Annual report pursuant to Section 13 and 15(d)

OPERATING SEGMENTS

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OPERATING SEGMENTS
12 Months Ended
Dec. 31, 2019
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 Company-owned or 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 investments. Company-owned or 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 related to concentrate operations and finished product operations:
Year Ended December 31,
2019

2018

2017

Concentrate operations
55
%
58
%
50
%
Finished product operations
45

42

50

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,
2019

2018

2017

United States
$
11,715

$
11,344

$
14,727

International
25,551

22,956

21,485

Net operating revenues
$
37,266

$
34,300

$
36,212

The following table provides information related to our property, plant and equipment — net (in millions):
Year Ended December 31,
2019

2018

2017

United States
$
4,062

$
4,154

$
4,163

International
6,776

5,444

5,475

Property, plant and equipment — net
$
10,838

$
9,598

$
9,638


Information about our Company's operations by operating segment and Corporate as of and for the years ended December 31, 2019, 2018 and 2017 is as follows (in millions):
 
Europe, Middle East & Africa

 
Latin
America

 
North
America

 
Asia Pacific

 
Global Ventures

 
Bottling
Investments

 
Corporate

 
Eliminations

 
Consolidated

 
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

1 
1,801

 
17,687

 
2,060


7,265

 
11,170

1 
18,376

 

 
66,502

 
Investments2
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

 
Identifiable operating assets
7,414

1 
1,715

 
17,519

 
1,996

 
968

 
10,525

1 
22,800

 

 
62,937

 
Investments2
789

 
784

 
400

 
216

 

 
14,372

 
3,718

 

 
20,279

 
Capital expenditures
66

 
90

 
429

 
31

 
11

 
517

 
404

 

 
1,548

 
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Third party
$
6,780

 
$
3,953

 
$
8,678

 
$
4,753

 
$
712

 
$
11,223

 
$
113

 
$

 
$
36,212

 
   Intersegment
42

 
73

 
1,951

 
409

 
3

 
83

 

 
(2,561
)
 

 
   Total net operating revenues
6,822

 
4,026

 
10,629

 
5,162

 
715

 
11,306

 
113

 
(2,561
)
 
36,212

 
Operating income (loss)
3,585

 
2,215

 
2,472

 
2,136

 
159

 
(806
)
 
(2,006
)
 

 
7,755

 
Interest income

 

 
36

 

 
9

 

 
634

 

 
679

 
Interest expense

 

 

 

 

 

 
853

 

 
853

 
Depreciation and amortization
86

 
37

 
411

 
65

 
5

 
454

 
202

 

 
1,260

 
Equity income (loss) — net
49

 
(3
)
 
(3
)
 
11

 

 
878

 
140

 

 
1,072

 
Income (loss) before income
  taxes
3,666

 
2,209

 
2,192

 
2,168

 
167

 
(2,202
)
 
(1,310
)
 

 
6,890

 
Capital expenditures
77

 
55

 
541

 
50

 
4

 
737

 
286

 

 
1,750

 
1 Property, plant and equipment — net in South Africa represented 16 percent and 14 percent of consolidated property, plant and equipment — net in 2019 and 2018, respectively.
2 Principally equity method investments and other investments in bottling companies.


During 2019, 2018 and 2017, our operating segments and Corporate were impacted by acquisition and divestiture activities. Refer to Note 2.
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 20.
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 18.
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 equity 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 18.
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 equity 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 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 15 and Note 20.
Operating income (loss) and income (loss) before income taxes were reduced by $450 million for Bottling Investments due to asset impairment charges. Refer to Note 18.
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 13.
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 long-term debt. Refer to Note 12.
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 18.
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. Refer to Note 18.
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 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 15.
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 form of CBA 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.
In 2017, 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 $26 million for Europe, Middle East and Africa, $7 million for Latin America, $241 million for North America, $10 million for Asia Pacific, $57 million for Bottling Investments and $193 million for Corporate due to the Company's productivity and reinvestment program. Income (loss) before income taxes was also reduced by $116 million for Corporate due to pension settlements related to the Company's productivity and reinvestment program. Refer to Note 15 and Note 20.
Operating income (loss) and income (loss) before income taxes were reduced by $737 million for Bottling Investments and $34 million for Corporate due to asset impairment charges.
Operating income (loss) was reduced by $280 million and income (loss) before income taxes was reduced by $419 million for Bottling Investments due to costs incurred to refranchise certain of our bottling operations. Refer to Note 2.
Operating income (loss) and income (loss) before income taxes were reduced by $225 million for Corporate as a result of a cash contribution we made to The Coca-Cola Foundation.
Operating income (loss) and income (loss) before income taxes were reduced by $67 million for Corporate due to tax litigation expense. Refer to Note 13.
Income (loss) before income taxes was increased by $445 million for Corporate due to a gain recognized resulting from the merger of CCW and CCEJ. Refer to Note 19.
Income (loss) before income taxes was increased by $150 million for Corporate related to the remeasurement of our previously held equity interests in CCBA and its South African subsidiary to fair value. Refer to Note 2.
Income (loss) before income taxes was increased by $88 million for Corporate due to a gain recognized upon refranchising our China bottling operations and selling a related cost method investment. Refer to Note 2.
Income (loss) before income taxes was increased by $25 million for Corporate due to Coca‑Cola FEMSA, an equity method investee, issuing additional shares of its stock during the period at a per share amount greater than the carrying value of the Company's per share investment.
Income (loss) before income taxes was reduced by $2,140 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 $313 million for North America primarily related to payments made to convert the bottling agreements for certain North America bottling partners' territories to a single form of CBA with additional requirements. Refer to Note 2.
Income (loss) before income taxes was reduced by $50 million for Corporate due to an other-than-temporary impairment charge related to one of our international equity method investees.
Income (loss) before income taxes was reduced by $38 million for Corporate due to the early extinguishment of long-term debt. Refer to Note 12.
Income (loss) before income taxes was reduced by $26 million for Corporate due to a charge related to our former German bottling operations.
Income (loss) before income taxes was reduced by $4 million for Europe, Middle East and Africa, $2 million for North America, $70 million for Bottling Investments and $16 million for Corporate due to the Company's proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees.