Annual report pursuant to Section 13 and 15(d)

OPERATING SEGMENTS

v3.20.4
OPERATING SEGMENTS
 12 Months Ended
Dec. 31, 2018
Operations, Reportable Information, by Operating Segment  
OPERATING SEGMENTS OPERATING SEGMENTS
Our organizational structure consists of the following operating segments: Europe, Middle East and Africa; Latin America; North America; Asia Pacific; Global Ventures and Bottling Investments. Our operating structure also includes Corporate, which consists of two components: (1) a center focused on strategic initiatives, policy and governance; and (2) an enabling services organization focused on both simplifying and standardizing key transactional processes and providing support to business units through global centers of excellence.
Segment Products and Services
The business of our Company is nonalcoholic beverages. Our geographic operating segments (Europe, Middle East and Africa; Latin America; North America; and Asia Pacific) derive a majority of their revenues from the manufacture and sale of beverage concentrates and syrups and, in some cases, the sale of finished beverages. Our Global Ventures operating segment includes the results of our Costa, innocent and doğadan businesses as well as fees earned pursuant to distribution coordination agreements between the Company and Monster. Our Bottling Investments operating segment is composed of our consolidated bottling operations, regardless of the geographic location of the bottler. Our Bottling Investments operating segment also includes equity income from the majority of our equity method investees. Our consolidated bottling operations derive the majority of their revenues from the sale of finished beverages. Generally, finished product operations produce higher net operating revenues but lower gross profit margins compared to concentrate operations. Refer to Note 3.
The following table sets forth the percentage of total net operating revenues attributable to concentrate operations and finished product operations:
Year Ended December 31, 2020 2019 2018
Concentrate operations 56  % 55  % 58  %
Finished product operations 44  45  42 
Total 100  % 100  % 100  %
Method of Determining Segment Income or Loss
Management evaluates the performance of our operating segments separately to individually monitor the different factors affecting financial performance. Our Company manages income taxes and certain treasury-related items, such as interest income and expense, on a global basis within Corporate. We evaluate segment performance based primarily on net operating revenues and operating income (loss).
Geographic Data
The following table provides information related to our net operating revenues (in millions):
Year Ended December 31, 2020 2019 2018
United States $ 11,281  $ 11,715  $ 11,344 
International 21,733  25,551  22,956 
Net operating revenues $ 33,014  $ 37,266  $ 34,300 
The following table provides information related to our property, plant and equipment — net (in millions):
Year Ended December 31, 2020 2019 2018
United States $ 3,988  $ 4,062  $ 4,154 
International 6,789  6,776  5,444 
Property, plant and equipment — net $ 10,777  $ 10,838  $ 9,598 
Information about our Company's operations by operating segment and Corporate as of and for the years ended December 31, 2020, 2019 and 2018 is as follows (in millions):
Europe,
Middle East & Africa		 Latin
America		 North
America		 Asia Pacific Global Ventures Bottling
Investments		 Corporate Eliminations Consolidated
2020                
Net operating revenues:                
   Third party $ 5,534  $ 3,499  $ 11,473  $ 4,213 

$ 1,991  $ 6,258  $ 46  $ —  $ 33,014 
   Intersegment 523  —  4  509  —  7  —  (1,043) — 
   Total net operating revenues 6,057  3,499  11,477  4,722  1,991  6,265  46  (1,043) 33,014 
Operating income (loss) 3,313  2,116  2,471  2,133  (123) 308  (1,221) —  8,997 
Interest income —  —  64  —  11  —  295  —  370 
Interest expense —  —  —  —  —  —  1,437  —  1,437 
Depreciation and amortization 86  45  439  47  122  551  246  —  1,536 
Equity income (loss) — net 31  (72) —  8  (9) 779  241  —  978 
Income (loss) before income taxes 3,379  2,001  2,500  2,158  (120) 898  (1,067) —  9,749 
Identifiable operating assets 8,098 
2
 1,597  19,444  2,073 
3
 7,575  10,521 
2,3
 17,903  —  67,211 
Investments1
517  603  345  240  4  14,183  4,193  —  20,085 
Capital expenditures 27  6  182  20  261  474  207  —  1,177 
2019                
Net operating revenues:                
   Third party $ 6,434  $ 4,118  $ 11,906  $ 4,723  $ 2,560  $ 7,431  $ 94  $ —  $ 37,266 
   Intersegment 624  —  9  604  2  9  —  (1,248) — 
   Total net operating revenues 7,058  4,118  11,915  5,327  2,562  7,440  94  (1,248) 37,266 
Operating income (loss) 3,551  2,375  2,594  2,282  334  358  (1,408) —  10,086 
Interest income —  —  65  —  12  —  486  —  563 
Interest expense —  —  —  —  —  —  946  —  946 
Depreciation and amortization 86  35  439  31  117  446  211  —  1,365 
Equity income (loss) — net 35  (32) (6) 11  (3) 836  208  —  1,049 
Income (loss) before income taxes 3,361  2,288  2,592  2,310  343  716  (824) —  10,786 
Identifiable operating assets 8,143 
2
 1,801  17,687  2,060  7,265  11,170 
2
 18,376  —  66,502 
Investments1
543  716  358  224  14  14,093  3,931  —  19,879 
Capital expenditures 108  140  392  47  209  836  322  —  2,054 
2018    
Net operating revenues:    
   Third party $ 6,535  $ 3,971  $ 11,370  $ 4,797  $ 767  $ 6,768  $ 92  $ —  $ 34,300 
   Intersegment 564  39  260  388  3  19  —  (1,273) — 
   Total net operating revenues 7,099  4,010  11,630  5,185  770  6,787  92  (1,273) 34,300 
Operating income (loss) 3,693  2,318  2,318  2,271  152  (197) (1,403) —  9,152 
Interest income —  —  57  —  13  —  619  —  689 
Interest expense —  —  —  —  —  —  950  —  950 
Depreciation and amortization 77  30  422  58  8  239  252  —  1,086 
Equity income (loss) — net 2  (19) (2) 12  —  828  187  —  1,008 
Income (loss) before income taxes 3,386  2,243  2,345  2,298  165  (159) (2,053) —  8,225 
