Coca Cola 2015 Annual Report Download - page 95

Brazilian Bottling Operations
On July 3, 2013, the Company combined our Brazilian bottling operations with an independent bottler in Brazil in a transaction involving a disposition of
shares for cash and an exchange of shares for a 44 percent minority ownership interest in the newly combined entity, which was recorded at fair value. This
combination resulted in the deconsolidation of our Brazilian bottling operations. As a result of this transaction, the Company recognized a gain of $615
million in the line item other income (loss) — net in our consolidated statement of income during the year ended December 31, 2013.
The owners of the majority interest have the option to acquire up to 24 percent of the new entity's outstanding shares from us at any time for a period of six
years beginning December 31, 2013, based on an agreed-upon formula. In December 2014, the Company received notification that the owners of the majority
interest had exercised their option to acquire from us a 10 percent interest in the entity's outstanding shares. During the year ended December 31, 2014, we
recorded an estimated loss of $32 million as a result of the exercise price being lower than our carrying value. The transaction closed in January 2015, and the
Company recorded an additional loss of $6 million during the year ended December 31, 2015, calculated based on the final option price. As a result of this
transaction, the Company's ownership was reduced to 34 percent of the entity’s outstanding shares. The owners of the majority interest have a remaining
option to acquire an additional 14 percent interest of the entity's outstanding shares at any time through December 31, 2019, based on an agreed-upon
formula.
Assets and Liabilities Held for Sale
North America Refranchising
As of December 31, 2015, the Company had entered into agreements to refranchise additional territories in North America. These territories met the criteria to
be classified as held for sale. Additionally, to the extent that the parties have reached definitive agreements related to the transfer of production assets in
conjunction with the new NPSS, and the related transfer is anticipated to close within a year, the related assets also met the criteria to be classified as held for
sale. As such, we were required to record the related assets and liabilities at the lower of carrying value or fair value less any costs to sell based on the agreed-
upon sale price. The Company expects these transactions to close at various times throughout 2016.
Coca-Cola European Partners
In August 2015, the Company entered into an agreement to merge our German bottling operations with Coca-Cola Enterprises, Inc. ("CCE") and Coca-Cola
Iberian Partners SA ("CCIP") to create Coca-Cola European Partners ("CCEP"). At closing, the Company will own 18 percent of CCEP, which we anticipate
accounting for as an equity method investment based on our equity ownership percentage, our representation on CCEP's Board of Directors and other
governance rights. The Boards of Directors of the Company, CCE and CCIP have approved the transaction. The proposed merger is subject to approval by
CCE's shareowners, receipt of regulatory clearances and other customary conditions. The merger is expected to close in the second quarter of 2016. As a result
of this agreement, our German bottling operations met the criteria to be classified as held for sale as of December 31, 2015. We were not required to record the
related assets and liabilities at fair value less any costs to sell because their fair value exceeded our carrying value.
Coca-Cola Beverages Africa Limited
In November 2014, the Company, SAB Miller plc, and Gutsche Family Investments entered into an agreement to combine the bottling operations of each of
the parties' nonalcoholic ready-to-drink beverage businesses in Southern and East Africa. Upon completion of the proposed merger, the Company will have
an ownership of 11 percent in the bottler which will be called Coca-Cola Beverages Africa Limited. The Company will also acquire or license several brands
in exchange for cash as a result of the transaction. As of December 31, 2015, our South African bottling operations and related equity method investments
met the criteria to be classified as held for sale, but we were not required to record these assets and liabilities at fair value less any costs to sell because their
fair value exceeded our carrying value. The Company expects the transaction to close in the second quarter of 2016, subject to regulatory approval. Based on
the proposed governance structure, the Company expects to account for its resulting interest in the new entity as an equity method investment.
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