What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-02-22 compared with 2021-02-26 · 235 added, 344 removed, 1272 unchanged (31% of the section changed)

10 unchanged sentences

Other expense, net 150,573 35,603 100,539

Gain on exchange transactions — — 10,170

Income (loss) before taxes 241,040 34,225 ( 13,287 )

Income before taxes 255,149 241,040 34,225

Income tax expense 65,569 58,943 15,665

Net income (loss) 182,097 18,560 ( 15,156 )

Net income 189,580 182,097 18,560

Net income attributable to noncontrolling interest — 9,604 7,185

Net income (loss) attributable to Coca‑Cola Consolidated, Inc.

Net income attributable to Coca‑Cola Consolidated, Inc.

$ 189,580 $ 172,493 $ 11,375

Basic net income (loss) per share based on net income (loss) attributable to Coca‑Cola Consolidated, Inc.:

Basic net income per share based on net income attributable to Coca‑Cola Consolidated, Inc.:

Common Stock $ 20.23 $ 18.40 $ 1.21

2 unchanged sentences

Weighted average number of Class B Common Stock shares outstanding 2,232 2,232 2,229

Diluted net income (loss) per share based on net income (loss) attributable to Coca‑Cola Consolidated, Inc.:

Diluted net income per share based on net income attributable to Coca‑Cola Consolidated, Inc.:

Common Stock $ 20.17 $ 18.30 $ 1.21

6 unchanged sentences

(in thousands) 2021 2020 2019

Net income (loss) $ 182,097 $ 18,560 $ ( 15,156 )

Net income $ 189,580 $ 182,097 $ 18,560

Other comprehensive income (loss), net of tax:

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( 409 ) ( 409 )

Total equity of Coca-Cola Consolidated, Inc.

512,990 346,952

Noncontrolling interest — 104,164

Total equity 711,786 512,990

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Cash Flows from Operating Activities:

Net income (loss) $ 182,097 $ 18,560 $ ( 15,156 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation expense from property, plant and equipment and financing or capital leases 155,936 156,886 164,502

Net income $ 189,580 $ 182,097 $ 18,560

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation expense from property, plant and equipment and financing leases 157,320 155,936 156,886

Amortization of intangible assets and deferred proceeds, net 23,245 23,081 23,030

Fair value adjustment of acquisition related contingent consideration 146,308 31,210 92,788

Deferred payroll taxes under CARES Act ( 18,739 ) 37,412 —

Deferred income taxes ( 9,183 ) 8,737 3,987

Impairment of property, plant and equipment 8,030 8,798 453

Loss on sale of property, plant and equipment 5,921 5,187 6,498

Impairment and abandonment of property, plant and equipment 3,200 8,030 8,798

Amortization of debt costs 1,256 1,050 1,313

Stock compensation expense — — 2,045

Gain on exchange transactions — — ( 10,170 )

Proceeds from Legacy Facilities Credit — — 1,320

Change in current assets less current liabilities 30,595 36,901 ( 31,681 )

6 unchanged sentences

Additions to property, plant and equipment $ ( 155,693 ) $ ( 202,034 ) $ ( 171,374 )

Other distribution agreements ( 8,993 ) — ( 4,654 )

Proceeds from the sale of property, plant and equipment 5,274 3,385 4,064

Investment in CONA Services LLC ( 2,531 ) ( 1,770 ) ( 1,713 )

Other distribution agreements — ( 4,654 ) —

Net cash paid for exchange transactions — — ( 13,116 )

Proceeds from cold drink equipment — — 3,789

Acquisition of distribution territories and manufacturing plants, net of cash acquired and purchase price settlements — — 456

Net cash used in investing activities $ ( 161,943 ) $ ( 200,419 ) $ ( 173,677 )

2 unchanged sentences

Borrowings under revolving credit facility 55,000 235,000 515,339

Payments on term loan facility and senior bonds ( 45,000 ) ( 140,000 ) ( 7,500 )

Payments on term loan facilities ( 287,500 ) ( 45,000 ) ( 140,000 )

Borrowings under term loan facility 70,000 — —

Proceeds from issuance of senior notes — — 100,000

2 unchanged sentences

Cash dividends paid ( 9,374 ) ( 9,374 ) ( 9,369 )

Payments on financing or capital lease obligations ( 5,861 ) ( 8,656 ) ( 8,221 )

Payments on financing lease obligations ( 4,778 ) ( 5,861 ) ( 8,656 )

Debt issuance fees ( 1,542 ) ( 228 ) ( 420 )

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Balance on December 30, 2018 $ 10,204 $ 2,839 $ 124,228 $ 359,435 $ ( 77,265 ) $ ( 60,845 ) $ ( 409 ) $ 358,187 $ 96,979 $ 455,166

Net income (loss) — — — ( 19,930 ) — — — ( 19,930 ) 4,774 ( 15,156 )

