Coca Cola 2010 Annual Report Download - page 38

the close of the transaction. As a result, we recognized a gain of approximately $4,978 million, which was classified in
the line item other income (loss) — net in our consolidated statement of income. The gain included a $137 million
reclassification adjustment related to foreign currency translation gains recognized upon the disposal of our indirect
investment in CCE’s European operations. The Company relinquished its indirect ownership interest in CCE’s
European operations to New CCE as part of the consideration to acquire the 67 percent of CCE’s North American
business that was not already owned by the Company.
Although the CCE transaction was structured to be primarily cashless, under the terms of the merger agreement, we
agreed to assume approximately $8.9 billion of CCE debt. In the event that the actual CCE debt on the acquisition date
was less than the agreed amount, we agreed to make a cash payment to New CCE for the difference. As of the
acquisition date, the debt assumed by the Company was approximately $7.9 billion. The total cash consideration paid to
New CCE as part of the transaction was approximately $1.3 billion, which included approximately $1.0 billion related to
the debt shortfall.
In contemplation of the closing of our acquisition of CCE’s North American business, we reached an agreement with
DPS to distribute certain DPS brands in territories where DPS brands had been distributed by CCE prior to the CCE
transaction. Under the terms of our agreement with DPS, concurrently with the closing of the CCE transaction, we
entered into license agreements with DPS to distribute Dr Pepper trademark brands in the U.S., Canada Dry in the
Northeast U.S., and Canada Dry and C’ Plus in Canada, and we made a net one-time cash payment of $715 million to
DPS. Under the license agreements, the Company agreed to meet certain performance obligations to distribute DPS
products in retail and foodservice accounts and vending machines. The license agreements have initial terms of
20 years, with automatic 20-year renewal periods unless otherwise terminated under the terms of the agreements. The
license agreements replaced agreements between DPS and CCE existing immediately prior to the completion of the
CCE transaction. In addition, we entered into an agreement with DPS to include Dr Pepper and Diet Dr Pepper in our
Coca-Cola Freestyle fountain dispensers in certain outlets throughout the United States. The Coca-Cola Freestyle
agreement has a term of 20 years.
On October 2, 2010, we sold all of our ownership interests in our Norwegian and Swedish bottling operations to New
CCE for approximately $0.9 billion in cash. In addition, in connection with the acquisition of CCE’s North American
business, we granted to New CCE the right to acquire our majority interest in our German bottler at any time from 18
to 39 months after February 25, 2010, at the then current fair value and subject to terms and conditions as mutually
agreed.
The Nonalcoholic Beverages Segment of the Commercial Beverages Industry
We operate in the highly competitive nonalcoholic beverages segment of the commercial beverages industry. We face
strong competition from numerous other general and specialty beverage companies. We, along with other beverage
companies, are affected by a number of factors, including, but not limited to, cost to manufacture and distribute
products, consumer spending, economic conditions, availability and quality of water, consumer preferences, inflation,
political climate, local and national laws and regulations, foreign currency exchange fluctuations, fuel prices and weather
patterns.
Our Objective
Our objective is to use our formidable assets — brands, financial strength, unrivaled distribution system, global reach,
and a strong commitment by our management and associates worldwide — to achieve long-term sustainable growth.
Our vision for sustainable growth includes the following:
• People: Being a great place to work where people are inspired to be the best they can be.
• Portfolio: Bringing to the world a portfolio of beverage brands that anticipates and satisfies people’s desires and
needs.
• Partners: Nurturing a winning network of partners and building mutual loyalty.
• Planet: Being a responsible global citizen that makes a difference.
• Profit: Maximizing return to shareowners while being mindful of our overall responsibilities.
• Productivity: Managing our people, time and money for greatest effectiveness.
36