Coca Cola 2011 Annual Report Download - page 96

In a concurrent transaction, we agreed to sell all of our ownership interests in Coca-Cola Drikker AS (the ‘‘Norwegian bottling
operation’’) and Coca-Cola Drycker Sverige AB (the ‘‘Swedish bottling operation’’) to New CCE at fair value. The divestiture of
our Norwegian and Swedish bottling operations also closed on October 2, 2010. See further discussion of this divestiture below. In
addition, we granted New CCE the right to negotiate the acquisition of our majority interest in our German bottling operation,
Coca-Cola Erfrischungsgetraenke AG (‘‘CCEAG’’), 18 to 39 months after the date of the merger agreement, at the then current
fair value and subject to terms and conditions as mutually agreed.
The Company incurred $84 million of transaction costs in connection with our acquisition of CCE’s North American business and
the sale of our ownership interests in our Norwegian and Swedish bottling operations to New CCE since the transaction
commenced. These costs were included in the line item other operating charges in our consolidated statements of income. Refer
to Note 17 for additional information. In addition, the Company recorded charges of $265 million related to preexisting
relationships during 2010. These charges were primarily related to the write-off of our investment in infrastructure programs with
CCE. Our investment in these infrastructure programs with CCE did not meet the criteria to be recognized as an asset subsequent
to the acquisition. In 2011, the Company recorded an additional charge of $1 million associated with these preexisting
relationships. These charges were included in the line item other income (loss) — net in our consolidated statements of income.
Refer to Note 6 for additional information.
The CCE North American business contributed net revenues of approximately $3,637 million and net losses of approximately
$122 million from October 2, 2010 through December 31, 2010. The following table presents unaudited consolidated pro forma
information as if our acquisition of CCE’s North American business and the divestiture of our Norwegian and Swedish bottling
operations had occurred on January 1, 2009 (in millions):
Unaudited
Year Ended December 31, 2010 2009
Net operating revenues1$ 43,106 $ 41,635
Net income attributable to shareowners of The Coca-Cola Company26,839 11,7673
1The deconsolidation of our Norwegian and Swedish bottling operations resulted in a decrease to net operating revenues of approximately
$433 million and $542 million in 2010 and 2009, respectively.
2The deconsolidation of our Norwegian and Swedish bottling operations resulted in a decrease to net income attributable to shareowners of The
Coca-Cola Company of approximately $387 million in 2010 and an increase of $294 million in 2009.
3Includes the gain related to the remeasurement of our equity interest in CCE to fair value upon the close of the transaction, the gain on the sale of
our Norwegian and Swedish bottling operations, transaction costs and charges related to preexisting relationships. The 2010 pro forma information
has been adjusted to exclude the impact of these items in order to present the pro forma information as if the transactions had occurred on
January 1, 2009.
The unaudited pro forma financial information presented above does not purport to represent what the actual results of our
operations would have been if our acquisition of CCE’s North American business and the divestiture of our Norwegian and
Swedish bottling operations had occurred on January 1, 2009, nor is it indicative of the future operating results of The Coca-Cola
Company. The unaudited pro forma financial information does not reflect the impact of future events that may occur after the
acquisition, including, but not limited to, anticipated cost savings from operating synergies.
The unaudited pro forma financial information presented in the table above has been adjusted to give effect to adjustments that
are (1) directly related to the business combination; (2) factually supportable; and (3) expected to have a continuing impact. These
adjustments include, but are not limited to, the application of our accounting policies; elimination of related party transactions
and equity income; and depreciation and amortization related to fair value adjustments to property, plant and equipment and
intangible assets.
Dr Pepper Snapple Group, Inc. Agreements
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, and 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 in order 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
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