Other comprehensive income, net of tax — — — — 16,937 — — 16,937 — 16,937

Net income — — — 11,375 — — — 11,375 7,185 18,560

Other comprehensive loss, net of tax — — — — ( 18,017 ) — — ( 18,017 ) — ( 18,017 )

Cash dividends paid:

6 unchanged sentences

— 21 4,755 — — — — 4,776 — 4,776

Reclassification of stranded tax effects — — — 19,720 ( 19,720 ) — — — — —

Balance on December 29, 2019 $ 10,204 $ 2,860 $ 128,983 $ 381,161 $ ( 115,002 ) $ ( 60,845 ) $ ( 409 ) $ 346,952 $ 104,164 $ 451,116

7 unchanged sentences

— — — ( 2,233 ) — — — ( 2,233 ) — ( 2,233 )

Issuance of 19,224 shares of Class B Common Stock

— 21 4,755 — — — — 4,776 — 4,776

Reclassification of stranded tax effects — — — 19,720 ( 19,720 ) — — — — —

Purchase of noncontrolling interest in Piedmont Coca-Cola Bottling Partnership — — 6,970 — — — — 6,970 ( 113,768 ) ( 106,798 )

Balance on December 31, 2020 $ 10,204 $ 2,860 $ 135,953 $ 544,280 $ ( 119,053 ) $ ( 60,845 ) $ ( 409 ) $ 512,990 $ — $ 512,990

Net income — — — 189,580 — — — 189,580 — 189,580

Other comprehensive loss, net of tax — — — — ( 4,051 ) — — ( 4,051 ) — ( 4,051 )

Other comprehensive income, net of tax — — — — 18,590 — — 18,590 — 18,590

Cash dividends paid:

4 unchanged sentences

— — — ( 2,233 ) — — — ( 2,233 ) — ( 2,233 )

Purchase of noncontrolling interest in Piedmont Coca-Cola Bottling Partnership — — 6,970 — — — — 6,970 ( 113,768 ) ( 106,798 )

Balance on December 31, 2021 $ 10,204 $ 2,860 $ 135,953 $ 724,486 $ ( 100,463 ) $ ( 60,845 ) $ ( 409 ) $ 711,786 $ — $ 711,786

7 unchanged sentences

Approximately 83 % of the Company’s total bottle/can sales volume to retail customers consists of products of The Coca‑Cola Company, which include some of the most recognized and popular beverage brands in the world.

The Company also distributes products for several other beverage companies, including BA Sports Nutrition, LLC (“BodyArmor”), Keurig Dr Pepper Inc.

The Company also distributes products for several other beverage companies, including Keurig Dr Pepper Inc.

(“Dr Pepper”) and Monster Energy Company (“Monster Energy”).

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Sparkling beverages are carbonated beverages and the Company’s principal sparkling beverage is Coca‑Cola.

Still beverages include energy products and noncarbonated beverages such as bottled water, tea, ready to drink coffee, enhanced water, juices and sports drinks.

Still beverages include energy products and noncarbonated beverages such as bottled water, ready to drink tea, ready to drink coffee, enhanced water, juices and sports drinks.

The Company’s products are sold and distributed in the United States through various channels, which include selling directly to customers, including grocery stores, mass merchandise stores, club stores, convenience stores and drug stores, selling to on-premise locations, where products are typically consumed immediately, such as restaurants, schools, amusement parks and recreational facilities, and selling through other channels such as vending machine outlets.

The Company manages its business on the basis of three operating segments.

Nonalcoholic Beverages represents the vast majority of the Company’s consolidated revenues and income from operations.

Nonalcoholic Beverages represents the vast majority of the Company’s consolidated net sales and income from operations.

The additional two operating segments do not meet the quantitative thresholds for separate reporting, either individually or in the aggregate, and, therefore, have been combined into “All Other.”

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Actual results could differ from those estimates.

During the fourth quarter of 2020, the Company’s Board of Directors approved a change in the Company’s fiscal year so that each fiscal year will end on December 31 of the applicable calendar year.

This change was not considered a change in fiscal year under the rules of the Securities and Exchange Commission as the new fiscal year commenced within seven days of the prior fiscal year-end and the new fiscal year commenced with the end of the prior fiscal year.

Beginning in 2020, the Company’s fiscal year ends on December 31 of the applicable calendar year.

Previously, the Company’s fiscal year generally ended on the Sunday closest to December 31 of each year.

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The Company sells its products and extends credit, generally without requiring collateral, based on an ongoing evaluation of the customer’s business prospects and financial condition.

The Company evaluates the collectability of its trade accounts receivable based

on a number of factors, including the Company’s historic collections pattern and changes to a specific customer’s ability to meet its financial obligations.

The Company evaluates the collectability of its trade accounts receivable based on a number of factors, including the Company’s historic collections pattern and changes to a specific customer’s ability to meet its financial obligations.

