Principles Of Accounting II Assignment 4
Hello everyone, I have an Assignment for you today. This assignment must beDONE by Wednesday, August 26, 2020, no later than 10 pm. By the way, I need this assignment to be PLAGIARISM FREE & a Spell Check when completed. Make sure youREADthe instructionsCAREFULLY. Now without further ado, the instructions to the assignments are below:
Instructions
Financial Analysis
For this assignment, you will apply what you have learned thus far from the unit lessons and required unit resources.
You will conduct a financial analysis of the Coca-Cola Company and PepsiCo. Write a five-page paper that evaluates each firm, and provide your findings and recommendation for investment or employment.
Your paper should consist of the components listed below.
Provide a company overview for both companies, which should be one page in length.
Include a comparison of three accounting methods (i.e., receivables, depreciation, and inventory valuation), which should be one page in length (formatted either as a table or an outline).
Provide four ratio calculations (i.e., one ratio each for liquidity, solvency, profitability, and market) as well as an analysis, which should be two pages in length.
Include your recommendations and conclusions, which should be one page in length.
You are encouraged to utilize the resources below to support your findings.
PepsiCo. (2019). 2018 PepsiCo annual report. https://www.pepsico.com/docs/album/annual-reports/2018-annual-report.pdf?sfvrsn=35d1d2bc_2
U.S. Securities and Exchange Commission. (2019). Form 10-K: The Coca-ColaCompany (Commission File No. 001-02217).https://www.coca-colacompany.com/content/dam/journey/us/en/policies/pdf/shareowner-services/2018-annual-report-on-form-10-K.pdf
You may submit an appendix with any research you conductedbeyond the companies most recent 10-Ksto support your analyses and recommendations. Your paper should include appropriate reference citations.
Write your responses in a Word document, and include at least two resources to support your findings. Adhere to APA Style when creating citations and references for this assignment.
By the way I’ve added several attachments below, the first two attachments are pdf files for the two 2018 PepsiCo annual report & The Coca-Cola Company Commission File. And lastly is the Study Guide. Please utilizes all the resources provided to complete this assignment. This is a four page assignment excluding the title & reference page. This assignment must be APA style! Please read instruction carefully! NO PLAGIARISM NO PLAGIARISM!!!!
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2018
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 001-02217
(Exact name of Registrant as specified in its charter)
Delaware 58-0628465
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
One Coca-Cola Plaza,
Atlanta, Georgia 30313
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (404) 676-2121
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $0.25 Par Value New York Stock Exchange
Floating Rate Notes Due 2019 New York Stock Exchange
Floating Rate Notes Due 2019 New York Stock Exchange
0.000% Notes Due 2021 New York Stock Exchange
1.125% Notes Due 2022 New York Stock Exchange
0.75% Notes Due 2023 New York Stock Exchange
0.500% Notes Due 2024 New York Stock Exchange
1.875% Notes Due 2026 New York Stock Exchange
1.125% Notes Due 2027 New York Stock Exchange
1.625% Notes Due 2035 New York Stock Exchange
1.100% Notes Due 2036 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes No
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T ( 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant
was required to submit such files). Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K ( 229.405 of this chapter) is not
contained herein, and will not be contained, to the best of Registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting
company and emerging growth company in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark if the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
The aggregate market value of the common equity held by non-affiliates of the Registrant (assuming for these purposes, but without
conceding, that all executive officers and Directors are affiliates of the Registrant) as of June 29, 2018, the last business day of the
Registrants most recently completed second fiscal quarter, was $184,986,760,847 (based on the closing sale price of the Registrants
Common Stock on that date as reported on the New York Stock Exchange).
The number of shares outstanding of the Registrants Common Stock as of February 15, 2019, was 4,275,340,031.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Companys Proxy Statement for the Annual Meeting of Shareowners to be held on April 24, 2019, are incorporated by
reference in Part III.
