Quarterly report pursuant to Section 13 or 15(d)

Operating Segments

v3.5.0.2
Operating Segments
 9 Months Ended
Sep. 30, 2016
Operating Segments [Abstract]  
Operating Segments
OPERATING SEGMENTS
Effective January 1, 2016, we transferred CCR's bottling and associated supply chain operations in the United States and Canada from our North America segment to our Bottling Investments segment. Additionally, effective August 1, 2016, the Company formed a new Europe, Middle East and Africa operating group consisting of the business units that were previously included in the Europe and the Eurasia and Africa operating groups. As a result, our organizational structure consists of the following operating segments: Europe, Middle East and Africa; Latin America; North America; Asia Pacific; Bottling Investments; and Corporate. Accordingly, all prior period segment information presented herein has been revised to reflect these changes in our organizational structure.
Information about our Company's operations as of and for the three months ended September 30, 2016 and October 2, 2015 by operating segment is as follows (in millions):
 
Europe, Middle East & Africa

Latin
America

North
America

Asia Pacific

Bottling
Investments

Corporate

Eliminations

Consolidated

2016
 
 
 
 
 
 
 
 
Net operating revenues:
 
 
 
 
 
 
 
 
Third party
$
1,852

$
949

$
1,661

$
1,315

$
4,809

$
47

$
—

$
10,633

Intersegment
—

16

1,003

145

31

—

(1,195
)
—

Total net revenues
1,852

965

2,664

1,460

4,840

47

(1,195
)
10,633

Operating income (loss)
914

435

666

583

124

(451
)
—

2,271

Income (loss) before income taxes
922

447

653

589

(734
)
(449
)
—

1,428

Identifiable operating assets
4,337

1,964

16,406

2,257

17,390

33,546

—

75,900

Noncurrent investments
1,315

823

123

166

12,223

3,377

—

18,027

2015
 
 
 
 
 
 
 
 
Net operating revenues:
 
 
 
 
 
 
 
 
Third party
$
1,764

$
993

$
1,468

$
1,247

$
5,900

$
55

$
—

$
11,427

Intersegment
169

19

1,112

159

48

—

(1,507
)
—

Total net revenues
1,933

1,012

2,580

1,406

5,948

55

(1,507
)
11,427

Operating income (loss)
930

538

585

571

85

(330
)
—

2,379

Income (loss) before income taxes
945

535

581

576

(547
)
(365
)
—

1,725

Identifiable operating assets
4,506

1,463

16,383

1,784

23,067

30,786

—

77,989

Noncurrent investments
1,161

673

128

166

8,134

4,672

—

14,934

As of December 31, 2015
 
 
 
 
 
 
 
 
Identifiable operating assets
$
4,156

$
1,627

$
16,396

$
1,639

$
22,688

$
27,702

$
—

$
74,208

Noncurrent investments
1,138

657

107

158

8,084

5,644

—

15,788


During the three months ended September 30, 2016, the results of our operating segments 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, $22 million for North America, $22 million for Bottling Investments and $14 million for Corporate due to the Company's productivity and reinvestment program as well as other restructuring initiatives. Operating income (loss) and income (loss) before income taxes were increased by $1 million for Latin America due to the refinement of previously established accruals related to the Company's productivity and reinvestment program. Refer to Note 10 and Note 11 for additional information on each of the Company's productivity, restructuring and integration initiatives.
•
Operating income (loss) and income (loss) before income taxes were reduced by $76 million for Latin America due to the write-down we recorded related to our receivables from our bottling partner in Venezuela due to changes in exchange rates. Refer to Note 1.
•
Operating income (loss) and income (loss) before income taxes were reduced by $73 million for Bottling Investments due to costs incurred to refranchise certain of our North America bottling territories. Refer to Note 10.
•
Income (loss) before income taxes was reduced by $14 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. Refer to Note 10.
•
Income (loss) before income taxes was reduced by $17 million for North America related to payments made to convert the bottling agreements for certain North America bottling partners' territories to Final Form CBAs. Refer to Note 2.
•
Income (loss) before income taxes was reduced by $1,089 million for Bottling Investments primarily due to the refranchising of certain bottling territories in North America. Refer to Note 2 and Note 10.
•
Income (loss) before income taxes was reduced by $21 million for Corporate due to the deconsolidation of our South African bottling operations in exchange for investments in CCBA and CCBA's South African subsidiary. Refer to Note 2.
During the three months ended October 2, 2015, 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 Latin America, $31 million for North America, $2 million for Asia Pacific, $151 million for Bottling Investments and $29 million for Corporate due to the Company's productivity and reinvestment program as well as other restructuring initiatives. Operating income (loss) and income (loss) before income taxes were increased by $1 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 10 and Note 11.
•
Operating income (loss) and income (loss) before income taxes were reduced by $48 million for Corporate primarily due to impairment charges on certain of the Company's intangible assets. Refer to Note 10 and Note 14.
•
Income (loss) before income taxes was reduced by $794 million for Bottling Investments and $21 million for Corporate primarily due to the refranchising of certain bottling territories in North America. Refer to Note 2 and Note 10.
•
Income (loss) before income taxes was increased by $3 million for Europe, Middle East and Africa due to the Company's proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees. Refer to Note 10.
Information about our Company's operations for the nine months ended September 30, 2016 and October 2, 2015 by operating segment is as follows (in millions):
 
Europe, Middle East & Africa

Latin
America

North
America

Asia Pacific

Bottling
Investments

Corporate

Eliminations

Consolidated

2016
 
 
 
 
 
 
 
 
Net operating revenues:
 
 
 
 
 
 
 