The Company typically collects payment from customers within 30 days from the date of sale.

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If the Company determines the carrying amount of an asset or asset group is not recoverable based upon the expected undiscounted future cash flows of the asset or asset group, an impairment loss is recorded equal to the excess of the carrying amounts over the estimated fair values of the long-lived assets.

The Company adopted Accounting Standards Update (“ASU”) 2016-02, “Leases” on December 31, 2018 using the optional transition method.

The Company leases office and warehouse space, machinery and other equipment under noncancelable operating lease agreements and also leases certain warehouse space under financing lease agreements.

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Certain leases include renewal options to extend the lease term and/or purchase options to purchase the leased asset.

The Company assesses these options using a threshold of reasonably certain, which is a high threshold and, therefore, the majority of the Company’s leases do not include renewal periods or purchase options for the measurement of the right-of-use asset and the associated lease liability.

The Company assesses these options using a threshold of reasonably certain, which

is a high threshold and, therefore, the majority of the Company’s leases do not include renewal periods or purchase options for the measurement of the right-of-use asset and the associated lease liability.

For leases the Company is reasonably certain to renew or purchase, those options are included within the lease term and, therefore, included in the measurement of the right-of-use asset and the associated lease liability.

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(“CCR”), a wholly owned subsidiary of The Coca‑Cola Company, over the useful life of the related distribution rights.

Pursuant to the CBA, the Company 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 certain distribution territories the Company acquired from CCR.

The Coca‑Cola Company and related products in certain distribution territories the Company acquired from CCR.

This acquisition related contingent consideration is valued using a probability weighted discounted cash flow model based on internal forecasts and the weighted average cost of capital (“WACC”) derived from market data, which are considered Level 3 inputs.

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There are two Company-sponsored pension plans.

The primary Company-sponsored pension plan (the “Primary Plan”) was frozen as of June 30, 2006 and no benefits accrued to participants after this date.

The primary Company-sponsored pension plan (the “Primary Plan”) was frozen as of June 30, 2006 and no benefits accrued to participants after that date.

The second Company-sponsored pension plan (the “Bargaining Plan”) is for certain employees under collective bargaining agreements.

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Other sales include sales to other Coca‑Cola bottlers, “post-mix” products, transportation revenue and equipment maintenance revenue.

Post-mix products are dispensed through equipment

that mixes fountain syrups with carbonated or still water, enabling fountain retailers to sell finished products to consumers in cups or glasses.

Post-mix products are dispensed through equipment that mixes fountain syrups with carbonated or still water, enabling fountain retailers to sell finished products to consumers in cups or glasses.

The Company’s contracts are derived from customer orders, including customer sales incentives, generated through an order processing and replenishment model.

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The Company has defined its performance obligations for its contracts as either at a point in time or over time.

Bottle/can sales, sales to other Coca‑Cola bottlers and post-mix sales are recognized when control transfers to a customer, which is generally upon delivery and is considered a single point in time (“point in time”).

Bottle/can sales, sales to

other Coca‑Cola bottlers and post-mix sales are recognized when control transfers to a customer, which is generally upon delivery and is considered a single point in time (“point in time”).

Other sales, which include revenue for service fees related to the repair of cold drink equipment and delivery fees for freight hauling and brokerage services, are recognized over time (“over time”).

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The Company receives marketing funding support payments in cash from The Coca‑Cola Company and other beverage companies.

Payments to the Company for marketing programs to promote bottle/can sales volume and fountain syrup sales volume are recognized as a reduction of cost of sales, primarily on a per unit basis, as the product is sold.

Payments to the Company for marketing programs to promote bottle/can sales volume and fountain syrup sales volume are recognized as a reduction to cost of sales, primarily on a per unit basis, as the product is sold.

Payments for periodic programs are recognized in the period during which they are earned.

Cash consideration received by a customer from a vendor is presumed to be a reduction of the price of the vendor’s products or services.

As such, the cash received is accounted for as a reduction of cost of sales unless it is a specific reimbursement of costs or payments for services.

Payments the Company receives from The Coca‑Cola Company and other beverage companies for marketing funding support are classified as reductions of cost of sales.

As such, the cash received is accounted for as a reduction to cost of sales unless it is a specific reimbursement of costs or payments for services.

Payments the Company receives from The Coca‑Cola Company and other beverage companies for marketing funding support are classified as reductions to cost of sales.

Derivative Financial Instruments

6 unchanged sentences

Commodity derivative instruments held by the Company are marked to market on a monthly basis and recognized in earnings consistent with the expense classification of the underlying hedged item.

The Company generally pays a fee for these commodity

derivative instruments, which is amortized over the corresponding period of each commodity derivative instrument.

The Company generally pays a fee for these commodity derivative instruments, which is amortized over the corresponding period of each commodity derivative instrument.

