Coca-Cola West Japan Company, Limited Corporate Book 2003

Coca-Cola West Japan Company, Limited

Corporate Book 2003
Year ended December 31, 2003

Profile

On July 1, 1999, Sanyo Coca-Cola Bottling Co., Ltd. and Kita Kyushu
Coca-Cola Bottling Co., Ltd. merged to form Coca-Cola West Japan
Company, Limited (CCWJ). Backed by an equity investment from The
Coca-Cola Company, Japan’s first Coca-Cola Anchor Bottler was born.
As an Anchor Bottler and strategic partner of The Coca-Cola Company,
CCWJ now plays a central role in Coca-Cola’s business activities in Japan.

Contents
1
2
3

Consolidated Financial Highlights
To Our Shareholders
President & CEO Norio Sueyoshi on
the Medium-term Management Plan
8 Reform From Within—the Medium-termManagement Plan
10 Responding to Buy-side and Sell-side
Trends18 CCWJ’s Core Brands
20 Corporate Social Responsibility—
Contributing to Society

24
25
30
34
36
37
38
39
40
41

Six-year Summary
Management’s Discussion and Analysis
Financial Data
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements ofShareholders’ Equity
Consolidated Statements of Cash Flows
Group Companies
Stock Information/Credit Rating
Information
Corporate Data/Management

Forward-looking Statements
This corporate book contains statements regarding the Company’s future plans, strategies, projected performance andoutlook. 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 materially from those projected by the 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.

Consolidated Financial Highlights(Millions of yen)

Fiscal year:

2002

2003

Net sales¥247,737¥240,825

Operating income

16,704

19,638Recurring profit

17,00519,895

Net income

7,086

9,380

Total assets

204,070

204,180

Shareholders’ equity

164,658

165,454(Yen)

Per share data:
Net income per share¥

Dividend per share

85.49¥ 116.25

34.00

36.00
1

Net sales

Operating income

Net income(Millions of yen)

(Millions of yen)

(Millions of yen)¥240,825 million¥19,638 million¥9,380 million

247,737
226,111

17,449207,827

16,634 16,704

15,160164,731

7,086

6,823
5,700

1,420

99

00

01

02

03

99

00

01

02

03

99

00

01

02

03

To Our Shareholders

Operating Results

Complementing the

Expectations of a recovery in Japan’s economy grew

objectives of ourduring fiscal 2003, ended December 31, 2003. The

medium-term management plan was Coca-Colasoft drink sector, however, remained sluggish,

National Beverage Co., Ltd., which began operations

impacted by cool summer temperatures and otherin October 2003. Established through the cooperationunseasonable weather conditions. Moreover, a closer

of Coca-Cola (Japan) Co., Ltd. and all Coca-Colalook at trends over the last several years reveals thatbottlers across Japan, this new company was createdthe scale of the soft drink market has plateaued,

to lower costs by achieving optimal supply chain

forcing soft drink companies to vie for growth amid

management (SCM) on a nationwide scale.

increasingly stiff competition.
Against this backdrop, CCWJ’s consolidated net

Realizing Definitive Results

sales declined 2.8% to ¥240,825 million in fiscal

The soft drink sector is expected to face challenging

2003. Operating income climbed 17.6% to ¥19,638

conditions for some time. Amid this climate, CCWJ

million, and recurring profit increased 17.0% towill stay the course as a group unified in driving¥19,895 million. Net income, meanwhile, jumped

forward the measures outlined in our medium-term

32.4% over the previous year to ¥9,380 million.

management plan. Fiscal 2004, the second year ofOperating income, recurring profit, and net income

this plan, will be the year we focus on building uponin fiscal 2003 were the highest ever for CCWJ.

the foundations we have cemented thus far to deliver2

definitive results. Our overarching goal is to make

Cementing Reform From Within

another leap forward in growth when Reform From

The year under review saw the launch of Reform

Within draws to a close in fiscal 2005. To this end,

From Within, our medium-term management plan

we also intend to further our cooperation withscheduled to run through fiscal 2005. We designatedCoca-Cola (Japan) and Coca-Cola bottlers

fiscal 2003 as a time to cement the foundations forthroughout Japan.

implementing the plan, and took appropriate action
to do just that.
As a first step, we shifted our business system to
one more responsive to buy-side customers and sellside clients. Under the new system, we bolstered

Backed by a fully united CCWJ group, we will
make the utmost effort to achieve sustainable growthover the long term by establishing a solid, yet
resilient, base of operations.
We are grateful for the support of all our

CCWJ’s sales capabilities and developed “freshness

shareholders and look forward to their continued

initiatives” for better managing product freshness. In

understanding and support.

another move, we implemented the preparatory
measures and integrations necessary to ensure that all

April 2004of the functions required for conducting our CocaCola business reside within the group. We now havea system in place whereby each group company canfully and responsibly execute its specific duty andfunction. To maximize results, we also sought

Norio Sueyoshi

optimal placement of our human resources to boost
motivation and encourage a “can-do” attitude

Representative Director

among our employees.

President & CEO

President & CEO Norio Sueyoshi on the Medium-term Management Plan

In this interview, we talked with Norio Sueyoshi, President and CEO of CCWJ,
about initiatives and operating results in fiscal 2003, progress made on establishing a nationwide SCM framework, and his outlook and vision for CCWJ in
fiscal 2004 and beyond.
OPERATING RESULTS IN FISCAL 2003
Many industries were impacted by the

Q.1 weather last summer, reportedly Japan’scoolest in a decade. How did the softdrink industry fare?
Without a doubt, the cool summer took its toll. The softdrink sector in 2003 contracted 1.0% compared to a year
earlier. In the end, this was still a modest decline considering how devastating the summer weather could have been.
Looking at trends in recent years, weakness among major
brands that once spearheaded growth and the poor performance of new products all indicate that the market has
stopped growing. This adds up to tougher competition forsoft drink companies.

What were problem areas regarding last

Q.3 year’s results?

As I mentioned, Japan’s soft drink market contracted by
1.0%. Our own sales volume was down even more. Thisbrought down our market share by 2.2 percentage points,from 32.6% in the previous year to 30.4% in fiscal 2003.
For this reason, sales and market share are two priority
issues, and I would like most of all to see us zero in on
measures to boost sales.

REFORM FROM WITHIN—CCWJ’S MEDIUMTERM MANAGEMENT PLAN
Could you tell us more about the medium-Q.4 term management plan launched last year?

How did Coca-Cola West Japan perform

Q.2 in this climate?

CCWJ saw consolidated net sales dip 2.8%, while operating
income and net income rose 17.6% and 32.4%, respectively. Sales faced an uphill battle from the impact of theunseasonable summer temperatures. On the other hand,
we reviewed our personnel management system and took
other steps to improve our business structure, actions
which led to record-high earnings. Our operating income
margin rose 1.5 percentage points, while the net income
margin was up 1.0 percentage point over the previous year.

We realized that CCWJ urgently needed systems and anorganization capable of flexibly responding to far-reaching
and rapid changes in market trends. The measures wedevised for enhancing the CCWJ group’s competitivenessand achieving further growth culminated in our mediumterm management plan. Our goal is to raise enterprisevalue by demonstrating the functions and roles necessary
to improve convenience and make CCWJ a more indispensable presence in the eyes of customers and clients alike.

3

Q.5

What is the meaning of Reform FromWithin, your medium-term management
plan?

Structural reform doesn’t mean much if the only change is
new organizational lines. Reform From Within expresses
two of our convictions: that all executives and personnel inthe group must change themselves from within, and thatchange in our company must come from within all executives and personnel. This idea that directors and employees

4must change themselves so they can change the Company
is implicit to Reform From Within. During the three-year
run of the plan, our goal is to transform CCWJ into a
company capable of quickly responding to market trends.
What type of “Reform From Within”

Q.6 took place during fiscal 2003, the firstyear of the plan?
We designated the first year of the plan as a time for building the basic framework. This mainly involved changes
such as redefining our business and personnel systems.
In changing the business system, we shifted toward one
more focused on specific sales channels. To this end, we
conducted extensive marketing activities that better matchour buy-side customers and sell-side clients, and reorganized our activities into business units divided along functional and business lines. Through these actions, we now
have a system that fully integrates every aspect of ouroperations, from planning through frontline sales.
As for our personnel system, we allocated human resources
to bolster the individual roles and functions of ouremployees. As part of this process, we conducted a review
of salaries, bonuses, retirement packages and pensions,which helped to streamline our management structure.
For any group, accurately managing the performance ofeach component of its organization is essential to reachingoverall objectives. To this end, we made the necessary
preparations for the full-scale adoption of our new

performance management system. This included establishing new performance management indicators and introducing the budget system that will underpin them.
What exactly are “freshness initiatives”?

Q.7 How are they conducted and what
benefits can be expected?

In the Coca-Cola business, our fundamental policy is toprovide dependable, high-quality products that everyone
can enjoy whenever and wherever they are. Fulfilling thiscommitment requires a two-pronged approach. To
provide a dependable product, we first need to guarantee
freshness. Next, to give everyone the chance to enjoy our
products anytime and anywhere, we need to ensure
product availability. Freshness initiatives, then, describe
our efforts to keep a steady supply of fresh products moving quickly from the production line to our customers.
What are some of the specific ways

Q.8 CCWJ preserves the freshness of its
products?
For starters, we establish targets at every stage, fromproduction to sales, to better manage the freshness of our
products. A bold transformation is also under way in our
mindset regarding freshness. Many benefits are emerging.
One is a one-third reduction in our internal inventory. Byleveraging an extensive sales network unmatched by any
competitor, we are executing a comprehensive freshness
management program, and hope to link that to improved
customer satisfaction.
In your words, fiscal 2003 was a year for

Q.9 “building the basic framework” at CCWJ.
Do you think the Company succeeded?
I’m inclined to think so. In just one year, we built anorganization designed to make full use of our collective

strengths, as well as a sales system more closely attuned toour customers and clients. As the run-up to the conclusionof our medium-term plan in 2005, fiscal 2004 will be a time
for delivering definitive results. The entire group will work as
one to set the stage for another leap ahead in growth in 2005.

Having an optimal SCM framework on a nationwide scale
will allow us to reduce costs. Our aim is to ensure thelong-term growth of the Coca-Cola group in Japan byreinvesting the resources freed up in this process to bolster
marketing activities and improve client services.

