Coca Cola 2014 Annual Report Download - page 4

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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 provided franchise
leadership and consumer marketing and innovation for the North American market. Effective January 1, 2014, our North America
business was restructured to consist of two operating units, Coca-Cola North America and CCR. Coca-Cola North America provides
franchise leadership and consumer marketing and innovation and will also manage our foodservice operations. CCR manages our
North America bottling operations and the product supply chain functions for the North American market. Our two North America
operating units have distinct capabilities, responsibilities and strengths, but operate as a unified, aligned and agile organization.
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, 2014, 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
• Asia Pacific
• Bottling Investments
• Corporate
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.