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24NOV200315305262
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
፤ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
OR
អTRANSITION 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
(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
Atlanta, Georgia 30313
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (404) 676-2121
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
COMMON STOCK, $0.25 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 ፤No អ
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. អ
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the
Act). Yes ፤No អ
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 June 30,
2003, was $99,406,380,686 (based on the closing sale price of the Registrant’s Common Stock on that date as reported on
the New York Stock Exchange).
The number of shares outstanding of the Registrant’s Common Stock as of February 23, 2004 was 2,445,264,403.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company’s Proxy Statement for the Annual Meeting of Share Owners to be held on April 21, 2004, are
incorporated by reference in Part III.

Table of contents

  • Page 1
    ..., that all executive officers and Directors are ''affiliates'' of the Registrant) as of June 30, 2003, was $99,406,380,686 (based on the closing sale price of the Registrant's Common Stock on that date as reported on the New York Stock Exchange). The number of shares outstanding of the Registrant...

  • Page 2
    ...Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ...Selected Financial Data ...Management's Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures About Market Risk ...Financial Statements and...

  • Page 3
    (This page has been left blank intentionally.)

  • Page 4
    ... I ITEM 1. BUSINESS The Coca-Cola Company is the largest manufacturer, distributor and marketer of nonalcoholic beverage concentrates and syrups in the world. Finished beverage products bearing our trademarks, sold in the United States since 1886, are now sold in more than 200 countries and include...

  • Page 5
    ... syrups, including fountain syrups. We also manufacture and sell some finished beverages, both carbonated and noncarbonated, including certain juice and juice-drink products and water products. As used in this report: • ''concentrates'' means flavoring ingredients used to prepare beverage syrups...

  • Page 6
    ... directly and through a network of business partners, including certain Coca-Cola bottlers, Company-manufactured juice and juice-drink products and certain water products are sold by us to retailers and wholesalers in the United States and numerous other countries. The Company's beverage products...

  • Page 7
    ...Those bottlers prepare and sell finished beverages bearing our trademarks for the food store and vending machine distribution channels and for other distribution channels supplying home and immediate consumption. Approximately 32% of 2003 U.S. gallon sales was attributable to fountain syrups sold to...

  • Page 8
    ...attributable to fountain syrups. The remaining approximately 3% of 2003 non-U.S. unit case volume was attributable to juice and juice-drink products. In addition to conducting our own independent advertising and marketing activities, we may provide promotional and marketing services and/or funds and...

  • Page 9
    ... a fixed price for Coca-Cola syrup used in bottles and cans. This price is subject to quarterly adjustments to reflect changes in the quoted price of sugar. Bottlers accounting for the remaining approximately 11% of U.S. bottle/can gallon sales in 2003 have contracts for certain Coca-Cola Trademark...

  • Page 10
    ... strength and efficiency of the Coca-Cola 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 our Company...

  • Page 11
    ... that we account for by the equity method include the following: Coca-Cola Enterprises Inc. Our ownership interest in CCE was approximately 37% at December 31, 2003. CCE is the world's largest bottler of the Company's beverage products. In 2003, net sales of concentrates and syrups by the Company to...

  • Page 12
    ..., and ownership of several value brands. Our Company made a cash payment to acquire a controlling 51% equity interest in CCDA and is also providing marketing, distribution and management expertise. The results of CCDA's operations have been included in our Company's consolidated financial statements...

  • Page 13
    ... areas. Competitive factors with respect to our business include pricing, advertising, 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...

  • Page 14
    ...to fluctuations in its market price. Our Company generally has not experienced any difficulties in obtaining its requirements for sweeteners. In the United States we purchase our requirements of high-fructose corn syrup with the assistance of Coca-Cola Bottlers' Sales & Services Company LLC (''CCBSS...

  • Page 15
    ... material adverse effect upon our Company's capital expenditures, net income or competitive position. Employees As of December 31, 2003, our Company employed approximately 49,000 persons, compared to approximately 56,000 at the end of 2002. The decrease in the number of employees was primarily due...

  • Page 16
    ... a system of contract packers to produce and/or distribute certain products where appropriate. The Company also owns a facility that manufactures juice concentrates for food service use. Our Company owns or leases additional real estate, including a Company-owned office and retail building at...

