Coca Cola 2004 Annual Report Download - page 16

(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. The motion was
denied by the Court on April 15, 2003.
On June 2, 2003, the plaintiffs filed an Amended Consolidated Complaint. The defendants moved to dismiss
the Amended Complaint on June 30, 2003. On March 31, 2004, the Court granted in part and denied in part the
defendants’ Motion to Dismiss the Amended Complaint. In its order, the Court dismissed a number of the
plaintiffs’ allegations, including the claim that the Company made knowingly false statements to financial analysts.
The Court permitted the remainder of the allegations to proceed to discovery. The Court denied plaintiffs’ request
for leave to further amend and replead their complaint. The lawsuit is now in the discovery phase.
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.
(‘‘Aqua-Chem’’), 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 but 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 not covered by insurance 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, the Company purchased over
$400 million of insurance coverage of which $350 million is still available to cover Aqua-Chem for certain
product liability and other claims. Cleaver Brooks, a division of Aqua-Chem, 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. Following a lawsuit involving a tax dispute, the Company entered into
a settlement agreement in 1983 with Lyonnaise American Holding, Inc. 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
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