Coca-Cola West Holdings Company, Limited

Annual Review 2007
Year ended December 31, 2007

Contents

Consolidated Financial Highlights . . . . 1
Proﬁle / Corporate Mission . . . . . . . . . . 2
Coca-Cola West Group . . . . . . . . . . . . . . 3
To Our Shareholders andOther Investors . . . . . . . . . . . . . . . . . . . 4
Initiatives to Derive Beneﬁts
From Operational Integration . . . . . . . 6
Market Overview. . . . . . . . . . . . . . . . . . . 8
Trends in the JapaneseSoft Drink Market
Market Information for
CCWH Sales Territory
Corporate Social Responsibility—
Contributing to Society. . . . . . . . . . . . . 14
Contributions to Regional Society
Environmental Activities
Operating Performance . . . . . . . . . . . . . 18
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of
Changes in Shareholders’ Equity
Consolidated Statements of Cash Flows
Financial Data
Risk Information . . . . . . . . . . . . . . . . . . . 29
Corporate Governance . . . . . . . . . . . . . . 30
Corporate Data . . . . . . . . . . . . . . . . . . . . 33
Stock Information . . . . . . . . . . . . . . . . . . 33
Credit Rating Information . . . . . . . . . . . 33
Coca-Cola System in Japan . . . . . . . . . . 34

Forward-looking Statements
This annual review contains statements regarding the Company’s future plans, projected performance and outlook. These forward-looking
statements are not historical facts, but represent management’s opinions and beliefs based on information available at the time of writing.
Readers are cautioned that any number of risks and factors beyond the Company’s control could cause actual results to differ materiallyfrom those projected by management. These include, but are not limited to, economic trends, intensifying competition in the soft drink
industry, market supply and demand, and changes in taxation and other applicable laws and regulations.
Coca-Cola, Georgia, Aquarius, Sokenbicha and their Japanese-character counterparts are all trademarks of The Coca-Cola Company.

Consolidated Financial Highlights
Fiscal year

2003

2004

2005

2006

Net revenues . . . . . . . . . . . ¥ 240,825 ¥ 253,248 ¥ 245,874 ¥ 327,821(Millions of yen)
2007

(Thousands of
U.S. dollars)*1
2007¥ 409,521$3,636,308

Gross proﬁt . . . . . . . . . . . .

107,829

113,572

107,523

141,556

175,208

1,555,745

Operating income . . . . . . .
Recurring income . . . . . . .

19,63819,895

16,86017,065

11,83012,256

12,321
13,225

16,056
17,493

142,568
155,328

other adjustments . . . . . .
Net income . . . . . . . . . . . .

17,9859,380

14,6598,564

12,201
7,305

13,108
7,570

14,254
9,375

126,567
83,245

Total assets . . . . . . . . . . . .
Equity ratio (%)*2 . . . . . . . .

204,180

207,216

208,711

304,907

315,672

2,802,983

81.0

80.6

83.2

82.1

80.5

Income before income taxes,
minority interests andPer share data:
Net income per share(EPS) . . . . . . . . . . . . . . . . ¥ 116.25 ¥ 108.80 ¥ 93.42 ¥ 82.22
Net assets per share(BPS) . . . . . . . . . . . . . . . . 2,089.94 2,149.99 2,228.79 2,358.05
Dividend per share. . . . . . .
36.00
40.00
40.00
42.00
Year-end share price . . . . .
2,100
2,630
2,755
2,755

¥

(Yen)

(U.S. dollars)*1

88.29

$

2,391.83
43.00
2,475

0.78
21.24
0.38
21.98

*1 U.S. dollar amounts are translated from yen, for convenience only, at the rate of ¥112.62 = US$1.00, the prevailing exchange rate on
December 28, 2007.
*2 Through ﬁscal 2005, Shareholders’ equity ratio=Shareholders’ equity / Total assets; from ﬁscal 2006, Equity ratio = Total equity/Total assets

Net revenues

Operating income

Net income(Millions of yen)

(Millions of yen)

(Millions of yen)

20,00010,000500,000

19,638409,521400,000

9,380
16,05615,000300,000

11,830240,825

8,000
7,305

327,821253,248 245,874

9,375
8,564

16,86012,321

7,570

6,000

10,000200,000

4,000
5,000

100,000

0

2,000

0

0

03

04

05

06

07

03

04

05

06

07

03

04

05

06

07

Annual Review 20071

ProﬁleCoca-Cola West Holdings Company, Limited (CCWH) is the largest
bottler in Japan, with an operating area covering 2 metropolitan
regions and 12 prefectures in west Japan. We are also a leading bottler
in world terms among listed bottlers, ranking 4th in terms of sales.
As the largest bottler in Japan, and one of the top-ranked from a
global perspective, CCWH is acting as a Strategic Leading Partnerwith The Coca-Cola Company and Coca-Cola (Japan) Co., Ltd. In thiscapacity, it is playing a leading role in the transformation of the
Coca-Cola system in Japan by engaging in product development,
test marketing and other collaborative activities that go beyond the
traditional scope of a bottler.

Corporate Mission
These statements express our commitment to continue to deliver highvalue to consumers, employees, and shareholders, and to be of value tosociety and the environment.

— Coca-Cola West Group Corporate Mission —Create future of beverage businessWe• offer products and services welcomed by consumers• respect each employee’s motivation and personal life
• respond to shareholders’ expectations and trust by
sustainable growth• nurture the relationships with society and environment2

Coca-Cola West Holdings Company, Limited

Coca-Cola West Group
Coca-Cola West Japan Area
Coca-Cola West Japan Company, Limited
Nishinihon Beverage Co., Ltd.
Coca-Cola West Japan Sales Co., Ltd.
Kinki Area

Coca-Cola West Holdings Company, Limited

Kinki Coca-Cola Bottling Company, Limited
Kansai Beverage Service Co., Ltd.
Nesco Co., Ltd.
Kadiac Co., Ltd.
Mikasa Area
Mikasa Coca-Cola Bottling Co., Ltd.
Mikasa Beverage Service Co., Ltd.
Sales Equipment Services
Coca-Cola West Equipment Services Co., Ltd.
Production
Coca-Cola West Products Co., Ltd.
Coca-Cola West Daisen Products Co., Ltd.
Distribution
Coca-Cola West Logistics Co., Ltd.
Other Group Companies

Minami Kyushu Coca-Cola Group

Annual Review 2007

3

To Our Shareholders and Other Investors
I am pleased to report our operating results
for the ﬁscal year ended December 31, 2007,
and provide an overview of our Group
policies and business strategies.

4

Business Overview and Operating Results

Initiatives in the First Year of “In ﬁscal 2007, the year ended December 31, 2007, theJapanese economy continued to expand modestly, as
the ongoing improvement in corporate earnings supported an uptick in capital investment and a stronger
job market. However, steep rises in crude oil prices
and ﬁnancial market turmoil triggered by the subprime
mortgage problem combined to create an uncertain
economic outlook.
During ﬁscal 2007, the Japanese soft drink industry
experienced growth, underpinned by favorable weather
conditions, namely a mild winter and record-breaking
heat after the end of the rainy season. However, sales
competition among soft drink producers intensiﬁed
during the past year amid a difﬁcult business environment characterized by rapidly rising prices of crude oiland other raw materials.
Against this challenging market backdrop, we took
a variety of initiatives as a Group towards achieving the goals of our medium-term management plan“.” This plan identiﬁes customers as the basis
for all value, and serves as a blueprint for striving toalways offer more value than our competitors so that
we can achieve growth over the next several decades.
As a result of these efforts, Coca-Cola West Holdings Company, Limited (CCWH) reported consolidated net revenues of ¥409,521 million, up 24.9%
from the previous year. Operating income rose 30.3%
year on year to ¥16,056 million, and recurring income
increased 32.3% to ¥17,493 million. Net income also
increased, rising 23.8% to ¥9,375 million.

As a ﬁrst step in executing the management plan, we
put in place a framework for promoting Group management. This involved altering the Group’s organizational and management structure by consolidating
functions. Marketing functions are now controlled ineach area close to the markets served. Highly specialized manufacturing and distribution functions havealso been consolidated. Speciﬁcally, management of
the manufacturing and distribution functions in the
Kinki area, which were previously under the control of
Kinki Coca-Cola Bottling Company, Limited (Kinki
CCBC), were transferred to CCWH. This move allows
Kinki CCBC to focus on marketing, similar to the roleof Coca-Cola West Japan Company, Limited (CCWJ).
We also merged Coca-Cola West Japan Logistics
Co., Ltd., Kansai Logistics Co., Ltd. and Mikasa
Logistic Co., Ltd., each of which had handled distribution for the Group, to establish Coca-Cola West
Logistics Co., Ltd. The new company has enhanced
distribution by sharing the best practices of the three
former companies and through the consolidation of
their management and support divisions. Additionally,effective January 1, 2008, we merged Group manufacturing companies Coca-Cola West Japan Products Co.,
Ltd. and Kinki Coca-Cola Products Co., Ltd. to form
Coca-Cola West Products Co., Ltd. By combining eachcompany’s speciﬁc areas of expertise, we believe thismerger will allow us to further improve both productquality and productivity.
We are now working with Coca-Cola Integrated
Business Systems Co., Ltd. (CCIBS), a joint venture

Coca-Cola West Holdings Company, Limited”

established by The Coca-Cola Company and Japanese
Coca-Cola bottlers, to construct a core system that will
become a model for Coca-Cola bottlers nationwide.
This system will standardize the different operatingprocesses and information systems of each company
with the goal of generating beneﬁts from the management integration with Kinki CCBC.
On the marketing side, we have used aggressive
new product launches and promotional campaigns tobolster the core brands of Coca-Cola, Georgia, Sokenbicha, and Aquarius. We signiﬁcantly increased total
sales of Coca-Cola brand (the world’s number one
brand) products through aggressive marketing, including the launch of Coca-Cola Zero, which is alreadysold in other markets around the world.
Also, we took steps to ensure that our marketing andsales organization is one step ahead of the curve andcan continue to support future growth amid the changing business environment. In this vein, we launched the
Next Generation Model Project and are studying new
ideas for marketing and vending machine operations.
We also advanced our CSR (Corporate Social
Responsibility) program during ﬁscal 2007. Under the
new Group management structure, we established uniﬁed Group principles and rules for compliance, quality assurance, and risk management, and establishedsystems for putting them into practice. We believethat adhering to these principles and rules will allow
us to keep the trust of all stakeholders. To help protect the environment, during ﬁscal 2007 we expanded
the Sawayaka Shizen-no-Mori (fresh natural forest) project, which aims to preserve forests and theirwater-holding capacity. New locations include Houki
Town (Tottori Prefecture), Ujitawara Town (Kyoto),and Aisho Town (Shiga Prefecture). This project was
launched in 2006 in Tosu, Saga Prefecture. In othernews, we began construction of a facility for recycling
old vending machines to assist in efforts to create arecycling-oriented society.
In addition to the activities discussed above, CCWH
formed a capital and business alliance with Minami
Kyushu Coca-Cola Bottling Co., Ltd., which markets in the neighboring region. As a consequence, thecompany became an equity-method afﬁliate effective April 3, 2007. We are now working together in a
number of areas, including marketing, supply chain
operations, and purchasing, to maximize the beneﬁts
of the alliance.

