Coca Cola 2005 Annual Report Download - page 8

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the territory, and (2) to prepare, package, distribute and sell such beverages in the territory, in any other manner
or form. Territorial restrictions on bottlers vary in some cases in accordance with local law.
The Bottler’s Agreements between us and our authorized bottlers in the United States differ in certain
respects from those in the other countries in which Company Trademark Beverages are sold. As further
discussed below, the principal differences involve the duration of the agreements; the inclusion or exclusion of
canned beverage production rights; the inclusion or exclusion of authorizations to manufacture and distribute
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
Trademark Beverages 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
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