  • Page 17
    ...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 the United States District Court for the Northern District of Georgia consolidating the two cases...

  • Page 18
    ...test for Frozen Coke products conducted by one of the Company's customers, improper accounting treatment in connection with the purchase of certain fountain dispensing equipment and marketing allowances, and false or misleading statements or omissions in connection with the reporting of sales volume...

  • Page 19
    ...North America strategic business unit. Mr. Douglas was elected to his current position in February 2003. Gary P. Fayard, 51, is Executive 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...

  • Page 20
    ..., 51, is Executive Vice President of the Company and President and Chief Operating ´xico Officer, Latin America. He began his career with The Coca-Cola Company in 1980 in Coca-Cola de Me as Manager of Strategic Planning. In 1986 he was Manager of the Sprite and diet Coke brands at Corporate 17

  • Page 21
    ...appointed Director of Worldwide Public Affairs and Communications in 2001. In 2002, he took on additional responsibilities, including Government Affairs, North American Public Relations & Communications, Strategic Event Services and Company Archives. Mr. Tuggle was elected to his current position in...

  • Page 22
    ... indicated, the high and low closing prices per share for the Company's common stock, as reported on the New York Stock Exchange composite tape, and dividend per share information: Common stock market price High Low (In dollars) Dividends declared 2003 Fourth quarter Third quarter Second quarter...

  • Page 23
    ... 6. SELECTED FINANCIAL DATA The Coca-Cola Company and Subsidiaries (In millions except per share data, ratios and growth rates) Compound Growth Rates 5 Years 10 Years Year Ended December 31, 20032 20023,4 SUMMARY OF OPERATIONS Net operating revenues Cost of goods sold Gross profit Selling, general...

  • Page 24
    The Coca-Cola Company and Subsidiaries...Accounting for Derivative Instruments and Hedging Activities.'' ''Employers' Disclosures about Pensions and Other Postretirement Benefits.'' ''Accounting for Certain Investments in Debt and Equity Securities.'' ''Employers' Accounting for Postemployment Benefits...

  • Page 25
    ... our business; the value drivers of our business; measurements; and opportunities, challenges and risks. • Financial Strategies and Risk Management - information about debt financing, share repurchases, dividend policy and financial risk management. • Application of Critical Accounting Policies...

  • Page 26
    ... our strong capital position, our access to key financial markets, our ability to raise funds at a low effective cost and our overall low cost of borrowing provide a competitive advantage. As our cash flows increase, we expect to increase our share repurchases. Furthermore, dividends increased for...

  • Page 27
    ... represents a serious risk. We recognize that obesity is a complex and serious public health problem. Our commitment to consumers begins with our broad product line, led by Coca-Cola and a wide selection of diet and light beverages, juices and juice drinks, sports drinks and waters. Our commitment...

  • Page 28
    ... increase in tariffs around the world demonstrate the challenges related to free trade. It is important for our Company in particular and the beverage industry in general to show leadership in communicating the benefits of free trade. All three of these challenges and risks-obesity, water and free...

  • Page 29
    ...strong capital position give us access to key financial markets around the world, enabling us to raise funds with a low effective cost. This posture, coupled with active management of our mix of short-term and long-term debt, results in a lower overall cost of borrowing. Our debt management policies...

  • Page 30
    ...of fixed-rate and variable-rate debt and other business and financial risks. The above financial measures trended positively in 2003 and 2002, reflecting improved business results and effective capital management strategies. Share Repurchases In October 1996, our Board of Directors authorized a plan...

  • Page 31
    ... a review of business and other financial risks as noted above. We also enter into interest rate swap agreements to manage these risks. Value at Risk. We monitor our exposure to financial market risks using several objective measurement systems, including value-at-risk models. Our value-at-risk...

  • Page 32
    ...with equity method investees. Effective February 2002, our Company acquired control of Coca-Cola Erfrischungsgetraenke AG (''CCEAG''), the largest bottler of the Company's beverage products in Germany. Under our policy, we concluded that CCEAG should be consolidated in our financial statements based...