Steps to Achieve the Goals of
As we move forward, we expect the business environment to become increasingly tough, as share prices
drop, the price of raw materials and crude oil rise
steeply, and competition in the industry intensiﬁes assoft drink producers battle for survival.
Given this situation, we will continue to take strides
towards achieving the goals of our medium-term management plan “,” which runs for the 2007–2009
period. As I said at the top of this letter, this customercentric plan is designed to provide value that always
exceeds that of the competition, based on the principlethat all value starts with the customer. The aim is tomaintain growth over the next several decades.
This will involve a number of initiatives. First, we
will deepen our relationship with The Coca-Cola Company and Coca-Cola (Japan) Co., Ltd., and strengthen
our organizational and operational structures to better serve our customers. Regarding overhaul of theGroup’s organizational and operational structures, weare integrating Group sales equipment maintenanceservices in an attempt to improve production.
Amid the markedly changing business environment,
we will devise innovative strategies and create organizational structures in all areas, including marketing,vending machines, and supply chain operations, toenable continued growth going forward.
Furthermore, we will push ahead with our CSR program (centered on the environment) as we make all
efforts possible to earn the trust of all our stakeholders.

Dividends
In return for our shareholders’ loyal support, the yearend dividend applicable to 2007 will be ¥22 per share.
As a result, the full-year dividend, which includes theinterim dividend, comes to ¥43 per share, an increaseof ¥1 per share from the previous year.
I look forward to your continued support and understanding.
April 2008

Norio Sueyoshi
Representative Director & CEO

Annual Review 2007

5

Initiatives to Derive Beneﬁts From Operational Integration
In 2007, the ﬁrst year of our “” medium-term management plan, we
pushed ahead with efforts to strengthen functions and promote efﬁciency thatleveraged the beneﬁts of operational integration. Our focus was to create systems
and structures that will help drive growth of the Group going forward.
Integration of Sales Equipment Service Subsidiaries
Coca-Cola West Equipment
Services Co., Ltd.

Coca-Cola West Japan
Customer Service Co., Ltd.
Kansai Beverage Service Co., Ltd.
Other
business units

Rex Techno
business unit

Mikasa Service Co., Ltd.

Integration of Manufacturing Companies
Coca-Cola WestJapan Products Co., Ltd.

Coca-Cola West Products Co., Ltd.

Kinki Coca-Cola
Products Co., Ltd.

Integration of Logistics Companies
Coca-Cola West Japan
Logistics Co., Ltd.

Coca-Cola West Logistics Co., Ltd.

Kansai Logistics Co., Ltd.

Mikasa Logistic Co., Ltd.

Capital and Business Alliance With Minami Kyushu Coca-Cola Bottling

6

Coca-Cola West Holdings Company, Limited

Overhaul of the Group Organizational and Management Structure
We continue to make progress integrating functions deeply tied with consumers by region and highly
specialized companies on a functional basis. This process has seen the number of Coca-Cola businesssubsidiaries decline by 4 from 17 to 13 since the integration.

July 2006 (Management Integration)

As of April 2008

Coca-Cola West Holdings Company, Limited

Coca-Cola West Holdings Company, Limited

Coca-Cola West Japan Company, Limited

Coca-Cola West Japan Area

Nishinihon Beverage Co., Ltd.

Coca-Cola West Japan Company, Limited

Coca-Cola West Japan Vending Co., Ltd.

Nishinihon Beverage Co., Ltd.

Coca-Cola West Japan Customer Service Co., Ltd.

Coca-Cola West Japan Sales Co., Ltd.

Coca-Cola West Japan Products Co., Ltd.
Coca-Cola West Japan Logistics Co., Ltd.
Nichibei Co., Ltd.
Takamasamune Co., Ltd.
West Japan Service Co., Ltd.

Kinki Area
Kinki Coca-Cola Bottling Company, Limited
Kansai Beverage Service Co., Ltd.
Nesco Co., Ltd.
Kadiac Co., Ltd.

Kinki Coca-Cola Bottling Company, Limited
Kansai Beverage Service Co., Ltd.

Mikasa Area
Mikasa Coca-Cola Bottling Co., Ltd.

Nesco Co., Ltd.
Mikasa Beverage Service Co., Ltd.
Kadiac Co., Ltd.
Kinki Coca-Cola Products Co., Ltd.

Sales Equipment Services
Kansai Logistics Co., Ltd.

Coca-Cola West Equipment Services Co., Ltd.

Rex Estate Co., Ltd.
Seiko Corporate Japan Co., Ltd.

Production

C & C Co., Ltd.

Coca-Cola West Products Co., Ltd.

Akiyoshi Systems Co., Ltd.

Coca-Cola West Daisen Products Co., Ltd.

Mikasa Coca-Cola Bottling Co., Ltd.
Mikasa Beverage Service Co., Ltd.

Distribution
Coca-Cola West Logistics Co., Ltd.

Mikasa Service Co., Ltd.
Mikasa Logistic Co., Ltd.

Daisen Beverage Co., Ltd.

Other Group Companies

Minami Kyushu Coca-Cola Group

Annual Review 20077

Market Overview
Trends in the Japanese Soft Drink Market
In 2007, production volume in the soft drink market
increased year on year due to factors including favorable weather in the form of a mild winter and recordbreaking heat waves after the end of the rainy season.
By category, carbonated beverages, tea and mineralwater grew, with especially strong growth for cola
drinks and blended tea drinks in the carbonated beverages and tea categories, respectively. On the other hand,coffee and sports drinks were lower year on year.

Production volume of soft drinks (Total industry)(1,000kl)
20,00017,846

17,780

04

05

06

Q Coffee

Q Tea

Q Others

16,162

17,174

18,53015,00010,000

5,000

0

03
Q Carbonated07

Source: Japan Soft Drinks Association(Annual Statistic Report on Soft Drinks FY2007)

Market Information for CCWH Sales
Territory
1. Trends in CCWH Sales Territory
CCWH’s sales territory encompasses 2 metropolitan regions: Osaka and Kyoto, and 12 prefectures inwest Japan: Fukuoka, Saga, Nagasaki, Hiroshima,
Okayama, Yamaguchi, Shimane, Tottori, Hyogo, Nara,
Shiga and Wakayama. Japan’s population in 2007
totaled 127,053,000, of which 35,693,000 people lived
in CCWH’s sales territory, representing 28.1% of thecountry’s total population.
The yearly per capita consumption of soft drinks in thissales territory is 169 bottles, based on a serving size of
237ml, representing an increase of 6 bottles from 2006.

Population trends in Japan(Population, 1,000s)
50,000150,000
126,688

126,824

127,757

127,055

127,053

35,75435,75635,96235,73935,69340,000120,000

30,00090,00020,00060,00010,00030,000

0

0

03

04

05

06

07

Q CCWH’s sales territory

All Japan
Source: Basic Resident Register

Per capita consumption in CCWH sales territory(Bottles)
200

159

165

166

163

169

04

05

06

07

150

100

50

0

03

8

Coca-Cola West Holdings Company, Limited

2. Vending Machine Installation
The number of CCWH vending machines installed in
the Company’s territory was 253,353 units at the endof 2007, a decrease of 5,091 from the end of 2006. The
Company’s share of the vending machine market was
36.0% in 2007, a high ﬁgure compared to competitors.
The number of machines installed and share of theoutdoor vending machine market have both declinedin the past several years, but this is primarily due tothe removal of units with low sales as part of a focus
on proﬁtability.

Number of vending machines(Machines)
300,000
256,666

258,955

260,381258,444

253,353

03

04

05

06

07

200,000

100,000

0* Vending machine numbers above represent the total for
Coca-Cola West Japan Co., Ltd., Kinki Coca-Cola BottlingCo., Ltd. and Mikasa Coca-Cola Bottling Co., Ltd.

Share of outdoor vending machine market
(%)
50

40

37.6

36.9

36.3

36.3

36.0 CCWH

17.4

17.9

18.3

18.1

18.2

8.2

8.9

9.1

9.1

9.0

6.8

6.7

6.6

6.5

6.6

03

04

05

06

07

30

20

10

0

Company A

Company B
Company C

Source: ACNielsen Corporation Japan Store Audit (2007)

3. OTC Market Share(Excluding Vending Machines)
In 2007, CCWH’s share of the OTC market was 21.7%
and CCWH held onto its No. 1 share in the soft drinks
industry in its operating area. CCWH has also built
the following market positions in different businessformats: grocery stores, 37.4%; liquor stores, 22.6%;
supermarkets, 21.6%; and convenience stores, 18.8%.
These ﬁgures represent the leading market share foreach business format.

OTC market share(Excluding vending machines)
(%)
30
24.5

23.2

23.0

22.1

21.7
CCWH

20
14.5

15.3

15.3

15.0

14.7
Company A

10

9.9

9.4

9.1

8.6

8.4
Company B

5.0

5.1

5.3

5.7

5.9

03

04

05

06

07

Company C

0Source: Intage Inc. of Japan Store Audit

Annual Review 20079

4. Sales Overview
Sales Volume by Brand
CCWH is focused on fundamentally strengthening
its core brands, Coca-Cola, Georgia, Sokenbicha andAquarius, by proactively introducing new products
and running aggressive sales campaigns. Total sales
volume in ﬁscal 2007 increased by 4,030,000 cases, or
2.2%, to 186,237,000 cases.
Coca-Cola sales volume recorded double-digit
growth. This mainly reﬂected the success of sales strategies, such as our three color Cola strategy and a new
global advertising campaign “the Coke side of life.”
Sales volume of Sokenbicha was up sharply by
6.4% on the back of strong sales of products sold onlyat certain times of the year.

Sales by brand(Thousand cases)

200,000
179,105

186,076

187,902

182,207

186,237

150,000

100,000

50,000

0

Brand

2003

Q Coca-Cola. . . . . . . . . . . . . . . 16,661
Q Georgia . . . . . . . . . . . . . . . . . 44,835
Q Sokenbicha . . . . . . . . . . . . . . 14,896
Q Aquarius . . . . . . . . . . . . . . . . 13,110
Total for CCWH’s Core Brands . . 89,502
Q Others . . . . . . . . . . . . . . . . . . 89,603
Total. . . . . . . . . . . . . . . . . . . . . . . 179,105

2004

2005

2006

2007

YoY % Change

17,09644,43317,01815,47894,02592,050186,076

15,80144,366
14,474
18,401
93,041
94,861
187,902

14,63542,665
14,711
19,29891,30990,898
182,207

16,97342,373
15,65919,417
94,422
91,815
186,237(+16.0%)(–0.7%)(+6.4%)(+0.6%)(+3.4%)(+1.0%)(+2.2%)* Sales ﬁgures above represent the total for Coca-Cola West Japan Co., Ltd., Kinki Coca-Cola Bottling Co., Ltd. and Mikasa Coca-Cola
Bottling Co., Ltd. Some corrections have been made to sales volume ﬁgures for the previous year, which have been reﬂected in year-onyear comparisons.

10

Coca-Cola West Holdings Company, Limited

Breakdown of Sales Volume (2007)
Coca-Cola

9%

Georgia
Other

50%

23%

Aquarius

10%

Sokenbicha

8%
CCWH’s Core Brands

Coca-Cola

OTC Market Share by Product Category (2007)
Cola

77%

Georgia

Canned Coffee

49%

Aquarius

Sports Drinks

53%

Sokenbicha

Blended Tea

73%

Annual Review 200711

Sales Volume by Channel
The vending machine channel, which is a pillar of
CCWH’s sales and proﬁts, experienced 0.4% growthyear on year, with a total of 59,002,000 cases sold.
However, excluding the effect of enterprise adjustments*, the channel grew 2.9%. During the past year,
we focused on core brands, which make up roughly
60% of sales volume in this channel, and worked toincrease sales per machine via the expansion andeffective utilization of IT-enabled vending machines.
The chain store channel, which grew faster than mostother channels, posted an increase in sales volume of

7.1% year on year to 39,369,000 cases. Despite ﬁerce
competition in this channel, we made progress improving proﬁts by increasing shipments of small PET bottle products. Furthermore, we expanded sales spaces
throughout the year for large PET bottle products, particularly core brands, enabling us to raise sales.
* Enterprise adjustment: CCWJ’s cup machines were transferredto Nishinihon Beverage Co., Ltd. (NNB), and NNB’s Coca-Colavending machines were transferred to CCWJ. (NNB’s sales
volume is included under the ‘Other’ sales channel.)

