Coca-Cola Consolidated Annual Report 2020

1 Coca-Cola Consolidated Annual Report 2020 Form 10-K (NASDAQ:COKE)Published: February 25th, 2020 PDF generated by UNITED STATESSECURITIES AND EXCHANGE COMMISSIONW ashington, 20549 FORM 10-K Annual Report pursuant TO section 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year endedDecember 29, 2019or 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: 0-9286 Coca-Cola Consolidated , INC.(Exact name of registrant as specified in its charter) Delaware 56-0950585(State or other jurisdiction ofincorporation or organization) ( EmployerIdentification No.) 4100 Coca-Cola PlazaCharlotte, NC 28211(Address of principal executive offices) (Zip Code) Registrant s telephone number, including area code: (704) 557-4400 Securities registered pursuant to section 12(b) of the Act: Title of each classTrading Symbol(s)Name of each exchange on which registeredCommon Stock, $ Par ValueCOKEThe NASDAQ Global Select Market 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.

2 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 ( 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 the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act.

3 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 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 Common Stock, $ Par Value $1,394,350,587 Class B Common Stock, $ 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.

4 The Class B Common Stock isconvertible into Common Stock on a share-for-share basis at the option of the the number of shares outstanding of each of the registrant s classes of common stock, as of the latest practicable date. Class Outstanding as of January 26, 2020 Common Stock, $ Par Value 7,141,447 Class B Common Stock, $ Par Value 2,232,242 Documents 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 , Report ON FORM 10 KFOR THE FISCAL YEAR ENDED DECEMBER 29, 2019 TABLE OF CONTENTS Page PART I Item 1. Business 3 Item 1A. Risk Factors 9 Item 1B. Unresolved Staff Comments 17 Item 2. Properties 17 Item 3.

5 Legal Proceedings 18 Item 4. Mine Safety Disclosures 18 Information About Our Executive Officers 19 PART II Item 5. Market for Registrant s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 21 Item 6. Selected Financial Data 23 Item 7. 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 Item 10. Directors, Executive Officers and Corporate Governance 90 Item 11. Executive Compensation 90 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 90 Item 13.

6 Certain Relationships and Related Transactions, and Director Independence 90 Item 14. Principal Accountant Fees and Services 90 PART IV Item 15. Exhibits and Financial Statement Schedules 91 Item 16. Form 10-K Summary 96 Signatures 98 PART I Item Introduction Coca 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.

7 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. Ownership J. 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.

8 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 Products We 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.

9 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 Beverages Still BeveragesThe Coca-Cola Company Products:Barqs Root Beer Fanta Core Power Honest TeaCherry Coke Fanta Zero Dasani Hubert s LemonadeCherry Coke Zero Fresca Dasani Flavors Minute Maid Juices To GoCoca-Cola Mello Yello Dasani Sparkling Peace TeaCoca-Cola Life Mello Yello Zero FUZE POWERadeCoca-Cola Orange Vanilla Minute Maid Sparkling glac au smartwater POWERade ZeroCoca-Cola Vanilla Pibb Xtra glac au vitaminwater Tum-E YummiesCoca-Cola Zero Sugar Seagrams Ginger Ale Gold Peak Tea Yup MilkDiet Barqs Root Beer Sprite Hi-C ZICODiet Coke Sprite Zero Products Licensed to Us by Other Beverage Companies.

10 Diet Dr Pepper BodyArmor products Monster Energy productsDr Pepper Dunkin Donuts Iced Coffee NOS Sundrop Full Throttle Reign products System Transformation In 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.