Annual report pursuant to Section 13 and 15(d)

OPERATING SEGMENTS

v3.22.4
OPERATING SEGMENTS
 12 Months Ended
Dec. 31, 2022
Segment Reporting [Abstract]  
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 focusing on strategic initiatives, policy, governance and scaling global initiatives, and (2) a platform services organization supporting operating units, global marketing category leadership teams and the center by providing efficient and scaled global services and capabilities, including, but not limited to, transactional work, data management, consumer analytics, digital commerce and social/digital hubs.
Segment Products and Services
The business of our Company is primarily 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 manufacture and sale of finished beverages. Generally, finished product operations produce higher net operating revenues but lower gross profit margins than 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, 2022 2021 2020
Concentrate operations 56  % 56  % 56  %
Finished product operations 44  44  44 
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 interest expense, on a global basis within Corporate. We evaluate operating 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, 2022 2021 2020
United States $ 15,413  $ 13,010  $ 11,281 
International 27,591  25,645  21,733 
Net operating revenues $ 43,004  $ 38,655  $ 33,014 
The following table provides information related to our property, plant and equipment — net (in millions):
Year Ended December 31, 2022 2021 2020
United States $ 3,494  $ 3,420  $ 3,988 
International 6,347  6,500  6,789 
Property, plant and equipment — net $ 9,841  $ 9,920  $ 10,777 
Information about our Company’s operations by operating segment and Corporate is as follows (in millions):
Europe,
Middle East & Africa		 Latin
America		 North
America		 Asia Pacific Global Ventures Bottling
Investments		 Corporate Eliminations Consolidated
As of and for the Year Ended December 31, 2022
                
Net operating revenues:                
Third party $ 6,896  $ 4,910  $ 15,667  $ 4,711 

$ 2,843  $ 7,883  $ 94  $ —  $ 43,004 
Intersegment 627  —  7  734  —  8  —  (1,376) — 
Total net operating revenues 7,523  4,910  15,674  5,445  2,843  7,891  94  (1,376) 43,004 
Operating income (loss) 3,958  2,870  3,742  2,303  185  487  (2,636) —  10,909 
Interest income —  —  29  —  9  —  411  —  449 
Interest expense —  —  —  —  —  —  882  —  882 
Depreciation and amortization 63  39  330  58  140  435  195  —  1,260 
Equity income (loss) — net 43  7  (1) 9  —  1,184  230  —  1,472 
Income (loss) before income taxes 3,952  2,879  3,768  2,320  196  1,743  (3,172) —  11,686 
Identifiable operating assets 7,088  2,067  25,760  2,368 
2
 7,325  10,232 
2
 19,158  —  73,998 
Investments1
410  629  15  219  —  12,892  4,600  —  18,765 
Capital expenditures 50  4  280  22  179  697  252  —  1,484 
As of and for the Year Ended December 31, 2021
                