THE COCA-COLA COMPANY AND SUBSIDIARIES
Table of Contents
Page
Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Part I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Item X. Executive Officers of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Part II
Item 5. Market for Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . 29
Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . 153
Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
Part III
Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
Item 13. Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
Item 14. Principal Accountant Fees and Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
Part IV
Item 15. Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Item 16. Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
1
FORWARD-LOOKING STATEMENTS
This report contains information that may constitute forward-looking statements. Generally, the words believe, expect, intend,
estimate, anticipate, project, will and similar expressions identify forward-looking statements, which generally are not historical in
nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements that
address operating performance, events or developments that we expect or anticipate will occur in the future including statements relating
to volume growth, share of sales and earnings per share growth, and statements expressing general views about future operating results
are forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However,
caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the
date when made. Our Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks
and uncertainties that could cause our Companys actual results to differ materially from historical experience and our present expectations
or projections. These risks and uncertainties include, but are not limited to, those described in Part I, Item 1A. Risk Factors and elsewhere
in this report and those described from time to time in our future reports filed with the Securities and Exchange Commission.
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PART I
ITEM 1. BUSINESS
In this report, the terms The Coca-Cola Company, Company, we, us and our mean The Coca-Cola Company and all entities
included in our consolidated financial statements.
General
The Coca-Cola Company is the worlds largest nonalcoholic beverage company. We own or license and market more than 500
nonalcoholic beverage brands, which we group into the following category clusters: sparkling soft drinks; water, enhanced water and
sports drinks; juice, dairy and plant-based beverages; tea and coffee; and energy drinks. We own and market four of the worlds top five
nonalcoholic sparkling soft drink brands: Coca-Cola, Diet Coke, Fanta and Sprite. Finished beverage products bearing our trademarks,
sold in the United States since 1886, are now sold in more than 200 countries and territories.
We make our branded beverage products available to consumers throughout the world through our network of independent bottling
partners, distributors, wholesalers and retailers as well as Company-owned or -controlled bottling and distribution operations the
worlds largest beverage distribution system. Beverages bearing trademarks owned by or licensed to us account for more than
1.9 billion of the approximately 61 billion servings of all beverages consumed worldwide every day.
We believe our success depends on our ability to connect with consumers by providing them with a wide variety of beverage options to
meet their desires, needs and lifestyles. Our success further depends on the ability of our people to execute effectively, every day.
Our objective is to use our Companys assets our brands, financial strength, unrivaled distribution system, global reach, and the
talent and strong commitment of our management and associates to become more competitive and to accelerate growth in a
manner that creates value for our shareowners.
We were incorporated in September 1919 under the laws of the State of Delaware and succeeded to the business of a Georgia
corporation with the same name that had been organized in 1892.
Operating Segments
The Companys operating structure is the basis for our internal financial reporting. As of December 31, 2018, our operating structure
included the following operating segments, which are sometimes referred to as operating groups or groups:
Europe, Middle East and Africa
Latin America
North America
Asia Pacific
Bottling Investments
Our operating structure as of December 31, 2018 also included 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.
In January 2019, we established a new operating segment, Global Ventures, which includes the results of Costa Limited (Costa),
which we acquired on January 3, 2019, and the results of our innocent and Doadan businesses as well as fees earned pursuant to
distribution coordination agreements between the Company and Monster Beverage Corporation (Monster). Refer to Note 22 of
Notes to Consolidated Financial Statements set forth in Part II, Item 8. Financial Statements and Supplementary Data of this report
for information regarding the Costa acquisition.
Except to the extent that differences among operating segments are material to an understanding of our business taken as a whole, the
description of our business in this report is presented on a consolidated basis.