Sales by channel(Thousand cases)

200,000
179,105

186,076

187,902

182,207

186,237

150,000

100,000

50,0000Channel2003

Q Vending machines . . . . . . . . . 54,586
Q Chain stores . . . . . . . . . . . . . 39,139
Q Convenience stores. . . . . . . . 19,439
Q General retail . . . . . . . . . . . . . 27,815
Q Food service . . . . . . . . . . . . . 17,784
Q Other. . . . . . . . . . . . . . . . . . . 20,342
Total. . . . . . . . . . . . . . . . . . . . . . . 179,105

2004

2005

2006

2007

YoY % Change

58,055
41,174
20,352
25,05919,01822,418186,076

59,062
37,034
19,53429,53418,992
23,746
187,90258,75836,756
18,832
26,65917,131
24,071
182,207

59,00239,36918,601
25,825
18,371
25,069186,237(+0.4%)(+7.1%)(–1.2%)(–3.1%)(+7.2%)(+4.1%)(+2.2%)* Sales ﬁgures above represent the total for Coca-Cola West Japan Co., Ltd., Kinki Coca-Cola Bottling Co., Ltd. and Mikasa Coca-Cola
Bottling Co., Ltd. Some corrections have been made to sales volume ﬁgures for the previous year, which have been reﬂected in year-onyear comparisons.

12

Coca-Cola West Holdings Company, Limited

Sales Volume by Package
Sales volume of small PET bottle products up to
1,000ml jumped 8.1%, reaching 42,622,000 cases inthe year under review. Sales volume of large PET bottle products over 1,000ml was up 6.7% year on year at
30,250,000 cases.
We achieved growth with earnings by working to
expand shipments of small PET bottle products andintroducing various other packaging formats matchingcustomer needs.

Sales by package(Thousand cases)

200,000
179,105

186,076

187,902

2004

2,881
34,951
28,45358,872
10,984
6,028
43,907
186,076

182,207

186,237

2005

2006

2007

YoY % Change

2,395
37,83728,51758,577
10,9884,048
45,087
187,9022,074
39,44528,34854,822
9,105
6,104
42,308
182,207

2,094
42,62230,25056,0036,569
5,834
42,865
186,237(+1.0%)(+8.1%)(+6.7%)(+2.2%)(–27.9%)(–4.4%)(+1.3%)(+2.2%)

150,000

100,000

50,000

0

Package

2003

Q Bottles . . . . . . . . . . . . . . . . . 2,979
Q Small PET bottles (up to 1,000ml) . . 29,422
Q Large PET bottles (over 1,000ml). . 28,132
Q Cans . . . . . . . . . . . . . . . . . . . 65,295
Q Bottle-cans . . . . . . . . . . . . . . 6,522
Q Other. . . . . . . . . . . . . . . . . . . 4,715
Q Post mix . . . . . . . . . . . . . . . . 42,038
Total. . . . . . . . . . . . . . . . . . . . . . . 179,105* Sales ﬁgures above represent the total for Coca-Cola West Japan Co., Ltd., Kinki Coca-Cola Bottling Co., Ltd. and Mikasa Coca-Cola
Bottling Co., Ltd. Some corrections have been made to sales volume ﬁgures for the previous year, which have been reﬂected in year-onyear comparisons.

Annual Review 200713

Corporate Social Responsibility—Contributing to Society
Committed to being a good corporate citizen, the Coca-Cola West Group always
thinks and acts from a social standpoint. Consequently, we are involved in a rangeof activities that contribute to local communities and the global environment in
2 metropolitan regions and 12 prefectures within our operational area. CCWH
allocates a ﬁxed portion of earnings every year to fund these ongoing activities
with the understanding and support of shareholders.

Contributions to Regional Society
Basic Philosophy
Together With Society
Community
WelfareCCWH’s support for the healthy development ofyouth and its efforts to promote closer communication with target regions consists of four areasof activity: community welfare, sports activities,
cultural events and educational programs, andmajor regional events.

Cultural
Events andEducational
Programs

Contributions
to Regional
SocietySportsActivities

Major
Regional
EventsCommunity Welfare• Donation of Educational Materials to Special Schools

CCWH donates PCs, peripherals and other IT equipment to special schools for the blind, deaf and those with other special needs,
as teaching aids in the hope of helping students lead future independent lives in society.

Sports Activities• Donation of Unicycles to

Elementary Schools
CCWH supports the healthy development of youth by donating unicycles
to public elementary schools. Unicycles are recognized as being helpful
in developing the nervous system andform part of the Ministry of Education,
Culture, Sports, Science and Technology curriculum guidelines.

14

Coca-Cola West Holdings Company, Limited• Sawayaka Rugby Clinic

Members of the Coca-Cola WestRed Sparks rugby team teach thefundamentals of the game to seniorhigh school students, helping to
improve skills and encourage interaction, thereby promoting healthy
development of youths.

• Sawayaka Sports Hiroba

CCWH manages this well-grassed
sports ground, which is open to the
local community.

Cultural Events and Educational Programs• Sawayaka Classical Concert

CCWH hosts this high-quality, full-ﬂedged classical music event for the local community.

• Sawayaka Family Musical

CCWH hosts this musical for parents andchildren during the summer holidays.

• Sawayaka Concert

CCWH supports this entertaining concert,which brings together local orchestras andnotable guest singers.

• Ichimura Nature School in Kyushu

This facility uses plant cultivation and cooperative living to help children develop into
well-balanced, mature young people.

Major Regional Events
As a local business, CCWH supports major regional events run by the government and various groups.

• National Cultural Festival Yamaguchi 2006

• The 11th IAAF World Championships in Athletics,
Osaka 2007

• Saruku Urban Walking Tour Expo 2006
in Nagasaki

Annual Review 200715

Environmental Activities
Basic Philosophy on the Environment
Tackling
GlobalWarming

Refreshing the Community and the Environment
As a company dedicated to creating the future of thebeverage business, we recognize the preservation of
the Earth’s environment as an issue of the greatest
importance and thus endeavor to contribute to therealization of a sustainable society.
We will continue to carry out environmental protection activities with the combined efforts of theCompany and each individual employee as a company trusted by the local community.

Keeping
Creating a
Local
Recycling
Environmental
Communities
Society
Activities
Clean

Preserving
Watershed
Forests

Supporting
Environmental
Education

Our Action Plan

• Consider the environment and prioritize environmental protection measures to guard against environmental
risks in all aspects of our business activities.
• Operate and continuously improve systems designed to reduce the environmental burden in our daily business activities.
• Use water effectively, use energy efﬁciently and reduce and recycle waste.
• Comply with applicable laws and ordinances, agreements and voluntary standards introduced as needed.
• Engage in activities that contribute to local communities and leave a beneﬁcial legacy for the next generation.
• Raise employee awareness of environmental protection issues through training and education.
• Act as a good corporate citizen by promoting communication with stakeholders.

Tackling Global Warming• Implementing Strategies to Reduce Greenhouse Gases

CCWH reduces emissions of greenhouse gases, seen as one of the causes of global warming, through effective operation of its
environmental management system.

• Introducing Environmentally Friendly

Vending Machines
CCWH is rolling out energy-efﬁcient vending
machines with heat pumps that do not use
CFCs, the gases responsible for the destruction of the ozone layer.

16

Coca-Cola West Holdings Company, Limited• Introducing Environmentally Friendly

Vehicles
CCWH is promoting the “Eco-Drive” concept
by proactively adding hybrid and natural gaspowered vehicles to its ﬂeet and encouraging environmentally friendly driving.

Creating a Recycling Society• Operation of the Kitakyushu Sawayaka Recycling Center

In order to make the most effective use of limited resources, we reduce waste from business operations and recycle
where possible.

• Container Recycling• Vending Machine Recycling

CCWH sorts, processes and recycles empty
glass bottles, cans and plastic bottles collected at sales branches.

Old vending machines are disassembled at
CCWH facilities and, after recovering materials such as CFCs and ﬂuorescent tubes, theiron parts are recycled as scrap metal.

Supporting Environmental Education• School Biotope Creation

Projects
CCWH supports this activity in whichchildren build wildlife refuges with
their own hands and in the processlearn about the splendor and importance of the natural environment.

• School Tree Planting Projects

Under this program, which isdesigned to nurture a love of natureand teach its importance, children
become “foster parents” for oak
seedlings, which they plant in themountains.

• Coca-Cola Ecology School

With the trees, insects and other ﬂora
and fauna in the countryside as the
textbook, CCWH holds environmental education classes that provide
important experiences for coexistingwith nature.

Preserving Watershed Forests

Keeping Local Communities Clean• Activities in Sawayaka Shizen-no-Mori

As a sign of gratitude to local communities,
CCWH designates one day of each month as
Coca-Cola Clean Day when employees clean
roads and public spaces around CCWH ofﬁces.
CCWH also actively participates in locally organized community cleaning activities.

As a company that uses water, one ofnature’s gifts, in its products, CCWH engages
in activities such as pruning trees to preserve
watershed forests.

Annual Review 2007

17

Operating Performance

Overview of Fiscal 2007 Operating Results

Osaka 2007 to strengthen the Coca-Cola brand and boost
sales performance through advertising and sales promo-

Net Revenues

tions. In mineral water, we worked to expand both sales

Consolidated net revenues increased ¥81,699 million, orand market share with the release of Minaqua to tap this

24.9%, year on year to ¥409,521 million. This was pri-fast-growing market.

marily the result of an expansion of scale in terms of sales

Furthermore, in order to ensure continued growth ofarea and other operational aspects due to integration with

the Coca-Cola business, in partnership with The Coca-Cola

Kinki Coca-Cola Bottling Co., Ltd. (Kinki CCBC) in

Company and Coca-Cola (Japan) Co., Ltd. we pushed

July 2006, combined with an increase in sales volume.

ahead with initiatives such as top-level management
meetings and marketing forums and a collaborative proj-

Operating Income

ect to improve the sales system.

Operating income increased ¥3,734 million, or 30.3%,

As a result of these efforts, the Manufacturing andto ¥16,056 million mainly as a result of the increase inMarketing of Beverages & Foods segment reported ascale from integration of operational management and24.8% increase in revenues to ¥397,236 million before

lower operating expenses.

the elimination of intersegment transactions. Operating
income was ¥26,640 million, an increase of 24.5%.

Recurring Income
Recurring income increased ¥4,268 million, or 32.3%, toOther Businesses¥17,493 million.

Major businesses in this segment are the manufacture ofprocessed foods, production and sale of alcoholic bever-Net Incomeages, insurance agency, leasing, real estate, and restau-

Net income was ¥9,375 million, up ¥1,804 million, or

rants and retail businesses.

23.8%, on ﬁscal 2006. This resulted in net income pershare of ¥88.29, an increase of ¥6.07 year on year.