  • Page 33
    ... indicate carrying value may not be recoverable: Equity method investments Cost method investments, principally bottling companies Other assets Property, plant and equipment, net Amortized intangible assets, net (various, principally trademarks) Tested for impairment at least annually or when events...

  • Page 34
    ...Other Assets. Our Company invests in infrastructure programs with our bottlers that are directed at strengthening our bottling system and increasing unit case volume. Additionally, our Company advances payments to certain customers to fund future marketing activities intended to generate profitable...

  • Page 35
    ... if events or circumstances indicate it might be impaired. Such tests include comparing the fair value of a reporting unit with its carrying value, including goodwill. We use a variety of methodologies in conducting these impairment assessments, including cash flow analysis, estimates of sales...

  • Page 36
    Operations Review Analysis of Consolidated Statements of Income Year Ended December 31, (In millions except per share data and percentages) 2003 2002 2001 Percent Change 03 vs. 02 02 vs. 01 NET OPERATING REVENUES Cost of goods sold GROSS PROFIT GROSS PROFIT MARGIN Selling, general and ...

  • Page 37
    ..., a carbonated line of drinks. In the third quarter of 2002, our Company and Danone Waters of North America (''DWNA'') formed a new joint venture company, CCDA Waters, L.L.C. (''CCDA'') for the production, marketing and distribution of DWNA's bottled spring and source water business in the United...

  • Page 38
    ...and Baltics bottling operations accounted for approximately $150 million of 2001 net operating revenues. Price increases and product/geographic mix in selected countries positively impacted our 2002 net operating revenues. The improvements in these core business factors reflected a positive trend in...

  • Page 39
    ...defined contribution pension plans, and postretirement health care and life insurance benefits plans. Selling expenses increased by approximately $32 million due to the inclusion of one additional month of operations for CCEAG in 2003 compared to 2002. The Seagram's mixers, the CCDA water brands and...

  • Page 40
    ... decrease in our expected weighted-average, long-term rate of return assumption, the decrease in our discount rate assumption and increased amortization of actuarial losses increased our net periodic pension cost by $48 million in 2003 compared to 2002. Net periodic pension cost in 2004 is expected...

  • Page 41
    ... $52 million for Corporate. Refer to Note 16. Interest Income and Interest Expense In 2003, interest income decreased by $33 million compared to 2002 primarily due to lower interest rates earned on short-term investments. Nevertheless, the Company continues to benefit from cash invested in locations...

  • Page 42
    ... This process included the closing of various distribution centers and manufacturing plants. Furthermore, due to the challenging economic conditions and an uncertain political situation in Venezuela, certain intangible assets were determined to be impaired and written down to their fair market value...

  • Page 43
    ...(loss)-net in 2002. Gains on Issuances of Stock by Equity Investees If and when 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...

  • Page 44
    .... Items such as seasonality, bottlers' inventory practices, supply point changes, timing of price increases and new product introductions can create differences between gallon sales and unit case volume. Although most of our Company's revenues are not based directly on unit case volume, we believe...

  • Page 45
    ... million to the primary qualified U.S. pension plan in 2001. • A stronger U.S. dollar. Purchases of property, plant and equipment accounted for the most significant cash outlays for investing activities in each of three years ended December 31, 2003. Our Company currently estimates that purchases...

  • Page 46
    ... the next most significant investing activity accounting for $359 million in 2003, $544 million in 2002 and $651 million in 2001. Our single largest 2003 acquisition requiring the use of cash was the purchase of a 100 percent ownership interest in Truesdale Packaging Company LLC (''Truesdale'') from...

  • Page 47
    ... 90 days. Net issuances related to commercial paper with maturities of 90 days or less were $40 million in 2001. During 2003, 2002 and 2001, the Company repurchased common stock under the share repurchase plan authorized by our Board of Directors in October 1996. As strong cash flows are expected...

  • Page 48
    ... long-term debt by several options including cash flows from operations, issuance of commercial paper or issuance of other long-term debt. We calculated estimated interest payments for short-term loans and notes payable and long-term debt as follows. For fixed-rate debt and term debt, we calculated...

  • Page 49
    ... U.S. postretirement health care benefit plan during 2004. We funded the $100 million payment with cash flows from operations, and we generally expect to fund all future contributions with cash flows from operations. Our international pension plans are funded in accordance with local laws and income...

