Coca Cola 2004 Annual Report Download - page 18

taken to address any issues raised. The Company is unable to predict at this time with any reasonable degree of
certainty what action, if any, the Commission will take with respect to these issues.
The Spanish competition service made unannounced visits to our offices and those of certain bottlers in
Spain in 2000. In December 2003, the Spanish competition service suspended its investigation until the
Commission notifies the service of how the Commission will proceed in its aforementioned investigation.
The French competition directorate has also initiated an inquiry into commercial practices related to the
soft drink 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.
By letter dated June 10, 2003, the Company was informed that the SEC had commenced an informal,
nonpublic inquiry into whether the Company or certain persons associated with the Company violated federal
securities laws in connection with the allegations in two lawsuits filed by Matthew Whitley, a former employee,
in May 2003. In his lawsuits, which were settled in October 2003, Mr. Whitley alleged, among other things, that
he was terminated in retaliation for reporting to senior management certain accounting and other improprieties.
Mr. Whitley’s lawsuits alleged, among other things, the improper manipulation of a marketing 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. On January 14, 2004, the Company
received an order from the SEC, making its inquiry a formal investigation. The Company has provided
substantial documentation and other information in response to document subpoenas and informal requests
received from the SEC. The SEC has also taken deposition testimony and/or interviewed numerous current and
former Company employees. The Company is continuing to cooperate with the SEC.
On July 11, 2003, the Company announced that the United States Attorney’s Office for the Northern
District of Georgia had commenced a criminal investigation of the allegations raised by Mr. Whitley. In
connection with that investigation, the Company has received a number of Grand Jury subpoenas as well as
additional informal requests for documents and materials relating to the issues under investigation and,
numerous current and former employees have provided testimony before the Grand Jury or have been
interviewed. The Company is cooperating with the investigation and has provided substantial documentation
and information to the United States Attorney’s Office. The Company is continuing to cooperate with the
United States Attorney’s Office.
On June 18, 2004, Michael Hall filed what is purported to be a shareholder derivative suit on behalf of the
Company, in the Superior Court of Fulton County, Georgia. The defendants in this action are the current
members of the Company’s Board of Directors (other than E. Neville Isdell and Donald R. Keough), and former
Company officers Douglas N. Daft and Steven J. Heyer. The Company is also named as a nominal defendant.
The complaint alleges, among other things, that in connection with certain alleged Company accounting and
business practices that were originally the subject of litigation brought by former employee Matthew Whitley in
2003, approvals of executive compensation and severance packages, and dealings between the Company and
entities with which the defendants are affiliated, the defendants breached their fiduciary duties to the Company
through gross mismanagement, waste of corporate assets, abuse of their positions of authority within the
Company, and by unjustly enriching themselves.
The plaintiff, on behalf of the Company, seeks declaratory relief; a monetary judgment requiring the
defendants to pay the Company unspecified amounts by which the Company allegedly has been damaged by
reason of the conduct complained of; an award to the plaintiff of the costs and disbursements incurred in
connection with the action, including reasonable attorneys’ and experts’ fees; extraordinary equitable and/or
injunctive relief; and such other further relief as the Court may deem just and proper.
The Company intends to take appropriate action to protect its interests in connection with this matter.
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