As a result of the operational integration on July 1,
2006, the segment added companies engaged in motor
vehicle repair and maintenance, real estate and restau-

Dividends

rants and retail. However, in order to focus business

The dividend per share rose ¥1 from ﬁscal 2006 toresources on the soft drinks business we sold all shares¥43, representing a consolidated dividend payout ratioof Seiko Corporate Japan Co., Ltd., which is engaged inof 48.7%.

motor vehicle repair and maintenance.
As a result, the segment recorded an increase in rev-

Operating Results by Segment

enues of 29.6% to ¥12,659 million before the elimination

Manufacturing and Marketing of Beverages & Foodsof intersegment transactions. Operating income jumped

In terms of brand strategy, the segment actively launched

45.8% to ¥675 million.

new products and ran various promotions with the aim ofPlease note that effective from the ﬁscal year understrengthening its core brands—Coca-Cola, Georgia, Soken-

review, the segment business makeup has changed. Fig-bicha and Aquarius. With respect to Coca-Cola, in addition

ures for the previous ﬁscal year have been restated based

to launching Coca-Cola Zero we ran a new campaign.

on the new segment business makeup for the purpose of

Furthermore, two new products were launched under the

year-on-year comparisons.

Georgia brand, Vintage Label and Café Espresso, and a18

new nutritional health drink, Vitamin Guard, under the

OutlookAquarius brand.

For ﬁscal 2008, we are expecting consolidated net rev-

We took full advantage of our position as ofﬁcial spon-enues to increase 3.8% year on year to ¥425.0 billion.

sor of the 11th IAAF World Championships in Athletics,

Operating income is expected to rise 5.9% to ¥17.0 bil-

Coca-Cola West Holdings Company, Limited

lion. The forecast for recurring income is ¥18.5 billion,

Cash Flows

up 5.8%. Net income is projected at ¥10.1 billion, a 7.7%
increase year on year.

Cash Flows From Operating Activities
Operating activities provided net cash of ¥33,000 million,up ¥11,193 million, or 51.3%, year on year.

Financial Position

Factors included an increase due to the expanded scale(sales area) following the operational integration with

Compared to the end of the previous ﬁscal year, total assets

Kinki CCBC in July 2006.

increased ¥10,765 million, or 3.5%, to ¥315,672 million.
Current assets increased ¥13,046 million, or 16.7%.

Cash Flows From Investing Activities

The change was mainly attributable to an ¥8,739 million,

Investing activities used net cash of ¥23,306 million, anor 81.9%, increase in marketable securities due to theincrease of ¥8,349 million, or 55.8%, year on year.

short-term investment of funds from operating activities.

The main factor for this large increase was a ¥10,829

In property, plant and equipment, we changed themillion outﬂow for subscription to an April 3, 2007 pri-way we depreciate vending machines to the straight line

vate placement of shares by neighboring Minami Kyushu

method after examining a more appropriate method of

Coca-Cola Bottling, with whom the Company entered

allocating expenses than the previously used declining

into a capital and business alliance. This bottler was madebalance method. Furthermore, following revisions toan equity-method afﬁliate as a result.

the income tax law, property, plant and equipment otherthan buildings (excluding building ﬁxtures) are being

Cash Flows From Financing Activities

depreciated according to the revised income tax law.

Financing activities provided net cash of ¥3,586 mil-Investment securities increased ¥2,517 million, or
4.7%, year on year. This was primarily due to a ¥10.8 billion investment in Minami Kyushu Coca-Cola BottlingCo., Ltd.

lion, ¥12,830 million more than the net cash used in theprevious year.
This was largely attributable to the borrowing of ¥10.5
billion from banks to ﬁnance the aforementioned pur-

Advanced payments for retirement expenses increased

chase of shares in Minami Kyushu Coca-Cola Bottling.

¥2,326 million, or 22.4%, in line with contributions to

As a result of the above, cash and cash equivalents

the corporate pension fund.
Current liabilities increased ¥11,667 million, orat end of year stood at ¥35,564 million, an increase of¥13,280 million, or 59.6%, compared to a year earlier.

38.3%. This was largely as a result of a ¥10.5 billion
increase in short-term debt from banks due to the borrowing of funds to purchase shares in Minami Kyushu
Coca-Cola Bottling.
Long-term debt was erased as a result of repayment of
Kinki CCBC’s long-term debt.
Net unrealized gains on other marketable securities
decreased ¥1,115 million, or 69.6%, as a result of depreciation in the market value of securities held.
Net assets rose ¥3,561 million, or 1.4%, to ¥254,025
million. The equity ratio fell by 1.6 percentage points
from 82.1% to 80.5%. Net assets per share rose around
1% from ¥2,358.05 to ¥2,391.83.

Annual Review 200719

Consolidated Balance Sheets(As of December 31, 2005, 2006 and 2007)(Thousands of
U.S. dollars)*1
2007

2005

2006

(Millions of yen)
2007

Cash and deposits . . . . . . . . . . . . . . . . . . . . .

¥ 13,101¥ 16,311¥ 19,567$ 173,744

Trade notes and accounts receivable . . . . . . . .

11,994

22,28023,064

204,795

Marketable securities . . . . . . . . . . . . . . . . . . . .

7,706

10,66819,407

172,323

Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,169

11,778

11,721

104,076

Deferred tax assets . . . . . . . . . . . . . . . . . . . . .

728

2,200

2,143

19,029Other current assets . . . . . . . . . . . . . . . . . . . .

10,04015,031

15,420136,921

Allowance for doubtful accounts . . . . . . . . . . .

(67)

(97)

(103)

(915)

Total current assets . . . . . . . . . . . . . . . . . . . . . . .

50,67378,17391,220809,980

Buildings and structures . . . . . . . . . . . . . . . . .

18,85635,61735,192

312,484

Machinery, equipment and vehicles . . . . . . . . .

13,981

20,134

20,181

179,196

Sales equipment . . . . . . . . . . . . . . . . . . . . . . .

15,25330,85727,285242,275

Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

34,36957,36656,709503,543

Construction in progress . . . . . . . . . . . . . . . . .

425

56

672

5,967

Other property, plant and equipment . . . . . . . .

1,398

2,211

1,992

17,688

Total property, plant and equipment . . . . . . . .

84,285

146,243

142,033

1,261,170

Intangible assets . . . . . . . . . . . . . . . . . . . . . . . .

2,925

5,730

4,719

41,902

Investment securities . . . . . . . . . . . . . . . . . . . .

60,34853,27755,794495,418

Deferred tax assets . . . . . . . . . . . . . . . . . . . . .

862

4,703

3,596

31,930

Advanced payments for retirement expenses . .

6,746

10,406

12,732

113,053

Other assets . . . . . . . . . . . . . . . . . . . . . . . . . .

3,111

6,967

6,147

54,582

Allowance for doubtful accounts . . . . . . . . . . .

(241)

(594)

(572)

(5,079)Total investments and other assets . . . . . . . . .

70,826

74,76077,698689,913

Total ﬁxed assets . . . . . . . . . . . . . . . . . . . . . . . . .

158,038

226,734

224,452

1,993,003

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥208,711¥304,907¥315,672$2,802,983

ASSETS
Current assets:

Fixed assets:
Property, plant and equipment:

Investments and other assets:*1 U.S. dollar amounts are translated from yen, for convenience only, at the rate of ¥112.62=US$1.00, the prevailing exchange rate on
December 28, 2007.

20

Coca-Cola West Holdings Company, Limited

2005

2006

(Millions of yen)
2007

(Thousands of
U.S. dollars)*1
2007

¥

$

LIABILITIESCurrent liabilities:
Trade notes and accounts payable . . . . . . . . . .
Short-term debt . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of long-term debt . . . . . . . . . . .
Accrued income taxes . . . . . . . . . . . . . . . . . . .
Other accounts payable . . . . . . . . . . . . . . . . . .
Notes payable for equipment . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . .
Long-term liabilities:
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . .
Allowance for employees’ retirement beneﬁts . .
Liabilities for directors’ andcorporate auditors’ retirement beneﬁts . . . . . .
Goodwill on consolidation. . . . . . . . . . . . . . . . .
Negative goodwill . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . .
Total long-term liabilities . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

2,809
–
–
2,166
7,787
183
4,833
17,780

¥

3,828
–
2,300
2,674
13,866702
7,059
30,431

5,222
10,5002,000
3,270
13,63887
7,380
42,09946,36893,23417,75929,036
121,097773
65,530373,815

–
9,785
2,768

2,000
11,122
4,770

–
9,040
5,180

–
80,27045,995

206
48
–
120
12,92930,709

249
–
1,867
4,002
24,01254,444

65
–
1,452
3,809
19,54861,647577–
12,89333,822
173,575
547,390

Shareholders’ equity:
Common stock . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . .
Treasury stock (at cost). . . . . . . . . . . . . . . . . . .
Total shareholders’ equity . . . . . . . . . . . . . . . . . . .

–
–
–
–
–

15,231109,072
135,623(11,229)
248,697

15,231109,074
140,432(11,271)
253,467

135,242
968,5141,246,954(100,080)
2,250,639

Valuation and translation adjustments:
Net unrealized gains on othermarketable securities . . . . . . . . . . . . . . . . . . .
Gain on deferred hedges . . . . . . . . . . . . . . . . .
Total valuation and translation adjustments . . . .
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . .
Total net assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and net assets . . . . . . . . . . . . . . . .

–
–
–
–
–
–

1,604
106
1,710
54
250,463¥304,907

488
4
492
64
254,025¥315,672

4,333
36
4,369
568
2,255,594$2,802,983

4,394

–

–

–

15,23135,399131,982

–
–
–

–
–
–

–
–
–

2,437
(11,442)
173,608

–
–
–

–
–
–

–
–
–

¥208,711–––

NET ASSETSMINORITY INTERESTS
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . .

SHAREHOLDERS’ EQUITY
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital surplus. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized gains on othermarketable securities . . . . . . . . . . . . . . . . . . . . .
Treasury stock (at cost) . . . . . . . . . . . . . . . . . . . . .
Total shareholders’ equity . . . . . . . . . . . . . . . . . . .
Total liabilities, minority interests andshareholders’ equity . . . . . . . . . . . . . . . . . . . . . .

Annual Review 200721

Consolidated Statements of Income(Years ended December 31, 2005, 2006 and 2007)(Thousands of
U.S. dollars)*1
2007

2005

2006

(Millions of yen)
2007

Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . .
Gross proﬁt . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥245,874
138,351
107,523¥327,821
186,265
141,556¥409,521
234,313
175,208$3,636,308
2,080,563
1,555,745

Selling, general and administrative expenses . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . .

95,693
11,830129,235
12,321

159,151
16,056

1,413,168
142,568

Non-operating income . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of negative goodwill . . . . . . . . . . . . .
Equity in earnings of afﬁliates . . . . . . . . . . . . . . . .
Property rental income . . . . . . . . . . . . . . . . . . . . .
Other non-operating income . . . . . . . . . . . . . . . .
Non-operating expenses . . . . . . . . . . . . . . . . . . .
Interest expenses . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in loss of afﬁliates . . . . . . . . . . . . . . . . . . .
Loss on disposal of property, plantand equipment . . . . . . . . . . . . . . . . . . . . . . . . . .
Property rental costs . . . . . . . . . . . . . . . . . . . . . .
Other non-operating expenses. . . . . . . . . . . . . . .
Recurring income . . . . . . . . . . . . . . . . . . . . . . .