  • Page 50
    ...A $1,102 million increase in cash and cash equivalents due primarily to increased cash flows from operations; • The increase in our equity method investment in Coca-Cola FEMSA of $327 million and the decrease in equity method investments, other, principally bottling companies, of $357 million were...

  • Page 51
    ... of the inflationary effects of increasing costs and to generate sufficient cash flows to maintain our productive capability. Forward-Looking Statements Certain written and oral statements made by our Company and subsidiaries or with the approval of an authorized executive officer of our Company may...

  • Page 52
    ...product sales. • Our ability to effectively align ourselves with our bottling system as we focus on increasing the investment in our brands; seeking efficiencies throughout the supply chain; delivering more value for our customers; and better meeting the needs of our consumers. • Changes in laws...

  • Page 53
    ... Page Consolidated Statements of Income ...Consolidated Balance Sheets ...Consolidated Statements of Cash Flows ...Consolidated Statements of Share-Owners' Equity ...Notes to Consolidated Financial Statements ...Report of Independent Auditors ...Report of Management ...Quarterly Data (Unaudited...

  • Page 54
    CONSOLIDATED STATEMENTS OF INCOME The Coca-Cola Company and Subsidiaries Year Ended December 31, (In millions except per share data) 2003 2002 2001 NET OPERATING REVENUES Cost of goods sold GROSS PROFIT Selling, general and administrative expenses Other operating charges OPERATING INCOME Interest ...

  • Page 55
    ...assets TOTAL CURRENT ASSETS INVESTMENTS AND OTHER ASSETS Equity method investments: Coca-Cola Enterprises Inc. Coca-Cola Hellenic Bottling Company S.A. Coca-Cola FEMSA, S.A. de C.V. Coca-Cola Amatil Limited Other, principally bottling companies Cost method investments, principally bottling companies...

  • Page 56
    The Coca-Cola Company and Subsidiaries December 31, (In millions except share data) 2003 2002 LIABILITIES AND SHARE-OWNERS' EQUITY CURRENT Accounts payable and accrued expenses Loans and notes payable Current maturities of long-term debt Accrued income taxes $ 4,058 2,583 323 922 $ 3,692 2,475 ...

  • Page 57
    CONSOLIDATED STATEMENTS OF CASH FLOWS The Coca-Cola Company and Subsidiaries Year Ended December 31, (In millions) 2003 2002 2001 OPERATING ACTIVITIES Net income Depreciation and amortization Stock-based compensation expense Deferred income taxes Equity income or loss, net of dividends Foreign ...

  • Page 58
    CONSOLIDATED STATEMENTS OF SHARE-OWNERS' EQUITY The Coca-Cola Company and Subsidiaries Year Ended December 31, (In millions except per share data) 2003 2002 2001 NUMBER OF COMMON SHARES OUTSTANDING Balance at beginning of year Stock issued to employees exercising stock options Purchases of stock ...

  • Page 59
    .... The difference between consolidation and the equity method impacts certain financial ratios because of the presentation of the detailed line items reported in the financial statements. We use the cost method to account for our investments in companies that we do not control and for which we...

  • Page 60
    ... TO CONSOLIDATED FINANCIAL STATEMENTS The Coca-Cola Company and Subsidiaries NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) enterprise; or product issues such as a product recall. In addition, policy concerns particular to the United States with respect to a country...

  • Page 61
    ... TO CONSOLIDATED FINANCIAL STATEMENTS The Coca-Cola Company and Subsidiaries NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The following table illustrates the effect on net income and earnings per share as if the fair value method had been applied to all outstanding...

  • Page 62
    ... our bottlers that are directed at strengthening our bottling system and increasing unit case volume. Management periodically evaluates the recoverability of these assets by preparing estimates of sales volume, the resulting gross profit, cash flows and other factors. The costs of these programs are...

  • Page 63
    ... on high-quality, fixed-income debt instruments on December 31 of each year. The rate of compensation increase is another significant assumption used for pension accounting and is determined by the Company based upon annual reviews. For postretirement health care plan accounting, our Company reviews...

