Annual Report 2016
Unite
Our Vision A s a g r o w i n g company we strive t o h o n o r G o d , s e r ve others, to pursue excellence and to g r o w p r o f i t a b l y.
Brief History Cocacola has been refreshing the world for over 125 years
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10 Letter to Shareholders Follow us in our year of expansion, growth and unity
Since its birth at a soda fountain in downtown Atlanta Georgia, in 1886, Coco-Cola has been a catalyst for social interaction and inspired i n n ovat i o n . To d ay, i t i s t h e
Financial Data
universal symbol of happiness and one of the world’s most influential brands, bringing
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smiles to all our customers, and one coke at a time.
12 About US Get to know our products and services
“
Why Coca-Cola is perfect for me. As a brand, Coca–cola promotes the notion of enjoying life and being happy. I feel as though I can connect with
their philosophies and principles and really build upon the meaning behind their brand. Coca-cola and I both share a passion for making people smile and appreciate what life has to offer. Coca cola has a fantastic product that has provided people al over the world with a refreshing drink that not only quenches their thirst but makes them feel good about themselves. -Muhtar Kent CEO for Coca-Cola
Our company is built around two core assets its brand and it people. That’s what makes working here so special. We believe that work is more than a place you go every day. It should be a place of explorations, creativity, professional growth and interpersonal relationships. It’s about being inspired and motivated to achieve extraordinary things. We want our people to take pride in their work and in building brand others love. It’s the combine talents, skills, knowledge, experience and unity of our people that make us who we are.
2005 It’s hard to believe, but Coca-Cola Zero officially turned 10 earlier this year. When the zerocalorie cola debuted in June 2005, it became The CocaCola Company’s most successful new product launch since Diet Coke in 1982
1982 Diet Coke is the most popular calorie-free soft drink in America. It’s the original sparkling beverage for those who want great flavor without the calories - a drink for those with great taste.
In May of 1886,
Coca-cola is created by
John S. Pemberton and served at Jacobs’ Pharmacy. Nine drinks a day are sold during this
year.
Company
accountant,
Frank
Robinson, names the drink “Coca-Cola,” and thinking the two Cs would look well in advertising, pens the famous Spencerian script
logo.
Coca-cola
was
originally
intended as a patent medicine invented by John Pemberton in the late 19 century. Before selling the company to Benjamin F. Thomas, businessman Asa Griggs Candler bought Coca-Cola and his marketing plan led coke to the dominance of the world soft-drink throughout the 20th century.
The History of
W e a r e i n t h e m i d s t o f o n e of the most transformative periods in our Company’s history. We are growing our Company, and community, and it is important to stess our Purpose: To honor God in all we do, to serve others, to pursue excellence and to grow p r o f i t a b l y. We a r e r a p i d l y ex p a n d i n g o u r i n f l u e n c e i n t h e U . S . Recent
six manufacturing facilities in
highlights include: In 2015
Virginia, Maryland, Indiana
and early 2016, we acquired
a n d O h i o. I n O c t o b e r 2 0 1 6 , we
distribution territories in
s i g n e d a n a g re e m e n t w i t h T h e
e a s t e r n Te n n e s s e e , Ke n t u c k y
Co c a - Co l a Co m p a ny a n d o t h e r
and Indiana, including major
bottlers to form a national
m a r k e t s i n K n o x v i l l e , Te n n . ;
product supply group which
L o u i sv i l l e a n d L ex i n g t o n , Ky. ;
will oversee system production
and Evansville, Ind. In May 2016,
throughout the United States
we signed a letter of intent with
a n d i n c r e a s e c o m p e t i t i ve n e s s
The Coca-Cola Company to
through strategic infrastructure
acquire new markets in 10 states
p l a n n i n g , i n n ov a t i o n p l a n n i n g
and the District of Columbia,
and optimal product sourcing.
Coca-Cola system.
including major markets in
Throughout our expansion,
Baltimore, Md.; Alexandria,
w e h a ve m a i n t a i n e d o u r f o c u s
N o r f o l k a n d R i c h m o n d , Va . ;
on operating excellence as
Cincinnati, Columbus and
evidenced by our solid 2015
Dayton, Ohio; and Indianapolis,
financial results. We continue to
Ind. In September 2016, we
d r i ve r e ve n u e g r o w t h t h r o u g h
signed a letter of intent with The
product innovation and broader
Coca-Cola Company to acquire
product and package offerings,
i n c l u d i n g s i g n i f i c a n t i n c re a s e d
o u t re a c h p r o g r a m s i n o u r n e w
d i st r i b u t i o n o f M o n ste r E n e rg y
te r r i to r i e s to s e r ve a n d m a ke a
p r o d u c t s . We a l s o c o n t i n u e
difference in the communities
to focus on ongoing cost-
in which our employees, and
containment initiatives and
consumers live.
o p e ra t i o n a l e f f i c i e n c i e s i n o u r
our strategic plans would
new and legacy territories.
