Coca Cola 2013 Annual Report Download - page 4

Acquisition of Coca-Cola Enterprises Inc.’s Former North America Business and Related Transactions
On October 2, 2010, we acquired the former North America business of Coca-Cola Enterprises Inc. (‘‘CCE’’), one of our major
bottlers, consisting of CCE’s production, sales and distribution operations in the United States, Canada, the British Virgin Islands,
the United States Virgin Islands and the Cayman Islands, and a substantial majority of CCE’s corporate segment. CCE
shareowners other than the Company exchanged their CCE common stock for common stock in a new entity named Coca-Cola
Enterprises, Inc. (‘‘New CCE’’), which, after the closing of the transaction, continued to hold the European operations that had
been held by CCE prior to the acquisition. The Company does not have any ownership interest in New CCE. Upon completion of
the CCE transaction, we combined the management of the acquired North America business with the management of our existing
foodservice business; Minute Maid and Odwalla juice businesses; North America supply chain operations; and Company-owned
bottling operations in Philadelphia, Pennsylvania, into a unified bottling and customer service organization called Coca-Cola
Refreshments (‘‘CCR’’). In addition, we reshaped our remaining Coca-Cola North America operations into an organization that
primarily provides franchise leadership and consumer marketing and innovation for the North American market. As a result of the
transaction and related reorganization, our North American businesses operate as aligned and agile organizations with distinct
capabilities, responsibilities and strengths.
In contemplation of the closing of our acquisition of CCE’s former North America business, we reached an agreement with
Dr Pepper Snapple Group, Inc. (‘‘DPSG’’) to distribute certain DPSG brands in territories where DPSG brands had been
distributed by CCE prior to the CCE transaction. Under the terms of our agreement with DPSG, concurrently with the closing of
the CCE transaction, we entered into license agreements with DPSG to distribute Dr Pepper trademark brands in the United
States, Canada Dry in the Northeastern United States, and Canada Dry and C’ Plus in Canada, and we made a net one-time cash
payment of $715 million to DPSG. Under the license agreements, the Company agreed to meet certain performance obligations to
distribute DPSG 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 DPSG and CCE existing immediately prior to the completion of the CCE transaction.
In addition, we entered into an agreement with DPSG 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 Coca-Cola Drikker AS (the ‘‘Norwegian bottling operation’’) and
Coca-Cola Drycker Sverige AB (the ‘‘Swedish bottling operation’’) to New CCE for $0.9 billion in cash.
Operating Segments
The Company’s operating structure is the basis for our internal financial reporting. As of December 31, 2013, our operating
structure included the following operating segments, the first six of which are sometimes referred to as ‘‘operating groups’’ or
‘‘groups’’:
• Eurasia and Africa
• Europe
• Latin America
• North America
• Pacific
• Bottling Investments
• Corporate
Our operating structure as of December 31, 2013, reflected changes we made, effective January 1, 2013, when we transferred our
India and South West Asia business unit from the Eurasia and Africa operating segment to the Pacific operating segment. We
revised previously reported operating segment information to conform to our operating structure in effect as of December 31,
2013. Effective January 1, 2014, we changed the name of the Pacific operating segment to Asia Pacific.
Except to the extent that differences among operating segments are material to an understanding of our business taken as a
whole, the description of our business in this report is presented on a consolidated basis.
For financial information about our operating segments and geographic areas, refer to Note 19 of Notes to Consolidated Financial
Statements set forth in Part II, ‘‘Item 8. Financial Statements and Supplementary Data’’ of this report, incorporated herein by
reference. For certain risks attendant to our non-U.S. operations, refer to ‘‘Item 1A. Risk Factors’’ below.
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