Coca Cola 2003 Annual Report Download - page 84

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
NOTE 11: COMMITMENTS AND CONTINGENCIES (Continued)
In 2003, the Securities and Exchange Commission began conducting an investigation into whether the
Company or certain persons associated with our Company violated federal securities laws in connection with the
conduct alleged by a former employee of the Company. Additionally, in 2003 the United States Attorney’s
Office for the Northern District of Georgia commenced a criminal investigation of the allegations raised by the
same former employee. These investigations are ongoing, and to the Company’s knowledge no criminal
prosecutions or civil enforcement actions have been filed. While the Company cannot predict whether any such
actions will be filed in the future, the Company will continue to cooperate fully with the
governmental investigations.
During the period from 1970 to 1981, our Company owned Aqua-Chem, Inc. (‘‘Aqua-Chem’’). A division of
Aqua-Chem manufactured certain boilers that contained gaskets that Aqua-Chem purchased from outside
suppliers. Several years after our Company sold this entity, Aqua-Chem received its first lawsuit relating to
asbestos, a component of some of the gaskets. Aqua-Chem has notified our Company that it believes we are
obligated to them for certain costs and expenses associated with the litigation. Aqua-Chem has demanded that
our Company reimburse it for approximately $10 million for out-of-pocket litigation-related expenses incurred
over the last 18 years. Aqua-Chem has also demanded that the Company acknowledge a continuing obligation to
Aqua-Chem for any future liabilities and expenses that are excluded from coverage under the applicable
insurance or for which there is no insurance. Our Company disputes Aqua-Chem’s claims, and we believe we
have no obligation to Aqua-Chem for any of its past, present or future liabilities, costs or expenses. Furthermore,
we believe we have substantial legal and factual defenses to Aqua-Chem’s claims. The parties entered into
litigation to resolve this dispute, which is currently pending. The Company believes Aqua-Chem has substantial
insurance coverage to pay Aqua-Chem’s asbestos claimants. An estimate of possible losses, if any, cannot be
made at this time.
The Competition Directorate of the European Commission made unannounced visits to the offices of the
Company and certain of our bottlers in Austria, Belgium, Denmark, Germany and Great Britain several years
ago. This investigation, which is directed at various commercial and market practices, is continuing and the
Company and bottlers are endeavoring to have a dialogue with the Commission in order to address their
concerns. The Commission may, following its usual practice, issue one or more statements of objection, after
which the Company and the bottlers would have formal rights to reply and to judicial appeal in the event of an
adverse decision by the Commission. The Commission has authority to impose fines in connection with an
adverse decision, however, the Company is not able to predict whether fines would be imposed or the amount of
such fines.
The Spanish competition service made unannounced visits to our own offices and those of certain bottlers
in Spain in 2000. In December 2003, the Spanish competition service suspended its investigation until
the European Commission notifies the service of how the European Commission will proceed in its
aforementioned investigation.
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 the time of divesting our interest in a consolidated entity, we sometimes agree to indemnify the buyer for
specific liabilities related to the period we owned the entity. Management believes that any liability to the
Company that may arise as a result of any such indemnification agreements will not have a material adverse
effect on the financial condition of the Company taken as a whole.
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