Transcription
Coca-Cola Consolidated Annual Report 2020Form 10-K (NASDAQ:COKE)Published: February 25th, 2020PDF generated by stocklight.com
UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 29, 2019or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period fromtoCommission File Number: 0-9286COCA-COLA CONSOLIDATED, INC.(Exact name of registrant as specified in its charter)Delaware(State or other jurisdiction ofincorporation or organization)56-0950585(I.R.S. EmployerIdentification No.)4100 Coca-Cola PlazaCharlotte, NC(Address of principal executive offices)28211(Zip Code)Registrant’s telephone number, including area code: (704) 557-4400Securities registered pursuant to Section 12(b) of the Act:Title of each classCommon Stock, 1.00 Par ValueTrading Symbol(s)COKEName of each exchange on which registeredThe NASDAQ Global Select MarketSecurities registered pursuant to Section 12(g) of the Act: NoneIndicate 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 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 12months (or for such shorter period that the registrant was required to file such reports), 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 ofthis 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 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 filerNon-accelerated filer Accelerated filerSmaller reporting companyEmerging 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 financialaccounting standards provided pursuant to Section 13(a) of the Exchange Act. Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, orthe average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.Market Value as of June 28, 2019 1,394,350,587*Common Stock, l.00 Par ValueClass B Common Stock, l.00 Par Value*No market exists for the Class B Common Stock, which is neither registered under Section 12 of the Act nor subject to Section 15(d) of the Act. The Class B Common Stock isconvertible into Common Stock on a share-for-share basis at the option of the holder.Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.ClassCommon Stock, 1.00 Par ValueClass B Common Stock, 1.00 Par ValueOutstanding as of January 26, 20207,141,4472,232,242Documents Incorporated by ReferencePortions of the registrant’s definitive Proxy Statement to be filed with the Securities and Exchange Commission in connection with the registrant’s 2020 Annual Meeting ofStockholders are incorporated by reference in Part III.
COCA-COLA CONSOLIDATED, INC.ANNUAL REPORT ON FORM 10‑KFOR THE FISCAL YEAR ENDED DECEMBER 29, 2019TABLE OF CONTENTSPagePART IItem 1.Item 1A.Item 1B.Item 2.Item 3.Item 4.BusinessRisk FactorsUnresolved Staff CommentsPropertiesLegal ProceedingsMine Safety DisclosuresInformation About Our Executive Officers391717181819PART IIItem 5.Item 6.Item 7.Item 7A.Item 8.Item 9.Item 9A.Item 9B.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesSelected Financial DataManagement’s Discussion and Analysis of Financial Condition and Results of OperationsQuantitative and Qualitative Disclosures About Market RiskFinancial Statements and Supplementary DataChanges in and Disagreements With Accountants on Accounting and Financial DisclosureControls and ProceduresOther Information2123244243898989PART IIIItem 10.Item 11.Directors, Executive Officers and Corporate GovernanceExecutive Compensation90Item 12.Item 13.Item 14.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersCertain Relationships and Related Transactions, and Director IndependencePrincipal Accountant Fees and Services90909090PART IVItem 15.Item 16.Exhibits and Financial Statement SchedulesForm 10-K SummarySignatures919698
PART IItem 1.Business.IntroductionCoca‑Cola Consolidated, Inc., a Delaware corporation (together with its majority-owned subsidiaries, the “Company,” “we,” “our” or “us”), distributes,markets and manufactures nonalcoholic beverages in territories spanning 14 states and the District of Columbia. The Company was incorporated in 1980and, together with its predecessors, has been in the nonalcoholic beverage manufacturing and distribution business since 1902. We are the largestCoca‑Cola bottler in the United States. Approximately 85% of our total bottle/can sales volume to retail customers consists of products ofThe Coca‑Cola Company, which include some of the most recognized and popular beverage brands in the world. We also distribute products for severalother beverage companies, including BA Sports Nutrition, LLC (“BodyArmor”), Keurig Dr Pepper Inc. (“Dr Pepper”) and Monster Energy Company(“Monster Energy”). Our purpose is to honor God, to serve others, to pursue excellence and to grow profitably.OwnershipJ. Frank Harrison, III, the Chairman of the Board of Directors and Chief Executive Officer of the Company, together with the trustees of certain trustsestablished for the benefit of certain relatives of the late J. Frank Harrison, Jr., control shares representing approximately 86% of the total voting power ofthe Company’s total outstanding Common Stock and Class B Common Stock on a consolidated basis. As of December 29, 2019,The Coca‑Cola Company owned approximately 27% of the Company’s total outstanding Common Stock and Class B Common Stock on a consolidatedbasis, representing approximately 5% of the total voting power of the Company’s Common Stock and Class B Common Stock voting together. As long asThe Coca‑Cola Company holds the number of shares of Common Stock it currently owns, it has the right to have its designee proposed by the Companyfor nomination to the Company’s Board of Directors, and J. Frank Harrison, III and the trustees of the J. Frank Harrison, Jr. family trusts described above,have agreed to vote the shares of the Company’s Class B Common Stock which they control in favor of such designee. The Coca‑Cola Company doesnot own any shares of the Company’s Class B Common Stock.Beverage ProductsWe offer a range of nonalcoholic beverage products and flavors designed to meet the demands of our consumers, including both sparkling and stillbeverages. Sparkling beverages are carbonated beverages and the Company’s principal sparkling beverage is Coca‑Cola. Still beverages includeenergy products and noncarbonated beverages such as bottled water, tea, ready to drink coffee, enhanced water, juices and sports drinks.Our sales