In
be impossible without the
the past two years, we have
dedication and hard work of our
expanded our consumer base
t a l e n t e d e m p l o y e e s . We h a v e
from about 21 million people
grown from 6,700 employees at
in 11 states to approximately
t h e e n d o f 2 0 1 3 to a wo r k f o rce
33 million people in 14 states,
of more than 9,000 at the end of
providing us with a tremendous
2015. We look forward to adding
opportunity to serve new
employees in the new territories
c o m m u n i t i e s . We a r e w o r k i n g
to the Coke Consolidated family
hard to build one-to-one
a s we c o m p l e t e o u r r e m a i n i n g
customer connections and brand
acquisitions. Throughout our
loyalty through local marketing
expansion, we have worked
in our new territories. We are also
to optimize the transition
eager to build our community
experience by staggering
Achieving
t h e t ra n s a c t i o n d a te s . S u cce ss f u l l y b l e n d i n g o u r n ew a n d l e g a c y teammates in a collaborative manner has been a top priority.
As
we grow and unite our Company, we remain guided by our Purpose. We are privileged to sell the world’s greatest brands, and we remain co m m i t te d to d i s c i p l i n e, p ro f i t a b l e g row t h t h at d r i ve s l o n g - te r m shareholder value. We are grateful for your continued support.
Coca-Cola
produces, markets,
and distributes nonalcoholic beverages, which include s o m e o f t h e m o st re co g n i ze d a n d p o p u l a r b eve ra g e brands in the world. The Company was incorporated i n 1 9 8 0, a n d h a s b e e n i n t h e n o n a l co h o l i c b eve ra g e m a n u fa c t u r i n g a n d d i st r i b u t i o n b u s i n e ss s i n ce 1 9 02 . H i s t o r i c a l l y, o u r o p e r a t i o n a l f o o t p r i n t i n c l u d e d m a r ke t s l o c a te d i n N o r t h C a ro l i n a , S o u t h C a ro l i n a , s o u t h Alabama, South Georgia, c e n t ra l Te n n e s s e e , we s t e r n Vi rg i n i a a n d We st Vi rg i n i a ( t h e “ Le g a cy Te r r i to r i e s � ) . Since April 2013, as part of Th e C o c a - C o l a C o m p a ny ’s plans to refranchise its North American bottling territories, we have engaged in a series of transactions with The Coca-
previously served by CCR (the “ E x p a n s i o n Te r r i t o r i e s ” ) a n d o f re l a t e d d i s t r i b u t i o n a s s e t s (the “Distribution Expansion Transactions”). The Company’s rights to distribute and market
Inspiring Moments of Uplift Everyday
beverage products of The CocaCola Company in the Expansion Te r r i t o r i e s a r e g o v e r n e d b y a Comprehensive Beverage Agreement entered into at
C o l a C o m p a ny a n d C o c a - C o l a Refreshments, Inc. (“CCR”), a wholly owned subsidiary o f T h e C o c a - C o l a C o m p a n y, to expand our distribution operations
significantly
through the acquisition both of rights to serve additional distribution
territories
each closing for Expansion Te r r i t o r i e s a n d a r e d i f f e r e n t from the rights we hold under agreements with The CocaCola Company to serve the markets located in the Legacy Territories.
Rasakan Momennya Siente El Sabor Kóst Pravá Chut’ Stapp
Sien Pravá Chut’ Siente El Sabor Stapp Piyo Zara Jhomm K Refreshing Siente El Sabor K Refreshing &
Taste the Feeling
Siente El Sabor Otmórz Szce told meg az érzést Piyo Zara J Rasakan Momennya Siente E pa la felicitá Refreshing & Upli Pravá Chut’ Rasakan Momenn nte El Sabor Otmórz Szcesice Piyo Zara Jhomm K Kóstold m pa la felicitá Refreshing & Upl Rasakan Momennya Pravá Ch & Uplifiting Stappa la felicitá Kóstold meg az érzést Pravá C & Uplifiting Otmórz Szcescie
2009
Open Happieness In 2009, the “Open Happiness” campaign was unveiled globally. The central message of “Open Happiness” is an invitation to billions around the world to pause, refresh with a Coca‑Cola, and continue to enjoy one of life’s simple pleasures.
Beverage Products Still Beverages
Nonalcoholic beverage products that we produce, market and
Vitaminwater Smartwater POWERade Zero Tum-E Yummies Dasani Flavors Gold Peak Tea Minute Maid POWERade Dasani FUZE
Sparkling beverages Coca-Cola Diet Coke Coca-Cola Zero Coca-Cola Life Cherry Coke Zero Seagrams Ginger Ale Diet Coke Spelnda Barges Root Beer Cherry Coke Mello Yello Pibb Xtra Fresca Sprite TAB
distribute can be broken down into two categories:
2016 Net Sale by Category: Sparkling beverages 1,503,683 78.6% Still beverages 397,901 21.4%
2015 Fiscal Year
2016 High
Low
First Quarter
$112.00
$86.90
Second Quarter
$149.40
$111.07
Third Quarter
$194.43
$126.31
Fourth Quarter
$220.93
$170.01
Coke Consolidated’s product portfolio has grown
to
include
approximately 275 brands and flavors in a wide variety of package types and sizes.