BUILDING AN SCM FRAMEWORKNATIONWIDE

Q.11 this SCM framework?

Coca-Cola National Beverage Co., Ltd.

Q.10 (CCNBC) began operations in October

2003, reflecting CCWJ’s plans for an SCM
structure spanning the entire country.
What does CCWJ hope to accomplish bytaking this step?
CCNBC was established to integrate procurement, manufacturing and distribution for the Coca-Cola group in Japan.

What does CCWJ most hope to gain from

In addition to enhanced efficiency and cost reductions,what makes nationwide SCM so attractive is that it gives
us the supply-side system needed to flexibly meet thechanging needs of our customers and clients. SCM should
also improve the quality of our client services. We expect
this framework to provide what CCWJ on its own could
not—steady improvements in efficiency that go beyond asingle target region.

Diagram of Integrated Nationwide SCM

SCM
Coca-Cola National BeverageCo., Ltd. (CCNBC)
Low-cost, highly competitive
supply chain

Attract customers
Coca-Cola (Japan)
Co., Ltd. (CCJC)
Customer-focused marketing
innovation

Minimizes total PPL* costs
Allows provision of best possible services
Highest quality standards can be maintained
Swift responses possible
Supports suitable risk sharing/new investment

Top priority: reducing costs
Long-term objective: competitive, sustainable system
PPL* = Procurement / Products / Logistics

Client services
Coca-Cola BottlingCompany (CCBC)
Client-focused marketing andbusiness strategies

Long-term competitiveness of
Coca-Cola’s system

5

Do you foresee economic merits emerging

Q.12 from bottling companies in the future?

6

Today, CCNBC is spearheading efforts to smoothly
integrate procurement, manufacturing and distribution
operations by 2005. Having a common operational process
will allow bottlers to adopt integrated information systems
for greater efficiency. In terms of manufacturing anddistribution, integration will permit optimal management
group-wide of the manufacturing facilities utilized bybottlers in each region. As always, sales will be conductedby establishing closer ties between bottlers and the regions
they serve. Extending information systems support toeach bottler will boost productivity, allow for better useof production lines, and help us to keep an appropriate

Reducing Supply Costs via PPL*
Commencement of Nationwide SCM
Profit / Cost

supply of products on hand. Through these improvements,
we expect to see annual cost reductions of over ¥25.0
billion by 2007.

OUTLOOK FOR 2004 AND BEYOND

Q.13 What sort of year will 2004 be for CCWJ?
I think we’re likely to see conditions steadily rebound for
the Japanese economy as a whole on the back of higher
capital investments by corporations and rising exports.
This emerging recovery, however, has yet to spread toconsumers and the employment front, meaning thatdifficulties still lie ahead for the soft drink market. CCWJ,
for its part, will remain committed to boosting sales andearnings. In fiscal 2004, we are forecasting net sales of¥254.0 billion, operating income of ¥17.7 billion, and net
income of ¥10.4 billion.
How does CCWJ plan to deliver the

Q.14 definitive results promised for its
Lower sales from shift in channels
and deflationary pressures

CRP* for 2007: More than ¥25 bil.
Increased costs due to shift awayfrom cans to PET bottles

Integrated SCM—a solution forminimizing supply-side costs
Time

PPL* = Procurement / Products / Logistics
CRP* = Cost Reduction Profit

medium-term management plan?
In fiscal 2004, we intend to make a point of executing
operations centered on direct, frontline contact with ourcustomers and clients, and rigorously applying new standards for operations. In terms of product strategy, we plan
to grow by introducing value-added products, and developing brands, packaging and pricing geared to specificsales channels. Complementing these measures will beefforts to reenergize our four main brands—Coca-Cola,
Georgia, Sokenbicha, and Aquarius. Among our newvalue-added products, we plan to include “borderless
products,” offerings such as beverages that provide specificfunctions as part of a healthy diet, as well as products withflavors similar to cocktails and other alcoholic beverages.

As for products targeting specific sales channels, we are
seeking to broaden sales opportunities by expanding ourlineup of vending machine-only products, and introducing
new containers for products sold in supermarkets.
In 2004, the new business system built in the previous
year will provide the template for a range of actions thatshould lead to significant growth for CCWJ.
What is the Company’s basic stance on

Q.15 corporate governance?

Our stance is that good corporate governance gives us thelatitude to make management more efficient and transparent,
thereby increasing shareholder value.
In March 1999, we restructured the Board of Directors
and adopted the executive officer system, separating
decision-making authority and management oversightfrom business execution functions. In 2001, we established
a committee responsible for executive nomination andremuneration. Acting in an advisory capacity to the Boardof Directors, this committee, chaired by one of CCWJ’s
external directors, is designed to bring greater transparency
to the selection of directors and corporate auditors, and toensure that compensation for directors is handled in an
appropriate manner.
Currently, six of CCWJ’s nine directors, and three of
its four corporate auditors, are from outside the group.
Directors and auditors also take part in top management
meetings—attended primarily by executive officers—aswell as other important company meetings, resulting in asystem that allows directors and auditors to fully monitor
how executives conduct business operations. Whenquestions arise during the course of business execution,
CCWJ consults attorneys, CPAs and other specialists foradvice on determining the best way to proceed.
At the CCWJ group, our belief is that compliance withall applicable laws and regulations, and the spirit in whichsuch are written, is fundamental to engaging in businessactivities, as is the proper observance of social norms andcustomary business practices. This belief is enshrined in
the code of conduct we have compiled to encourage acompliance mindset among all CCWJ directors andemployees. At the same time, we have assigned directors
and other personnel in charge of compliance to reinforce
corporate ethics throughout the group.
Rest assured that going forward we will continue topursue the necessary initiatives to be certain that CCWJ
maintains a well-oiled corporate governance framework.
What role will CCWJ play as Japan’s sole

Q.16 Anchor Bottler?

CCWJ is the only Anchor Bottler* in Japan and The
Coca-Cola Company is a shareholder. Today, Japan’s softdrink industry is witnessing rapid changes in terms of sales
channels and the diversifying tastes and preferences ofcustomers. We now face an era where resilience and adaptability are the qualities that bottlers need most. As an
Anchor Bottler and leader in the Coca-Cola system inJapan, we will strive to raise the quality of our sales
capabilities and operations. In the course of honing thesefundamental strengths, CCWJ will distinguish itself fromrivals, upholding a level of competitiveness that we believe
will further enhance our market presence.
* Anchor Bottler refers to bottlers with whom The Coca-Cola
Company maintains a special relationship. The Coca-Cola
Company currently has 10 Anchor Bottlers located around theglobe. The term has become a byword for bottlers with outstanding
financial and management capabilities, as well as for wide-areabottlers exhibiting growth potential, that have received equity
investment from, share common objectives with, and are considered
influential partners of The Coca-Cola Company. As a key partner
in The Coca-Cola Company’s global strategies, CCWJ is qualified topursue investment opportunities in Coca-Cola bottlers throughout
the Asia-Pacific region.

7

Reform From Within—the Medium-term Management Plan

Achieving Reform From Within
The CCWJ medium-term management plan runs from the beginning of fiscal
2003 to the end of fiscal 2005. The fundamental policy of the medium-term
management plan is Reform From Within, which is made up of five key areas ofreform to be targeted by the entire group.
The second year of this plan, 2004, will see CCWJ build on foundations laid in
the previous year to deliver definitive results, as it conducts activities designed
to spur another leap ahead in growth as the plan draws to a close in 2005.

Medium-term Management

Concrete Measures

Fundamental Policy (2003-2005)

1

BUILD A NEW BUSINESS SYSTEM

2

STRENGTHEN GROUPMANAGEMENT

3

RESTRUCTURE PERSONNELMANAGEMENT

Reform From Within
8

Reform From Within that makes the
CCWJ group a vital part of customers’
lives and clients’ businesses.
Reform From Within that puts the
CCWJ group ahead in the soft drink
business.
Reform From Within that encourages
the CCWJ group to pursue roles andfunctions.
Reform From Within that draws on
the vitality of the employees andorganization of the CCWJ group.

Reform From Within that establishes a
CCWJ group coexisting with society.

Reform From Within means:■ Change must come from within all executives and personnel in the group■ Change in building companies and a group must come from within all
executives and personnel in the group4

1. Reform management
2. Strengthen management capabilities with new businessunits
3. Foster and develop new products
4. Prioritize quality
5. Build a system that optimizes supply and demand
6. Prioritize customer satisfaction

1. Promote an appropriate positioning of businesses within
the group
2. Build a group-wide management control system
3. Enhance communication

1. Strengthen functions through the appropriate
positioning of businesses within the group
2. Build a new personnel and welfare system that
responds to enhanced functions and roles
3. Create the necessary personnel structure to meetneeds for inventory checks and new roles
4. Establish appropriate working hours
5. Foster and recruit personnel
6. Create a platform for communication between company
and employee

COEXIST WITH SOCIETY
1. Augment the corporate ethics system
2. Take the lead as an environmentally friendly company
3. Make a greater contribution to regional communities

CCWJ group companies are working as one to conductcustomer- and client-oriented marketing activities.
Coca-Cola WestJapan Company,
Limited

Nishinihon
BeverageCo., Ltd.

MarketingCoca-ColaWest Japan
VendingCo., Ltd.

Clients andCustomers

Coca-ColaWest Japan
Products
Co., Ltd.
9

Logicom Japan
Co., Ltd.

Nishinihon Customer
Service Co., Ltd.

■ Nishinihon Beverage Co., Ltd.
(Vending Sales)■ Coca-Cola West Japan Company, Limited(Product Management)

Responsible for managing CCWJ’s network of vending
machines, with a focus on Coca-Cola products, Nishinihon
Beverage pursues increased sales and profits by providing
high-quality vending machine services to customers.

Responsible for product management, or more accurately,marketing, CCWJ puts together proposals for sales promotion
plans and installs new vending machines as it seeks to help
business partners boost their sales of Coca-Cola products. In
this way, CCWJ is working to increase earnings and market
share, and, ultimately, working hand in hand with other groupcompanies, to enhance the corporate value of the group as a whole.

■ Coca-Cola West Japan Vending Co., Ltd.
(Vending Machine Operations)■ Coca-Cola West Japan Products Co., Ltd.
(Manufacturing)Responsible for vending machine operations, Coca-Cola
West Japan Vending works hard to ensure our customers
keep coming back for more. This is achieved by positioning machines in optimum locations, changing the type ofdrinks loaded in machines to match the season, andensuring machines are always full.

