Coca Cola 2011 Annual Report Download - page 106

We accounted for our investment in CCE under the equity method of accounting until our acquisition of CCE’s North American
business was completed on October 2, 2010. Therefore, our consolidated net income for the year ended December 31, 2010,
included equity income from CCE during the first nine months of 2010. The Company owned 33 percent of the outstanding
common stock of CCE immediately prior to the acquisition. The following table provides summarized financial information for
CCE for the nine months ended October 1, 2010, and for the year ended December 31, 2009 (in millions):
Nine Months Ended Year Ended
October 1, 2010 December 31, 2009
Net operating revenues $ 16,464 $ 21,645
Cost of goods sold 10,028 13,333
Gross profit $ 6,436 $ 8,312
Operating income (loss) $ 1,369 $ 1,527
Net income (loss) $ 677 $ 731
The following table provides a summary of our significant transactions with CCE for the nine months ended October 1, 2010, and
for the year ended December 31, 2009 (in millions):
Nine Months Ended Year Ended
October 1, 2010 December 31, 2009
Concentrate, syrup and finished product sales to CCE $ 4,737 $ 6,032
Syrup and finished product purchases from CCE 263 351
CCE purchases of sweeteners through our Company 251 419
Marketing payments made by us directly to CCE 314 415
Marketing payments made to third parties on behalf of CCE 106 174
Local media and marketing program reimbursements from CCE 268 330
Payments made to CCE for dispensing equipment repair services 64 87
Other payments — net 19 66
Syrup and finished product purchases from CCE represent purchases of fountain syrup in certain territories that have been resold
by our Company to major customers and purchases of bottle and can products. Marketing payments made by us directly to CCE
represent support of certain marketing activities and our participation with CCE in cooperative advertising and other marketing
activities to promote the sale of Company trademark products within CCE territories. These programs were agreed to on an
annual basis. Marketing payments made to third parties on behalf of CCE represent support of certain marketing activities and
programs to promote the sale of Company trademark products within CCE’s territories in conjunction with certain of CCE’s
customers. Pursuant to cooperative advertising and trade agreements with CCE, we received funds from CCE for local media and
marketing program reimbursements. Payments made to CCE for dispensing equipment repair services represent reimbursement to
CCE for its costs of parts and labor for repairs on cooler, dispensing or post-mix equipment owned by us or our customers. The
other payments — net line in the table above represents payments made to and received from CCE that are individually
insignificant.
Our Company had previously entered into programs with CCE designed to help develop cold-drink infrastructure. Under these
programs, we paid CCE for a portion of the cost of developing the infrastructure necessary to support accelerated placements of
cold-drink equipment. These payments supported a common objective of increased sales of Company Trademark Beverages from
increased availability and consumption in the cold-drink channel.
Preexisting Relationships
The Company evaluated all of our preexisting relationships with CCE prior to the close of the transaction. Based on these
evaluations, the Company recognized charges of $265 million in 2010 related to preexisting relationships with CCE. These charges
were primarily related to the write-off of our investment in cold-drink infrastructure programs with CCE as our investment in
these programs did not meet the criteria to be recognized as an asset subsequent to the acquisition. These charges were included
in the line item other income (loss) — net in our consolidated statements of income and impacted the Corporate operating
segment. Refer to Note 17.
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