  • Page 64
    ... Activities.'' SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (''EITF'') Issue No. 94-3, ''Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity...

  • Page 65
    ..., primarily bottlers, currently accounted for under the equity method of accounting that may be considered variable interest entities. These variable interests relate to profit guarantees or subordinated financial support for these bottlers. Our Company determined that we will increase assets as of...

  • Page 66
    ...-Cola Enterprises Inc. (''CCE'') is the world's largest marketer, distributor and producer of bottle and can nonalcoholic beverages, operating in eight countries. On December 31, 2003, our Company owned approximately 37 percent of the outstanding common stock of CCE. We account for our investment...

  • Page 67
    ... TO CONSOLIDATED FINANCIAL STATEMENTS The Coca-Cola Company and Subsidiaries NOTE 2: BOTTLING INVESTMENTS (Continued) A summary of our significant transactions with CCE is as follows (in millions): 2003 2002 2001 Net concentrate and syrup sales to CCE CCE purchases of sweeteners through our Company...

  • Page 68
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Coca-Cola Company and Subsidiaries NOTE 2: BOTTLING INVESTMENTS (Continued) infrastructure necessary to support accelerated placements of cold-drink equipment. These payments support a common objective of increased sales of Coca-Cola beverages from ...

  • Page 69
    ... Share-owners' equity Company equity investment $ 6,416 17,394 5,467 9,011 9,332 3,964 $ 5,649 14,453 4,816 6,010 9,276 3,765 $ 23,810 $ $ 20,102 $ $ 14,478 $ $ $ 10,826 $ $ Year Ended December 31, 2003 2002 2001 Net operating revenues Cost of goods sold Gross profit Operating...

  • Page 70
    ... owners. In December 2003, our Company received our share capital return payment from CCHBC equivalent to $136 million, and we recorded a reduction to our investment in CCHBC. Effective February 2002, our Company acquired control of Coca-Cola Erfrischungsgetraenke AG (''CCEAG''), the largest bottler...

  • Page 71
    ... but are reviewed annually for impairment. Our Company is the owner of some of the world's most valuable trademarks. As a result, certain trademarks and franchise rights to bottle and distribute such trademarked products are expected to generate positive cash flows for as long as the Company owns...

  • Page 72
    ...distribute such trademarked brands. The macroeconomic conditions and lower pricing depressed operating margins for these trademarks. For Europe, Eurasia and Middle East equity method investees, a $400 million impairment was recorded as of January 1, 2002 for the Company's proportionate share related...

  • Page 73
    ... acquired certain brands and related contractual rights from Panamco valued at $54 million in the Latin America operating segment with an estimated useful life of 10 years. As discussed in Note 18, in 2002 the Company acquired certain intangible assets in connection with the business combinations of...

  • Page 74
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Coca-Cola Company and Subsidiaries NOTE 4: GOODWILL, TRADEMARKS AND OTHER INTANGIBLE ASSETS (Continued) The following table summarizes and reconciles net income before cumulative effect of accounting change for the three years ended December 31, 2003, ...

  • Page 75
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Coca-Cola Company and Subsidiaries NOTE 6: SHORT-TERM BORROWINGS AND CREDIT ARRANGEMENTS (Continued) in commercial paper borrowings. Our weighted-average interest rates for commercial paper outstanding were approximately 1.1 percent and 1.4 percent per ...

  • Page 76
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Coca-Cola Company and Subsidiaries NOTE 8: COMPREHENSIVE INCOME Accumulated other comprehensive income (''AOCI''), including our proportionate share of equity method investees' AOCI, consists of the following (in millions): December 31, 2003 2002 ...

  • Page 77
    ... The Coca-Cola Company and Subsidiaries NOTE 9: FINANCIAL INSTRUMENTS Fair Value of Financial Instruments The carrying amounts reflected in our balance sheets for cash, cash equivalents, marketable equity securities, cost method investments, receivables, loans and notes payable, and long-term debt...

  • Page 78
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Coca-Cola Company and Subsidiaries NOTE 9: FINANCIAL INSTRUMENTS (Continued) Gross Unrealized Gains Losses Estimated Fair Value December 31, Cost 2002 Available-for-sale securities: Bank and corporate debt Equity securities Collateralized mortgage ...