Settlements of commodity derivative instruments are included in cash flows from operating activities in the consolidated statements of cash flows.

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Stock Compensation

In 2008, the stockholders of the Company approved a performance unit award agreement (the “Performance Unit Award Agreement”) for J.

Frank Harrison, III, the Chairman of the Board of Directors and Chief Executive Officer of the Company, consisting of 400,000 performance units (“Units”) subject to vesting in annual increments over a 10 -year period starting in fiscal year 2009.

The Performance Unit Award Agreement expired at the end of 2018, with the final award issued in the first quarter of 2019 in connection with Mr.

Harrison’s services during 2018.

In 2018, the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) and the Company’s stockholders approved a long-term performance equity plan (the “Long-Term Performance Equity Plan”) to succeed the Performance Unit Award Agreement.

Awards granted to Mr.

Harrison under the Long-Term Performance Equity Plan are earned based on the Company’s attainment during a performance period of performance measures specified by the Compensation Committee.

The Company has a long-term performance equity plan (the “Long-Term Performance Equity Plan”) under which awards are earned and granted to Mr.

Harrison based on the Company’s attainment during a performance period of performance measures specified by the Compensation Committee of the Company’s Board of Directors.

Harrison may elect to have awards earned under the Long‑Term Performance Equity Plan settled in cash and/or shares of Class B Common Stock.

In 2018, the Long-Term Performance Equity Plan replaced a performance unit award agreement (the “Performance Unit Award Agreement”).

The Performance Unit Award Agreement expired at the end of 2018, with the final award issued in 2019 in connection with Mr.

Harrison’s services during 2018.

See Note 2 for additional information on Mr.

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Each share of Common Stock is entitled to one vote per share and each share of Class B Common Stock is entitled to 20 votes per share at all meetings of the Company’s stockholders.

Except as otherwise required by law, holders of the Common Stock and Class B Common Stock vote together as a single class on all matters submitted to the Company’s stockholders, including the election of the Board of Directors.

Except as otherwise required by law, holders of the Common Stock and the Class B Common Stock vote together as a single class on all matters submitted to the Company’s stockholders, including the election of the Board of Directors.

As a result, the holders of the Class B Common Stock control approximately 86 % of the total voting power of the stockholders of the Company and control the election of the Board of Directors.

In the event of liquidation, there is no preference between the two classes of common stock.

No cash dividend or dividend of property or stock other than stock of the Company, as specifically described in the Company’s certificate of incorporation, may be declared and paid on the Class B Common Stock unless an equal or greater dividend is declared and paid on the Common Stock.

Under the Company’s certificate of incorporation, the Board of Directors may declare dividends on the Common Stock without declaring equal or any dividends on the Class B Common Stock.

No cash dividend or dividend of property or stock other than stock of the Company, as specifically described in the Company’s Restated Certificate of Incorporation, as amended (the “Restated Certificate of Incorporation”), may be declared and paid on the Class B Common Stock unless an equal or greater dividend is declared and paid on the Common Stock.

Under the Restated Certificate of Incorporation, the Board of Directors may declare dividends on the Common Stock without declaring equal or any dividends on the

Class B Common Stock.

Notwithstanding this provision, the Class B Common Stock has voting and conversion rights that allow the Class B Common Stock to participate equally on a per share basis with the Common Stock.

The Board of Directors has declared, and the Company has paid, dividends on the Common Stock and Class B Common Stock and each class of common stock has participated equally in all dividends declared by the Board of Directors and paid by the Company since 1994.

The Board of Directors has declared, and the Company has paid, dividends on the Common Stock and the Class B Common Stock and each class of common stock has participated equally in all dividends declared by the Board of Directors and paid by the Company since 1994.

During 2021, 2020 and 2019, dividends of $ 1.00 per share were declared and paid on both Common Stock and Class B Common Stock.

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Under this method:

(a) Income from continuing operations (“net income”) is reduced by the amount of dividends declared in the current period for each class of stock and by the contractual amount of dividends that must be paid for the current period.

(b) The remaining earnings (“undistributed earnings”) are allocated to Common Stock and Class B Common Stock to the extent each security may share in earnings as if all the earnings for the period had been distributed.

(i) Income from continuing operations (“net income”) is reduced by the amount of dividends declared in the current period for each class of stock and by the contractual amount of dividends that must be paid for the current period.

(ii) The remaining earnings (“undistributed earnings”) are allocated to Common Stock and Class B Common Stock to the extent each security may share in earnings as if all the earnings for the period had been distributed.

The total earnings allocated to each security is determined by adding together the amount allocated for dividends and the amount allocated for a participation feature.

(c) The total earnings allocated to each security is then divided by the number of outstanding shares of the security to which the earnings are allocated to determine the earnings per share for the security.

(d) Basic and diluted net income per share data are presented for each class of common stock.

