Annual report pursuant to Section 13 and 15(d)

OPERATING SEGMENTS

v2.4.0.6
OPERATING SEGMENTS
 12 Months Ended
Dec. 31, 2011
Operations, Reportable Information, by Operating Segment  
Segment Reporting Disclosure [Text Block]
OPERATING SEGMENTS
As of December 31, 2011, our organizational structure consisted of the following operating segments: Eurasia and Africa; Europe; Latin America; North America; Pacific; Bottling Investments; and Corporate.
Segment Products and Services
The business of our Company is nonalcoholic beverages. Our geographic operating segments (Eurasia and Africa; Europe; Latin America; North America; and 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 Bottling Investments operating segment is comprised of our Company-owned or consolidated bottling operations, regardless of the geographic location of the bottler, except for bottling operations managed by CCR, which are included in our North America operating segment, and equity income from the majority of our equity method investments. Company-owned or consolidated bottling operations derive the majority of their revenues from the sale of finished beverages. Subsequent to our acquisition of CCE's North American business on October 2, 2010, our North America operating segment began to derive the majority of its net operating revenues from the sale of finished beverages. Refer to Note 2. Generally, bottling and finished products operations produce higher net revenues but lower gross profit margins compared to concentrate and syrup operations.
The following table sets forth the percentage of total net operating revenues related to concentrate operations and finished products operations:
Year Ended December 31,
2011

 
2010

 
2009

Concentrate operations1
39
%
 
51
%
 
54
%
Finished products operations2,3
61


49

 
46

Net operating revenues
100
%
 
100
%
 
100
%

1 
Includes concentrates sold by the Company to authorized bottling partners for the manufacture of fountain syrups. The bottlers then typically sell the fountain syrups to wholesalers or directly to fountain retailers.
2 
Includes fountain syrups manufactured by the Company, including consolidated bottling operations, and sold to fountain retailers or to authorized fountain wholesalers or bottling partners who resell the fountain syrups to fountain retailers.
3 
Includes net operating revenues related to the acquired CCE North American business from October 2, 2010.
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 the Corporate operating segment. We evaluate segment performance based on income or loss before income taxes.
Geographic Data
The following table provides information related to our net operating revenues (in millions):
Year Ended December 31,
2011

 
2010

 
2009

United States
$
18,699

 
$
10,629

 
$
8,011

International
27,843

 
24,490

 
22,979

Net operating revenues
$
46,542

 
$
35,119

 
$
30,990

The following table provides information related to our property, plant and equipment — net (in millions):
Year Ended December 31,
2011

 
2010

 
2009

United States
$
8,043

 
$
8,251

 
$
3,115

International
6,896

 
6,476

 
6,446

Property, plant and equipment — net
$
14,939

 
$
14,727

 
$
9,561


Information about our Company's operations by operating segment for the years ended December 31, 2011, 2010 and 2009, is as follows (in millions):
 
Eurasia &
Africa

 
Europe

 
Latin
America

 
North
America

 
Pacific

 
Bottling
Investments

 
Corporate

 
Eliminations

 
Consolidated

2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Third party
$
2,689

 
$
4,777

 
$
4,403

 
$
20,559

 
$
5,454

1 
$
8,501

 
$
159

 
$
—

 
$
46,542

   Intersegment
152

 
697

 
287

 
12

 
384

 
90

 
—

 
(1,622
)
 
—

   Total net revenues
2,841

 
5,474

 
4,690

 
20,571

 
5,838

 
8,591

 
159

 
(1,622
)
 
46,542

Operating income (loss)
1,091

 
3,090

 
2,815

 
2,318

 
2,151

 
224

 
(1,535
)
 
—

 
10,154

Interest income
—

 
—

 
—

 
—

 
—

 
—

 
483

 
—

 
483

Interest expense
—

 
—

 
—

 
—

 
—

 
—

 
417

 
—

 
417

Depreciation and amortization
39

 
109

 
63

 
1,065

 
106

 
403

 
169

 
—

 
1,954

Equity income (loss) — net
(3
)
 
33

 
20

 
6

 
1

 
646

 
(13
)
 
—

 
690

Income (loss) before income taxes
1,089

 
3,134

 
2,832

 
2,325

 
2,154

 
897

 
(992
)
 
—

 
11,439

Identifiable operating assets2
1,245

 
3,204

3 
2,446

 
33,422

 
2,085

 
8,905

3 
20,293

 
—

 
71,600

Investments4
284

 
243

 
475

 
26

 
133

 
7,140

 
73

 
—

 
8,374

Capital expenditures
86

 
38

 
105

 
1,364

 
92

 
1,039

 
196

 
—

 
2,920

2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Third party
$
2,426

 
$
4,424

 
$
3,880

 
$
11,140

 
$
4,941

1 
$
8,216

 
$
92

 
$
—

 
$
35,119

   Intersegment
130

 
825

 
241

 
65

 
330

 
97

 
—

 
(1,688
)
 