  • Page 79
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Coca-Cola Company and Subsidiaries NOTE 9: FINANCIAL INSTRUMENTS (Continued) The contractual maturities of these investments as of December 31, 2003 were as follows (in millions): Available-for-Sale Securities Fair Cost Value Held-to-Maturity Securities...

  • Page 80
    ... Company estimates the fair value of its interest rate management derivatives based on quoted market prices. Foreign Currency Management The purpose of our foreign currency hedging activities is to reduce the risk that our eventual U.S. dollar net cash inflows resulting from sales outside the United...

  • Page 81
    ... recognized in earnings in the line item other income (loss)-net of our statements of income to offset the effect of remeasurement of the monetary assets and liabilities. The Company also enters into forward exchange contracts to hedge its net investment position in certain major currencies. Under...

  • Page 82
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Coca-Cola Company and Subsidiaries NOTE 10: HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS (Continued) The following table summarizes activity in AOCI related to derivatives designated as cash flow hedges held by the Company during the ...

  • Page 83
    ... contracts Options and collars $ (10) $ (10) 60 60 $ 50 $ 50 2003 2003-2004 The Company estimates the fair value of its foreign currency derivatives based on quoted market prices or pricing models using current market rates. This amount is primarily reflected in prepaid expenses and other assets...

  • Page 84
    .... The French competition directorate has also initiated an inquiry into commercial practices related to the soft drinks sector in France. This inquiry has been conducted through visits to the offices of the Company; however, no conclusions have been communicated to the Company by the directorate. At...

  • Page 85
    ... the difference between the market price and the option price. Options to purchase common stock under the 1991 Option Plan have been granted to Company employees at fair market value at the date of grant. The 1999 Stock Option Plan (the ''1999 Option Plan'') was approved by share owners in April of...

  • Page 86
    ...-average fair value of options granted Dividend yields Expected volatility Risk-free interest rates Expected lives $ 13.49 $ 13.10 $ 15.09 1.9% 1.7% 1.6% 28.1% 30.2% 31.9% 3.5% 3.4% 5.1% 6 years 6 years 5 years A summary of stock option activity under all plans is as follows (shares in millions...

  • Page 87
    ...the Company established a program to provide Performance Share Unit Awards under the 1989 Restricted Stock Award Plan to executives. Awards for the 2004-2006 performance period were made in December 2003 at a fair value of $46.78 per share. The performance measure for these awards is compound annual...

  • Page 88
    ... the promises to grant stock at the end of the three-year period were not achieved. NOTE 14: PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS Our Company sponsors and/or contributes to pension and postretirement health care and life insurance benefit plans covering substantially all U.S. employees. We...

  • Page 89
    ... TO CONSOLIDATED FINANCIAL STATEMENTS The Coca-Cola Company and Subsidiaries NOTE 14: PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Continued) Our Company uses a measurement date of December 31 for substantially all of our pension and postretirement benefit plans. Obligations and Funded Status...

  • Page 90
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Coca-Cola Company and Subsidiaries NOTE 14: PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Continued) The following table sets forth the change in the fair value of plan assets for our benefit plans (in millions): December 31, Pension Benefits 2003 ...

  • Page 91
    ... The weighted-average assumptions used in computing net periodic benefit cost are as follows: Year Ended December 31, Pension Benefits 2003 2002 2001 14 Other Benefits 2003 2002 2001 Discount rate1 Rate of increase in compensation levels Expected long-term rate of return on plan assets 1 6% 61...

  • Page 92
    ... TO CONSOLIDATED FINANCIAL STATEMENTS The Coca-Cola Company and Subsidiaries NOTE 14: PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Continued) Plan Assets The fair value of plan assets for our U.S. pension benefit plans as of December 31, 2003 was $1,467 million. The following table sets forth...

  • Page 93
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Coca-Cola Company and Subsidiaries NOTE 14: PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Continued) targeted asset mix identified in the asset and liability study. Adjustments are made to the expected long-term rate of return assumption when deemed ...