As the manufacturing arm of the group, Coca-Cola WestJapan Products provides the high-quality, dependable softdrinks that our clients want. Offering a broad range ofmanufacturing services, the company constantly endeavors
to supply products more quickly at lower cost to otherparts of the CCWJ group.

■ Logicom Japan Co., Ltd.
(Logistics and Retail Operations)■ Nishinihon Customer Service Co., Ltd.
(Equipment Service)

Logicom Japan is responsible for the group’s logistical andretail operations, providing quality distribution services
based on safety, precision, speed, care and courtesy. The
objective is to supply business partners with the products
they want, when they want them.

Responsible for the installation, repair and cleanliness ofvending machines, Nishinihon Customer Service provides
the best in equipment support services so that customers
can count on CCWJ for consistently high product quality.

10

Responding to Buy-side and Sell-side Trends

Vending Machine Business Unit
The vending machine business unit, one of CCWJ’s coresales channels, has an extensive network for providing
products to customers.

Fiscal 2003 Overview
This business unit accounted for 49% of sales in fiscal
2003, and has long contributed to top- and bottom-line
performance as a key source of earnings for CCWJ.
Sales volume was 33,318,000 cases, an increase of
3.5% compared to the 32,185,000 cases recorded infiscal 2002. This was 38.7% of CCWJ’s total sales
volume, up 2.3 percentage points from the 36.4%
posted a year earlier.
In fiscal 2003, the vending machine business unit
had a total of 135,152 vending machines, and a 52.6%
share of Japan’s outdoor vending machine market.

Measures Taken
During fiscal 2003, CCWJ worked to create vending
machines that customers find more attractive to use.
These efforts included introducing PET bottles andbottle-cans, rolling out C-mode vending machines andsales support vending machines with IT capabilities,
and conducting promotional campaigns that make useof IT.
Together with group company Nishinihon Beverage,
CCWJ also developed the indoor vending machine
market, with an emphasis on workplaces, hospitals
and schools.
To lower the breakeven point and costs, all groupvending machine operations were transferred to
Coca-Cola West Japan Vending. To reduce vending
machine monitoring costs, a joint supply deal wasformed with bottlers nationwide, along with a joint
operations agreement with CCWJ group company
Nishinihon Customer Service.
Targeted initiatives during the year led to better
management of product freshness, allowing CCWJ toprovide customers with fresher, better tasting products.

Despite a year-on-year decline in the total number ofvending machines in operation, the vending machine
business unit was able to contribute to earnings andsales volume—the result of an extensive review of vending machine models, locations and product lineups.

Policies for Fiscal 2004 and Beyond
Reenergizing existing vending machines

Until recently, CCWJ’s objective has been to improve
performance for all existing vending machines. The
policy going forward, however, is to give greater
weight to efficiency—ranking machines according tosales volume and enacting in-depth measures as necessary. Vending machines that generate a high sales
volume, for example, will gradually be upgraded tomodels with IT capabilities and equipped with quality
control and remote operated hot-cold thermostat
functions. Machines with mid-range sales volume will
be exchanged for lower-cost models, and installationagreements will be reviewed. Low-volume machineswith little chance of sales growth, and that are thus
unable to provide customers with fresh products, will
be removed. Through these measures, CCWJ aims toincrease earnings.
Scaling Back New Business Areas

The profitability of new vending machines will be amajor focus. In fiscal 2003, new machines were
installed in a relatively large number of low-volume
locations, causing sales volume to come in below
initial targets. In response, CCWJ plans to elevate sales
volume per machine by extensively researching
locations to identify those with the greatest potential.

11

12

Responding to Buy-side and Sell-side Trends

Chain Store Business Unit
The chain store business unit has achieved considerable
growth in recent years by targeting specific consumer
needs in its supermarket-oriented operations.

Fiscal 2003 Overview
The chain store business unit saw sales volume edge
0.2% lower to 16,586,000 cases, compared to
16,618,000 cases in fiscal 2002. The percentage of
CCWJ’s total sales volume was 19.3%, up 0.5 of apercentage point from 18.8% recorded in the previous
year. CCWJ has made steady progress in this businessarea, with sales volume for fiscal 2003—despite theslight decline—more than 20% higher than thatposted three years earlier. On the earnings side, CCWJ
achieved positive operating income in fiscal 2003, withplans to build on this growth.

Measures Taken
With an eye on expanding both volume and market
share while stressing profitability, CCWJ plans to raise
operating income as a proportion of net sales to 5% in
fiscal 2005. To achieve this objective, CCWJ proposes
joint sales promotions with clear merits for both sides
in its negotiations with supermarket chains. In discussions with individual stores, CCWJ allotted more time
for business negotiations and strengthened its ability tooffer proposals. The chain store business unit also
improved its efficiency, thanks to a review of theoperational system, a more suitable operational load
for merchandisers, and optimal placement of personnel
in charge of client accounts.
The drive to maintain profitability continued toencounter challenges, as the competition centered onlarge PET bottles intensified. In response, CCWJ
shifted away from large formats in its packaging mix
during the year under review, in favor of smaller
formats more closely matched to consumer needs—amove which led to higher earnings. CCWJ also
launched measures to augment distribution efficiency

by shipping water and tea products in 2-liter PET
bottles directly from the factory to clients.

Policies for Fiscal 2004 and Beyond
CCWJ will build upon the momentum of its return toprofitability in the chain store business unit by ramping up steps taken in fiscal 2003 to develop packaging
formats that more accurately reflect consumer needs.
In doing so, CCWJ is correcting a tendency until now
to favor large, easy-to-sell packaging formats over thosebest suited to consumer demands, a stance that
resulted in a lineup with a higher percentage of large
packaging formats. This situation made finding ways
to boost profitability a key issue, and came amid the
pursuit of better price competitiveness vis-à-vis industry
rivals and intense competition among CCWJ’s clients.
Consequently, CCWJ plans to spur growth in sales
volume by aligning its product mix more closely to
consumer needs.
In fiscal 2004, CCWJ will introduce products in
500ml and 1-liter PET bottles in line with its “multimix” approach to sales—part of its strategy to raise
profitability. This action should alleviate consumers’
dissatisfaction with the weight and volume of large
PET bottles, while simultaneously boosting thepresence of smaller packaging formats in the
product lineup.
CCWJ will also pursue strategies derived fromanalysis of its clients on an individual basis, ranking
each according to sales volume and profitability. Sales
strategies that cater to the needs present will then be
developed to respond to client characteristics in bothof these areas.

13

14

Responding to Buy-side and Sell-side Trends

Convenience Store andGeneral Retail Business Unit
This business unit encompasses sales to convenience
stores, drug stores, high-volume food retailers andliquor stores.

Fiscal 2003 Overview
Sales volume in the convenience store and generalretail business unit was 24,960,000 cases, down 11.6%
from 28,238,000 cases in fiscal 2002. Sales volume forthis business unit dipped 1.9 percentage points to
29.0% of total volume, compared with 31.9% a year
earlier. Presently, this business unit is seeing real
growth in sales at convenience stores, with a contraction at general retail stores.

Measures Taken
Long-term business relationships are a prominent
feature of CCWJ’s retail channels. Many clients haveties that date back to the early days of CCWJ, whencompany representatives paid personal visits to each
one to request their business. Today, the emergence of
convenience stores and supermarkets has diversified
sales routes, sparking the need to devise sales methods
to cope with these market changes. For this reason,
CCWJ is turning its attention to proposal-based sales
initiatives that better anticipate market demand.
To develop a product lineup and propose sales
methods more conducive to client needs, CCWJ is
exercising greater flexibility in aligning its negotiating
strategies with the business conditions of its clients.
For convenience stores, CCWJ enhanced its marketing
capabilities by beefing up the options and terms of its
negotiation methods. The methodology used now
depends on whether negotiations with a convenience
store chain must be handled by its head office, orwhether individual stores are authorized to negotiate
on their own. As a result, CCWJ succeeded in
expanding the number of items in the main productflow of convenience store chains. CCWJ also reaped
benefits—in the form of higher sales volume—by

meeting the needs of national convenience store chainsthrough sales promotion activities built on its cooperative system with other bottlers.
For general retail stores, a category encompassing
high-volume stores such as drug stores, home improvement centers and discount liquor stores, CCWJ
conducted activities that reflect the uniquecharacteristics—opening hours, pricing policies andsales methods—of each client.
Benefits also emerged from CCWJ’s enhanced management of product freshness, as initiatives targeting
freshness during the year helped clients maintainsuitable product inventory levels.

Policies for Fiscal 2004 and Beyond
For major convenience store chains where productflow cannot be implemented on an individual store
level, CCWJ will assist the regional headquarters in
implementing their main product flow, with the goalof steadily raising both sales and sales volume. For
chains where individual store flow is possible,
marketing specialists will make regular visits to offer
in-depth sales proposals as CCWJ endeavors to drum
up demand.
For general retail stores, CCWJ will pursue sales
volume strategies that pay close attention to the sales
characteristics of each client. Going forward, CCWJ
will home in on drug stores, where sales growth has
been greatest, as part of plans to further boost sales.
For high-volume food retailers and liquor stores,
CCWJ will create proposals tailored to client needs
after scrutinizing data such as store locations andtargeted customer segments.

15

16

Responding to Buy-side and Sell-side Trends

Food Service Business Unit
The food service business unit’s core operations
encompass the sale of soft drink syrup to fast foodchains, casual dining restaurants, cinemas, sports
facilities and amusement centers.

Fiscal 2003 Overview
Sales volume in the food service business unit rose
0.4% to 7,418,000 cases, compared to 7,387,000 casesin the previous year. The percentage of total sales
volume was 8.6%, up 0.2 of a percentage point fromthe 8.4% recorded in fiscal 2002. On the earnings
side, CCWJ reduced the operating loss posted a year
earlier by closely monitoring sales and expenses.
Despite unseasonably cool summer weather—which
impaired the ability of leisure facilities and others to
attract customers—sales volume was virtuallyunchanged from the previous year, thanks to benefits
gained from stronger capabilities in marketing hot
drinks and other products. To raise efficiency, CCWJ
took measures for improving the performance of
low-selling stores, bringing a return to profitability forthis business unit within reach.