—

   Total net revenues
2,556

 
5,249

 
4,121

 
11,205

 
5,271

 
8,313

 
92

 
(1,688
)
 
35,119

Operating income (loss)
980

 
2,976

 
2,405

 
1,520

 
2,048

 
227

 
(1,707
)
 
—

 
8,449

Interest income
—

 
—

 
—

 
—

 
—

 
—

 
317

 
—

 
317

Interest expense
—

 
—

 
—

 
—

 
—

 
—

 
733

 
—

 
733

Depreciation and amortization
31

 
106

 
54

 
575

 
101

 
430

 
146

 
—

 
1,443

Equity income (loss) — net
18

 
33

 
24

 
(4
)
 
1

 
971

 
(18
)
 
—

 
1,025

Income (loss) before income taxes
1,000

 
3,020

 
2,426

 
1,523

 
2,049

 
1,205

 
3,020

 
—

 
14,243

Identifiable operating assets2
1,278

 
2,724

3 
2,298

 
32,793

 
1,827

 
8,398

3 
16,018

 
—

 
65,336

Investments4
291

 
243

 
379

 
57

 
123

 
6,426

 
66

 
—

 
7,585

Capital expenditures
59

 
33

 
94

 
711

 
101

 
942

 
275

 
—

 
2,215

2009
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Third party
$
1,977

 
$
4,308

 
$
3,700

 
$
8,191

 
$
4,533

1 
$
8,193

 
$
88

 
$
—

 
$
30,990

   Intersegment
220

 
895

 
182

 
80

 
342

 
127

 
—

 
(1,846
)
 
—

   Total net revenues
2,197

 
5,203

 
3,882

 
8,271

 
4,875

 
8,320

 
88

 
(1,846
)
 
30,990

Operating income (loss)
810

 
2,946

 
2,042

 
1,699

 
1,887

 
179

 
(1,332
)
 
—

 
8,231

Interest income
—

 
—

 
—

 
—

 
—

 
—

 
249

 
—

 
249

Interest expense
—

 
—

 
—

 
—

 
—

 
—

 
355

 
—

 
355

Depreciation and amortization
27

 
132

 
52

 
365

 
95

 
424

 
141

 
—

 
1,236

Equity income (loss) — net
(1
)
 
20

 
(4
)
 
(1
)
 
(23
)
 
785

 
5

 
—

 
781

Income (loss) before income taxes
810

 
2,976

 
2,039

 
1,701

 
1,866

 
980

 
(1,426
)
 