  • Page 94
    ...of tax benefits on charges related to streamlining initiatives recorded in locations with tax rates higher than our effective tax rate. In 2003, management concluded that it was more likely than not that tax benefits would not be realized on Coca-Cola FEMSA's write-down of intangible assets in Latin...

  • Page 95
    ...of the following (in millions): December 31, 2003 2002 Deferred tax assets: Property, plant and equipment Trademarks and other intangible assets Equity method investments (including translation adjustment) Other liabilities Benefit plans Net operating/capital loss carryforwards Other Gross deferred...

  • Page 96
    ...quarter of 2002, our Company recorded a noncash pretax charge of approximately $157 million (recorded in the line item other income (loss)-net), primarily related to the write-down of certain investments in Latin America. This write-down reduced the carrying value of the investments in Latin America...

  • Page 97
    ...Middle East Latin America Corporate Total $ 273 12 18 183 8 67 $ 561 NOTE 18: ACQUISITIONS AND INVESTMENTS During 2003, our Company's acquisition and investment activity totaled approximately $359 million. These acquisitions included purchases of trademarks, brands and related contractual rights of...

  • Page 98
    ... retail bottled spring and source water business in the United States. These assets include five production facilities, a license for the use of the Dannon and Sparkletts brands, as well as ownership of several value brands. Our Company made a cash payment to acquire a controlling 51 percent equity...

  • Page 99
    ... in May 2001. In March 2001, our Company signed a definitive agreement with La Tondena Distillers, Inc. (''La Tondena'') and San Miguel to acquire carbonated soft-drink, water and juice brands for $84 million. CCBPI acquired the related manufacturing and distribution assets from La Tondena for $63...

  • Page 100
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Coca-Cola Company and Subsidiaries NOTE 18: ACQUISITIONS AND INVESTMENTS (Continued) In December 2001, our Company completed a cash tender offer for all outstanding shares of the common stock of Odwalla, Inc. This acquisition was valued at approximately...

  • Page 101
    ... million primarily for a charge related to one of our equity method investees. Refer to Note 2. Principally marketable securities, finance subsidiary receivables, goodwill, trademarks and other intangible assets, and property, plant and equipment. Principally equity investments in bottling companies...

  • Page 102
    ... CONSOLIDATED FINANCIAL STATEMENTS The Coca-Cola Company and Subsidiaries NOTE 19: OPERATING SEGMENTS (Continued) Europe, Eurasia & Middle East Compound Growth Rate Ended December 31, 2003 North America Africa Asia Latin America Corporate Consolidated Net operating revenues 5 years 10 years...

  • Page 103
    ... Auditors Board of Directors and Share Owners The Coca-Cola Company We have audited the accompanying consolidated balance sheets of The Coca-Cola Company and subsidiaries as of December 31, 2003 and 2002, and the related consolidated statements of income, shareowners' equity, and cash flows for...

  • Page 104
    ... and reported. The internal accounting control system is augmented by a program of internal audits and appropriate reviews by management, written policies and guidelines, careful selection and training of qualified personnel and a written Code of Business Conduct adopted by our Company's Board of...

  • Page 105
    .... In the first quarter of 2002, Cervejarias Kaiser S.A. sold its investment in Cervejarias Kaiser Brazil, Ltda to Molson Inc. (''Molson'') for cash of approximately $485 million and shares of Molson valued at approximately $150 million. Our Company's pretax share of the gain related to this sale was...

  • Page 106
    .../or water and marketed under trademarks of the Company. Consumer: person who drinks Company products. Cost of Capital: after-tax blended cost of equity and borrowed funds used to invest in operating capital required for business. Customer: retail outlet, restaurant or other operation that sells or...

  • Page 107
    ... sweetener and water, sold to bottlers and customers who add carbonated water to produce finished carbonated soft drinks. Total Capital: share-owners' equity plus interest-bearing debt. Total Market Value of Common Stock: stock price as of a date multiplied by the number of shares outstanding as of...

  • Page 108
    ... material information relating to the Company and the Company's consolidated subsidiaries required to be disclosed in the Company's reports filed or submitted under the Exchange Act. There has been no change in the Company's internal control over financial reporting during the quarter ended December...