Net operating revenues:                
Third party $ 6,564  $ 4,143  $ 13,184  $ 4,682  $ 2,805  $ 7,194  $ 83  $ —  $ 38,655 
Intersegment 629  —  6  609  —  9  2  (1,255) — 
Total net operating revenues 7,193  4,143  13,190  5,291  2,805  7,203  85  (1,255) 38,655 
Operating income (loss) 3,735  2,534  3,331  2,325  293  473  (2,383) —  10,308 
Interest income —  —  40  —  10  —  226  —  276 
Interest expense —  —  —  —  —  —  1,597  —  1,597 
Depreciation and amortization 76  39  388  49  135  529  236  —  1,452 
Equity income (loss) — net 33  9  22  8  (6) 1,071  301  —  1,438 
Income (loss) before income taxes 3,821  2,542  3,140  2,350  310  1,596  (1,334) —  12,425 
Identifiable operating assets 7,908  1,720  25,730  2,355 
2
 7,949  10,312 
2
 19,964  —  75,938 
Investments1
436  594  21  230  —  12,669  4,466  —  18,416 
Capital expenditures 35  2  228  65  285  560  192  —  1,367 
Year Ended December 31, 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 
Capital expenditures 27  6  182  20  261  474  207  —  1,177 
1Principally equity method investments and other investments in bottling companies.
2Property, plant and equipment — net in the Philippines represented 10 percent of consolidated property, plant and equipment — net as of December 31, 2022 and 2021.
During 2022, 2021 and 2020, our operating segments and Corporate were impacted by acquisition and divestiture activities. Refer to Note 2.
In 2022, the results of our operating segments and Corporate were impacted by the following items:
•Operating income (loss) and income (loss) before income taxes were increased by $7 million for Europe, Middle East and Africa and were reduced by $1 million for Corporate due to revisions of management’s estimates related to the Company’s strategic realignment initiatives. Refer to Note 18.
•Operating income (loss) and income (loss) before income taxes were reduced by $1,000 million for Corporate due to the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition. Refer to Note 2.
•Operating income (loss) and income (loss) before income taxes were reduced by $85 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 $59 million for Corporate and were increased by $21 million for North America related to our acquisition of BodyArmor in 2021. Refer to Note 17.
•Operating income (loss) and income (loss) before income taxes were reduced by $57 million for Asia Pacific due to the impairment of a trademark. Refer to Note 16.
•Operating income (loss) and income (loss) before income taxes were reduced by $38 million for North America due to the restructuring of our North America operating unit. Refer to Note 18.
•Operating income (loss) and income (loss) before income taxes were reduced by $33 million and $34 million, respectively, for North America, and income (loss) before income taxes was reduced by $2 million for Corporate due to the restructuring of our manufacturing operations in the United States.
•Income (loss) before income taxes was increased by $153 million for Corporate due to the refranchising of our bottling operations in Cambodia. Refer to Note 2.
•Income (loss) before income taxes was reduced by $371 million for Corporate due 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 $96 million for Europe, Middle East and Africa due to an other-than-temporary impairment charge related to an equity method investee in Russia. Refer to Note 16.
•Income (loss) before income taxes was reduced by $34 million for Bottling Investments 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 $24 million for Corporate due to one of our equity method investees issuing additional shares of its stock. Refer to Note 16.
In 2021, 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 $369 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.
•Operating income (loss) and income (loss) before income taxes were reduced by $115 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 $98 million for Corporate and $21 million for North America related to various costs incurred in conjunction with our acquisition of BodyArmor. Refer to Note 17.
•Operating income (loss) and income (loss) before income taxes were reduced by $78 million for Europe, Middle East and Africa related to the impairment of a trademark. Refer to Note 16.
•Operating income (loss) and income (loss) before income taxes were reduced by $63 million and $61 million, respectively, for Europe, Middle East and Africa; $46 million and $160 million, respectively, for Corporate; $12 million and $14 million, respectively, for Asia Pacific; and $11 million and $12 million, respectively, for Latin America due to the Company’s strategic realignment initiatives. In addition, operating income (loss) and income (loss) before income taxes were reduced by $14 million for North America, and income (loss) before income taxes was reduced by $2 million for Bottling Investments due to the Company’s strategic realignment initiatives. Refer to Note 18.
•Operating income (loss) and income (loss) before income taxes were reduced by $52 million and $316 million, respectively, for North America, and income (loss) before income taxes was reduced by $2 million for Corporate related to the restructuring of our manufacturing operations in the United States. Refer to Note 16.
•Operating income (loss) and income (loss) before income taxes were reduced by $15 million for Corporate related to tax litigation expense. Refer to Note 11.
•Income (loss) before income taxes was increased by $834 million for Corporate in conjunction with our acquisition of BodyArmor, which resulted from the remeasurement of our previously held equity interest in BodyArmor to fair value. Refer to Note 2.
•Income (loss) before income taxes was increased by $695 million for Corporate related to the sale of our ownership interest in CCA, an equity method investee. Refer to Note 2.
•Income (loss) before income taxes was increased by $467 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 $114 million for Corporate related to the sale of our ownership interest in an equity method investee and the sale of a portion of our ownership interest in another equity method investee.
•Income (loss) before income taxes was reduced by $650 million for Corporate related to charges associated with the extinguishment of long-term debt. Refer to Note 10.
•Income (loss) before income taxes was reduced by $45 million for Bottling Investments and was increased by $32 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 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.
•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 $35 million for Corporate related to the sale of our ownership interest in an equity method investee and the sale of a portion of our ownership interest in another equity method investee. Refer to Note 2.
•Income (loss) before income taxes was reduced by $484 million for Corporate related to charges associated with the extinguishment of 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.
•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.