In applying the two-class method, the Company determined undistributed earnings should be allocated equally on a per share basis between the Common Stock and Class B Common Stock due to the aggregate participation rights of the Class B Common Stock (i.e., the voting and conversion rights) and the Company’s history of paying dividends equally on a per share basis on the Common Stock and Class B Common Stock.

(iii) The total earnings allocated to each security is then divided by the number of outstanding shares of the security to which the earnings are allocated to determine the earnings per share for the security.

(iv) Basic and diluted net income per share data are presented for each class of common stock.

The Class B Common Stock conversion rights allow the Class B Common Stock to participate in dividends equally with the Common Stock.

The Class B Common Stock is convertible into Common Stock on a one -for-one per share basis at any time at the option of the holder.

Class B Common Stock is convertible into Common Stock on a one -for-one per share basis at any time at the option of the holder.

Accordingly, the holders of the Class B Common Stock can participate equally in any dividends declared on the Common Stock by exercising their conversion rights.

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Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016‑13, “Measurement of Credit Losses on Financial Instruments,” which requires measurement and recognition of expected credit losses at the point a loss is probable to occur, rather than expected to occur, which will generally result in earlier recognition of allowances for credit losses.

In December 2019, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2019‑12, “Simplifying the Accounting for Income Taxes,” which simplifies the accounting for income taxes by removing certain exceptions to the general principles in income tax accounting and improves consistent application of and simplifies GAAP for other areas of income tax accounting by clarifying and amending existing guidance.

The new guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

The Company adopted ASU 2019-12 in 2021 and the adoption did not have a material impact on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018‑13, “Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement,” which removes, modifies and adds certain disclosure requirements in Accounting Standards Codification Topic 820, Fair Value Measurement.

This ASU is effective for annual and interim reporting periods beginning after December 15, 2019.

Certain amendments must be applied prospectively while others are to be applied on a retrospective basis to all periods presented.

The Company adopted ASU 2018‑13 in 2020 and has updated disclosures in this report.

See Note 16 for additional information.

In August 2018, the FASB issued ASU 2018‑14, “Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans,” which is effective for fiscal years ending after December 15, 2020.

Under this guidance, removed disclosures include the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year, the amount and timing of assets expected to be returned to the employer, certain related party disclosures, and the effects of a one-percentage-point change in the assumed health care cost trend rates.

Additional disclosures include an explanation of the reasons for significant gains and losses related to the benefit obligation for the period.

The Company adopted ASU 2018‑14 in 2020 and has updated disclosures in this report.

See Note 18 for additional information.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU 2019‑12, “Simplifying the Accounting for Income Taxes,” which will simplify the accounting for income taxes by removing certain exceptions to the general principles in income tax accounting and improve consistent application of and simplify GAAP for other areas of income tax accounting by clarifying and amending existing guidance.

The new guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

The Company evaluated the impact ASU 2019‑12 will have on its consolidated financial statements and does not expect a material impact upon adoption in 2021.

Piedmont Coca-Cola Bottling Partnership

The Company and The Coca‑Cola Company formed Piedmont Coca-Cola Bottling Partnership (“Piedmont”) in 1993 to distribute and market nonalcoholic beverages primarily in portions of North Carolina and South Carolina.

On December 9, 2020, an indirect wholly owned subsidiary of the Company purchased the remaining 22.7 % general partnership interest in Piedmont from an indirect wholly owned subsidiary of The Coca‑Cola Company for $ 100 million, and Piedmont became an indirect wholly owned subsidiary of the Company.

Piedmont was subsequently merged with and into CCBCC Operations, LLC, a wholly owned subsidiary of the Company, effective December 28, 2020.

Noncontrolling interest income, which was included in net income on the Company’s consolidated statements of operations, represented the portion of Piedmont owned by The Coca‑Cola Company and was $ 9.6 million in 2020, $ 7.2 million in 2019 and $ 4.8 million in 2018.

In addition, the amount of consolidated net income attributable to both the Company and noncontrolling interest are shown on the Company’s consolidated statements of operations.

Noncontrolling interest is included in the equity section of the Company’s consolidated balance sheets and totaled $ 104.2 million on December 29, 2019.

Related Party Transactions

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The Company’s business consists primarily of the distribution, marketing and manufacture of nonalcoholic beverages of The Coca‑Cola Company, which is the sole owner of the formulas under which the primary components of its soft drink products, either concentrate or syrup, are manufactured.

Frank Harrison, III, together with the trustees of certain trusts established for the benefit of certain relatives of the late J.

Frank Harrison, III, Chairman of the Board of Directors and Chief Executive Officer of the Company, together with the trustees of certain trusts established for the benefit of certain relatives of the late J.

Frank Harrison, Jr., control shares representing approximately 86 % of the total voting power of the Company’s total outstanding Common Stock and Class B Common Stock on a consolidated basis.