Products and Brands
As used in this report:
concentrates means flavoring ingredients and, depending on the product, sweeteners used to prepare syrups or finished
beverages and includes powders or minerals for purified water products;
syrups means beverage ingredients produced by combining concentrates and, depending on the product, sweeteners and
added water;
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fountain syrups means syrups that are sold to fountain retailers, such as restaurants and convenience stores, which use
dispensing equipment to mix the syrups with sparkling or still water at the time of purchase to produce finished beverages that
are served in cups or glasses for immediate consumption;
Company Trademark Beverages means beverages bearing our trademarks and certain other beverage products bearing
trademarks licensed to us by third parties for which we provide marketing support and from the sale of which we derive
economic benefit; and
Trademark Coca-Cola Beverages or Trademark Coca-Cola means beverages bearing the trademark Coca-Cola or any
trademark that includes Coca-Cola or Coke (that is, Coca-Cola, Coca-Cola Life, Diet Coke/Coca-Cola Light and Coca-Cola
Zero Sugar and all their variations and any line extensions, including caffeine free Diet Coke, Cherry Coke, etc.). Likewise,
when we use the capitalized word Trademark together with the name of one of our other beverage products (such as
Trademark Fanta, Trademark Sprite or Trademark Simply), we mean beverages bearing the indicated trademark (that
is, Fanta, Sprite or Simply, respectively) and all its variations and line extensions (such that Trademark Fanta includes Fanta
Orange, Fanta Zero Orange, Fanta Apple, etc.; Trademark Sprite includes Sprite, Diet Sprite, Sprite Zero, Sprite Light, etc.;
and Trademark Simply includes Simply Orange, Simply Apple, Simply Grapefruit, etc.).
Our Company markets, manufactures and sells:
beverage concentrates, sometimes referred to as beverage bases, and syrups, including fountain syrups (we refer to this part of
our business as our concentrate business or concentrate operations); and
finished sparkling soft drinks and other nonalcoholic beverages (we refer to this part of our business as our finished product
business or finished product operations).
Generally, finished product operations generate higher net operating revenues but lower gross profit margins than concentrate
operations.
In our domestic and international concentrate operations, we typically generate net operating revenues by selling concentrates, syrups
and certain finished beverages to authorized bottling operations (to which we typically refer as our bottlers or our bottling partners).
Our bottling partners either combine the concentrates with sweeteners (depending on the product), still water and/or sparkling water, or
combine the syrups with sparkling water to produce finished beverages. The finished beverages are packaged in authorized containers,
such as cans and refillable and nonrefillable glass and plastic bottles, bearing our trademarks or trademarks licensed to us and are then
sold to retailers directly or, in some cases, through wholesalers or other bottlers. In addition, outside the United States, our bottling
partners are typically authorized to manufacture fountain syrups, using our concentrate, which they sell to fountain retailers for use in
producing beverages for immediate consumption, or to authorized fountain wholesalers who in turn sell and distribute the fountain
syrups to fountain retailers. Our concentrate operations are included in our geographic operating segments.
Our finished product operations generate net operating revenues by selling sparkling soft drinks and a variety of other finished
nonalcoholic beverages, such as water, enhanced water and sports drinks; juice, dairy and plant-based beverages; tea and coffee; and
energy drinks, to retailers or to distributors and wholesalers who distribute them to retailers. These operations consist primarily of
Company-owned or -controlled bottling, sales and distribution operations, which are included in our Bottling Investments operating
segment. In certain markets, the Company also operates non-bottling finished product operations in which we sell finished beverages
to distributors and wholesalers that are generally not one of the Companys bottling partners. These operations are generally included
in one of our geographic operating segments. In the United States, we manufacture fountain syrups and sell them to fountain
retailers, who use the fountain syrups to produce beverages for immediate consumption, or to authorized fountain wholesalers or
bottling partners, who resell the fountain syrups to fountain retailers. These fountain syrup sales are included in our North America
operating segment.
For information regarding net operating revenues and unit case volume related to our concentrate operations and finished product
operations, refer to the heading Our Business General set forth in Part II, Item 7. Managements Discussion and Analysis of
Financial Condition and Results of Operations of this report, which is incorporated herein by reference.
For information regarding how we measure the volume of Company beverage products sold by the Company and our bottling partners
(Coca-Cola system), refer to the heading Operations Review Beverage Volume set forth in Part II, Item 7. Managements
Discussion and Analysis of Financial Condition and Results of Operations of this report, which is incorporated herein by reference.
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We own and market numerous valuable nonalcoholic beverage brands, including the following:
sparkling soft drinks: Coca-Cola, Diet Coke/Coca-Cola Light, Coca-Cola Zero Sugar, Fanta, Schweppes,* Sprite, Thums Up;
water, enhanced water and sports drinks: Aquarius, Dasani, glacau smartwater, glacau vitaminwater, Ice Dew, I LOHAS,
Powerade;
juice, dairy and plant-based beverages: AdeS, Del Valle, innocent, Minute Maid, Minute Maid Pulpy, Simply, ZICO; and
tea and coffee: Ayataka, Costa, FUZE TEA, Georgia, Gold Peak, HONEST TEA.