Capital expenditures 66  90  429  31  11  517  404  —  1,548 
1 Principally equity method investments and other investments in bottling companies.
2 Property, plant and equipment — net in South Africa represented 15 percent and 16 percent of consolidated property, plant and equipment — net in 2020 and 2019, respectively.
3 Property, plant and equipment — net in the Philippines represented 10 percent of consolidated property, plant and equipment — net in 2020.
During 2020, 2019 and 2018, our operating segments and Corporate were impacted by acquisition and divestiture activities. Refer to Note 2.
In 2020, the results of our operating segments and Corporate were impacted by the following items:
•Operating income (loss) and income (loss) before income taxes for North America were reduced by $160 million related to the impairment of the Odwalla trademark and $33 million related to the cost of discontinuing the Odwalla juice business.
•Operating income (loss) and income (loss) before income taxes were reduced by $145 million and $153 million, respectively, for Corporate, $31 million and $30 million, respectively, for Asia Pacific, $21 million and $26 million, respectively, for Bottling Investments and $19 million and $21 million, respectively, for Latin America due to the Company's strategic realignment initiatives. Additionally, operating income (loss) and income (loss) before income taxes were reduced by $115 million for North America, $78 million for Europe, Middle East and Africa and $4 million for Global Ventures due to the Company's strategic realignment initiatives. Refer to Note 18.
•Operating income (loss) and income (loss) before income taxes were reduced by $104 million for Corporate due to the Company's productivity and reinvestment program. Operating income (loss) and income (loss) before income taxes were increased by $5 million for Europe, Middle East and Africa due to the refinement of previously established accruals related to the Company's productivity and reinvestment program. Refer to Note 18.
•Operating income (loss) and income (loss) before income taxes were reduced by $59 million and $84 million, respectively, for North America related to the restructuring of our manufacturing operations in the United States.
•Operating income (loss) and income (loss) before income taxes were reduced by $55 million for North America related to the impairment of a trademark. Refer to Note 16.
•Operating income (loss) and income (loss) before income taxes were reduced by $51 million for Corporate related to the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition. Refer to Note 2.
•Income (loss) before income taxes was increased by $902 million for Corporate in conjunction with our fairlife acquisition, which resulted from the remeasurement of our previously held equity interest in fairlife to fair value. Refer to Note 2.
•Income (loss) before income taxes was increased by $148 million for Corporate related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities. Refer to Note 4.
•Income (loss) before income taxes was increased by $18 million for Corporate related to the sale of a portion of our ownership interest in one of our equity method investees.
•Income (loss) before income taxes was increased by $17 million for Corporate related to the sale of our ownership interest in one of our equity method investees.
•Income (loss) before income taxes was reduced by $484 million for Corporate related to charges associated with the extinguishment of certain long-term debt. Refer to Note 10.
•Income (loss) before income taxes was reduced by $252 million for Bottling Investments and $38 million for Latin America due to other-than-temporary impairment charges related to certain of our equity method investees. Refer to Note 16.
•Income (loss) before income taxes was reduced by $145 million for Bottling Investments, $70 million for Latin America and $1 million for North America due to the Company's proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees.
•Income (loss) before income taxes was reduced by $26 million for Corporate due to an impairment charge associated with an investment in an equity security without a readily determinable fair value. Refer to Note 16.
In 2019, the results of our operating segments and Corporate were impacted by the following items:
•Operating income (loss) and income (loss) before income taxes were reduced by $2 million for Europe, Middle East and Africa, $1 million for Latin America, $62 million for North America, $5 million for Bottling Investments and $194 million for Corporate due to the Company's productivity and reinvestment program. Refer to Note 18.
