Coca Cola 2003 Annual Report Download - page 17

Download and view the complete annual report

Please find page 17 of the 2003 Coca Cola annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 123

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123

(3) misrepresented the reasons for Mr. Ivester’s departure from the Company and then misleadingly reassured
the financial community that there would be no changes in the Company’s core business strategy or financial
outlook following that departure. Damages in an unspecified amount are sought in both Complaints.
On January 8, 2001, an order was entered by the United States District Court for the Northern District of
Georgia consolidating the two cases for all purposes. The Court also ordered the plaintiffs to file a Consolidated
Amended Complaint. On July 25, 2001, the plaintiffs filed a Consolidated Amended Complaint, which largely
repeated the allegations made in the original Complaints and added Douglas N. Daft as an
additional defendant.
On September 25, 2001, the defendants filed a Motion to Dismiss all counts of the Consolidated Amended
Complaint. On August 20, 2002, the Court granted in part and denied in part the defendants’ Motion to Dismiss.
The Court also granted the plaintiffs’ Motion for Leave to Amend the Complaint. On September 4, 2002, the
defendants filed a Motion for Partial Reconsideration of the Court’s August 20, 2002 ruling, which motion was
denied by the Court on April 15, 2003. On June 2, 2003, the plaintiffs filed an Amended Consolidated
Complaint. The Company moved to dismiss that Complaint on June 30, 2003. That motion is currently under
consideration by the Court.
The Company believes it has substantial legal and factual defenses to the plaintiffs’ claims.
On December 20, 2002, the Company filed a lawsuit (The Coca-Cola Company v. Aqua-Chem, Inc., Civil
Action No. 2002CV631-50) in the Superior Court, Fulton County, Georgia (the ‘‘Georgia Case’’) seeking a
declaratory judgment that the Company has no obligation to its former subsidiary, Aqua-Chem, Inc., for any
past, present or future liabilities or expenses in connection with any claims or lawsuits against Aqua-Chem.
Subsequent to the Company’s filing, on the same day Aqua-Chem filed a lawsuit (Aqua-Chem, Inc. v. The
Coca-Cola Company, Civil Action No. 02CV012179) in the Circuit Court, Civil Division of Milwaukee County,
Wisconsin (the ‘‘Wisconsin Case’’). In the Wisconsin Case, Aqua-Chem seeks a declaratory judgment that the
Company is responsible for all liabilities and expenses in connection with certain of Aqua-Chem’s general and
product liability claims arising from occurrences prior to the Company’s sale of Aqua-Chem in 1981, and a
judgment for breach of contract in an amount exceeding $9 million for defense costs, expenses and settlements
incurred by Aqua-Chem to date in connection with such claims.
The Company owned Aqua-Chem from 1970 to 1981. During that time frame, the Company purchased over
$400 million of insurance coverage that is available to cover Aqua-Chem for certain product liability and other
claims. Cleaver Brooks, an Aqua-Chem subsidiary, manufactured boilers, some of which contained asbestos
gaskets. The Company sold Aqua-Chem to Lyonnaise American Holding, Inc. in 1981 under the terms of a stock
sale agreement, and, following a lawsuit involving a tax dispute, entered into a settlement agreement in 1983
with Lyonnaise and Aqua-Chem. The 1981 and 1983 agreements, among other things, outlined the parties’ rights
and obligations concerning past and future claims and lawsuits involving Aqua-Chem.
Aqua-Chem was first named as a defendant in asbestos lawsuits in or around 1985 and, to date, has more
than 100,000 claims pending against it. In October 2002, Aqua-Chem asserted that since 1985 it had incurred
approximately $10 million in expenses related to these claims that were not covered by insurance. Aqua-Chem
demanded that the Company reimburse these expenses pursuant to its interpretation of the terms of the 1981
and 1983 agreements. It also demanded that the Company acknowledge its continuing obligations to
Aqua-Chem under these agreements for any future liabilities and expenses that are excluded from coverage
under the applicable insurance or for which there is no insurance. The Company disputes Aqua-Chem’s
interpretation of the agreements and believes it has no past, present or future obligation to Aqua-Chem in this
regard. This led to the filing of the Georgia Case.
The Wisconsin Case initially was stayed, pending final resolution of the Georgia Case, and later was
voluntarily dismissed without prejudice by Aqua-Chem. The parties have agreed to an extension of the discovery
14