* Schweppes is owned by the Company in certain countries other than the United States.
In addition to the beverage brands we own, we also provide marketing support and otherwise participate in the sales of other
nonalcoholic beverage brands through licenses, joint ventures and strategic partnerships, including, but not limited to, the following:
Certain Coca-Cola system bottlers distribute certain brands of Monster, primarily Monster Energy, in designated territories in
the United States, Canada and other international territories pursuant to distribution coordination agreements between the
Company and Monster and related distribution agreements between Monster and Coca-Cola system bottlers.
We have a strategic partnership with Aujan Industries Company J.S.C. (Aujan), one of the largest independent beverage
companies in the Middle East. We own 50 percent of the entity that holds the rights in certain territories to brands produced
and distributed by Aujan, including Rani, a juice brand, and Barbican, a flavored malt beverage brand.
We and certain of our bottling partners distribute products of fairlife, LLC (fairlife), our joint venture with Select Milk
Producers, Inc., a dairy cooperative, including fairlife ultra-filtered milk and Core Power, a high-protein milk shake, in the
United States and Canada.
Consumer demand determines the optimal menu of Company product offerings. Consumer demand can vary from one market to
another and can change over time within a single market. Employing our business strategy, our Company seeks to further build its
existing brands and, at the same time, to broaden its portfolio of brands, products and services in order to create and satisfy consumer
demand in every market.
Distribution System
We make our branded beverage products available to consumers in more than 200 countries and territories through our network
of independent bottling partners, distributors, wholesalers and retailers as well as Company-owned or -controlled bottling and
distribution operations the worlds largest beverage distribution system. Consumers enjoy finished beverage products bearing
trademarks owned by or licensed to us at a rate of more than 1.9 billion servings each day. We continue to expand our marketing
presence in an effort to increase our unit case volume and net operating revenues in developed, developing and emerging markets.
Our strong and stable bottling and distribution system helps us to capture growth by manufacturing, distributing and selling existing,
enhanced and new innovative products to our consumers throughout the world.
The Coca-Cola system sold 29.6 billion, 29.2 billion and 29.3 billion unit cases of our products in 2018, 2017 and 2016, respectively.
Sparkling soft drinks represented 69 percent of our worldwide unit case volume for each of 2018, 2017 and 2016. Trademark
Coca-Cola accounted for 45 percent of our worldwide unit case volume for each of 2018, 2017 and 2016.
In 2018, unit case volume in the United States represented 18 percent of the Companys worldwide unit case volume. Of the U.S.
unit case volume, 62 percent was attributable to sparkling soft drinks. Trademark Coca-Cola accounted for 43 percent of U.S. unit
case volume.
Unit case volume outside the United States represented 82 percent of the Companys worldwide unit case volume for 2018. The
countries outside the United States in which our unit case volumes were the largest were Mexico, China, Brazil and Japan, which
together accounted for 31 percent of our worldwide unit case volume. Of the non-U.S. unit case volume, 70 percent was attributable to
sparkling soft drinks. Trademark Coca-Cola accounted for 46 percent of non-U.S. unit case volume.
