The Coca-Cola Company Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Acquisitions and Divestitures

Acquisitions and Divestitures

6 Months Ended

Jun. 28, 2013

Acquisitions and divestitures

Acquisitions and Divestitures

ACQUISITIONS AND DIVESTITURES

Acquisitions

During the six months ended June 28, 2013, our Company's acquisitions of businesses, equity method investments and nonmarketable securities totaled $308 million, which primarily included our acquisition of the majority of the remaining outstanding shares of Fresh Trading Ltd. ("innocent") and bottling operations in Myanmar. The Company previously accounted for our investment in innocent under the equity method of accounting. We remeasured our equity interest in innocent to fair value upon the close of the transaction. The resulting gain on the remeasurement was not significant to our condensed consolidated financial statements.

During the six months ended June 29, 2012, our Company's acquisitions of businesses, equity method investments and nonmarketable securities totaled $755 million, which primarily included investments in the existing beverage business of Aujan Industries Company J.S.C. ("Aujan"), one of the largest independent beverage companies in the Middle East, and our acquisition of bottling operations in Vietnam, Cambodia and Guatemala.

The Company transferred $531 million during the six months ended June 29, 2012, under its definitive agreement with Aujan in exchange for an ownership interest of 50 percent in the Aujan entity that holds the rights to Aujan-owned brands in certain territories and an ownership interest of 49 percent in Aujan's bottling and distribution operations in certain territories. The Company's investments in Aujan are being accounted for under the equity method of accounting.

Divestitures

During the six months ended June 28, 2013, proceeds from disposals of businesses, equity method investments and nonmarketable securities totaled $690 million, which primarily included the sale of a majority ownership interest in our previously consolidated bottling operations in the Philippines ("Philippine bottling operations") to Coca-Cola FEMSA, S.A.B. de C.V. ("Coca-Cola FEMSA"), an equity method investee. The Company now accounts for our ownership interest in the Philippine bottling operations under the equity method of accounting. Following this transaction, we remeasured our investment in the Philippine bottling operations to fair value taking into consideration the sale price of the majority ownership interest. Coca-Cola FEMSA has an option to purchase our remaining ownership interest in the Philippine bottling operations at any time during the seven years following closing based on the initial purchase price plus a defined return. Coca-Cola FEMSA also has an option exercisable during the sixth year after closing to sell its ownership interest back to the Company at a price not to exceed the initial purchase price.

During the six months ended June 29, 2012, proceeds from disposals of businesses, equity method investments and nonmarketable securities totaled $11 million. None of the disposals were individually significant.

Assets and Liabilities Held for Sale

On December 13, 2012, the Company and Coca-Cola FEMSA executed a share purchase agreement for the sale of a majority ownership interest in our consolidated Philippine bottling operations. This transaction was completed on January 25, 2013. As of December 31, 2012, our Philippine bottling operations met the criteria to be classified as held for sale, and we were required to record their 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 recorded a total loss of $107 million, primarily during the fourth quarter of 2012, on the sale of our Philippine bottling operations. Refer to the table below for details of our Philippine bottling assets and liabilities that were classified as held for sale as of December 31, 2012.

On December 17, 2012, the Company entered into an agreement with several parties to combine our consolidated bottling operations in Brazil ("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 minority ownership interest in the newly combined entity resulting, upon completion, in the deconsolidation of our Brazilian bottling operations. As a result, our Brazilian bottling operations met the criteria to be classified as held for sale. We were not required to record their assets and liabilities at fair value less any costs to sell because their fair value exceeded our carrying value as of June 28, 2013, and December 31, 2012. This transaction was completed on July 3, 2013.

The following table presents information related to the major classes of assets and liabilities that were classified as held for sale in our condensed consolidated balance sheets as of June 28, 2013, and December 31, 2012 (in millions):



	June 28, 2013		December 31, 2012
	Brazilian Bottling Operations		Brazilian Bottling Operations		Philippine Bottling Operations			Total Bottling Operations Held for Sale as of December 31, 2012
Cash, cash equivalents and short-term investments	$	162	$	45	$	133		$	178
Trade accounts receivable, less allowances	59		88		108			196
Inventories	92		85		187			272
Prepaid expenses and other assets	118		174		223			397
Other assets	144		128		7			135
Property, plant and equipment — net	428		419		841			1,260
Bottlers' franchise rights with indefinite lives	122		130		341			471
Goodwill	20		22		148			170
Other intangible assets	—		1		—			1
Allowance for reduction of assets held for sale	—		—		(107		)	(107		)
Total assets¹	$	1,145	$	1,092	$	1,881		$	2,973
Accounts payable and accrued expenses	$	141	$	157	$	241		$	398
Loans and notes payable	58		6		—			6
Current maturities of long-term debt	28		28		—			28
Accrued income taxes	1		4		(4		)	—
Long-term debt	157		147		—			147
Other liabilities	64		75		20			95
Deferred income taxes	19		20		102			122
Total liabilities¹	$	468	$	437	$	359		$	796


¹	The assets and liabilities of our Philippine and Brazilian bottling operations were included in our Bottling Investments operating segment during the period(s) in which they were consolidated entities of the Company. Refer to Note 15.

We determined that our Philippine and Brazilian bottling operations did not meet the criteria to be classified as discontinued operations, primarily due to the continued significant involvement we anticipate having in these operations following each transaction.