•Operating income (loss) and income (loss) before income taxes were reduced by $95 million for Bottling Investments due to costs incurred to refranchise certain of our North America bottling operations.
•Operating income (loss) and income (loss) before income taxes were reduced by $46 million for Corporate related to transaction costs associated with the purchase of Costa, which we acquired in January 2019. Refer to Note 2.
•Operating income (loss) and income (loss) before income taxes were reduced by $42 million for Asia Pacific due to an impairment charge related to a trademark. Refer to Note 16.
•Income (loss) before income taxes was increased by $739 million for Corporate as a result of the sale of a retail and office building in New York City.
•Income (loss) before income taxes was increased by $250 million for Corporate related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities. Refer to Note 4.
•Income (loss) before income taxes was increased by $73 million for Bottling Investments due to the refranchising of certain bottling operations in India. Refer to Note 2.
•Income (loss) before income taxes was increased by $39 million for Corporate related to the sale of a portion of our ownership interest in Andina. Refer to Note 2.
•Income (loss) before income taxes was reduced by $406 million for Bottling Investments, $255 million for Europe, Middle East and Africa, $57 million for North America and $49 million for Latin America due to other-than-temporary impairment charges related to certain of our equity method investees. Refer to Note 16.
•Income (loss) before income taxes was reduced by $160 million for Corporate as a result of CCBA asset adjustments. Refer to Note 2.
•Income (loss) before income taxes was reduced by $118 million for Corporate resulting from a net loss in conjunction with our acquisition of the remaining ownership interest in CHI. Refer to Note 2.
•Income (loss) before income taxes was reduced by $105 million for Bottling Investments due to the refranchising of certain bottling territories in North America. Refer to Note 2.
•Income (loss) before income taxes was reduced by $98 million for Bottling Investments and $2 million for Corporate due to the Company's proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees.
In 2018, the results of our operating segments and Corporate were impacted by the following items:
•Operating income (loss) and income (loss) before income taxes were reduced by $4 million for Latin America, $175 million for North America, $31 million for Bottling Investments and $237 million for Corporate, and were increased by $3 million for Europe, Middle East and Africa and $4 million for Asia Pacific due to the Company's productivity and reinvestment program, including refinements to prior period accruals. In addition, income (loss) before income taxes was reduced by $64 million for Corporate and $4 million for Latin America due to pension settlements related to the Company's productivity and reinvestment program. Refer to Note 13 and Note 18.
•Operating income (loss) and income (loss) before income taxes were reduced by $450 million for Bottling Investments due to asset impairment charges.
•Operating income (loss) and income (loss) before income taxes were reduced by $139 million for Bottling Investments due to costs incurred to refranchise certain of our bottling operations.
•Operating income (loss) and income (loss) before income taxes were reduced by $33 million for Corporate due to tax litigation expense. Refer to Note 11.
•Operating income (loss) and income (loss) before income taxes were reduced by $19 million for Corporate related to noncapitalizable transaction costs associated with pending and closed transactions.
•Income (loss) before income taxes was increased by $296 million for Corporate related to the sale of our equity ownership in Lindley. Refer to Note 2.
•Income (loss) before income taxes was increased by $47 million for Corporate related to the refranchising of our Latin American bottling operations. Refer to Note 2.
•Income (loss) before income taxes was increased by $27 million for Corporate related to a net gain on the extinguishment of certain long-term debt. Refer to Note 10.
•Income (loss) before income taxes was reduced by $554 million for Corporate as a result of an impairment charge related to assets held by CCBA. Refer to Note 2.
•Income (loss) before income taxes was reduced by $476 million for Bottling Investments due to the refranchising of certain bottling territories in North America. Refer to Note 2.
•Income (loss) before income taxes was reduced by $334 million for Europe, Middle East and Africa, $205 million for Bottling Investments and $52 million for Latin America due to other-than-temporary impairment charges related to certain of our equity method investees.
•Income (loss) before income taxes was reduced by $278 million for Corporate related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities. Refer to Note 4.
•Income (loss) before income taxes was reduced by $124 million for Bottling Investments and was increased by $13 million for Corporate due to the Company's proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees.
•Income (loss) before income taxes was reduced by $149 million for Bottling Investments due to pension settlements related to the refranchising of certain of our North America bottling operations. Refer to Note 13.
•Income (loss) before income taxes was reduced by $79 million for Corporate related to economic hedging activity associated with the purchase of Costa, which we acquired in January 2019.
•Income (loss) before income taxes was reduced by $34 million for North America primarily related to payments made to convert the bottling agreements for certain North America bottling partners' territories to a single new form of bottling agreement with additional requirements. Refer to Note 2.
•Income (loss) before income taxes was reduced by $33 million for Bottling Investments primarily due to the reversal of the cumulative translation adjustments resulting from the substantial liquidation of the Company's former Russian juice operations.
•Income (loss) before income taxes was reduced by $32 million for Corporate related to acquiring a controlling interest in the Philippine bottling operations. Refer to Note 2.