Measures Taken
In this area, CCWJ turned its attention to improving
the earnings structure through enhanced market development and cost reductions centered on a review ofdrink dispenser locations. To bolster market development, CCWJ expanded sales opportunities for hot
drinks at restaurants and amusement and leisureareas—a move that was well received by consumers.
To underpin operational support services for clients,
CCWJ sought ways to tweak its equipment service andsanitation monitoring system, and initiated development of a late-night maintenance response system. To
boost efficiency, CCWJ persuaded clients with lower
annual sales volumes to switch to canned and bottled
products, to provide consumers with the freshest
products possible. CCWJ also took steps to cut costs,
and conducted a review of its lineup of products anddrink dispensers. In the end, these efforts proved
instrumental in CCWJ paring down the loss in thisarea in fiscal 2003.

Policies for Fiscal 2004 and Beyond
Fiscal 2004 will see CCWJ implement two strategies
in this business unit. First, broaden markets byenhancing marketing capabilities from the clients’viewpoint. Second, conduct extensive cost reductions
and raise efficiency to improve earnings.
To broaden markets, CCWJ will ramp up its
product-side services—which include providing drinksthat meet the specific needs of the target client. CCWJ
will also continue its efforts to increase its market
presence by acquiring new outlets for its products andexpanding sales opportunities for hot drinks.
For clients with lower sales volumes, CCWJ willcontinue efforts begun in fiscal 2003 to improve theirperformance. Originally, CCWJ had a three-year planin place for this purpose. Now, however, thanks toprogress in fiscal 2003 to make this area more profitable, plan objectives will likely be reached in 2004—afull year ahead of schedule. Improving efficiency is also
on the agenda, as CCWJ streamlines its productlineup, providing clients with only the products thatbest meet their needs.

17

CCWJ’s Core Brands

CCWJ is bolstering its four core brands—Coca-Cola, Georgia, Sokenbicha andAquarius—which are a stable source of sales and represent about 60% of
CCWJ’s sales volume. While no dramatic growth is expected for these brands
due to the sheer size of turnover, CCWJ is taking steps to maintain their highmarket shares.

18

Coca-Cola

Georgia

Contributing about 10% to CCWJ’s sales volume,

Launched by CCWJ in 1975 and now a byword for

Coca-Cola has a market share in Japan of 76%. In

canned coffee, Georgia was the first product in this

CCWJ’s operating area, Coca-Cola has a dominantcategory to be sold nationwide. Georgia represents moremarket share of 78%.

than 30% of CCWJ’s sales volume and commands a

In fiscal 2003, the design of Coca-Cola products wasmarket share in Japan of 45%. In CCWJ’s operating

revamped to give a fresher image and to furtherarea, Georgia’s commanding market share is even higher,

strengthen the appeal of the Coca-Cola brand. In fiscal

at 67%.

2004, in a drive to expand sales volume and market shareeven further, CCWJ launched a massive promotional

In fiscal 2003, CCWJ replaced “Tomorrow is Another
Day,” chosen as one of the most popular catchphrases incampaign, the first new campaign in three

Japan for the year, with “The Feeling is Georgia.” A

years. Launched in March, the campaign is

promotion launched at the same time—“The Georgia

called “Special Magic Coca-Cola.”

Number Challenge”—was a runaway success, elevating
CCWJ to number one in terms of the number ofentrants for a promotional giveaway in Japan during theyear. In fiscal 2004, CCWJ will step up its “The Feelingis Georgia” campaign to establish an
unassailable market position.

Market Share in CCWJ’s Operating

No.1

No.1

No.1

No.1

Area by Category (2003)

78%

78%

67%

Coca-Cola

Georgia

Cola

Canned coffee

53%
Aquarius

Sokenbicha

Sports drinks

Blended tea

Aquarius

Sokenbicha

Developed in Japan and growing in stature as a global

Underpinned by the keywords refreshing, healthy andbrand, Aquarius is Japan’s most-loved sports drink.

beautiful, Sokenbicha is a tea for health- and beauty-

Aquarius’ market share in Japan is 46%, with an over-conscious people. CCWJ was first in pioneeringwhelming 53% market share in CCWJ’s operating area.

Sokenbicha for its own target region, prior to the

In fiscal 2003, CCWJ developed the “Sport for

product’s nationwide launch. Sokenbicha has a market

Life” campaign using all sports as the theme.

share of 73% nationwide, and an impressive 78% share

In fiscal 2004, CCWJ will promote a new

in CCWJ’s operating area. Even today, Sokenbicha is stillcampaign—“BODY! Go! Go!”—to further

synonymous with blended tea.

enhance the dominance of this brand.

In fiscal 2003, CCWJ ran the “Naturally Naturally
Sokenbicha” campaign, but will launch a new
campaign—“So Beautiful, Sokenbicha”—in fiscal 2004,
to solidify this powerful brand.

19

Corporate Social Responsibility—Contributing to Society

Committed to being a good corporate citizen, the CCWJ group always thinks
and acts from a social standpoint. Consequently, CCWJ is developing a rangeof activities that contribute to regional society and the environment. CCWJ
allocates a fixed portion of earnings every year to fund these ongoing activities
with the understanding and support of shareholders.

Contributions to Regional Society
Together With Society
FUNDAMENTAL

With the aim of supporting the healthy development of youth and striving to foster closer rela-

STANCE

tionships with communities, CCWJ takes on a supporting role for community welfare, sporting
activities, cultural and educational activities, and community events.

■ Coca-Cola West Japan Family
Musical20■ Sawayaka Concert■ Ichimura’s nature school in Kyushu■ Sawayaka Classical Concert■ Kinshuki Gyokuryuki HighSchool Judo and Kendo
Tournament■ Japan Expo Kitakyushu 2001

■ The 9th FINA World Swimming
Championships—Fukuoka 2001

■ RoboCup 2002 Fukuoka/Busan■ Japan Expo Yamaguchi 2001

Culturaland
Educational
Activities■ World Wheelchair BasketballChampionships 2002

■ Donation of educational materials to
special schools■ Donation of unicycles to elementary schools■ Sawayaka Rugby Clinic

Social
WelfareServices■ Sawayaka Youth Soccer
Tournament■ Coca-Cola WestJapan Youth Soccer
Tournament

21■ Sawayaka Youth Rugby Tournament

Contributions toRegional SocietySportsActivities

Other
Regional
Events■ Japan Inter-High School Sports Meet■ Japan Youth Soccer Tournament■ H.I.H. Prince Takamado Trophy All Japan Inter-Middle School
English Oratorical Contest

Environmental Activities
An Industry Leader on Environmental Issues

BASIC
PHILOSOPHYACTION PLAN

CCWJ promotes its business activities while respecting human, social and environmental
harmony based on the premise of being a responsible corporate citizen. As a company that
conducts the bulk of its manufacturing and sales of soft drinks and related activities in Japan’s
Chugoku and Kitakyushu regions—areas that are surrounded by the sea, mountains and otherrich natural features—CCWJ recognizes the debt of gratitude it owes to its customers andsociety, which it repays through efforts to beautify and preserve the environment and recycle
resources. All employees throughout the CCWJ group take responsibility for the environment
in their workplaces and contribute to building a comfortable and abundant society.
■ Offer clean, safe products and services■ Promote greater energy efficiency to help prevent global warming■ Use water effectively to conserve this precious resource■ Work to reduce and recycle waste to help realize a recycling-oriented society■ Take steps to procure highly recyclable and environmentally friendly materials■ Vigorously develop regional environmental activities■ Educate employees through training and promotional programs to raise environmental awareness22

Construction and operation of
the Kitakyushu Sawayaka
Recycling Center
In 2003, construction of the Kitakyushu
Sawayaka Recycling Center was completed in
the Ecotown precinct of Kitakyushu City. Thiscenter collects and recycles empty cans, glass
bottles and PET bottles in Fukuoka and Saga
prefectures.

Recycling

Introduction of the Eco vehicle
To reduce carbon dioxide emissions fromvehicle exhaust gases, CCWJ has introduced hybrid vehicles and vehicles that run
on natural gas into its fleet.

Environmentally friendly
procurement
The CCWJ group promotes the use ofrecycled products, and is making a special
point of using products made from recycled
PET bottles.

Green
Procurement

Accredited with ISO 14001 certification
Three production plants of Coca-Cola West Japan Products Co., Ltd.
and the CCWJ head office have already attained ISO 14001 accreditation for environmental management. Among those joining the ranksof accreditation and developing environmental management systems
in 2003 were CCWJ’s Sales Division, all of the business sites ofCoca-Cola West Japan Vending Co., Ltd., and the head office divisionof Nishinihon Customer Service Co., Ltd.

School Biotopes
School biotopes are special refuges for wildlife
built by schoolchildren, with the help of theirteachers, parents and guardians. Thesebiotopes are an effective tool for environmental education, and are designed to help children experience firsthand the intricacy andwonder of natural systems.

School Tree Planting

Reducing
Waste and
SavingEnergyThis program, with the theme, “Let’s create an oak
forest,” aims to foster an appreciation and love of
nature in children by inviting them to become the“foster parents” of seedlings grown from acorns.
Students then get the experience of replanting thetree on the local mountainside when it has growninto a larger sapling.

Environmental
Activities

Regional
Environmental
Education
SupportCoca-Cola Ecology School
Under the guidance of environmental education instructors,
and with the trees, insects and other wildlife in the countrysideas the textbook, CCWJ holds environmental education
classes that provide important experiences for coexistingwith nature.

Regional
Environmental
Preservation
Activities

Coca-Cola Clean Day
With the aim of self-enlightenment onenvironmental issues for each andevery employee of the group, CCWJ
runs its Clean Day activities on the
8th of every month in regional communities.