2015 High
Low
First Quarter
$89.40
$65.74
Second Quarter
$86.56
$72.01
Third Quarter
$77.84
$68.75
Fourth Quarter
$95.65
$73.04
1998
Cash Flow In Millions
Cash Sources 2016
2015
2014
Cash provided by operating activities
150.6
132.9
$119.6
Proceeds from $350 million Senior Notes
349.9
-
-
Proceeds from revolving credit facilities
334.4
191.6
60.0
Proceeds from the sale of busines
26.4
-
-
1.9
1.7
6.1
$862.8
$326.2
$185.7
Proceeds from the sale of property, plant and equipment Total cash sources
Cash Used 2016
2015
2014
100
-
-
163.9
84.4
61.4
Acquisition of Expansion Territories
81.7
41.6
-
Payment of acquisition related contingent consideration
4.0
0.2
-
405.0
125.6
85.0
-
20.0
-
3.4
0.9
-
10.5
10,0
7.3
Payment of capital lease obligations
6.6
5.9
5.3
Income tax payments
31.8
31.0
15.9
Dividends
9.3
9.3
9.2
Other
0.2
-
0.2
Total cash uses
816.4
328.9
184.3
Increase (decrease) in cash
46.4
2.7
1.4
Payment of $100 million Senior Notes Capital expenditures
Payment on revolving credit facilities Payment on uncommitted line of credit Payment For debt issuance cost Contributions to pension plans
CONSOLIDATED STATEMENTS OF OPERATIONS In Thousands
2016
2015
2014
Net sales
2,306,458
1,746,369 1,641,331
Cost of sales
1,405,426
1,041,130 982,691
Gross margin
901,032
705,239
658,640
Selling, delivery and administrative expenses
802,888
619,272
584,993
Income from operations
98,144
85,967
73,647
Interest expense, net
28,915
29,272
29,403
Other income (expense), net
3,576
1,077
0
Gain on exchange of franchise territory
8,807
0
0
2016 Gain on sale of business Bargain purchase gain, net of tax
2015
2014
22,651
0
0
2,011
0
0
Income before taxes
99,122
55,618
44,244
Income tax expense
34,078
19,3536
12,142
Net income
65,044
36,082
32,102
6,042
4,728
4,427
59,002
31,354
27,675
Less: Net income attributable to noncontrolling interest
Net income
Comprehensives Income In Thousands
Net income
2016
2015
2014
$112.00
$86.90
$86.90
$149.40
$111.07
$111.07
Other comprehensive income (loss), net of tax: Foreign currency translation adjustment
Defined benefit plans:
Actuarial gain (loss)
$194.43
$126.31
$126.31
Prior service costs
$220.93
$170.01
$170.01
Postretirement benefits plan:
Actuarial gain (loss)
$112.00
$86.90
$86.90
Prior service costs
$149.40
$111.07
$111.07
Other comprehensive income (loss), net of tax
$112.00
$111.07
$111.07
Comprehensive income
$149.40
$111.07
$111.07
Less: comprehensive income attributable to noncontrolling interest
$149.40
$111.07
$111.07
Comprehensive income
$149.40
$111.07
$111.07
1994
Current assets: Cash and cash equivalents Accounts receivable, trade, less allowance for doubtful accounts of $2,117 and $1,330 respectively Accounts receivable Accounts receivable, other Inventres Prepaid expenses and other current assets Total current assets Property, plant and equipment, net Leased property under capital leases, net Other assets Franchise rights Goodwill Other identifiable intangible assets, net Total assets
Balance Sheet In Thousands
2016
2015
2014
$112.00
$86.90
$86.90
$149.40
$111.07
$111.07
$194.43
$126.31
$126.31
$220.93
$170.01
$170.01
$112.00
$86.90
$86.90
$149.40
$111.07
$111.07
$112.00
$111.07
$111.07
$149.40
$126.31
$126.31
$194.43
$170.01
$170.01
$220.93
$86.90
$86.90
$112.00
$111.07
$111.07
$149.40
$111.07
$111.07
$149.40
$111.07
$111.07
$149.40
$111.07
$111.07
28%
18%
South America
Pacific
16%
22%
North America
Europe
16%
Eurasia & Africa
25.5 Billion Unit Case Volume
Unite Coca-Cola 2016
Coca-Cola in 1889 available in only one country. By 1957, Coca-Cola was available in over
Eurasia & Africa
100 countries. Today, you can find
Worldwide
5%
Pacific
0%
North America
12%
South America
Europe
Coca-Cola in over 200 contries
2%
6%
5%
Total Growth World Wide
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