  • Page 109
    ... report for information regarding executive officers of the Company. The Company has adopted a code of business conduct and ethics applicable to the Company's Directors, officers (including the Company's principal executive officer, principal financial officer and controller) and employees, known...

  • Page 110
    ...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 SEC. The Key Executive Retirement Plan of the Company, as amended-incorporated herein by reference...

  • Page 111
    ...Exhibit 10.7 of the Company's Form 10-K Annual Report for the year ended December 31, 1999.* 1989 Restricted Stock Award Plan of the Company, as amended and restated December 17, 2003, effective as of December 1, 2003.* Compensation Deferral & Investment Program of the Company, as amended, including...

  • Page 112
    ... 10.22 of the Company's Form 10-K Annual Report for the year ended December 31, 1991.* Deferred Compensation Plan for Non-Employee Directors of the Company, as amended and restated through October 16, 2003.* Executive and Long-Term Performance Incentive Plan of the Company, effective as of January...

  • Page 113
    ... of the Board of Directors, dated April 15, 2003.* Amendment Number Two to The Coca-Cola Company Benefits Plan for Members of the Board of Directors, dated August 27, 2003.* Computation of Ratios of Earnings to Fixed Charges for the years ended December 31, 2003, 2002, 2001, 2000 and 1999. List of...

  • Page 114
    ... of the United States Code (18 U.S.C. 1350), executed by Douglas N. Daft, Chairman, Board of Directors, and Chief Executive Officer of The Coca-Cola Company and by Gary P. Fayard, Executive Vice President and Chief Financial Officer of The Coca-Cola Company. Cautionary Statement Relative to Forward...

  • Page 115
    .... THE COCA-COLA COMPANY (Registrant) By: /s/ DOUGLAS N. DAFT DOUGLAS N. DAFT Chairman, Board of Directors, Chief Executive Officer and a Director Date: February 27, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on...

  • Page 116
    ... February 27, 2004 JAMES D. ROBINSON III Director February 27, 2004 * * DONALD F. MCHENRY Director February 27, 2004 PETER V. UEBERROTH Director February 27, 2004 * * ROBERT L. NARDELLI Director February 27, 2004 JAMES B. WILLIAMS Director February 27, 2004 * *By: /s/ CAROL C. HAYES CAROL...

  • Page 117
    ... II-VALUATION AND QUALIFYING ACCOUNTS The Coca-Cola Company and Subsidiaries Year Ended December 31, 2003 (in millions) COL. A COL. B Description Balance at Beginning of Period COL. C Additions (1) (2) Charged to Charged Costs and to Other Expenses Accounts COL. D COL. E Deductions (Note...

  • Page 118
    ... II-VALUATION AND QUALIFYING ACCOUNTS The Coca-Cola Company and Subsidiaries Year Ended December 31, 2002 (in millions) COL. A COL. B Description Balance at Beginning of Period COL. C Additions (1) (2) Charged to Charged Costs and to Other Expenses Accounts COL. D COL. E Deductions (Note...

  • Page 119
    ... II-VALUATION AND QUALIFYING ACCOUNTS The Coca-Cola Company and Subsidiaries Year Ended December 31, 2001 (in millions) COL. A COL. B Description Balance at Beginning of Period COL. C Additions (1) (2) Charged to Charged Costs and to Other Expenses Accounts COL. D COL. E Deductions (Note...

  • Page 120
    ... I, Douglas N. Daft, Chairman, Board of Directors, and Chief Executive Officer of The Coca-Cola Company, certify that: 1. 2. I have reviewed this annual report on Form 10-K of The Coca-Cola Company; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit...

  • Page 121
    ... 31.2 CERTIFICATIONS I, Gary P. Fayard, Executive Vice President and Chief Financial Officer of The Coca-Cola Company, certify that: 1. 2. I have reviewed this report on Form 10-K of The Coca-Cola Company; Based on my knowledge, this report does not contain any untrue statement of a material fact or...

  • Page 122
    ...In connection with the Annual Report of The Coca-Cola Company (the ''Company'') on Form 10-K for the period ended December 31, 2003 (the ''Report''), I, Douglas N. Daft, Chairman, Board of Directors, and Chief Executive Officer of the Company and I, Gary P. Fayard, Executive Vice President and Chief...

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