As of December 31, 2020, The Coca‑Cola Company owned approximately 27 % of the Company’s total outstanding Common Stock and Class B Common Stock on a consolidated basis, representing approximately 5 % of the total voting power of the Company’s Common Stock and Class B Common Stock voting together.

As of December 31, 2021, The Coca‑Cola Company owned shares of the Company’s Common Stock representing approximately 5 % of the total voting power of the Company’s Common Stock and Class B Common Stock on a consolidated basis.

The number of shares of the Company’s Common Stock currently held by The Coca‑Cola Company gives it the right to have a designee proposed by the Company for nomination to the Company’s Board of Directors in the Company’s annual proxy statement.

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The Coca‑Cola Company does not own any shares of the Company’s Class B Common Stock.

The following table summarizes the significant transactions between the Company and The Coca‑Cola Company:

The following table summarizes the significant cash transactions between the Company and The Coca‑Cola Company:

(in thousands) 2021 2020 2019

Payments made by the Company to The Coca-Cola Company for:

Concentrate, syrup, sweetener and other purchases $ 1,174,616 $ 1,187,889 $ 1,188,818

Customer marketing programs 132,874 144,949 145,019

Purchase of noncontrolling interest in Piedmont 100,000 — —

Cold drink equipment parts 21,523 28,209 30,065

Brand investment programs 15,479 13,266 9,063

Payments made by The Coca-Cola Company to the Company for:

Marketing funding support payments $ 82,967 $ 98,013 $ 86,483

Fountain delivery and equipment repair fees 32,810 41,714 40,023

Presence marketing funding support on the Company’s behalf 8,434 8,002 8,311

Facilitating the distribution of certain brands and packages to other Coca-Cola bottlers 4,538 5,069 9,683

Cold drink equipment — — 3,789

Legacy Facilities Credit (excluding portion related to Mobile, Alabama facility) — — 1,320

In fiscal 2017 (“2017”), The Coca‑Cola Company agreed to provide the Company a fee to compensate the Company for the net economic impact of changes made by The Coca‑Cola Company to the authorized pricing on sales of covered beverages produced at certain manufacturing plants owned by the Company (the “Legacy Facilities Credit”).

The Company immediately recognized the portion of the Legacy Facilities Credit applicable to a regional manufacturing plant in Mobile, Alabama, which the Company divested in 2017, and the remaining balance of the Legacy Facilities Credit will be amortized as a reduction to cost of sales over a period of 40 years.

The portion of the deferred liability that is expected to be amortized in the next 12 months is classified as current.

Payments made by the Company to The Coca-Cola Company (1)

$ 1,558,784 $ 1,444,492 $ 1,374,313

Payments made by The Coca-Cola Company to the Company 207,073 128,749 152,798

(1) This excludes payments made by the Company to Coca-Cola Refreshments USA, Inc., a wholly owned subsidiary of The Coca‑Cola Company, as discussed in the next section.

More than 80 % of the payments made by the Company to The Coca‑Cola Company were for concentrate, syrup, sweetener and other finished goods products, which were recorded in cost of sales in the consolidated statements of operations and represent the primary components of the soft drink products the Company manufactures and distributes.

Payments made by the Company to The Coca‑Cola Company also included payments for marketing programs associated with large, national customers managed by The Coca‑Cola Company on behalf of the Company, which were recorded as a reduction to net sales in the consolidated statements of operations.

Other payments made by the Company to The Coca‑Cola Company related to cold drink equipment parts, fees associated with the rights to distribute certain brands and other customary items.

Payments made by The Coca‑Cola Company to the Company included annual funding in connection with the Company’s agreement to support certain business initiatives developed by The Coca‑Cola Company and funding associated with the delivery of post-mix products to various customers, both of which were recorded as a reduction to cost of sales in the consolidated statements of operations.

Post-mix products are dispensed through equipment that mixes fountain syrups with carbonated or still water, enabling fountain retailers to sell finished products to consumers in cups or glasses.

Payments made by The Coca‑Cola Company to the Company also included transportation services and fountain product delivery and equipment repair services performed by the Company on The Coca‑Cola Company’s equipment, all of which were recorded in net sales in the consolidated statements of operations.

Coca‑Cola Refreshments USA, Inc.

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Total acquisition related contingent consideration $ 542,105 $ 434,694

Upon the conversion of the Company’s then-existing bottling agreements in 2017 pursuant to the CBA, the Company received a fee from CCR (the “Territory Conversion Fee”).

The Territory Conversion Fee was recorded as a deferred liability and will be amortized as a reduction to cost of sales over a period of 40 years.

The portion of the deferred liability that is expected to be amortized in the next 12 months is classified as current.

Southeastern Container (“Southeastern”)

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All of SAC’s shareholders are Coca‑Cola bottlers and each has equal voting rights.

The Company accounts for SAC as an equity method

The Company accounts for SAC as an equity method investment.