 
Third party
$
5,369

$
2,787

$
4,759

$
3,818

$
15,631

$
90

$
—

$
32,454

Intersegment
264

50

2,978

437

116

5

(3,850
)
—

Total net revenues
5,633

2,837

7,737

4,255

15,747

95

(3,850
)
32,454

Operating income (loss)
2,897

1,470

1,982

1,892

222

(1,192
)
—

7,271

Income (loss) before income taxes
2,950

1,485

1,978

1,903

(897
)
202

—

7,621

2015
 
 
 
 
 
 
 
 
Net operating revenues:
 
 
 
 
 
 
 
 
Third party
$
5,405

$
2,995

$
4,237

$
3,816

$
17,721

$
120

$
—

$
34,294

Intersegment
471

56

3,311

476

143

—

(4,457
)
—

Total net revenues
5,876

3,051

7,548

4,292

17,864

120

(4,457
)
34,294

Operating income (loss)
3,036

1,641

1,874

1,876

239

(1,456
)
—

7,210

Income (loss) before income taxes
3,085

1,649

1,865

1,890

(240
)
(182
)
—

8,067


During the nine months ended September 30, 2016, the results of our operating segments were impacted by the following items:
•
Operating income (loss) and income (loss) before income taxes were reduced by $6 million for Europe, Middle East and Africa, $80 million for North America, $1 million for Asia Pacific, $300 million for Bottling Investments and $42 million for Corporate due to the Company's productivity and reinvestment program as well as other restructuring initiatives. Operating income (loss) and income (loss) before income taxes were increased by $2 million for Latin America due to the refinement of previously established accruals related to the Company's productivity and reinvestment program. Refer to Note 10 and Note 11 for additional information on each of the Company's productivity, restructuring and integration initiatives.
•
Operating income (loss) and income (loss) before income taxes were reduced by $76 million for Latin America due to the write-down we recorded related to our receivables from our bottling partner in Venezuela due to changes in exchange rates. Refer to Note 1.
•
Operating income (loss) and income (loss) before income taxes were reduced by $170 million for Bottling Investments due to costs incurred to refranchise certain of our North America bottling territories. Refer to Note 10.
•
Operating income (loss) and income (loss) before income taxes were reduced by $8 million for Bottling Investments and $29 million for Corporate related to noncapitalizable transaction costs associated with pending and closed transactions. Refer to Note 10.
•
Operating income (loss) and income (loss) before income taxes were reduced by $100 million for Corporate as a result of a cash contribution to The Coca-Cola Foundation. Refer to Note 10.
•
Income (loss) before income taxes was reduced by $32 million for Bottling Investments and $3 million for Corporate due to the Company's proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees. Refer to Note 10.
•
Income (loss) before income taxes was reduced by $17 million for North America related to payments made to convert the bottling agreements for certain North America bottling partners' territories to Final Form CBAs. Refer to Note 2.
•
Income (loss) before income taxes was reduced by $1,657 million for Bottling Investments primarily due to the refranchising of certain bottling territories in North America. Refer to Note 2 and Note 10.
•
Income (loss) before income taxes was increased by $1,323 million for Corporate as a result of the deconsolidation of our German bottling operations. Refer to Note 2.
•
Income (loss) before income taxes was increased by $18 million for Corporate as a result of the disposal of our investment in Keurig. Refer to Note 2.
•
Income (loss) before income taxes was reduced by $21 million for Corporate due to the deconsolidation of our South African bottling operations in exchange for investments in CCBA and CCBA's South African subsidiary. Refer to Note 2.
During the nine months ended October 2, 2015, the results of our operating segments were impacted by the following items:
•
Operating income (loss) and income (loss) before income taxes were reduced by $3 million for Europe, Middle East and Africa, $7 million for Latin America, $104 million for North America, $361 million for Bottling Investments and $53 million for Corporate due to the Company's productivity and reinvestment program as well as other restructuring initiatives. Operating income (loss) and income (loss) before income taxes were increased by $1 million for Asia Pacific due to the refinement of previously established accruals related to the Company's productivity and reinvestment program. Refer to Note 10 and Note 11.
•
Operating income (loss) and income (loss) before income taxes were reduced by $418 million for Corporate due to an impairment charge primarily related to the discontinuation of the energy products in the glacéau portfolio as a result of the Monster Transaction. Refer to Note 2 and Note 10.
•
Operating income (loss) and income (loss) before income taxes were reduced by $100 million for Corporate as a result of a cash contribution to The Coca-Cola Foundation. Refer to Note 10.
•
Income (loss) before income taxes was increased by $1,402 million for Corporate as a result of the Monster Transaction. Refer to Note 2 and Note 10.
•
Income (loss) before income taxes was reduced by $827 million for Bottling Investments and $21 million for Corporate primarily due to the refranchising of certain bottling territories in North America. Refer to Note 2 and Note 10.
•
Income (loss) before income taxes was reduced by $320 million for Corporate due to charges the Company recognized on the early extinguishment of debt. Refer to Note 10.
•
Income (loss) before income taxes was reduced by $33 million for Latin America and $105 million for Corporate due to the remeasurement of the net monetary assets of our local Venezuelan subsidiary into U.S. dollars using the SIMADI exchange rate, an impairment of a Venezuelan trademark and a write-down the Company recorded on receivables from our bottling partner in Venezuela. Refer to Note 1 and Note 10.
•
Income (loss) before income taxes was reduced by $19 million for Corporate as a result of the remeasurement of our previously held equity interest in a South African bottler to fair value upon our acquisition of the bottling operations. Refer to Note 2 and Note 10.
•
Income (loss) before income taxes was reduced by $6 million for Corporate as a result of a Brazilian bottling entity's majority interest owners exercising their option to acquire from us an additional equity interest at an exercise price less than that of our carrying value. Refer to Note 10.
•
Income (loss) before income taxes was reduced by $3 million for Europe, Middle East and Africa and $76 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. Refer to Note 10.