23

Six-year Summary(Millions of yen)

1998

Net sales

1999

2000

2001

2002

2003

¥ 117,991 ¥ 164,731 ¥ 207,827 ¥ 226,111 ¥ 247,737 ¥ 240,825

Operating income

12,533

15,16017,44916,634

16,704

19,638Recurring profit

12,51015,88918,516

16,021

17,00519,895Recurring profit margin (%)

10.6

9.6

8.9

7.1

6.9

8.3

Net income

5,872

6,823

5,700

1,420

7,086

9,380

Net income per share (Yen)

122.20113.67

77.83

17.62

85.49

116.25

5.0

4.1

2.7

0.6

2.9

3.9

Total assets

102,278

182,316

181,637

202,713204,070

204,180

Total shareholders’ equity

87,298154,395

157,604

157,129

164,658

165,454

85.4

84.7

86.8

77.5

80.7

81.0

Return on sales (%)

Shareholders’ equity ratio (%)
Shareholders’ equity pershare (Yen)
Return on equity (%)

1,816.64 2,107.74 2,151.52 1,950.07 2,009.39 2,089.94
6.9

5.6

3.7

0.9

4.4

5.7

Cash flows

12,552

17,31920,175

15,06722,481

25,268

Capital expenditures

6,670

14,937

14,634

11,35521,027

13,846

Depreciation

6,680

10,496

14,475

13,647

15,395

15,88824

Management’s Discussion and Analysis

Market Information

was 126,688,000, of which 15,116,000 people lived in
CCWJ’s sales territory, representing 11.9% of Japan’s popula-

Trends in the Japanese Soft Drinks Market

tion. The population in CCWJ’s sales territory has remained at

Production volumes have risen steadily, albeit marginally, inthe 15-million level for the past few years.

the Japanese soft drink market as a whole in recent years.

Annual per capita consumption in CCWJ’s sales territory,

However, production volumes slipped slightly in fiscal 2003,

calculated based on 1 bottle equaling 237ml, was 185 bottles in

ended December 31, 2003, due to unseasonable summer

fiscal 2003. The consumption rate had been growing at a pace

weather and the lackluster performance of major brands.

of 2% to 3% a year, but growth has slowed in recent years anddropped in 2003 due to a combination of factors, including the

By soft drink category, while production volumes of carbon-

cool summer.

ated beverages are decreasing, production volumes of coffee
beverages and tea beverages, including black teas, look to be
increasing. Tea beverages were launched onto the market in theMarket Share in Sales Territory

second half of the 1980s. Since then until around 2000,

CCWJ’s share of the soft drink market in its sales territory has

production volumes of tea beverages expanded yearly and grew

hovered between 30% and 35%. In fiscal 2003, its market

as a percentage of the overall soft drink market. Over the pastshare was 30.4%. CCWJ commands a particularly high market

few years, while the increase has been only slight, production

share in the Kyushu region.

volumes of tea beverages have still increased.
Vending Machine Statistics

Market Information in CCWJ’s Sales Territory

CCWJ has a high share of vending machines in its sales terri-

Population Trends

tory, controlling over 50% of all vending machines installed.

CCWJ’s sales territory encompasses five prefectures in the

At December 31, 2003, CCWJ had 135,152 machines, giving

Chugoku region (Hiroshima, Okayama, Yamaguchi, Tottori

it a market share of 52.6%. While both the number and share

and Shimane) and three prefectures in Northern Kyushu

of vending machines fell slightly in fiscal 2003, this was(Fukuoka, Saga and Nagasaki). According to 2003 population

because CCWJ reviewed the placement of machines as it

statistics and the Basic Resident Register, Japan’s populationemphasized profitability.

Overall production
volume of soft drinks

CCWJ’s share of the soft drink
market in its sales territory

Number of vending
machines/share(1,000kl)(%)(Machines/%)

15,167
2,892
2,600

4,057

15,493 15,859
2,804 2,649
2,610
4,380

16,167 16,162
2,608 2,575
34.3

2,688

2,757

2,743

4,828

4,798

4,959

5,618

5,699

5,694

6,004

5,885

99

00

01

02

03

Carbonated beverages
Tea beverages

48.5

Coffee beverages
OthersNote: Tea beverages include both green andblack teas
Source: Japan Soft Drinks Association (Annual
Statistic Report on Soft Drinks
FY2003)

33.0

33.9

00

01

52.3

52.9

52.6

32.6
30.4

99

50.6

02

03

Source: Neilsen Co. of Japan Store Audit(1999-2001)
Intage Inc. of Japan Store Audit(2003)

135,206 139,653 137,984 137,427 135,152

99

00

01

02

03

Source: Nielsen Co. of Japan Store Audit(2003)

25

Market share by category (2003)
(%)

No.1

No.1

Coca-Cola

Sokenbicha

Japanesemarket

CCWJ

No.1
Georgia

CCWJ

78%

No.1

CCWJ

Aquarius

67%

Japanesemarket

78%
No.1

CCWJ
JapanesemarketJapanesemarketMorinoMizu
Dayori53%
No.3
Marocha

No.1
CCWJ

Qoo
CCWJ

JapanesemarketCola

Canned coffee

Sports drinks

25%

CCWJ Japanese
17% Japanesemarketmarket 12%

Blended tea

Japanese tea

Fruit juice

Mineral water

84,07815,96585,63915,57888,178
16,27888,45015,56486,025
15,27452,48953,80555,49756,65955,017

15,624

16,256

16,403

16,227

15,734

Source: Intage Inc. of Japan Store Audit (2003)

26
Sales by category(Thousand cases)

Carbonated beverages
Non-carbonated beverages
Other■ Carbonatedbeverages

1999

2000

2001

2002

2003

Coca-Cola

8,482

8,278

9,403

8,967

8,484

Fanta

3,664

3,932

4,077

4,251

3,991

Other

3,819

3,368

2,798

2,346

2,799

Total

15,965

15,578

16,27815,564

15,274

26,665

26,58426,99827,54327,041

5,696

6,325

6,656

7,181

6,275

■ Non-carbonated Georgia
beverages

Aquarius
Sokenbicha

7,037

7,207

6,759

6,925

6,638

Marocha (Japanese teas)

2,135

2,890

4,065

3,669

4,360

Kochakaden

2,978

3,016

2,523

2,064

1,977

Qoo and HI-C

1,827

2,750

2,490

2,328

2,260

Other

6,151

5,033

6,006

6,949

6,466

Total

52,48953,80555,49756,65955,017■ Other

15,624

16,256

16,403

16,227

15,734

Total

84,07885,63988,17888,45086,025

Nationwide Comparison by Brand

Sales Volume by Packaging

The market shares of all CCWJ’s brands are higher in the

CCWJ continued to shift from cans to PET bottles, with

Company’s sales territory than nationwide. In particular,canned products accounting for 43.6% of sales volume, a

CCWJ’s four core brands—Coca-Cola, Georgia, Aquarius anddecline of 3.1 percentage points. PET bottle products rose 1.5

Sokenbicha—have commanding market shares. Georgia mostpercentage points to 31.6%. Sales of small PET bottle products

notably has a market share in CCWJ’s sales territory that farof 350ml or less grew strongly, with sales volumes rising 76.6%

exceeds its market share in Japan, underscoring its overwhelm-

year on year from 1,990,000 cases in fiscal 2002 to 3,515,000

ing strength on home ground.

cases in fiscal 2003. CCWJ plans to continue expanding sales
volumes of products packaged in small PET bottles by broadening its product lineup targeted at female consumers. Bottle-

Sales Volume in CCWJ’s Sales Territory

can products, which accounted for 0.4% of sales volume infiscal 2001, are climbing steadily, rising from 2.2% in fiscal

Sales Volume by Product Category

2002 to 4.7%, or 4,066,000 cases, in fiscal 2003. More growth

The Company’s beverages are broadly divided into three

is expected in the coming years.

categories: carbonated beverages, mainly the Coca-Cola andFanta brands; non-carbonated beverages, including Georgiabrand coffee, Aquarius and Sokenbicha; and other. Total sales
volume in fiscal 2003 decreased by 2,425,000 cases, or 2.7%,
to 86,025,000 cases. Sales volumes were down for both27

carbonated beverages and non-carbonated beverages. Sales
volumes of carbonated beverages declined 290,000 cases, or
1.9%, to 15,274,000 cases, while the sales volume of non-

Sales by packaging

carbonated beverages declined 1,642,000 cases, or 2.9%, to(Thousand cases)

55,017,000 cases.
By brand, Coca-Cola and Fanta accounted for 81.6%
carbonated beverages sold in fiscal 2003. In non-carbonated88,178 88,450
84,078 85,639 654
614 86,025
592
1,289
698
2,047
749
496
1,846 1,605 11,532 13,134 14,069
7,351 10,141

beverages, Georgia accounted for 49.2%, or nearly half, of the

10,763 11,477 12,735 13,482(55.5% and 26.1%, respectively) of the 15,274,000 cases of

55,017,000 cases sold, followed by Sokenbicha, Aquarius andJapanese teas with 12.1%, 11.4% and 7.9%, respectively.

47,31944,996 43,749 41,306

13,13737,488During fiscal 2003, the Company launched 155 new productvarieties, including a number of existing products sold withredesigned packaging, representing a total sales volume of
23,022,000 cases, a year-on-year increase of 1,959,000 cases,or 9.3%.
1,918 4,066
373
465
684
481
443
426
15,624 16,257 16,404 16,226 15,734

99
Returnable bottles
Large PET bottles
Other

00

01

02

One-way bottles
Cans
Post mix

03
Small PET bottles
Bottle-cans

Notes: 1. Post mix refers mainly to diluted drinks sold in paper cupdispensing vending machines.
2. Data for sales in CCWJ’s sales territory.

Sales Volume by Sales Channel
CCWJ is promoting marketing based on demand in each sales

Overview of Fiscal 2003 Operating
Results

channel in response to structural changes in the marketplace.
For example, the Company works to improve sales volumes

Consolidated net sales for fiscal 2003 decreased ¥6,912 million,

and profitability in vending machines in various ways. The

or 2.8%, to ¥240,825 million due to lower sales volumes

Company replaces vending machines with high sales volumes

resulting from unseasonable weather and other factors. Operatingand high operating rates with new, high-value-added machines

income rose ¥2,933 million, or 17.6%, to ¥19,638 million,

that have IT features, and relocates or withdraws machines inreflecting CCWJ’s success in cutting selling, general andlocations where sales volumes are low. At supermarkets, CCWJ

administrative expenses by revamping the personnel system andproposes products and sales methods on an individual store

through other management reforms. Recurring profit increased

basis and offers other detailed sales support. As a result of this

¥2,890 million, or 17.0%, to ¥19,895 million, and net income

approach, while total sales volume in fiscal 2003 declined fromjumped ¥2,293 million, or 32.4%, to ¥9,380 million. So,

the previous fiscal year, sales volumes at supermarkets were

although net sales edged down, CCWJ recorded significant

largely on a par with fiscal 2002 and sales volumes at conve-

increases in earnings.

nience stores, vending machines, and dispensers (sales at fast
food stores, etc.) were up year on year.