The Company’s investment in SAC, which was classified as other assets in the consolidated balance sheets, was $ 8.2 million as of December 31, 2021 and $ 8.0 million as of December 31, 2020.

2 unchanged sentences

The Company receives a fee for managing the day-to-day operations of SAC pursuant to a management agreement.

Proceeds from management fees received from SAC, which were classified as a reduction to cost of sales in the consolidated statements of operations, were $ 9.0 million in 2020, $ 9.1 million in 2019 and $ 9.0 million in 2018.

Proceeds from management fees received from SAC, which were recorded as a reduction to cost of sales in the consolidated statements of operations, were $ 8.7 million in 2021, $ 9.0 million in 2020 and $ 9.1 million in 2019.

Coca‑Cola Bottlers’ Sales & Services Company LLC (“CCBSS”)

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Everett, Vice Chair of the Company’s Board of Directors, is a minority stockholder.

During the first quarter of 2020, the Company entered into a new lease agreement, effective January 1, 2020, with Beacon to continue to lease its corporate facilities.

The new lease expires on December 31, 2029.

The principal balance outstanding under the new operating lease was $ 30.8 million on December 31, 2020 and the principal balance outstanding under the previous financing lease, which was replaced by the new operating lease, was $ 6.8 million on December 29, 2019.

The annual base rent the Company is obligated to pay under the new operating lease is subject to an adjustment for an inflation factor.

The previous financing lease included contingent rental payments that were a result of changes in the Consumer Price Index minimum and were recorded as adjustments to interest expense, net on the Company’s consolidated statements of operations.

Rental payments related to this lease were $ 3.3 million in 2020, $ 4.5 million in 2019 and $ 4.4 million in 2018.

The annual base rent the Company is obligated to pay is subject to an adjustment for an inflation factor and the lease expires on December 31, 2029.

The principal balance outstanding under this lease agreement was $ 28.2 million on December 31, 2021 and $ 30.8 million on December 31, 2020.

The Company leases the Snyder Production Center and an adjacent sales facility in Charlotte, North Carolina from Harrison Limited Partnership One (“HLP”), which is directly and indirectly owned by trusts of which J.

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Everett is a permissible, discretionary beneficiary.

During the third quarter of 2020, the Company entered into an amendment to this lease, effective June 30, 2020, with HLP to extend the term of the lease agreement by 15 years from January 1, 2021 through December 31, 2035.

The principal balance outstanding under the amended financing lease was $ 61.9 million on December 31, 2020 and the principal balance outstanding under the lease, prior to being amended, was $ 4.3 million on December 29, 2019.

The annual base rent the

Company is obligated to pay under the amended financing lease is subject to an adjustment for an inflation factor.

Rental payments related to this lease were $ 4.5 million in 2020, $ 4.4 million in 2019 and $ 4.2 million in 2018.

The annual base rent the Company is obligated to pay under the financing lease is subject to an adjustment for an inflation factor and the lease expires on December 31, 2035.

The principal balance outstanding under this lease was $ 59.1 million on December 31, 2021 and $ 61.9 million on December 31, 2020.

A summary of rental payments for these leases related to 2021, 2020, and 2019 is as follows:

(in thousands) 2021 2020 2019

Company headquarters (1)

$ 3,778 $ 3,304 $ 4,525

Snyder Production Center 4,451 4,451 4,354

(1) 2019 fell under a previous lease agreement with Beacon and included contingent rental payments that were a result of changes in the Consumer Price Index minimum, which were recorded as adjustments to interest expense, net in the consolidated statements of operations .

Long-Term Performance Equity Plan

In 2018, the Compensation Committee and the Company’s stockholders approved the Long-Term Performance Equity Plan, which compensates J.

The Long-Term Performance Equity Plan compensates J.

Frank Harrison, III based on the Company’s performance.

The Long-Term Performance Equity Plan succeeded the Performance Unit Award Agreement upon its expiration.

Awards granted to Mr.

Harrison under the Long-Term Performance Equity Plan are earned based on the Company’s attainment during a performance period of certain performance measures, each as specified by the Compensation Committee.

These awards may be settled in cash and/or shares of Class B Common Stock, based on the average of the closing prices of shares of Common Stock during the last 20 trading days of the performance period.

Compensation expense for the Long-Term Performance Equity Plan, which is included in SD&A expenses on the consolidated statements of operations, was $ 9.2 million in 2020, $ 12.9 million in 2019 and $ 2.0 million in 2018.

During 2019 and 2018, J.

Frank Harrison, III received shares of the Company’s Class B Common Stock in connection with his services as Chairman of the Board of Directors and Chief Executive Officer of the Company during the prior year, pursuant to the Performance Unit Award Agreement.

Compensation expense for the Long-Term Performance Equity Plan, which was included in SD&A expenses in the consolidated statements of operations, was $ 9.8 million in 2021, $ 9.2 million in 2020 and $ 12.9 million in 2019.