1,183
339
160
–
36
224
422
758
–
–

1,836
399
248
256
–
110
822
932
38
18

2,433
427
269
414
602
149
569
996
114
–

21,604
3,792
2,389
3,676
5,345
1,323
5,052
8,844
1,012
–

362
95
300
12,256593
38
242
13,225586
56
238
17,493

5,203
497
2,113
155,328

2,045
117
62
53
121

1,569
954
586
28
–

671
277
57
336
–

5,958
2,460
506
2,983
–

1,689
2,100
66
208
61
–

–
1,686
95
–
–
48

–
3,910
–
282
–
–

–
34,719
–
2,504
–
–

11
372
–
93
–
33
1,103
149

–
120
60
19
–
–
–
–

–
289
–
2,252
57
–
–
–

–
2,566
–
19,996
506
–
–
–

–
–
–
–

1,131
–
74
137

–
279
555
193

–
2,477
4,928
1,714

12,201
3,222
1,632
40
¥ 7,305

13,108
3,237
2,389
(89)
¥ 7,570

14,254
5,034
(167)
12
¥ 9,375

126,567
44,699
(1,483)107$ 83,245

Extraordinary income . . . . . . . . . . . . . . . . . . . . . .
Gain on sales of property, plant and equipment . .
Gain on sales of investment securities . . . . . . . . .
Proceeds from government assistance grants . . .
Compensation for expropriations . . . . . . . . . . . . .
Amortization of actuarial difference
from return of trust for retirement beneﬁts. . . . . .
Extraordinary losses . . . . . . . . . . . . . . . . . . . . . . .
Loss on sales of property, plant and equipment . .
Impairment loss . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss from earthquake damage . . . . . . . . . . . . . .
Loss from typhoon damage . . . . . . . . . . . . . . . . .
Loss on disposals of property, plantand equipment . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation for retirement of ﬁxed assets. . . . .
Loss on sales of investment securities . . . . . . . . .
Write-down of investment securities . . . . . . . . . . .
Write-down of golf club memberships . . . . . . . . .
Expense for change of subsidiary name . . . . . . . .
Expense for compatibility with new currency . . . .
Additional collection of liquor taxes . . . . . . . . . . .
Expense related to integration ofoperational management . . . . . . . . . . . . . . . . . .
Group restructuring expenses . . . . . . . . . . . . . . .
Expense for earthquake precautions . . . . . . . . . .
Quality problem countermeasure losses . . . . . . . .
Income before income taxes, minority interestsand other adjustments . . . . . . . . . . . . . . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax deferred . . . . . . . . . . . . . . . . . . . . . . .
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

*1 U.S. dollar amounts are translated from yen, for convenience only, at the rate of ¥112.62=US$1.00, the prevailing exchange rate on
December 28, 2007.

22

Coca-Cola West Holdings Company, Limited

Consolidated Statements of Changes in Shareholders’ Equity(Years ended December 31, 2005, 2006 and 2007)(Millions of yen)
Shareholders’ equity
2006

Balance as of December 31, 2005 . .
Changes during the consolidated
ﬁscal year
Issue of new stock . . . . . . . . . . . . . .
Distribution of dividends. . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . .
Bonus to directors andcorporate auditors . . . . . . . . . . . . .
Acquisition of treasury stock . . . . . .
Cancellation of treasury stock . . . . .
Net changes in items other thanshareholders’ equity during
the ﬁscal year . . . . . . . . . . . . . . . . .

Valuation and translation adjustments
Net unrealized
Total
Total
gains on other Gain (loss) valuation andshareholders’ marketable on deferred translation
equityhedgesadjustments
securities

Minority
interests

Total
net assets¥2,437¥ 4,394¥178,002

–
–
–

–
–
–

–
–
–

73,672(3,867)
7,570

–
–
–

–
–
–

–
–
–

–
–
–

(46)
(148)
345

(832)

¥106

(726)

(4,339)(5,065)

CapitalsurplusRetainedearnings

Treasurystock(at cost)¥15,231¥ 35,399¥131,982¥(11,442)¥171,171¥2,437––––73,672–––(3,867)
7,570

–
–
–

73,672(3,867)
7,570

–
–
–

–
–
–

–
–
–

(46)
–
(15)

–
(148)
361

(46)
(148)
345

–

–

–

–

–

Commonstock

Total changes during the ﬁscal year . .

–73,672

3,641

212

77,526

(832)

106

(726)

Balance as of December 31, 2006 . .

¥15,231¥109,072¥135,623¥(11,229)¥248,697¥1,604¥106¥1,710¥(4,339)72,46054¥250,463(Millions of yen)
Shareholders’ equity
2007

Balance as of December 31, 2006 . .
Changes during the consolidated
ﬁscal year
Distribution of dividends. . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . .
Acquisition of treasury stock . . . . . .
Cancellation of treasury stock . . . . .
Net changes in items other thanshareholders’ equity during
the ﬁscal year . . . . . . . . . . . . . . . . .

Valuation and translation adjustments
Net unrealized
Total
Total
gains on other Gain (loss) valuation andshareholders’ marketable on deferred translation
equityhedgesadjustments
securities

CapitalsurplusRetainedearnings

Treasurystock(at cost)¥15,231¥109,072¥135,623¥(11,229)¥248,697¥1,604

¥ 106

–
–
–
–

–
–
–
2

(4,566)
9,375
–
–

–
–
(56)
14

(4,566)
9,375
(56)
16

–
–
–
–

–
–
–
–

Commonstock

Minority
interests

Total
net assets¥ 1,710¥54¥250,463

–
–
–
–

–
–
–
–

(4,566)
9,375
(56)
16

–

–

–

–

–

(1,115)(102)(1,218)9(1,208)

Total changes during the ﬁscal year . .

–

2

4,809

(41)

4,769

(1,115)(102)(1,218)9

3,561

Balance as of December 31, 2007 . .

¥15,231¥109,074¥140,432¥(11,271)¥253,467

¥ 488

4

¥ 492

¥64

¥254,025¥(Thousands of U.S. dollars)*1
Shareholders’ equity
Commonstock

Capitalsurplus

Balance as of December 31, 2006 . .

$135,242$968,496 $1,204,253

–
–
–
–

Retainedearnings–––
18

Net unrealized
Total
Gain (loss)
Total
gains on othervaluation andshareholders’ marketable on deferred translation
equityhedgesadjustments
securities

Treasurystock(at cost)

2007

Changes during the consolidated
ﬁscal year
Distribution of dividends. . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . .
Acquisition of treasury stock . . . . . .
Cancellation of treasury stock . . . . .
Net changes in items other thanshareholders’ equity during
the ﬁscal year . . . . . . . . . . . . . . . . .

Valuation and translation adjustments(40,543)
83,245––$(99,707) $2,208,284

–
–
(497)
124

(40,543)
83,245(497)
142

Minority
interests

Total
net assets$14,243$ 941$ 15,184$479 $2,223,966

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

(40,543)
83,245
(497)
142

–

–

–

–

–

(9,909)(906)(10,815)89(10,726)

Total changes during the ﬁscal year . .

–1842,701(372)

42,354(9,909)(906)(10,815)89

31,628

Balance as of December 31, 2007 . .

$135,242$(100,080) $2,250,639$ 4,333$ 36$ 4,369$968,514 $1,246,954$568 $2,255,594*1 U.S. dollar amounts are translated from yen, for convenience only, at the rate of ¥112.62=US$1.00, the prevailing exchange rate on
December 28, 2007.

Annual Review 200723

Consolidated Statements of Cash Flows(Years ended December 31, 2005, 2006 and 2007)

Cash ﬂows from operating activities:
Income before income taxes, minority interestsand other adjustments . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . .
Impairment gains . . . . . . . . . . . . . . . . . . . . . . . . .
Write-off of consolidation adjustment account . . .
Amortization of negative goodwill . . . . . . . . . . . . .
Decrease in liabilities for directors’ andcorporate auditors’ retirement beneﬁts . . . . . . . .
Increase (decrease) in liabilities for retirement beneﬁts . .
Increase (decrease) in advanced payments
for retirement expenses . . . . . . . . . . . . . . . . . . .
Increase in investment securities from returnof trust for retirement beneﬁts. . . . . . . . . . . . . . .
Interest and dividend income . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings (losses) of afﬁliates . . . . . . . . . .
Loss on sales of marketable and investment securities . .
Write-down of marketable and investment securities . .
Loss on sales of ﬁxed assets . . . . . . . . . . . . . . . .
Loss on disposals of ﬁxed assets . . . . . . . . . . . . .
Increase (decrease) in accounts receivable. . . . . .
Decrease in inventories . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in other assets . . . . . . . . . . .
Increase (decrease) in accounts payable . . . . . . .
Decrease (increase) in other liabilities . . . . . . . . . .
Payment of directors’ bonuses. . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest and dividends received . . . . . . . . . . . . . .
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . .
Cash ﬂows from investing activities:
Acquisition of marketable and investment securities . .
Proceeds from sales of marketable
and investment securities . . . . . . . . . . . . . . . . . . .
Acquisition of ﬁxed assets . . . . . . . . . . . . . . . . . .
Proceeds from sales of ﬁxed assets . . . . . . . . . . .
Acquisition of shares of subsidiaries . . . . . . . . . . .
Acquisition of shares of afﬁliates . . . . . . . . . . . . . .
Proceeds from collection of loans to afﬁliates . . . .
Long-term loans . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from collection of long-term loans . . . .
Increase in time deposits . . . . . . . . . . . . . . . . . . .
Proceeds from refund of time deposits. . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . .
Cash ﬂows from ﬁnancing activities:
Increase (decrease) in short-term borrowings . . . .
Repayment of long-term debt . . . . . . . . . . . . . . .
Payments for acquisition of treasury stock . . . . . .
Proceeds from sales of treasury stock . . . . . . . . .
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid to minority interests . . . . . . . . . . .
Net cash used in (provided by) ﬁnancing activities . .
Net increase (decrease) in cash and cash equivalents . .
Cash and cash equivalents, beginning of year . .
Increase in cash and cash equivalents due tochange in scope of consolidation. . . . . . . . . . . .
Cash and cash equivalents at end of year . . . . . .

(Thousands of
U.S. dollars)*1
2007

2005

2006

(Millions of yen)
2007

¥12,201
13,860208
83–¥13,108
19,571––(256)¥14,254
22,533282–(414)$126,567
200,080
2,504–(3,676)

(139)
(378)

(115)
104

(181)
410

(1,607)
3,641

1,002

(3,660)(2,326)(20,654)(4,644)
(500)
–
(36)
(32)
93
(38)
394
1,675
5,592
(2,001)(5,082)(1,020)(38)(84)
21,113480–(4,985)
16,607

–
(647)
38
18
(577)
19
(850)
448
827
193
(1,711)(3,027)
949
(46)
(234)
24,153638(37)(2,949)21,806

–
(696)
114
(602)
(52)
2,252
(265)
564
(828)
56
1,196
1,407
(553)
–
145
37,297738(115)(4,920)33,000–(6,180)1,012(5,345)(462)
19,996(2,353)
5,008(7,352)497
10,62012,493(4,910)–1,288
331,176
6,553(1,021)(43,687)
293,021(6,023)(2,876)

(53)

(471)

3,030
(15,642)
3,163
–
–
62
–
–
(0)
150
3
(15,256)

8,420(23,327)
3,392
(652)
–
63
–
–
(20)
30
14
(14,956)

6,239(20,238)
1,947–(11,016)
–
(202)
17
(40)
38
2
(23,306)

55,399(179,702)
17,288–(97,816)–(1,794)
151
(355)
337
18
(206,944)

–
(203)
(14)
439
(3,106)(15)(2,901)(1,549)21,788(3,410)(2,223)(73)
345(3,867)(15)(9,244)(2,394)
20,238

10,495(2,300)(56)
16(4,566)(2)
3,586
13,28022,284

93,189(20,423)(497)
142(40,543)(18)
31,842
117,919
197,869–¥20,238

4,440¥22,284–¥35,564–$315,788*1 U.S. dollar amounts are translated from yen, for convenience only, at the rate of ¥112.62=US$1.00, the prevailing exchange rate on
December 28, 2007.