are divided into two main categories: (i) bottle/can sales and (ii) other sales. Bottle/can sales include products packaged primarily in plasticbottles and aluminum cans. Other sales include sales to other Coca‑Cola bottlers, “post-mix” products, transportation revenue and equipmentmaintenance revenue. Post-mix products are dispensed through equipment that mixes fountain syrups with carbonated or still water, enabling fountainretailers to sell finished products to consumers in cups or glasses.The following table sets forth some of our principal products, including products of The Coca‑Cola Company and products licensed to us by otherbeverage companies:Sparkling BeveragesThe Coca-Cola Company Products:Barqs Root BeerFantaCherry CokeFanta ZeroCherry Coke ZeroFrescaCoca-ColaMello YelloCoca-Cola LifeMello Yello ZeroCoca-Cola Orange VanillaMinute Maid SparklingCoca-Cola VanillaPibb XtraCoca-Cola Zero SugarSeagrams Ginger AleDiet Barqs Root BeerSpriteDiet CokeSprite ZeroProducts Licensed to Us by Other Beverage Companies:Diet Dr PepperDr PepperSundropStill BeveragesCore PowerDasaniDasani FlavorsDasani SparklingFUZEglacéau smartwaterglacéau vitaminwaterGold Peak TeaHi-CHonest TeaHubert’s LemonadeMinute Maid Juices To GoPeace TeaPOWERadePOWERade ZeroTum-E YummiesYup MilkZICOBodyArmor productsDunkin’ Donuts Iced CoffeeFull ThrottleMonster Energy productsNOS Reign products
System TransformationIn October 2017, we completed a multi-year series of transactions with The Coca‑Cola Company, Coca‑Cola Refreshments USA, Inc. (“CCR”), a whollyowned subsidiary of The Coca‑Cola Company, and Coca‑Cola Bottling Company United, Inc., an independent bottler that is unrelated to us, tosignificantly expand our distribution and manufacturing operations (the “System Transformation”). The System Transformation included the acquisitionand exchange of rights to serve distribution territories and related distribution assets, as well as the acquisition and exchange of regional manufacturingfacilities and related manufacturing assets. Final post-closing adjustments in accordance with the terms and conditions of the applicable asset purchaseagreement or asset exchange agreement were completed by 2018 for all System Transformation transactions.Following the completion of the System Transformation, we are party to several key agreements that (i) provide us with rights to distribute, market andmanufacture beverage products and (ii) coordinate our role in the North American Coca‑Cola system. The following sections summarize certain of thesekey agreements.Beverage Distribution and Manufacturing AgreementsWe have rights to distribute, promote, market and sell certain nonalcoholic beverages of The Coca‑Cola Company pursuant to a comprehensivebeverage agreement with The Coca‑Cola Company and CCR entered into on March 31, 2017 (as amended, the “CBA”). Pursuant to the CBA, theCompany is required to make quarterly sub-bottling payments to CCR on a continuing basis in exchange for the grant of exclusive rights to distribute,promote, market and sell the authorized brands of The Coca‑Cola Company and related products in distribution territories the Company acquired fromCCR as part of the System Transformation, but excluding territories the Company acquired in an exchange transaction. In addition to customarytermination and default rights, the CBA requires us to make ongoing capital expenditures in our distribution business and to meet certain minimumvolume requirements, gives The Coca-Cola Company certain approval and other rights in connection with a sale of the Company or of the distributionbusiness of the Company and prohibits us from producing, manufacturing, preparing, packaging, distributing, selling, dealing in or otherwise using orhandling any beverages, beverage components or other beverage products other than the products of The Coca‑Cola Company and expressly permittedcross-licensed brands without the consent of The Coca-Cola Company.We also have rights to manufacture, produce and package certain beverages and beverage products bearing trademarks of The Coca‑Cola Company atour manufacturing plants pursuant to a regional manufacturing agreement with The Coca‑Cola Company entered into on March 31, 2017 (as amended,the “RMA”). These beverages may be distributed by us for our own account in accordance with the CBA or may be sold by us to certain other U.S.Coca‑Cola bottlers and to the Coca‑Cola North America division of The Coca‑Cola Company (“CCNA”) in accordance with the RMA. Pursuant to theRMA, the prices, or certain elements of the formulas used to determine the prices, that the Company charges for these sales to CCNA or other U.S.Coca‑Cola bottlers are unilaterally established by CCNA from time to time. The RMA contains provisions restricting the sale of the Company or themanufacturing business of the Company, requiring minimum capital expenditures in our manufacturing business, limiting our ability to manufactureproducts other than the products of The Coca‑Cola Company and expressly permitted cross-licensed brands without the consent ofThe Coca‑Cola Company and allowing for the termination of the RMA which are similar to those contained in the CBA.These agreements are the principal agreements we have with The Coca‑Cola Company and its affiliates following completion of the SystemTransformation. In addition to our agreements with The Coca‑Cola Company and CCR, we also have rights to manufacture and/or distribute certainbeverage brands owned by other beverage companies, including Dr Pepper and Monster Energy, pursuant to agreements with such other beveragecompanies. Our distribution agreements with Dr Pepper permit us to distribute Dr Pepper beverage brands, as well as certain post-mix products of DrPepper. Certain of our agreements with Dr Pepper also authorize us to manufacture certain Dr Pepper beverage brands. Our distribution agreement withMonster Energy grants us the rights to distr
Management’s Discussion and Analysis of Financial Condition and Results of Operations 24 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 42 Item 8. Financial Statements and Supplementary Data 43 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 89 Item 9A. Controls and Procedures 89 Item 9B. Other Information 89 PART III