—

 
8,946

Identifiable operating assets2
1,155

 
3,047

3 
2,480

 
10,941

 
1,929

 
9,140

3 
13,224

 
—

 
41,916

Investments4
331

 
214

 
248

 
8

 
82

 
5,809

 
63

 
—

 
6,755

Capital expenditures
70

 
68

 
123

 
458

 
91

 
826

 
357

 
—

 
1,993

1 
Net operating revenues in Japan represented approximately 8 percent of consolidated net operating revenues in 2011, 9 percent in 2010 and 10 percent in 2009.
2 
Principally cash and cash equivalents, trade accounts receivable, inventories, goodwill, trademarks and other intangible assets and property, plant and equipment — net.
3 
Property, plant and equipment — net in Germany represented approximately 10 percent of consolidated property, plant and equipment — net in 2011, 10 percent in 2010 and 18 percent in 2009.
4 
Principally equity method investments, available-for-sale securities and nonmarketable investments in bottling companies.
In 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 $12 million for Eurasia and Africa, $25 million for Europe, $4 million for Latin America, $374 million for North America, $4 million for Pacific, $89 million for Bottling Investments and $164 million for Corporate, primarily due to the Company's ongoing productivity, integration and restructuring initiatives as well as costs associated with the merger of Arca and Contal. Refer to Note 18 for additional information on our productivity, integration and restructuring initiatives. Refer to Note 17 for additional information related to the merger of Arca and Contal.
•
Operating income (loss) and income (loss) before income taxes were reduced by $82 million for Pacific and $2 million for North America due to charges associated with the earthquake and tsunami that devastated northern and eastern Japan on March 11, 2011. Refer to Note 17.
•
Operating income (loss) and income (loss) before income taxes were reduced by $10 million for Corporate due to charges associated with the floods in Thailand that impacted the Company's supply chain operations in the region. Refer to Note 17.
•
Equity income (loss) — net and income (loss) before income taxes were reduced by $53 million for Bottling Investments, primarily attributable to the Company's proportionate share of asset impairments and restructuring charges recorded by certain of our equity method investees. Refer to Note 17.
•
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 17.
•
Income (loss) before income taxes was increased by a net $122 million for Corporate, primarily due to gains the Company recognized as a result of an equity method investee issuing additional shares of its own stock during the year at per share amounts greater than the carrying value of the Company's per share investment. These gains were partially offset by charges associated with certain of the Company's equity method investments in Japan. Refer to Note 17.
•
Income (loss) before income taxes was increased by $102 million for Corporate, primarily 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 17.
•
Income (loss) before income taxes was reduced by $41 million for Corporate due to the impairment of an investment in an entity accounted for under the equity method of accounting. Refer to Note 16 and Note 17.
•
Income (loss) before income taxes was reduced by $17 million for Corporate due to other-than-temporary impairments of certain available-for-sale securities. Refer to Note 16 and Note 17.
•
Income (loss) before income taxes was reduced by $9 million for Corporate due to the net charge we recognized on the repurchase and/or exchange of certain long-term debt assumed in connection with our acquisition of CCE's North American business as well as the early extinguishment of certain other long-term debt. Refer to Note 10.
•
Income (loss) before income taxes was reduced by $5 million for Corporate due to the finalization of working capital adjustments related to the sale of our Norwegian and Swedish bottling operations to New CCE. Refer to Note 2 and Note 17.
In 2010, the results of our operating segments were impacted by the following items:
•
Operating income (loss) and income (loss) before income taxes were reduced by $7 million for Eurasia and Africa, $50 million for Europe, $133 million for North America, $22 million for Pacific, $122 million for Bottling Investments and $485 million for Corporate, primarily due to the Company's ongoing productivity, integration and restructuring initiatives; charitable donations; transaction costs incurred in connection with our acquisition of CCE's North American business and the sale of our Norwegian and Swedish bottling operations to New CCE; and other charges related to bottling activities in Eurasia. Refer to Note 17.
•
Operating income (loss) and income (loss) before income taxes were reduced by $74 million for North America due to the acceleration of expense associated with certain share-based replacement awards issued in connection with our acquisition of CCE's North American business. Refer to Note 12.
•
Equity income (loss) — net and income (loss) before income taxes were reduced by $66 million for Bottling Investments. This net charge was primarily attributable to the Company's proportionate share of unusual tax charges, asset impairments, restructuring charges and transaction costs recorded by equity method investees, which were partially offset by our proportionate share of a foreign currency remeasurement gain recorded by an equity method investee. The components of the net charge were individually insignificant. Refer to Note 17.
•
Income (loss) before income taxes was reduced by $23 million for Bottling Investments and $25 million for Corporate due to other-than-temporary impairments and a donation of preferred shares in one of our equity method investees. Refer to Note 17.
•
Income (loss) before income taxes was increased by $4,978 million for Corporate due to the remeasurement of our equity investment in CCE to fair value upon the close of the transaction. Refer to Note 2.
•
Income (loss) before income taxes was increased by $597 million for Corporate due to the gain on the sale of our Norwegian and Swedish bottling operations to New CCE. Refer to Note 2.
•
Income (loss) before income taxes was reduced by $342 million for Corporate related to the premiums paid to repurchase the long-term debt and the costs associated with the settlement of treasury rate locks issued in connection with the debt tender offer. Refer to Note 10.
•
Income (loss) before income taxes was reduced by $265 million for Corporate due to charges related to preexisting relationships with CCE. These charges primarily related to the write-off of our investment in infrastructure programs with CCE. Refer to Note 2.
•
Income (loss) before income taxes was reduced by $103 million for Corporate due to the remeasurement of our Venezuelan subsidiary's net assets. Refer to Note 1.
•
Income (loss) before income taxes was increased by $23 million for Corporate due to the gain on the sale of 50 percent of our investment in Leão Junior. Refer to Note 17.
In 2009, the results of our operating segments were impacted by the following items:
•
Operating income (loss) and income (loss) before income taxes were reduced by $4 million for Eurasia and Africa, $7 million for Europe, $31 million for North America, $1 million for Pacific, $141 million for Bottling Investments and $129 million for Corporate, primarily as a result of the Company's ongoing productivity, integration and restructuring initiatives and asset impairments. Refer to Note 17.
•
Equity income (loss) — net and income (loss) before income taxes were reduced by $84 million for Bottling Investments and $2 million for Corporate, primarily attributable to the Company's proportionate share of asset impairment and restructuring charges recorded by certain of our equity method investees. Refer to Note 17.
•
Income (loss) before income taxes was increased by $44 million for Corporate due to realized gains on the sale of equity securities that were classified as available-for-sale. In 2008, the Company recognized an other-than-temporary impairment related to these securities. Refer to Note 17.
•
Income (loss) before income taxes was reduced by $27 million for Corporate due to an other-than-temporary impairment of a cost method investment. Refer to Note 17.