plan of the Company, as amended through October 15, 1998 -- incorporated herein by reference to Exhibit 10.2 of the Company's Form 10-Q Quarterly Report for the quarter ended September 30, 1998.* 10.6 1983 Restricted Stock Award Plan of the Company, as amended -- incorporated herein by reference to Exhibit 10.11 of the Company's Form 10-K Annual Report for the year ended December 31, 1991.* 10.7.1 1989 Restricted Stock Award Plan of the Company, as amended through October 17, 1996 -- incorporated herein by reference to Exhibit 10.11.1 of the Company's Form 10-K Annual Report for the year ended December 31, 1996.* 10.7.2 Resolutions, dated October 17, 1996, adopted by the Restricted Stock Subcommittee of the Compensation Committee of the Board of Directors of the Company -- incorporated herein by reference to Exhibit 10.11.2 of the Company's Form 10-K Annual Report for the year ended December 31, 1996.* 10.8.1 Compensation Deferral & Investment Program of the Company, as amended, including Amendment Number Four dated November 28, 1995 -- incorporated herein by reference to Exhibit 10.13 of the Company's Form 10-K Annual Report for the year ended December 31, 1995.* 10.8.2 Amendment Number 5 to the Compensation Deferral & Investment Program of the Company, effective as of January 1, 1998 -- incorporated herein by reference to Exhibit 10.8.2 of the Company's Form 10-K Annual Report for the year ended December 31, 1997.* 10.9 Special Medical Insurance Plan of the Company, as amended -- incorporated herein by reference to Exhibit 10.16 of the Company's Form 10-K Annual Report for the year ended December 31, 1995.* 10.10.1 Supplemental Benefit Plan of the Company, as amended -- incorporated herein by reference to Exhibit 10.17 of the Company's Form 10-K Annual Report for the year ended December 31, 1993.* 10.10.2 Amendment Number Five to the Supplemental Benefit Plan of the Company -- incorporated herein by reference to Exhibit 10.17.2 of the Company's Form 10-K Annual Report for the year ended December 31, 1996.* 10.11 Retirement Plan for the Board of Directors of the Company, as amended -- incorporated herein by reference to Exhibit 10.22 of the Company's Form 10-K Annual Report for the year ended December 31, 1991.* -2- EXHIBIT NO. - ----------- 10.12 Deferred Compensation Plan for Non-Employee Directors of the Company, adopted as of October 16, 1997 -- incorporated herein by reference to Exhibit 10.12 of the Company's Form 10-K Annual Report for the year ended December 31, 1997.* 10.13 Deferred Compensation Agreement for Officers or Key Executives of the Company -- incorporated herein by reference to Exhibit 10.20 of the Company's Form 10-K Annual Report for the year ended December 31, 1993.* 10.14 Long Term Performance Incentive Plan of the Company, as amended February 16, 1994 -- incorporated herein by reference to Exhibit 10.21 of the Company's Form 10-K Annual Report for the year ended December 31, 1993.* 10.15 Executive Performance Incentive Plan of the Company, as amended -- incorporated herein by reference to Exhibit 10.22 of the Company's Form 10-K Annual Report for the year ended December 31, 1994.* 10.16 Form of United States Master Bottle Contract, as amended, between the Company and Coca-Cola Enterprises Inc. ("Coca-Cola Enterprises") or its subsidiaries -- incorporated herein by reference to Exhibit 10.24 of Coca-Cola Enterprises' Annual Report on Form 10-K for the fiscal year ended December 30, 1988 (File No. 01-09300). 12.1 Computation of Ratios of Earnings to Fixed Charges for the years ended December 31, 1998, 1997, 1996, 1995 and 1994. 13.1 Portions of the Company's 1998 Annual Report to Share Owners expressly incorporated by reference herein: Pages 27 through 59, 61, 64 and 65 (definitions of "Dividend Payout Ratio," "Economic Profit," "Free Cash Flow," "Net Debt and Net Capital," "Return on Capital," "Return on Common Equity," "Total Capital" and "Total Market Value of Common Stock"). 21.1 List of subsidiaries of the Company as of December 31, 1998. 23.1 Consent of Independent Auditors. 24.1 Powers of Attorney of Officers and Directors signing this report. 27.1 Restated Financial Data Schedule for the year ended December 31, 1996, submitted to the Securities and Exchange Commission in electronic format. 27.2 Restated Financial Data Schedule for the year ended December 31, 1997, submitted to the Securities and Exchange Commission in electronic format. -3- EXHIBIT NO. - ----------- 27.3 Financial Data Schedule for the year ended December 31, 1998, submitted to the Securities and Exchange Commission in electronic format. 99.1 Cautionary Statement Relative to Forward-Looking Statements. - ------------------- * Management contracts and compensatory plans and arrangements required to be filed as exhibits pursuant to Item 14(c) of this report. -4-