24

Coca-Cola West Holdings Company, Limited

Financial Data

Operating income (Millions of yen)
Operating income/Net revenues (%)

Recurring income (Millions of yen)
Recurring income margin (%)

50,00040,0008.2

1050,0008

40,000

10
8.3

8
6.7

6.7
30,000

630,0006
5.0

4.8
20,00019,6383.8
16,86012,3210

03

4

17,065

04

05

06

2

10,000

0

0

03

5

500,000

3.0
2.3

4

400,000

3

300,000

2

200,000

1

100,000

05

06

0

0

55.2

55.2

56.3

56.8

60

30

186,26507

139,675

138,35115

003

Net income
Return on sales

Operating income . . . . . . . . . . . . . . . . . . . .
Operating income/Net revenues (%) . . . . . .
Recurring income . . . . . . . . . . . . . . . . . . . .
Recurring income margin (%) . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . .
Return on sales (%) . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . .
Cost of goods sold/Net revenues (%) . . . . .

57.2

45

132,995

0

04

07

234,313

7,570

5,000

03

06

2.3
9,375

7,305

05

75

3.4

8,564

04

Cost of goods sold (Millions of yen)
Cost of goods sold/Net revenues (%)

3.9

9,380

2

Recurring income
Recurring income margin

25,00010,00013,225007

Net income (Millions of yen)
Return on sales (%)

15,0004

17,493
12,256

Operating income
Operating income/Net revenues

20,0004.3

4.0

19,89520,00016,056
11,83010,000

3.9

04

05

06

07

Cost of goods soldCost of goods sold/Net revenues

2003

2004

2005

2006

(Millions of yen)
2007

19,638
8.2
19,895
8.3
9,380
3.9
132,995
55.2

16,8606.7
17,065
6.7
8,564
3.4
139,675
55.2

11,830
4.8
12,256
5.0
7,305
3.0
138,351
56.3

12,321
3.8
13,225
4.0
7,570
2.3
186,265
56.8

16,056
3.9
17,493
4.3
9,375
2.3
234,313
57.2

Annual Review 200725

Total equity*1 (Millions of yen)
Equity ratio*2 (%)

Total assets (Millions of yen)
Total assets turnover ratio (Times)
500,000
1.3
400,000

1.2

1.2

304,907200,000

204,180

207,216500,000

1.2

400,000

0.9

300,000

100

1.3

1.2

300,000

1.5

315,672

208,711

0.6

81.0

80.6

83.2

82.1

80.5

250,463

254,0258060

200,000
165,454

167,03640

173,608

100,000

0.3

100,000

20

0

0

0

0

03

04

05

06

07

03

Total assets
Total assets turnover ratio

Inventories (Millions of yen)
Inventory turnover ratio (Times)

34.6

06

07

40

200,00030

150,000

400

34.9

30,000
24.7
19.3

05

Current assets (Millions of yen)
Current ratio (%)

40,00020,00004

Total equity
Equity ratio

300

285.0
239.5

256.9

243.5

216.7

20.0

20

100,000

91,220200

78,173
12,57012,762

10,00011,778

11,72106

07

1050,0000

057,13459,54003

04

50,673

100

7,169

0

03

04

05

Inventories
Inventory turnover ratio

Total assets . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets turnover ratio (Times) . . . . . . . .
Total equity*1 . . . . . . . . . . . . . . . . . . . . . . . .
Equity ratio*2 (%) . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory turnover ratio (Times) . . . . . . . . . .
Current assets . . . . . . . . . . . . . . . . . . . . . . .
Current ratio (%) . . . . . . . . . . . . . . . . . . . . .

0

05

06

07

Current assets
Current ratio

2003

2004

2005

2006

(Millions of yen)
2007

204,180
1.2
165,454
81.0
12,57019.3
57,134239.5

207,2161.2
167,036
80.6
12,76220.0
59,540243.5

208,711
1.2
173,608
83.2
7,169
24.7
50,673285.0

304,9071.3
250,463
82.1
11,77834.6
78,173256.9

315,6721.3
254,02580.5
11,721
34.9
91,220216.7

Total assets turnover ratio = Net revenues / The average of assets at the beginning and end of the ﬁscal period*1 Until ﬁscal 2005, Shareholders’ equity; from ﬁscal 2006, Total equity = Shareholders’ equity + Valuation and translation adjustments*2 Until ﬁscal 2005, Shareholders’ equity ratio = Shareholders’ equity / Total assets; from ﬁscal 2006, Equity ratio = Total equity / Total assets
Inventory turnover ratio = Net revenues / The average of inventory taken at the beginning and end of the ﬁscal period
Current ratio = Current assets / Current liabilities

26

Coca-Cola West Holdings Company, Limited

Interest coverage ratio (Times)

Capital expenditures (Millions of yen)

3,000

25,00022,0202,402.0

20,00019,951

2,000
15,00015,611

16,19913,846

10,000
1,000
589.3

894.9

5,000
285.4

0

0

03

04

05

06

07

03

Depreciation and amortization (Millions of yen)

05

06

07

Return on equity (ROE) (%)
Return on assets (ROA) (%)

25,00010
22,53320,00015,00004

9.7
819,571
15,88814,927

6

13,86010,000

4

5,000

2

0

5.7

8.3

5.9
5.2

5.1

5.6

4.3
3.6

3.7

06

07

0

03

04

05

06

07

03

04

05

Return on equity (ROE)
Return on assets (ROA)

Interest coverage ratio (Times) . . . . . . . . . . .
Capital expenditures . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . .
Return on equity (ROE) (%) . . . . . . . . . . . . .
Return on assets (ROA) (%) . . . . . . . . . . . . .

2003

2004

2005

2006

(Millions of yen)
2007

894.9
13,846
15,8885.7
9.7

2,402.0
15,611
14,927
5.2
8.3–
16,19913,860
4.3
5.9

589.3
22,02019,571
3.6
5.1

285.4
19,951
22,533
3.7
5.6

Interest coverage ratio = Operating cash ﬂow / Interest paid
(This calculation uses net cash provided by operating activities and interest paid from the Consolidated Statements of Cash Flows for
operating cash ﬂow and interest payments, respectively.)
Return on equity (ROE) = Net income / The average of shareholders’ equity at the beginning and end of the ﬁscal period
Return on assets (ROA)= Recurring income / The average of assets at the beginning and end of the ﬁscal period

Annual Review 2007

27

Net assets per share*1 (Yen)Price book-value ratio (PBR)*2 (Times)

Net income per share (Yen)Price earnings ratio (PER) (Times)
200

40

5,000

1.5

33.5
29.5

150
116.25
100

18.1

28.0

30

93.42

88.29

2,000
10

0

0

0.9

05

06

2,089.94

2,149.99

2,228.79

2,358.05

2,391.83
0.6

1,000

0.3

0

0

07

03

Net income per share
Price earnings ratio (PER)

04

05

06

07

Net assets per share
Price book-value ratio (PBR)

Payout ratio (Consolidated) (%)

Dividend per share (Yen)

60

50
51.1

50

48.7

40

42.8
40
30

1.0

20

50

04

1.2

3,000

82.22

03

1.2

1.0

24.2
108.80

1.2

1.2

4,000

40.00

40.00

04

05

42.00

43.00

06

07

36.00

36.8

30

31.0
20

20
10

10

0

0

03

04

05

06

07

03

(Yen)

Net income per share . . . . . . . . . . . . . . . . .
Price earnings ratio (PER) (Times) . . . . . . . .
Net assets per share*1 . . . . . . . . . . . . . . . . .
Price book-value ratio (PBR)*2 (Times) . . . . .
Payout ratio (Consolidated) (%) . . . . . . . . . .
Dividend per share. . . . . . . . . . . . . . . . . . . .

2003

2004

2005

2006

2007

116.2518.1
2,089.94
1.0
31.0
36.00

108.8024.2
2,149.99
1.2
36.8
40.00

93.42
29.5
2,228.79
1.2
42.8
40.00

82.22
33.5
2,358.05
1.2
51.1
42.00

88.29
28.0
2,391.83
1.0
48.7
43.00

Net income per share = Net income / The average number of shares during the period
Price earnings ratio (PER) = Market value at the end of the period / Net income per share*1 Until ﬁscal 2005, Shareholders’ equity per share = Shareholders’ equity / The number of shares outstanding at the end of the period; fromﬁscal 2006, Net assets per share = Net assets / The number of shares outstanding at the end of the period*2 Until ﬁscal 2005, Price book-value ratio (PBR) = Market value at the end of the period / Shareholders’ equity per share; from ﬁscal 2006,
Price book-value ratio (PBR) = Market value at the end of the period / Net assets per share28

Coca-Cola West Holdings Company, Limited

Risk Information
Business results and other aspects of the Company’s operations mentioned in this annual review are subject to avariety of risks. Those risks deemed most likely to havea signiﬁcant impact on potential investment decisions arefound below. The Coca-Cola West Group (CCWG) is fully
aware of the possibility of these risks and thus works to
avoid them or deal effectively with them should they arise.
Statements herein regarding future events or assumptions
reﬂect the judgment of CCWG as of March 25, 2008.

 Impact of weather-related factors

Weather conditions tend to have an effect on the sales ofbeverages, CCWG’s core products. Cool summers or warm
winters, for example, often have a signiﬁcant impact on
customer (consumer) demand. Although CCWG makes
every effort to minimize the inﬂuence of weather-related
factors on sales, the Group offers no guarantee that it cancompletely eliminate the effect of such factors.
(5) Impact of economic conditions(1) Business agreements with The Coca-Cola Company of the United States and Coca-Cola (Japan)
Co., Ltd.

CCWH conducts business activities based on a manufacturing licensing agreement with The Coca-Cola
Company, Coca-Cola (Japan) Co., Ltd. and Coca-Cola
National Beverages Co., Ltd. (CCNBC), and a distribution licensing agreement with The Coca-Cola Company
and Coca-Cola (Japan) Co., Ltd.
(2) Business ties with CCNBC

CCWH has an equity interest in CCNBC, a company
established to consolidate and oversee procurement,
manufacturing and distribution operations nationwide for
the Coca-Cola Group in Japan, and to build an optimal
nationwide supply chain structure, thereby reducing costs.
CCNBC’s operations are conducted in partnership with
CCWH and other Coca-Cola bottlers across Japan. The
future progress and status of cost-cutting plans of CCNBC
could potentially impact the operating results of CCWG.
(3) Quality assurance

Beverages are the core product of CCWG. The Groupmakes every effort to raise employee awareness regarding quality and implements programs aimed at preventing incidents concerning quality in order to offer its
customers (consumers) high-quality and reliable beverages. Nevertheless, in the event of an incident related to
product quality, the Company’s brand image could be tarnished, irrespective of whether or not CCWG was actually at fault. An incident of this nature could adversely
affect the operating results of CCWG.
(4) The soft drink industry
 Market competitiveness

Sales of beverages, CCWG’s core products, are readily
inﬂuenced by changes in customer (consumer) preference. In a beverage market of this kind, CCWG strives tocontinuously offer appealing products and services. Nevertheless, failure to amply forecast market changes could
potentially affect the operating results of CCWG.