Our five largest independent bottling partners based on unit case volume in 2018 were:
Coca-Cola FEMSA, S.A.B. de C.V. (Coca-Cola FEMSA), which has bottling and distribution operations in Mexico
(a substantial part of central Mexico, including Mexico City, as well as southeast and northeast Mexico), Guatemala
(nationwide), Nicaragua (nationwide), Costa Rica (nationwide), Panama (nationwide), Colombia (most of the country),
Venezuela (nationwide), Brazil (greater So Paulo, Campias, Santos, the state of Mato Grosso do Sul, the
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state of Paran, the state of Santa Catarina, part of the state of Rio Grande do Sul, part of the state of Gois, part of the
state of Rio de Janeiro and part of the state of Minas Gerais), Argentina (federal capital of Buenos Aires and surrounding
areas) and Uruguay (nationwide);
Coca-Cola European Partners plc (CCEP), which has bottling and distribution operations in Andorra, Belgium, continental
France, Germany, Great Britain, Iceland, Luxembourg, Monaco, the Netherlands, Norway, Portugal, Spain and Sweden;
Coca-Cola HBC AG (Coca-Cola Hellenic), which has bottling and distribution operations in Armenia, Austria, Belarus,
Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, the Czech Republic, Estonia, the Former Yugoslav Republic of Macedonia,
Greece, Hungary, Italy, Latvia, Lithuania, Moldova, Montenegro, Nigeria, Northern Ireland, Poland, Republic of Ireland,
Romania, the Russian Federation, Serbia, Slovakia, Slovenia, Switzerland and Ukraine;
Arca Continental, S.A.B. de C.V., which has bottling and distribution operations in northern and western Mexico, northern
Argentina, Ecuador, Peru, and the state of Texas and parts of the states of New Mexico, Oklahoma and Arkansas in the United
States; and
Swire Beverages, which has bottling and distribution operations in 11 provinces and the Shanghai Municipality in the eastern
and southern areas of mainland China, Hong Kong, Taiwan, and territories in 13 states in the western United States.
In 2018, these five bottling partners combined represented 40 percent of our total unit case volume.
Being a bottler does not create a legal partnership or joint venture between us and our bottlers. Our bottlers are independent
contractors and are not our agents.
Bottlers Agreements
We have separate contracts, to which we generally refer as bottlers agreements, with our bottling partners regarding the
manufacture and sale of Company products. Subject to specified terms and conditions and certain variations, the bottlers agreements
generally authorize the bottlers to prepare, package, distribute and sell Company Trademark Beverages in authorized containers
in (but, subject to applicable local law, generally only in) an identified territory. The bottler is obligated to purchase its entire
requirement of concentrates or syrups for the designated Company Trademark Beverages from the Company or Company-authorized
suppliers. We typically agree to refrain from selling or distributing, or from authorizing third parties to sell or distribute, the designated
Company Trademark Beverages throughout the identified territory in the particular authorized containers; however, we typically
reserve for ourselves or our designee the right (1) to prepare and package such Company Trademark Beverages in such containers
in the territory for sale outside the territory; (2) to prepare, package, distribute and sell such Company Trademark Beverages in the
territory in any other manner or form (territorial restrictions on bottlers vary in some cases in accordance with local law); and (3) to
handle certain key accounts (accounts that cover multiple territories).
While under most of our bottlers agreements we generally have complete flexibility to determine the price and other terms of sale of
the concentrates and syrups we sell to our bottlers, as a practical matter, our Companys ability to exercise its contractual flexibility
to determine the price and other terms of sale of concentrates and syrups is subject, both outside and within the United States, to
competitive market conditions. In addition, in some instances we have agreed or may in the future agree with a bottler with respect to
concentrate pricing on a prospective basis for specified time periods. Also, in some markets, in an effort to allow our Company and our
bottling partners to grow together through shared value, aligned financial objectives and the flexibility necessary to meet consumers
always changing needs and tastes, we worked with our bottling partners to develop and implement an incidence-based concentrate
pricing model. Under this model, the concentrate price we charge is impacted by a number of factors, including, but not limited to,
bottler pricing, the channels in which the finished products are sold and package mix.
As further discussed below, our bottlers agreements for territories outside the United States differ in some respects from our bottlers
agreements for territories within the United States.
Bottlers Agreements Outside the United States
Bottlers agreements between us and our authorized bottlers outside the United States generally are of stated duration, subject in
some cases to possible extensions or renewals. Generally, these bottlers agreements are subject to termination by the Company
following the occurrence of certain designated events, including defined events of default and certain changes in ownership or control
of the bottlers. Most of the bottlers agreements in force between us and bottlers outside the United States authorize the bottlers to
manufacture and distribute fountain syrups, usually on a nonexclusive basis.
In certain parts of the world outside the United States, we have not granted comprehensive beverage production and distribution
rights to the bottlers. In such instances, we have authorized certain bottlers to (1) manufacture Company Trademark Beverages for
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sale to other bottlers or (