By segment, the Manufacturing and Marketing of Beverages& Foods segment, while posting a 2.6% decrease in sales to¥236,925 million prior to the elimination of intersegment
transactions, saw operating income increase 7.0% to ¥22,216
million. The Other Businesses segment, which includes distri-

28

bution and vending machine maintenance operations, generated
sales before the elimination of intersegment transactions ofSales by channel¥18,175 million, or 7.4% lower year on year. Operating(Thousand cases)

income also fell, down 64.2% to ¥363 million.

84,07825,87588,178 88,450
86,025
21,389 18,779
15,351
22,99985,63916,618 16,586
15,403
13,703

8,508
27,85329,824

Net income per share increased from ¥85.49 to ¥116.25 as aresult of the 32.4% increase in net income to ¥9,380 million.
The dividend per share was ¥36 for fiscal 2003 and the payout

12,0798,357

Net Income per Share

8,738

9,459

9,609

ratio was 28.3%.

33,31831,432 32,185

Financial Position
Total assets increased ¥109 million, or 0.1%, to ¥204,180

6,144
3,619

99

Retail stores
Convenience stores
Drink dispensers

6,722

7,146

7,387

7,418

million. Current assets decreased ¥13,008 million, or 18.5%,

4,034

4,070

4,022

3,743

00

01

02

03

from a year ago. This mainly reflects decreases in cash and deposits

Supermarkets
Vending machines
Other

Note: This graph shows data for sales in CCWJ’s sales territory. Sales tooperators included in Other through the previous fiscal year havebeen included in Vending machines in 2003.

and marketable securities to fund the repurchase of Company
shares and pay lump sum transfers. Total fixed assets rose
¥13,117 million, or 9.8%, year on year, mainly as a result of an
occurrence of advanced payments for retirement expenses. Thisoccurrence resulted from an excess of recognizable pension assets
at year-end relative to recognizable retirement benefit obligations accompanying a change in the retirement benefit system.

Total current liabilities decreased ¥3,512 million, or 12.8%,

Bottling Co., Ltd. As a result of these and other factors, netcompared with a year ago, principally as a result of a decrease in

cash used in investing activities increased ¥3,237 million from

accrued expenses accompanying the payment of lump sum

the previous fiscal year.

transfers and a decrease due to the redemption of convertible

Financing activities used net cash of ¥11,107 million, 99.5%

bonds. Total long-term liabilities increased ¥3,540 million, or

more than in fiscal 2002. In fiscal 2003, the Company

50.2%, from a year ago, mainly reflecting an increase inrepurchased treasury stock as part of its capital strategy anddeferred tax liabilities. Until the previous fiscal year, thealso redeemed convertible bonds. These factors resulted in a

Company had recorded the equivalent tax related to retirement¥5,540 million year-on-year increase in net cash used inbenefit expenses as a deferred tax asset deductible from futurefinancing activities.

income, but accompanying a change in the retirement benefit
system in fiscal 2003, retirement benefit expenses werereversed, resulting in a consequential decrease in deferred tax
assets, which were exceeded by future tax payments related togains on securities contributed to a retirement benefit trust.
Shareholders’ equity increased ¥796 million, or 0.5%, to¥165,454 million. The shareholders’ equity ratio rose 0.3 of apercentage point from 80.7% to 81.0%, and equity per share
increased approximately 4% from ¥2,009 to ¥2,090 at fiscal
2003 year-end.

Cash Flows29

Cash flows(Millions of yen)

Cash and cash equivalents at end of year decreased ¥13,536
million, or 38.2%, to ¥21,869 million.
24,763Operating activities provided net cash of ¥18,423 million,

20,885down 11.8% year on year. In 2003, there was a payment of

18,423
16,228¥4,516 million for expenses for lump sum transfers booked as
an extraordinary loss in the previous fiscal year, which waspartially offset by a decrease in income taxes paid due to theamount recorded for accrued income taxes in the previous fiscal

0

00

01

02

03

year being small as a result of the booking of lump sum transfers and other items. In addition to this, the increase in ac-–9,310–2,719counts receivable exceeded the increase in accounts payable.

–15,007

The result of these and other factors was that net cash provided–3,126–17,615–20,852–5,566by operating activities decreased ¥2,461 million.
Investing activities used net cash of ¥20,852 million, up–11,10718.4% year on year. In fiscal 2003, while outflows decreased
for the acquisition of fixed assets as there were no large investments, such as new production facilities, outflows for theacquisition of marketable securities, such as investment bonds,
increased as part of CCWJ’s investment strategy. Anotherfactor was that in the previous fiscal year, cash was provided by
the partial sale of shares of subsidiary Mikasa Coca-Cola

From operating activities
From investing activities
From financing activities

Financial Data

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

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

9.6
Operating income/Net sales

9.2
8.4

Recurring profit margin

8.9

8.3

8.2
7.4

7.1

6.9

16,021

17,00501

02

6.7
Operating income

Recurring profit

19,63817,44916,634

16,70400

01

02

15,16099

19,895

18,516
15,88999

03

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

00

03

Cost of sales (Millions of yen)
Cost of sales/Net sales (%)

30
Cost of sales/Net sales

4.1

3.9
54.1

54.9

55.2

135,989

132,995

02

03

2.9

2.7
Net income

54.2

53.3

Cost of sales

Return on sales

9,380
122,504

110,876

7,086

6,823

89,050

5,700
0.6

99

00

1,420

01

02

03

99

00

01

(Millions of yen)

Operating income
Operating income/Net sales (%)
Recurring profit
Recurring profit margin (%)
Net income
Return on sales (%)
Cost of sales
Cost of sales/Net sales (%)

1999

2000

2001

2002

2003

15,16017,44916,634

16,704

19,638

9.2

8.4

7.4

6.7

8.2

15,88918,516

16,021

17,00519,895

9.6

8.9

7.1

6.9

8.3

6,823

5,700

1,420

7,086

9,380

4.1

2.7

0.6

2.9

3.9

89,050110,876

122,504

135,989

132,995

54.1

53.3

54.2

54.9

55.2

Total assets (Millions of yen)
Total asset turnover ratio (Times)

Total shareholders’ equity (Millions of yen)
Shareholders’ equity ratio (%)

Total asset turnover ratio

1.2

1.2

1.2

202,713204,070

204,180

Shareholders’ equity ratio

86.8

84.7

1.2

77.5

1.1

Total assets

182,316

99

80.7

81.0

Total shareholders’ equity

181,637

00

01

02

03

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

154,395

157,604

157,129

164,658

165,454

99

00

01

02

03

Current assets (Millions of yen)
Current ratio (%)
31

478.0
Inventory turnover ratio

22.4

21.1

20.1

19.7

Current ratio

402.1

19.3
282.5
Current assets

256.3

Inventories

12,776
10,045

9,681

99

00

12,361

94,534

94,311

12,570239.5

72,34870,142
57,134

01

02

03

99

00

01

02

03

(Millions of yen)

Total assets
Total asset turnover ratio (Times)
Total shareholders’ equity
Shareholders’ equity ratio (%)

1999

2000

2001

2002

2003

182,316

181,637

202,713204,070

204,180

1.2

1.1

1.2

1.2

1.2

154,395

157,604

157,129

164,658

165,454

84.7

86.8

77.5

80.7

81.0

10,045

9,681

12,776

12,361

12,570

22.4

21.1

20.1

19.7

19.3

Current assets

94,311

94,534

72,34870,142

57,134Current ratio (%)

402.1

478.0

282.5

256.3

239.5

Inventories
Inventory turnover ratio (Times)

Asset turnover ratio = Net sales / The average of assets at the beginning and end of the fiscal year
Shareholders’ equity ratio = Shareholders’ equity / Total assets
Inventory turnover ratio = Net sales / The average of inventory taken at the beginning and end of the period
Current ratio = Current assets / Current liabilities

Interest coverage ratio (Times)

Capital expenditures (Millions of yen)

901.9
21,027445.1

99

14,937
410.4

00

394.7

01

14,634

13,846357.4

0211,3550399

Depreciation (Millions of yen)

00

01

02

ROE/ROA (%)

32

5.7

5.6

14,47503

15,395

4.4

15,8884.8

13,647

10,496

ROA

3.7

4.6

ROE

3.5
3.1

0.9
0.7

99

00

01

02

99

03

00

01

02

03

(Millions of yen)
1999

2000

2001

2002

2003

Interest coverage ratio (Times)

445.1

410.4

394.7

357.4

901.9

Capital expenditures

14,937

14,634

11,35521,027

13,846

Depreciation

10,496

14,475

13,647

15,395

15,888ROE (%)

5.6

3.7

0.9

4.4

5.7

ROA (%)

4.8

3.1

0.7

3.5

4.6

Interest coverage ratio = (Operating income + Interest and dividend income) / Interest expense
ROE = Net income / The average of shareholders’ equity at the beginning and end of the fiscal year
ROA = Net income / The average of assets at the beginning and end of the fiscal year

Net income per share (Yen)PER (Times)

Shareholders’ equity per share (Yen)PBR (Times)

2.0
133.6

PER

Shareholders’equity per share

Net income per share

PBR

1.4

1.2

116.25113.67

2,107.74

2,151.52

85.49

77.83

2,009.39

1.0

0.9

37.8

99

38.7

17.62

00

01

2,089.94

1,950.07

20.8

18.1

02

03

99

Cash flows per share (Yen)
PCFR (Times)

00

01

02

03

Dividend per share (Yen)33
Cash flows per share

36.0

PCFR

14.9

32.0

32.0

99

00

34.0

34.0

01

02

12.6
10.9

313.70288.54272.28275.44187.00

99

00

01

6.5

6.7

02

03

03

(Yen)

Net income per share
PER (Times)
Shareholders’ equity per share
PBR (Times)

1999

2000

2001

2002

2003

113.67

77.83

17.62

85.49

116.25

37.8

38.7

133.6

20.8

18.1

2,107.74

2,151.52

1,950.07

2,009.39

2,089.94

2.0

1.4

1.2

0.9

1.0

288.54275.44187.00272.28313.70PCFR (Times)

14.9

10.9

12.6

6.5

6.7

Dividend per share

32.0

32.0

34.0

34.0

36.0

Cash flows per share

Net income per share = Net income / The average number of shares during the period
PER = Market value at the end of the year / Net income per share
Shareholders’ equity per share = Shareholders equity / The number of shares outstanding at the end of the period
PBR = Market value at the end of the year / Shareholders’ equity per share
Cash flows per share = Cash flows / The average number of shares during the period
PCFR = Market value at the end of the year / Cash flows per shareConsolidated Balance Sheets(As of December 31, 2001, 2002 and 2003)(Millions of yen)
2001

ASSETS
Current assets:
Cash and deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 23,863
Trade notes and accounts receivable . . . . . . . . . . . . . . . . . . . . . .
12,172Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,648Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12,776
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,678
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,388
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . .
(178)

34

2002

2003

¥ 19,182
11,664
16,484
12,361
1,279
9,287
(117)

¥ 15,295
13,175
7,141
12,570
841
8,227
(118)

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

72,34870,142

57,134

Fixed assets:
Property, plant and equipment:
Buildings and structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery, equipment and vehicles . . . . . . . . . . . . . . . . . . . . . . . .
Sales equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . .

19,212
12,674
17,27036,662
1,339
1,131

20,187
15,774
17,487
34,637261
1,019

18,852
14,674
17,74034,722
44
947

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

88,29089,367

86,982Intangible assets:
Goodwill on consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,861
3,718

250
3,566

118
2,599

Total intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,580

3,817

2,718

Investments and other assets:
Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advanced payments for retirement expenses . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . .

30,002
4,100
–
2,512
(120)

31,940
1,735
–
7,178
(110)

40,636569
13,306
3,097(264)

Total investments and other assets . . . . . . . . . . . . . . . . . . . . . . . .

36,49440,74357,344

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

130,364

133,928

147,045

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥202,713¥204,070¥204,180

(Millions of yen)
2001

2002

2003

LIABILITIESCurrent liabilities:
Notes and accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥Convertible bonds due to mature within one year . . . . . . . . . . . . .
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes payable for equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,093
–
806
384
3,671
6,558
1,138
4,952

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25,60527,36623,853Long-term liabilities:
Convertible bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for employees’ retirement benefits . . . . . . . . . . . . . . . .
Liabilities for directors’ and corporate auditors’ retirement benefits . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,154
21
1,784
6,783
490
1,186

–
–
1,906
3,683
372
1,092

–
–
5,880
3,394
323
996

Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12,4197,055

10,595

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

38,02534,421

34,449MINORITY INTERESTS
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,558

4,990

4,276

SHAREHOLDERS’ EQUITY
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized gains on other marketable securities . . . . . . . . . . . .
Treasury stock (at cost) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

–
–
–
–
–

15,23135,399115,771341(2,086)

15,23135,399122,372411(7,960)Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

–164,658

165,454

Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized gains on other marketable securities . . . . . . . . . . . .
Treasury stock (at cost) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15,231
29,687
111,586
628
(4)

–
–
–
–
–

–
–
–
–
–

Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

157,129––

Total liabilities, minority interests and shareholders’ equity . . . . . . ¥202,713¥204,070¥204,180

¥

7,787
2,154
180
334
902
6,153
1,485
8,369

¥

8,950
–
–
203
2,924
5,426
667
5,681

35

Consolidated Statements of Income(Years ended December 31, 2001, 2002 and 2003)(Millions of yen)
2001

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥226,111
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122,504

36

2002

2003

¥247,737
135,989¥240,825
132,995

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

103,607

111,747

107,829

Selling, general and administrative expenses . . . . . . . . . . . . . . . . . .

86,973

95,04388,191

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16,634

16,704

19,638Non-operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,342
398
80
–
304
558

1,280
306
32
–
302
638

1,100
254
35
59
294
456

Non-operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in losses of affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on disposal of property, plant and equipment . . . . . . . . . . . . . .
Property rental costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,954
43
1,004
293
271
341

979
47
2
471
268
188

843
22
–
441
188
191

Recurring profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16,021

17,00519,895Extraordinary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on reversal of allowance for doubtful accounts . . . . . . . . . . . . .
Gain on sales of property, plant and equipment . . . . . . . . . . . . . . . .
Gain on sales of investment securities . . . . . . . . . . . . . . . . . . . . . . . .
Gain on securities contribution to employee retirement benefit trust . . .
Return on the substituted portion of the combined welfare
pension insurance fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,351
–
605
6
9,739

4,419
38
–
211
–

231
–
231
–
–

–

4,169

–

Extraordinary losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on sales of property, plant and equipment . . . . . . . . . . . . . . . .
Water damage losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on sales of investment securities . . . . . . . . . . . . . . . . . . . . . . . .
Loss on sale of subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss from earthquake damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses for early retirement program . . . . . . . . . . . . . . . . . . . . . . .
Loss on disposals of property, plant and equipment . . . . . . . . . . . . .
Write-down of investment securities . . . . . . . . . . . . . . . . . . . . . . . . .
Write-down of golf club memberships . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of net transitional obligation arising from adoption of
new accounting standards for retirement benefits . . . . . . . . . . . . . .
Loss on securities contribution to employee retirement benefit trust . . . .
Retirement expense along with a large number of retirements . . . . . .
Lump sum transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expense for restructure of subsidiaries . . . . . . . . . . . . . . . . . . . . . . .
Product disposal losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Product valuation losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Flavoring problem countermeasure losses . . . . . . . . . . . . . . . . . . . . .
Quality problem countermeasure losses . . . . . . . . . . . . . . . . . . . . . .

24,234
77
–
50
–
23
2,811
201
667
137

9,006
1,472
–
–
764
–
148
–
39
39

2,141
45
43
31
–
–
–
17
97
189

19,930
332
–
–
–
–
–
–
–

–
–
171
4,516
1,855
–
–
–
–

–
–
–
–
753
269
112
113
466

Income before income taxes, minority interests andother adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,138
6,021
(4,601)(702)

12,418
2,241
3,089
1

17,985
3,768
5,532
(695)

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥

1,420

¥

7,086

¥

9,380

Consolidated Statements of Shareholders’ Equity(Years ended December 31, 2001, 2002 and 2003)(Millions of yen)
2001

2002

2003

Capital surplus:
Capital surplus at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . ¥Increase in capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock issued under exchange offerings . . . . . . . . . . . . . . . . . . . . . . .
Decrease in capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sale of shares in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

–
–
–
–
–

¥ 29,687
5,860
5,860
148
148

¥ 35,399––––

Capital surplus at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

–35,39935,399Retained earnings:
Retained earnings at beginning of year . . . . . . . . . . . . . . . . . . . . . . .
Increase in retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease in retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonus to directors and corporate auditors . . . . . . . . . . . . . . . . . . .
Sale of subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

–
–
–
–
–
–
–

111,586
7,086
7,086
2,901
2,859
37
4

115,771
9,380
9,380
2,779
2,738
41
–

Retained earnings at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . .

–115,771

122,372

Retained earnings at beginning of year . . . . . . . . . . . . . . . . . . . . . . .
Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonus to directors and corporate auditors . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

112,685
2,519
2,461
58
1,420

–
–
–
–
–

–
–
–
–
–

Retained earnings at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥111,586

¥

–

¥

–

37

Consolidated Statements of Cash Flows(Years ended December 31, 2001, 2002 and 2003)(Millions of yen)

38

2001

2002

2003

¥ 2,138
13,647199¥ 12,418
15,395138¥ 17,985
15,888
132

(269)
5,293
–
(479)
43
2,811
–
1,004
188
–
667
(524)
426

(99)
(3,094)(4,109)
(339)
47
–
4,516
2
(162)
764
39
1,461
363

(49)
(289)
(9,196)
(290)
22
–
–
(59)
62
–
97
(181)
353

4,038
234
33
2,276
281
14
(58)
143
32,111542(43)(2,863)–(4,984)
24,763

–
453
398
(907)
(282)
(1,211)(37)(210)
25,544404(59)––(5,005)20,885–(1,511)
(209)
(565)
1,163
939
(41)
194
24,445262(20)–(4,516)(1,746)
18,423

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 . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for acquisition of subsidiaries’ shares . . . . . . . . . . . . . . . .
Proceeds from sales of subsidiaries’ shares . . . . . . . . . . . . . . . . . . .
Increase in loans to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from collection of loans to affiliates . . . . . . . . . . . . . . . . . .
Proceeds from refund of time deposits . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . .

(2,132)
2,509(11,254)
1,886(6,689)–(3,555)
650
3,562
16
(15,007)(6,246)
4,477(21,062)
1,618
(191)
4,223
(436)
–
15
(12)
(17,615)(12,121)
3,118(14,575)
2,896
–
–
(192)
–
10
12
(20,852)

Cash flows from financing activities:
Decrease in short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redemption of convertible bonds . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for acquisition of treasury stock . . . . . . . . . . . . . . . . . . . .
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . .

(416)
(184)
–
–
(2,461)(64)(3,126)

(481)
(71)
–
(2,081)(2,859)(73)(5,566)

(180)
(130)
(2,154)(5,874)(2,738)(30)(11,107)

Net increase (decrease) in cash and cash equivalents . . . . . . . . . .
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . .
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . .

6,629
31,072¥ 37,702(2,296)37,702¥ 35,406(13,536)
35,406¥ 21,869

Cash flows from operating activities:
Income before income taxes, minority interests and other adjustments . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Write-off of consolidation adjustment account . . . . . . . . . . . . . . . . . .
Decrease in liabilities for retirement benefits and directors’ andcorporate auditors’ retirement benefits . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in liabilities for retirement benefits . . . . . . . . . . . .
Increase in advanced payments for retirement expenses . . . . . . . . . .
Interest and dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses for early retirement program . . . . . . . . . . . . . . . . . . . . . . .
Lump sum transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in losses (earnings) of affiliates . . . . . . . . . . . . . . . . . . . . . . . .
Loss (gain) on sales of marketable and investment securities . . . . . .
Loss on sale of shares in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . .
Write-down of marketable and investment securities . . . . . . . . . . . . .
Loss (gain) on sales of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on disposals of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment securities contribution to employee retirement
benefit trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease (increase) in accounts receivable . . . . . . . . . . . . . . . . . . . .
Decrease (increase) in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease (increase) in other assets . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in accounts payable . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in other liabilities . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of directors’ bonuses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest and dividends received . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses for early retirement program . . . . . . . . . . . . . . . . . . . . . . .
Expenses for lump sum transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . .

Group Companies(As of April 1, 2004)

COCA-COLA WEST JAPAN PRODUCTS CO., LTD.

WEST JAPAN SERVICE CO., LTD.

■ Principal businesses: Beverage production■ Head office: 1670-2 Nihonmatsu, Todorokimachi,
Tosu■ Paid-in capital: ¥100 million■ Representative: Akira Gohhara■ Principal businesses: Insurance, leasing, and realestate-related businesses■ Head office: 7-9-66 Hakozaki, Higashi-ku, Fukuoka■ Paid-in capital: ¥60 million■ Representative: Shinji Oda

Nishinihon Beverage Co., Ltd.

NICHIBEI CO., LTD.

■ Principal businesses: Beverage sales■ Head office: 5-1-6 Hakozakifuto, Higashi-ku,
Fukuoka■ Paid-in capital: ¥100 million■ Representative: Takeaki Sueyasu■ Principal businesses: Manufacture of processedfoods■ Head office: 6-9, Wakazakura, Fujinokimachi, Tosu
■ Paid-in capital: ¥80 million■ Representative: Katsuhiko Machida

COCA-COLA WEST JAPAN VENDING CO., LTD.

TakaMasamune Co., Ltd.

■ Principal businesses: Vending machine operations■ Head office: 2-2-32 Matsuda, Higashi-ku, Fukuoka■ Paid-in capital: ¥80 million■ Representatives: Yuji Yamasaki■ Principal businesses: Production and sale ofalcoholic beverages■ Head office: 297 Kuroda, Daizenjimachi, Kurume■ Paid-in capital: ¥90 million■ Representative: Toshiki Miyake

Nishinihon Customer Service Co., Ltd.

Mikasa Coca-Cola Bottling Co., Ltd.

■ Principal businesses: Vending machine-related
businesses■ Head office: 871 Taniyama, Koga, Fukuoka■ Paid-in capital: ¥22 million■ Representative: Masazumi Gotoh■ Principal businesses: Beverage production and sales■ Head office: 643 Kabata-machi, Tenri, Nara
■ Paid-in capital: ¥4,159 million■ Representative: Tadao Fujino

LOGICOM JAPAN CO., LTD.

MIKASA LOGISTICS CO., LTD.

■ Principal businesses: Freight transport operations■ Head office: 2-11-20 Higashisendamachi, Naka-ku,
Hiroshima■ Paid-in capital: ¥70 million■ Representative: Katsuyoshi Kawabe■ Principal businesses: Freight transport operations■ Head office: 643 Kabata-machi, Tenri, Nara
■ Paid-in capital: ¥50 million■ Representative: Minoru Yoshizawa

MIKASA SERVICE CO., LTD.
■ Principal businesses: Vending machine-related
businesses■ Head office: 643 Kabata-machi, Tenri, Nara
■ Paid-in capital: ¥90 million■ Representative: Nobutsugu Nakajima

39

Stock Information(As of December 31, 2003)

Authorized shares:
Outstanding shares:
Number of shareholders:Major shareholders:

270,000,000
82,898,654
14,802

Shareholders

Number of shares held(Thousands)

Percentage ofshares (%)

16,792
5,294
4,074
3,701
2,970
2,458
2,235
2,039
1,650
1,383

21.3
6.7
5.2
4.7
3.8
3.1
2.8
2.6
2.1
1.8

Ricoh Company, Ltd.
The New Technology Development Foundation
Coca-Cola Holdings West Japan, Inc.
Fukuoka City Bank, Ltd.
Nichirei Corporation
Mellon Bank Treaty Clients Omnibus
Japan Trustee Services Bank, Ltd. (Trust account)
The Master Trust Bank of Japan, Ltd. (Trust account)Showa Tansan Co., Ltd.
Kazue Takakura

Note: The Company owns 3,745,000 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:<Composition of shareholders>

40

4.5%
12.4%

19.0%
2.4%

18.6%

43.1%

Financial institutions
Securities companies
Other domestic corporations
Foreign corporations
Individuals and others
Treasury stock

PER (Times)
PBR (Times)
FY-end stock price (Yen)Dividend (Yen)
Payout ratio (%)

Number ofshareholders

Number ofshares (Thousands)

80
27
338
190
14,166
1

15,748
1,998
35,722
15,426
10,256
3,745

1999

2000

2001

2002

2003

37.8
2.0
4,300
32.0
26.7

38.7
1.4
2,735
32.0
42.7

133.6
1.2
2,355
34.0
108.9

20.8
0.9
1,775
34.0
52.1

18.1
1.0
2,100
36.0
28.3

Note: PER and PBR figures for fiscal 2000 are computed based on the year-end
stock price multiplied by 1.1 times to adjust for stock splits.

Credit Rating Information
1999

2000

2001

2002

2003

Japan Credit Rating Agency, Ltd.
Long-term credit rating

AA–

AA–

AA–

AA–

AA–

Rating and Investment Information, Inc.
Long-term credit rating

A+

A+

A+

A+

A+

Corporate Data
(As of April 1, 2004)

Company name:Coca-Cola West Japan Company, Limited

Head office:7-9-66 Hakozaki, Higashi-ku, Fukuoka, Japan

Established:

December 20, 1960

Outstanding shares:

82,898,654

Paid-in capital:¥15,231,000,000

Employees:

1,793

Principal businesses:

Manufacture and sales of beverages,
mainly Coca-Cola, Sprite, Fanta, and Georgia

Stock exchange listings: Tokyo Stock Exchange (First Section)
Osaka Securities Exchange (First Section)
Fukuoka Stock ExchangeManagement(As of April 1, 2004)

Directors
Representative Director

Hisashi Kubo

Chairman

Senior Corporate Officer

Junji Katsura

Food Service Sales Division Manager

Representative Director

Norio Sueyoshi*

Senior Corporate Officer

Yukio Sako

Vending Business Division Manager

Director

Yasumasa Niimi*

Senior Corporate Officer

Masami Nomiyama

CVS-Retail Sales Division Manager

Director

Hiroshi Hamada

Chairman, Ricoh Company, Ltd.

Senior Corporate Officer

Tatsuhiko Ike

Chainstore Sales Division Manager

Director

Tadashi Teshima

Adviser, Nichirei Corp.

Corporate Officer

Masayuki Yamasaki

Project Manager

Director

Masahiko Uotani

President, Coca-Cola Japan

Corporate Officer

Masuo Miyake

Manager, Agents Sales Dept.

Director

Takemoto Ohto

Chairman, Nichirei Corp.

Corporate Officer

Toshinori Seto

Manager, Partner Promotion

Director

Yusuke Inoue

Chairman and Representative
Director, The Kyushu Card Co., Ltd.

Corporate Officer

Hayao Ogawa

Manager, Operator Relationship

Corporate Officer

Katsuzou Tsugawa

Manager, Sales Planning Dept.

Corporate Officer

Shigejiro SatoManager, Business Systems Dept.

Corporate Officer

Naotake Tokieda

Manager, Sales Administration Dept.

Director

Sadahiro Arikawa

General Manager,
Major Accounts Marketing Division
Ricoh Company, Ltd.

Note: * Executive Officer

Group Executive Officers

Auditors

Group Senior Corporate Officer

Takeaki Sueyasu

President, Nishinihon Bevarage Co., Ltd.

Executive Corporate Auditor

Kounosuke HamadaGroup Senior Corporate Officer

Katusyoshi Kawabe

President, LOGICOM JAPAN CO., LTD.

Executive Corporate Auditor

Ryuji Nakagawa

Group Senior Corporate Officer

Akira Gohhara

Auditor

Tatsuo Hirakawa

Deputy President,
Ricoh Company, Ltd.

President, COCA-COLA WEST JAPANPRODUCTS CO., LTD.

Group Senior Corporate Officer

Toshiki Miyake

President, TakaMasamune Co., Ltd.

AuditorIsanari Ohuchida

Representative Senior Managing
Director, The Fukuoka City Bank, Ltd.

Group Senior Corporate Officer

Masazumi Gotoh

President, Nishinihon Customer Service
Co., Ltd.

Group Senior Corporate Officer

Nobuji Kihara

Director and Executive Corporate Officer,
Mikasa Coca-Cola Bottling Co., Ltd.

Group Senior Corporate Officer

Yuji Yamasaki

President, COCA-COLA WEST JAPANVENDING CO., LTD.

Group Senior Corporate Officer

Shinji Oda

President,
WEST JAPAN SERVICE CO., LTD.

Group Senior Corporate Officer

Mitsuo Isobe

Corporate Officer, Coca-Cola National
Beverage, Co., Ltd.

Group Senior Corporate Officer

Takuo Shibata

Director and Senior Corporate Officer,
COCA-COLA WEST JAPANPRODUCTS CO., LTD.

Group Corporate Officer

Mikitoshi Hagihara

Standard System Promotion Manager,
Coca-Cola Beverage Service Co., Ltd.

Group Corporate Officer

Tsuneo Fukuda

Corporate Officer, COCA-COLA WEST
JAPAN PRODUCTS CO., LTD.

Group Corporate Officer

Yoshiaki Hamasaki

Senior Corporate Officer, COCA-COLA
WEST JAPAN VENDING CO., LTD.

Executive Officers
President & CEO

Norio Sueyoshi

Executive Vice President

Yasumasa Niimi

Executive Corporate Officer

Executive Corporate Officer

Kouichi Morii

Presidential Adviser (Complianceand Special Projects), Head of
Offices for Corporate Ethics,
Environmental Policy and Quality
Assurance
Presidential Adviser (Reform FromWithin Committee) and Head of
Reform From Within Promotion
Office; and Manager,
Public Relations Office, Coca-Cola
West Japan University, and Reform
From Within Promotion OfficeHijiri Morita

Sales Planning Division Manager

Executive Corporate Officer

Tadatsugu Harada

Administration Division Manager

Executive Corporate Officer

Nobuo Shibata

General Affairs Division Manager andManager, Human Resources Dept.

Coca-Cola West Japan Company, Limited Corporate Book 2003

Coca-Cola West Japan Company, Limited
This corporate book is printed on recycled paper.
Printed in Japan

7-9-66 Hakozaki, Higashi-ku, Fukuoka 812-8650, JapanTEL (092) 641-8591
http://www.ccwj.co.jp/