 Trends in personal consumption

Sales of beverages, CCWG’s core products, are closely
linked to trends in personal consumption. A sudden
decline in personal consumption due to worsened economic conditions, however, could adversely affect theoperating results of CCWG.
 Fluctuations in asset value

Fluctuations in the value of land, marketable securities andother assets owned by CCWG could potentially impact theGroup’s operating results and ﬁnancial position. Marketable securities with a fair value, for example, are subject tochanges in fair market value in capital markets because thatis how they are valued.
(6) Public regulations

CCWG’s Manufacturing and Marketing of Beverages &Foods segment is subject to a number of regulations inJapan, including the Act Against Unjustiﬁable Premiums
and Misleading Representations (Premiums and Representations Act) and the Food Sanitation Law. The Groupfully complies with these and all other regulations in
its commitment to providing safe and reliable products.
Accordingly, tougher regulations, for example, might
incur new compliance costs, which could potentiallyaffect the operating results of CCWG.
(7) Management of personal information

CCWG holds large volumes of personal information. In
handling this information, the Group works on a uniﬁed
basis to formulate and adhere to related guidelines andimplement ongoing training and educational activities.
However, an external leak of personal information could
lead to a deterioration of trust in CCWG and potentially
impact the operating results of CCWG.
(8) Impact of disasters

CCWG has a system in place to minimize the effects ofpower outages, as well as other scenarios for which assumptions must be made, on its business operations. Typhoons,
earthquakes and other natural disasters, however, could trigger conditions that exceed these assumptions. Conditions of
this magnitude could potentially impact the operating results
and ﬁnancial position of CCWG.

Annual Review 200729

Corporate Governance
CCWH’s fundamental stance on corporate governanceis to maximize shareholder value by improving management efﬁciency and transparency.
(1) Corporate Governance System
 Status of Related Internal Bodies• Corporate Auditor System or Company With
Committees System
CCWH adopted the Corporate Auditor system in accordance with its decision to separate decision-making andmanagement oversight from business execution througha restructuring of the Board of Directors and the adoption of the corporate executive ofﬁcer system in March
1999. In April 2007, the corporate executive ofﬁcer
system was extended across the Group in the interestsof increasing the efﬁciency of Group management andspeeding up decision-making.
Furthermore, in March 2006, in order to clarify theroles and responsibilities of directors in each ﬁscal
year and to establish a management structure capableof rapid responses to changes in business conditions,
the Group shortened the term of ofﬁce of directors fromtwo years to one year.
• Number of Directors
The Company’s articles of incorporation stipulate that
there shall be a maximum of 15 directors.
• Requirements for Electing Directors
The Company’s articles of incorporation stipulate thatelection of directors shall be by a majority of votes,
where shareholders holding at least one-third of the voting rights of shareholders that can exercise voting rights
are in attendance. Resolution for election of directors
shall not be made by cumulative voting.
• Outside Directors and Corporate Auditors
At present, two of CCWH’s eight directors and four of
its ﬁve corporate auditors are from outside the Group.
The Company has concluded with one outside director and three outside corporate auditors agreements limiting liability in case of neglect of duty, based on theprovisions of Article 427, Paragraph 1 of the Company
Law. Under these agreements, liability is limited to theminimum amount permissible under the law.
• Acquisition of Treasury Stocks
The Company’s articles of incorporation stipulate that
the Company may, by a resolution of the Board of
Directors and without seeking shareholder approval,
buy back its own shares on the market, pursuant to theprovisions of Article 165, Paragraph 2 of the Company
Law. The Board of Directors has been authorized torepurchase Company shares with the aim of allow-

30

Coca-Cola West Holdings Company, Limited

ing them to execute a ﬂexible capital structure policy
according to changes in the business environment andin the interest of raising capital efﬁciency.
• Determination of Interim Dividends
The Company’s articles of incorporation stipulate that
the Company may, by a resolution of the Board of
Directors and without seeking shareholder approval,
determine interim dividends, as prescribed by Article
454, Paragraph 5 of the Company Law. The Board of
Directors has been authorized to determine interim dividends so that proﬁts can be returned to shareholders
when considered appropriate.
• Special Resolutions of the General Meeting of
Shareholders
The Company’s articles of incorporation stipulate thatspecial resolutions of a general meeting of shareholders, provided for in Article 309, Paragraph 2 of theCompany Law, shall be adopted by an afﬁrmative voteof at least two-thirds of votes, where shareholders holding not less than one-third of the voting rights of shareholders that can exercise voting rights are in attendance.
This is to ensure the smooth running of general meetings of shareholders by enabling a quorum to pass special resolutions.
• Overview of Committees
In July 2006, the Company established the Management Advisory Committee as an internal body of theBoard of Directors. This committee allows appropriate
advice to be given by experts with the goals of improving the efﬁciency and transparency of management andincreasing shareholder value. The committee is responsible for advising on matters concerning candidates for
director and corporate auditor positions and directors’
and corporate auditors’ remuneration as well as important strategic and other matters related to the generalmanagement of the Group.
• Support for Outside Appointments
Outside directors are supported by the General
Affairs Group, while outside corporate auditors aresupported by the Audit Group.
• Business Execution and Management Oversight
Outside appointments comprise more than half themembers of the Board of Corporate Auditors. This gives
CCWH the capacity to sufﬁciently monitor the performance of duties by directors and also allows it to draw
on independent third-party advice from external experts
appointed as outside directors. Directors and corporate auditors also fully monitor how corporate ofﬁcers
execute business operations. This includes participating
in meetings of the executive committee, which is made

up of corporate ofﬁcers, as well as other key company
meetings. When questions arise during the course ofbusiness execution, CCWH consults attorneys, CPAs
and other specialists for advice on determining the best
way to proceed.
 Risk Management System

CCWH has established the Coca-Cola West Group Risk
Management Committee. The objective of this body is
to minimize damage in the event of a crisis by preventing confusion within the Group and ensuring a rapid andappropriate response. The Group believes that compliance with all applicable laws and regulations, and thespirit in which they are written, is fundamental to its
business activities, as is the proper observance of social
norms and customary business practices. This belief isenshrined in a code of conduct created to encourage acompliance mindset among all Group corporate ofﬁcers
and employees.
 Audit System• Participating Personnel and Organizations
CCWH aims to comply with corporate rules and regulations, carry out appropriate corporate activities andoperational management, and protect its assets. To help
it achieve these goals, CCWH has established an Audit
Group within the Internal Audit Department. The grouphas 11 members and reports directly to the CEO.
Corporate auditors attend meetings of the Board of
Directors, executive committee and other importantCompany meetings. They also meet a representative
director on a regular basis and examine the resultsof audits performed by the Audit Group. Using theseand other methods, corporate auditors monitor the
executive actions of directors and executive ofﬁcersin accordance with relevant laws and regulations, theCompany’s own articles of incorporation and internal
auditing standards.
The Audit Group carries out prior discussions withcorporate auditors concerning its auditing policy andplans for each ﬁscal year. Corporate auditors also
receive reports about the results of audits of the Audit
Group as needed. In addition, at the start of the ﬁscal
year, the Company’s independent auditor provides thecorporate auditors with an explanation of its audit plans,
and as needed, supplies information and reports to theauditors during and at the end of the audit process.
• Independent Auditor and Related Personnel
CCWH has appointed KPMG AZSA & Co. as its
independent auditor. The names of the ﬁrm’s certiﬁed
public accountants (engagement and management part-ners) that audit the Company’s ﬁnancial statements arelisted as follows.
Name

Auditing Experience

Tetsuzo Hamashima

3 years

Masafumi Tanabe

1 year

The auditing team has eight additional members
including four CPAs and two assistant CPAs.
 Director and Corporate Auditor Remuneration

Remuneration paid to directors and corporate auditors forthe year under review was as follows.
Individuals

Total
Remuneration

Directors (Notes 1 and 2)(Outside Directors)

8(2)¥111 million(¥11 million)

Corporate Auditors (Note 3)(Outside Corporate Auditors)

5(4)¥56 million(¥31 million)

Total (Note 4)(Outside Appointments)

13(6)¥167 million(¥43 million)

Position(Notes) 1. In addition to the above, the 6 directors of the Company
who are not outside directors, received ¥115 million in
remuneration from subsidiaries where they serve concurrently as directors or corporate auditors.
2. Maximum monthly remuneration for directors was set
at ¥25 million by a resolution of the general meeting ofshareholders on March 22, 1991.
3. Maximum monthly remuneration for corporate auditors
was set at ¥7 million by a resolution of the general meeting of shareholders on March 25, 1994.
4. The retirement beneﬁts system for directors and corporate auditors was abolished by a resolution of thegeneral meeting of shareholders on March 24, 2006.
In accordance with the resolution, it was resolved tomake terminal payments of retirement beneﬁts to the 10
incumbent directors and 5 incumbent corporate auditorsof ¥117 million and ¥19 million, respectively, for thetime they served in their position through to the close ofthat general meeting of shareholders. Said payment is to
be made after retirement.

 Audit Fees

The Company paid ¥97 million in fees to the independent
auditor KPMG AZSA & Co. for services relevant to theyear under review. Of that amount, ¥55 million was forservices pursuant to Article 2-1 of the Certiﬁed Public
Accountant Law.
(2) Conﬂicts of Interest

One of the Company’s two outside directors is a representative of a company that has a business relationshipwith CCWH. The other outside director is a representative of a business partner that the Company treats as anequity-method afﬁliate for accounting purposes.
One of the Company’s four outside corporate auditors
is a representative of a partner ﬁnancial institution. The
remaining three outside corporate auditors have no conﬂicts of interest with the Company.

Annual Review 200731

Management(As of April 1, 2008)

Directors

Corporate Ofﬁcers

Representative Director

Norio Sueyoshi

CEO

CEO

Norio Sueyoshi

Director

Tadatsugu Harada

Representative Director &President, Coca-Cola WestJapan Co., Ltd.

Vice President

Hijiri Morita

Senior Ofﬁcer

Senior Corporate Ofﬁcer

Shigejiro SatoBusiness System GroupManager

Director

Tamio Yoshimatsu

Representative Director &President, Kinki Coca-Cola
Bottling Co., Ltd.

Senior Corporate Ofﬁcer

Akira Noguchi

Manufacturing facility,
System Next Generation Model
Project Manager

Director

Hijiri Morita

Vice President, Senior Ofﬁcer

Senior Corporate Ofﬁcer

Kazuaki Hisamatsu

Director

Shigeki Ota

Director & Executive Corporate
Ofﬁcer, Kinki Coca-Cola
Bottling Co., Ltd.

Business Process
Reengineering Project Manager

Corporate Ofﬁcer

Yoshinori Nakamura External Relations/
Secretary Group Manager

Director

Masamitsu Sakurai

Representative Director &Chairman, Ricoh Company, Ltd.

Corporate Ofﬁcer

Kiyoshi Fujiwara

Director

Michael Coombs

Representative Director & Vice
President, Coca-Cola (Japan)
Company, Limited

Corporate Ofﬁcer

Yoshimitsu Yoshitani Finance 3rd Ofﬁce Manager,
Finance Group

Director

Koukichi Hombou

Representative Director &Chairman, Minami Kyushu
Coca-Cola Bottling Co., Ltd.

