Coca Cola 2004 Annual Report Download - page 8

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fountain syrups; in some cases, the degree of flexibility on the part of the Company to determine the pricing of
syrups and concentrates; and the extent, if any, of the Company’s obligation to provide marketing support.
Outside the United States. The Bottler’s Agreements between us and our authorized bottlers outside the
United States generally are of stated duration, subject in some cases to possible extensions or renewals of the
term of the contract. Generally, these contracts are subject to termination by the Company following the
occurrence of certain designated events. These events include defined events of default and certain changes in
ownership or control of the bottler.
In certain parts of the world outside the United States, we have not granted comprehensive beverage
production rights to the bottlers. In such instances, we or our authorized suppliers sell Company Trademark
Beverages to the bottlers for sale and distribution throughout the designated territory, often on a nonexclusive
basis. A majority of the Bottler’s Agreements in force between us and bottlers outside the United States
authorize the bottlers to manufacture and distribute fountain syrups, usually on a nonexclusive basis.
Our Company generally has complete flexibility to determine the price and other terms of sale of the
concentrates and syrups we sell to bottlers outside the United States. In some instances, however, we have
agreed or may in the future agree with the bottler with respect to concentrate pricing on a prospective basis for
specified time periods. Outside the United States, in most cases, we have no obligation to provide marketing
support to the bottlers. Nevertheless, we may, at our discretion, contribute toward bottler expenditures for
advertising and marketing. We may also elect to undertake independent or cooperative advertising and
marketing activities.
Within the United States. In the United States, with certain very limited exceptions, the Bottler’s Agreements
for Coca-Cola and other cola-flavored beverages have no stated expiration date. Our standard contracts for
other soft drink flavors and for noncarbonated beverages are of stated duration, subject to bottler renewal rights.
The Bottler’s Agreements in the United States are subject to termination by the Company for nonperformance
or upon the occurrence of certain defined events of default that may vary from contract to contract. The ‘‘1987
Contract,’’ described below, is terminable by the Company upon the occurrence of certain events including:
• the bottler’s insolvency, dissolution, receivership or the like;
• any disposition by the bottler or any of its subsidiaries of any voting securities of any bottler subsidiary
without the consent of the Company;
• any material breach of any obligation of the bottler under the 1987 Contract; or
• except in the case of certain bottlers, if a person or affiliated group acquires or obtains any right to
acquire beneficial ownership of more than 10 percent of any class or series of voting securities of the
bottler without authorization by the Company.
Under the terms of the Bottler’s Agreements, bottlers in the United States are authorized to manufacture and
distribute Company Trademark Beverages in bottles and cans. However, these bottlers generally are not
authorized to manufacture fountain syrups. Rather, as described above, our Company manufactures and sells
fountain syrups to authorized fountain wholesalers (including certain authorized bottlers) and some fountain
retailers. These wholesalers in turn sell the syrups or deliver them on our behalf to restaurants and other retailers.
In the United States, the form of Bottler’s Agreement for cola-flavored soft drinks that covers the largest
amount of U.S. volume (the ‘‘1987 Contract’’) gives us complete flexibility to determine the price and other
terms of sale of soft drink concentrates and syrups for cola-flavored Company Trademark Beverages
(‘‘Coca-Cola Trademark Beverages’’) and other Company Trademark Beverages. In some instances, we have
agreed or may in the future agree with the bottler with respect to concentrate pricing on a prospective basis for
specified time periods. Bottlers operating under the 1987 Contract accounted for approximately 89 percent of
our Company’s total U.S. gallon sales for bottled and canned beverages, excluding direct sales by the Company
of juice and juice-drink products and other finished beverages (‘‘U.S. bottle/can gallon sales’’) in 2004. Certain
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