Quarterly report pursuant to Section 13 or 15(d)

Operating Segments

v2.4.0.6
Operating Segments
 6 Months Ended
Jun. 29, 2012
Operating Segments  
Operating Segments
Operating Segments
Information about our Company's operations as of and for the three months ended June 29, 2012, and July 1, 2011, by operating segment, is as follows (in millions):
 
Eurasia
& Africa

Europe

Latin
America

North
America

Pacific

Bottling
Investments

Corporate

Eliminations

Consolidated

2012
 
 
 
 
 
 
 
 
 
Net operating revenues:
 
 
 
 
 
 
 
 
 
Third party
$
777

$
1,314

$
1,083

$
5,789

$
1,594

$
2,476

$
52

$
—

$
13,085

Intersegment
63

173

62

8

121

21

—

(448
)
—

Total net revenues
840

1,487

1,145

5,797

1,715

2,497

52

(448
)
13,085

Operating income (loss)
347

897

686

756

823

90

(305
)
—

3,294

Income (loss) before income taxes
357

916

687

761

821

312

(231
)
—

3,623

Identifiable operating assets
1,436

3,159

2,459

34,316

2,257

9,218

23,068

—

75,913

Noncurrent investments
820

265

495

22

123

7,437

74

—

9,236

2011
 
 
 
 
 
 
 
 
 
Net operating revenues:
 
 
 
 
 
 
 
 
 
Third party
$
748

$
1,446

$
1,064

$
5,496

$
1,500

$
2,420

$
63

$
—

$
12,737

Intersegment
56

193

69

8

97

23

—

(446
)
—

Total net revenues
804

1,639

1,133

5,504

1,597

2,443

63

(446
)
12,737

Operating income (loss)
330

973

674

739

718

105

(360
)
—

3,179

Income (loss) before income taxes
330

995

674

742

718

305

35

—

3,799

Identifiable operating assets
1,412

3,435

2,484

34,118

2,186

9,028

18,971

—

71,634

Noncurrent investments
323

267

477

26

130

7,160

73

—

8,456

As of December 31, 2011
 
 
 
 
 
 
 
 
 
Identifiable operating assets
$
1,245

$
3,204

$
2,446

$
33,422

$
2,085

$
8,905

$
20,293

$
—

$
71,600

Noncurrent investments
284

243

475

26

133

7,140

73

—

8,374


During the three months ended June 29, 2012, the results of our operating segments were impacted by the following items:
•
Operating income (loss) and income (loss) before income taxes were reduced by $48 million for North America, $16 million for Bottling Investments and $5 million for Corporate due to charges related to the Company's productivity and reinvestment program as well as other restructuring initiatives. Refer to Note 10 and Note 11.
•
Operating income (loss) and income (loss) before income taxes were increased by $2 million for Europe due to the refinement of previously established accruals related to the Company's 2008–2011 productivity initiatives. Refer to Note 10 and Note 11.
•
Operating income (loss) and income (loss) before income taxes were reduced by $6 million for North America due to costs associated with the Company detecting residues of carbendazim, a fungicide that is not registered in the United States for use on citrus products, in orange juice imported from Brazil for distribution in the United States. As a result, the Company began purchasing additional supplies of Florida orange juice at a higher cost than Brazilian orange juice. Refer to Note 10.
•
Income (loss) before income taxes was increased by $92 million for Corporate due to a gain the Company recognized as a result of Coca-Cola FEMSA, an equity method investee, issuing additional shares of its own stock during the period at a per share amount greater than the carrying amount of the Company's per share investment. Refer to Note 10 and Note 14.
•
Income (loss) before income taxes was reduced by $3 million for Eurasia and Africa, $6 million for Europe, $2 million for Latin America, $3 million for Pacific and was increased by $3 million for Corporate due to changes in the structure of BPW, our 50/50 joint venture with Nestlé in the ready-to-drink tea category. Refer to Note 10.
•
Income (loss) before income taxes was reduced by a net $1 million for Bottling Investments. This net reduction primarily represents the Company's proportionate share of restructuring charges recorded by certain of our equity method investees, partially offset by our proportionate share of a transaction gain recorded by an equity method investee. Refer to Note 10.
During the three months ended July 1, 2011, the results of our operating segments were impacted by the following items:
•
Operating income (loss) and income (loss) before income taxes were reduced by $8 million for Eurasia and Africa, $2 million for Europe, $1 million for Latin America, $66 million for North America, $23 million for Bottling Investments and $47 million for Corporate, primarily due to the Company's productivity, integration and restructuring initiatives as well as costs associated with the merger of Arca and Contal. Refer to Note 10 and Note 11.
•
Operating income (loss) and income (loss) before income taxes were reduced by $4 million for Pacific due to charges associated with the earthquake and tsunami that devastated northern and eastern Japan on March 11, 2011. Refer to Note 10.
•
Income (loss) before income taxes was increased by a net $417 million for Corporate, primarily due to the gain the Company recognized as a result of the merger of Arca and Contal. Refer to Note 10 and Note 14.
•
Income (loss) before income taxes was reduced by $38 million for Corporate due to the impairment of an investment in an entity accounted for under the equity method of accounting. Refer to Note 10 and Note 14.
•
Income (loss) before income taxes was increased by $1 million for Corporate due to the net gain we recognized on the repurchase of certain long-term debt assumed in connection with our acquisition of CCE's former North America business.
Information about our Company's operations as of and for the six months ended June 29, 2012, and July 1, 2011, by operating segment, is as follows (in millions):
 