Corporate Ofﬁcer

Kiyotaka Yamada

Finance 2nd Ofﬁce Manager,
Finance Group

Corporate Ofﬁcer

Hidetoshi Shimizu

BS 1st Ofﬁce Manager,
Business System Group

Corporate Ofﬁcer

Shigeki Okamoto

Corporate Planning GroupManager

Auditors

Marketing Planning GroupManagerManagement Advisory Committee

Executive Corporate Auditor

Yasumasa Niimi

Standing

Executive Corporate Auditor

Hiroshi Kanda

Standing

Chairman

Masamitsu Sakurai

Representative Director &Chairman, Ricoh Company, Ltd.

Corporate Auditor

Zenji Miura

Director & Executive Corporate
Ofﬁcer, Ricoh Company, Ltd.

MemberMasahiko Uotani

Director & Chairman, Coca-Cola(Japan) Company, Limited

Corporate Auditor

Katsumi Sasaki

Representative Director & Vice
President, The Nishi-Nippon
City Bank, Ltd.

MemberShingo Matsuo

Representative Director &Chairman, Kyushu ElectricPower Co., Inc.

Corporate Auditor

Yukiko Kyokane

Attorney, Representative of
Kyokane Law Ofﬁce

MemberKazuhiko Enomoto

Representative Director &Chairman, Fukuoka Jisho
Co., Ltd.
Representative Director &Chairman, Royal Holdings
Co., Ltd.

32

Coca-Cola West Holdings Company, Limited

MemberToshiaki Hanawa

Representative Director &President, Mitsubishi Heavy
Industries Food & Packaging
Machinery Co., Ltd.

MemberSusumu Ishihara

Representative Director &President, Kyushu Railway
Company

MemberTakashi Matsuzaki

Attorney, Tokunaga, Matsuzaki& Saito Law Ofﬁce

Member

Eiji Muto

Director & Chairman, NTT
Data Institute of Management
Consulting, Inc.

MemberKunio Ito

Professor, Hitotsubashi
University

Member

Masakazu Morito

Adviser, Kinki Coca-Cola
Bottling Co., Ltd.

MemberMichael Coombs

Representative Director & Vice
President, Coca-Cola (Japan)
Company, Limited

Corporate Data
(As of December 31, 2007)

O Company name:

COCA-COLA WEST HOLDINGS COMPANY, LIMITEDO Ofﬁces:

Head ofﬁce

7-9-66 Hakozaki, Higashi-ku, Fukuoka, Japan

Fukuoka ofﬁce 1-2-25 Sumiyoshi, Hakata-ku, Fukuoka, Japan
Osaka ofﬁce

4-15-10 Nishitenma, Kita-ku, Osaka, JapanO Established:

December 20, 1960

O Paid-in capital:¥15,231,000,000

O Employees:

8,420 (Consolidated), 268 (Non-consolidated)

O Fiscal year-end:

December

O Principal businesses: Manufacture and sales of Coca-Cola and other soft drinks; management of Group
companies, etc.

Stock Information(As of December 31, 2007)

Stock code:
2579
Authorized shares:
270,000,000
Outstanding shares:
111,125,714
Number of shareholders: 21,466
Number of shares
per trading unit:
100 shares
Stock exchange listings:
Tokyo Stock Exchange(First Section)
Osaka Securities Exchange(First Section)
Fukuoka Stock Exchange

Major shareholders:Number ofshares held(Thousands)

Shareholders

Ricoh Company, Ltd.
16,792
Kirin Holdings Company, Limited
11,626The New Technology Development Foundation
5,294
Coca-Cola Holdings West Japan, Inc.
4,074
Mitsubishi Heavy Industries Food & Packaging Machinery Co., Ltd. 3,912
Mellon Bank Treaty Clients Omnibus
3,759
The Nishi-Nippon City Bank, Ltd.
3,703
Japan Trustee Services Bank, Ltd. (Trust account)
3,162
Morgan Stanley & Company Inc.
2,944
CBNY UMB FUNDS
1,693

Percentageof shares (%)

15.9
11.0
5.0
3.9
3.7
3.6
3.5
3.0
2.8
1.6

Note: The Company owns 4,947,000 shares of treasury stock. This shareholding is not shown in
the table and has not been included in the calculation of voting rights (percentage of shares).

Number of shares held and percentage of shares held by shareholder category:
Individuals
and others
10.7%

Foreigncorporations
26.6%

Treasury
stock
4.4%

Financial
institutions
13.9%
Securities
companies
0.7%

Other domestic
corporations
43.7%

Financial institutions
Securities companies
Other domestic corporations
Foreign corporations
Individuals and others
Treasury stock< Composition of shareholders >Number ofshareholders

Number of shares(Thousands)

67
32
479
274
20,613
1

15,421
741
48,62629,534
11,853
4,947

21,466111,125

Credit Rating Information

Japan Credit Rating Agency, Ltd.
Long-term credit rating
Rating and Investment Information, Inc.
Long-term credit rating

2003

2004

2005

2006

2007

AA–

AA–

AA–

AA–

AA–

A+

A+

A+

A+

A+

Annual Review 200733

Coca-Cola System in Japan
Japan’s Coca-Cola system consists of Coca-Cola (Japan) Co., Ltd.,
12 bottling companies (bottlers) that manufacture and sell Coca-cola
products in the different regions of the country and other companies.
•12 Bottlers (As of January 2008)
Note: Major investor shown in brackets
1

Coca-Cola West Holdings Company, Limited(Ricoh Company, Ltd.)

11

Minami Kyushu Coca-Cola Bottling Co., Ltd.
2
(Satsuma Shuzo Co., Ltd.)

3

Shikoku Coca-Cola Bottling Co., Ltd.
(Nippon Paper Group, Inc.)

5

Coca-Cola Central Japan Co., Ltd.

6

Tokyo Coca-Cola Bottling Co., Ltd.

7

Mikuni Coca-Cola Bottling Co., Ltd.

8

Tone Coca-Cola Bottling Co., Ltd.

9

Sendai Coca-Cola Bottling Co., Ltd.

10

Michinoku Coca-Cola Bottling Co., Ltd.

Hokuriku Coca-Cola Bottling Co., Ltd.
4
(Wakatsuru Shoji)

10

9

4
7 8
6
5

(Marujin Corporation)(Mitsui & Co., Ltd.)(Kikkoman Corporation)(Kamei Corporation)(Yamura family)

11 Hokkaido Coca-Cola Bottling Co., Ltd.

(Dai Nippon Printing Co., Ltd.)

12 Okinawa Coca-Cola Bottling Co., Ltd.

(Marujin Corporation)

3

1(Mitsubishi Corporation)

2

12

Roles
Coca-Cola (Japan) Co., Ltd.

Bottlers (12 bottling companies)

Engaged in marketing, planning, andmanufacturing of Coca-Cola and otherconcentrates in Japan.

Manufacture and distribute products

Planning

Research&
Development

Concentrate
Manufacturing

Coca-Cola Tokyo
Research & Development Co., Ltd.
R&D for products and packaging

Product
Manufacturing

Distribution

Sales

Collection

Recycling

Coca-Cola National
Beverages Co., Ltd.

Coca-Cola Customer Marketing
Company, Limited

Oversees the group’s joint
procurement of raw
materials/ingredients, aswell as manufacturing andsupply-demand planningand coordination on anational level, and supplies
products to the bottlers.

Responsible for business negotiations withmajor retailers, such as nationwide convenience stores and supermarket chains, aswell as developing proposals for sales
promotions and storefront activities.

FV Corporation
Sells vending machines to customers overa wide area.

34

Coca-Cola West Holdings Company, Limited

Group Overview (As of April 2007)
Note: Figures in brackets show voting rights (percentage of shares)

Investment(100%)

Coca-Cola
Tokyo Research &Development Co., Ltd.
(CCTR&D)

4

The
Coca-Cola
Company(TCCC)

2(100%)

Coca-Cola (Japan)
Co., Ltd.
(CCJC)

3

Coca-Cola National
Beverages Co., Ltd.
(CCNBC)

6

Coca-ColaWest Holdings
Company, Limited
1(CCWH)

5(3.9%)(20.0%)
Coca-Cola Integrated
Business Systems
Co., Ltd.
7(CCIBS)

Minami Kyushu
Coca-Cola BottlingCo., Ltd.

Coca-Cola Customer
Marketing Company,
Limited8(CCCMC)

Coca-Cola Central
Japan Co., Ltd.
(CCBC)FV Corporation(FVC)

Tokyo Coca-Cola
Bottling Co., Ltd.

9

Joint companies of
TCCC/CCJC and bottlers

햲 Coca-Cola West Holdings Company, Limited(CCWH)
Japan’s largest Coca-Cola bottler, formed in July 2006 by integrating the management of Coca-Cola West Japan Co., Ltd. andKinki Coca-Cola Bottling Co., Ltd. The Company entered into an
equity-based business alliance with Minami Kyushu Coca-Cola
Bottling Co., Ltd. in March 2007.

햳 The Coca-Cola Company (TCCC)
Established in 1919 in Atlanta, Georgia, in the United States.
TCCC holds the rights to license bottlers to manufacture and distribute Cola-Cola products. Bottling contracts with bottlers areentered into by TCCC or one of its subsidiaries.

햴 Coca-Cola (Japan) Co., Ltd. (CCJC)
Established in 1957 in Tokyo as “Nihon Inryo Kogyo K.K.,”
a wholly owned subsidiary of The Coca-Cola Company of the
U.S., and then renamed in 1958 to Coca-Cola (Japan) Co., Ltd.
CCJC is engaged in marketing, planning, and manufacture of
Coca-Cola and other concentrates in Japan.

햵 Coca-Cola Tokyo Research & Development Co., Ltd.
(CCTR&D)
Established in January 1993 as a wholly owned subsidiary of The
Coca-Cola Company of the U.S. Since January 1995, the centerhas been involved in product development and technical support
responding to needs in the Asian region.

햶 Coca-Cola Bottlers (CCBC)
In Japan, there are 12 bottlers. Each bottler manufactures anddistributes products within the region for which it is responsible.

Coca-Cola Bottling(8 companies)(CCBC)

햷 Coca-Cola National Beverages Co., Ltd. (CCNBC)
Established in April 2003 as a joint company of The Coca-Cola
Company and all the Japanese bottlers to create an optimum
national supply chain management (SCM) system for the
Coca-Cola system in Japan. CCNBC started its operations in
October the same year. The company oversees the group’s joint
procurement of raw materials/ingredients, manufacturing on anational level, and supply-demand planning and coordination, andsupplies products to the bottlers.

햸 Coca-Cola Integrated Business Systems Co., Ltd.
(CCIBS)
Established in January 2007 as a joint company of The
Coca-Cola Company and all the Japanese bottlers, CCIBS provides business consulting for the Coca-Cola system in Japan. It
also develops supporting information systems and is responsible
for their overall maintenance and running.

햹 Coca-Cola Customer Marketing Company, Limited(CCCMC)
Established in January 2007 as a joint company of Coca-Cola(Japan) Co., Ltd. and all the Japanese bottlers. Responsible forbusiness negotiations with major retailers, such as nationwide
convenience store and supermarket chains, as well as developing
proposals for sales promotions and storefront activities.

햺 FV Corporation (FVC)
Established in May 2001 as a joint company of Coca-Cola (Japan)
Co., Ltd. and all the Japanese bottlers. Its functions include: sales
to organizations spread over wide areas in the vending machine
business and handling of products other than corporate products(those authorized by Coca-Cola (Japan) Co., Ltd.).

Annual Review 200735

Coca-Cola West Holdings Company, Limited
1-2-25 Sumiyoshi, Hakata-ku, Fukuoka, JapanIR Team, Corporate Planning Group TEL: +81-92-283-5724
http://www.ccwh.co.jp/english/

Cert no. SA-COC-1210

Printed in Japan