Eurasia
& Africa

Europe

Latin
America

North
America

Pacific

Bottling
Investments

Corporate

Eliminations

Consolidated

2012
 
 
 
 
 
 
 
 
 
Net operating revenues:
 
 
 
 
 
 
 
 
 
Third party
$
1,427

$
2,368

$
2,210

$
10,706

$
2,869

$
4,560

$
82

$
—

$
24,222

Intersegment
97

323

121

12

225

40

—

(818
)
—

Total net revenues
1,524

2,691

2,331

10,718

3,094

4,600

82

(818
)
24,222

Operating income (loss)
642

1,592

1,430

1,207

1,396

125

(589
)
—

5,803

Income (loss) before income taxes
653

1,624

1,430

1,228

1,392

481

(460
)
—

6,348

2011
 
 
 
 
 
 
 
 
 
Net operating revenues:
 
 
 
 
 
 
 
 
 
Third party
$
1,370

$
2,518

$
2,146

$
10,180

$
2,641

$
4,308

$
91

$
—

$
23,254

Intersegment
90

345

141

11

185

42

—

(814
)
—

Total net revenues
1,460

2,863

2,287

10,191

2,826

4,350

91

(814
)
23,254

Operating income (loss)
595

1,687

1,390

1,203

1,161

113

(686
)
—

5,463

Income (loss) before income taxes
598

1,715

1,402

1,206

1,162

434

(202
)
—

6,315


During the six months ended June 29, 2012, the results of our operating segments were impacted by the following items:
•
Operating income (loss) and income (loss) before income taxes were reduced by $109 million for North America, $31 million for Bottling Investments and $8 million for Corporate due to charges related to the Company's productivity and reinvestment program as well as other restructuring initiatives. Refer to Note 10 and Note 11.
•
Operating income (loss) and income (loss) before income taxes were increased by $3 million for Europe due to the refinement of previously established accruals related to the Company's 2008–2011 productivity initiatives. Refer to Note 10 and Note 11.
•
Operating income (loss) and income (loss) before income taxes were reduced by $20 million for North America due to changes in the Company's ready-to-drink tea strategy as a result of our current U.S. license agreement with Nestlé terminating at the end of 2012. Refer to Note 10.
•
Operating income (loss) and income (loss) before income taxes were reduced by $12 million for North America due to costs associated with the Company detecting residues of carbendazim, a fungicide that is not registered in the United States for use on citrus products, in orange juice imported from Brazil for distribution in the United States. As a result, the Company began purchasing additional supplies of Florida orange juice at a higher cost than Brazilian orange juice. Refer to Note 10.
•
Income (loss) before income taxes was increased by $92 million for Corporate due to a gain the Company recognized as a result of Coca-Cola FEMSA, an equity method investee, issuing additional shares of its own stock during the period at a per share amount greater than the carrying amount of the Company's per share investment. Refer to Note 10 and Note 14.
•
Income (loss) before income taxes was increased by a net $43 million for Bottling Investments. This net increase primarily represents the Company's proportionate share of transaction gains recorded by an equity method investee, partially offset by our proportionate share of restructuring charges recorded by certain of our equity method investees. Refer to Note 10.
•
Income (loss) before income taxes was reduced by $3 million for Eurasia and Africa, $6 million for Europe, $2 million for Latin America and $3 million for Pacific due to changes in the structure of BPW, our 50/50 joint venture with Nestlé in the ready-to-drink tea category. Refer to Note 10.
During the six months ended July 1, 2011, the results of our operating segments were impacted by the following items:
•
Operating income (loss) and income (loss) before income taxes were reduced by $9 million for Eurasia and Africa, $3 million for Europe, $1 million for Latin America, $177 million for North America, $1 million for Pacific, $44 million for Bottling Investments and $74 million for Corporate, primarily due to the Company's productivity, integration and restructuring initiatives as well as costs associated with the merger of Arca and Contal. Refer to Note 11 for additional information on our productivity, integration and restructuring initiatives. Refer to Note 10 for information related to the merger of Arca and Contal.
•
Operating income (loss) and income (loss) before income taxes were reduced by $83 million for Pacific due to charges associated with the earthquake and tsunami that devastated northern and eastern Japan on March 11, 2011. Refer to Note 10.
•
Income (loss) before income taxes was increased by $102 million for Corporate due to the gain on the sale of our investment in Embonor, a bottling partner with operations primarily in Chile. Prior to this transaction, the Company accounted for our investment in Embonor under the equity method of accounting. Refer to Note 10.
•
Income (loss) before income taxes was increased by a net $417 million for Corporate, primarily due to the gain the Company recognized as a result of the merger of Arca and Contal. Refer to Note 10 and Note 14.
•
Income (loss) before income taxes was reduced by $38 million for Corporate due to the impairment of an investment in an entity accounted for under the equity method of accounting. Refer to Note 10 and Note 14.
•
Income (loss) before income taxes was reduced by $4 million for Bottling Investments, primarily attributable to the Company's proportionate share of restructuring charges recorded by an equity method investee. Refer to Note 10.
•
Income (loss) before income taxes was reduced by $3 million for Corporate due to the net charge we recognized on the repurchase of certain long-term debt assumed in connection with our acquisition of CCE's former North America business.