During 2019, J.

Frank Harrison, III received 34,700 shares of the Company’s Class B Common Stock in connection with his services as Chairman of the Board of Directors and Chief Executive Officer of the Company during 2018, pursuant to the Performance Unit Award Agreement.

The Performance Unit Award Agreement expired at the end of 2018, with the final award issued in 2019.

As permitted under the terms of the Performance Unit Award Agreement, a number of shares were settled in cash each year to satisfy tax withholding obligations in connection with the vesting of the performance units.

The remaining number of shares increased the total shares of Class B Common Stock outstanding.

A summary of the awards issued in 2019 and 2018 is as follows:

Date of approval for award March 5, 2019 March 6, 2018

Fiscal year of service covered by award 2018 2017

Shares settled in cash 15,476 16,504

Increase in Class B Common Stock shares outstanding 19,224 20,296

Total Class B Common Stock awarded 34,700 36,800

Compensation expense for the awards issued pursuant to the Performance Unit Award Agreement, recognized based on the closing share price of Common Stock as of the last trading day prior to the end of each fiscal period, was $ 2.0 million in 2019 and $ 5.6 million in 2018.

As permitted under the terms of the Performance Unit Award Agreement, 15,476 shares were settled in cash to satisfy tax withholding obligations in connection with the vesting of the performance units and the remaining 19,224 shares increased the total shares of Class B Common Stock outstanding.

Revenue Recognition

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Returned product is recognized as a reduction to net sales.

The Company’s reserve for customer returns was $ 3.6 million as of both December 31, 2020 and December 29, 2019.

The Company’s reserve for customer returns was $ 3.0 million as of December 31, 2021 and $ 3.6 million as of December 31, 2020.

The Company estimates an allowance for credit losses, based on historic days’ sales outstanding trends, aged customer balances, previously written-off balances and expected recoveries up to balances previously written off, in order to present the net amount expected to be collected.

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Following is a summary of activity for the allowance for credit losses during 2021:

(in thousands) Fiscal Year 2020

(in thousands) 2021 2020

Beginning balance - allowance for credit losses $ 18,070 $ 10,232

Additions charged to costs and expenses 14,265

Write-offs, net of recoveries ( 6,427 )

Additions charged to expenses and as reductions to net sales 4,638 14,265

Deductions ( 8,372 ) ( 6,427 )

Ending balance - allowance for credit losses $ 14,336 $ 18,070

The Company evaluates segment reporting in accordance with the FASB Accounting Standards Codification Topic 280, Segment Reporting, each reporting period, including evaluating the reporting package reviewed by the Chief Operating Decision Maker (the “CODM”).

The Company evaluates segment reporting in accordance with FASB Accounting Standards Codification Topic 280, Segment Reporting, each reporting period, including evaluating the reporting package reviewed by the Chief Operating Decision Maker (the “CODM”).

The Company has concluded the Chief Executive Officer, the Chief Operating Officer and the Chief Financial Officer, as a group, represent the CODM.

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Consolidated net sales $ 5,562,714 $ 5,007,357 $ 4,826,549

(1) The entire net sales elimination represents net sales from the All Other segment to the Nonalcoholic Beverages segment.

Sales between these segments are recognized at either fair market value or cost depending on the nature of the transaction.

(in thousands) 2021 2020 2019

Income from operations:

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Consolidated income from operations $ 439,171 $ 313,378 $ 180,754

(in thousands) 2020 2019 2018

Depreciation and amortization:

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Consolidated depreciation and amortization $ 180,565 $ 179,017 $ 179,916

(1) The entire net sales elimination represents net sales from the All Other segment to the Nonalcoholic Beverages segment.

Sales between these segments are recognized at either fair market value or cost depending on the nature of the transaction.

Net Income (Loss) Per Share

The following table sets forth the computation of basic net income (loss) per share and diluted net income (loss) per share under the two-class method.

See Note 1 for additional information related to net income (loss) per share.

Net Income Per Share

The following table sets forth the computation of basic net income per share and diluted net income per share under the two-class method.

See Note 1 for additional information related to net income per share.

(in thousands, except per share data) 2021 2020 2019

Numerator for basic and diluted net income (loss) per Common Stock and Class B Common Stock share:

Net income (loss) attributable to Coca-Cola Consolidated, Inc.

Numerator for basic and diluted net income per Common Stock and Class B Common Stock share:

Net income attributable to Coca-Cola Consolidated, Inc.

$ 189,580 $ 172,493 $ 11,375

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Class B Common Stock 2,233 2,233 2,228

Total undistributed earnings (losses) $ 163,119 $ 2,006 $ ( 29,283 )

Common Stock undistributed earnings (losses) – basic $ 124,275 $ 1,529 $ ( 22,365 )

Class B Common Stock undistributed earnings (losses) – basic 38,844 477 ( 6,918 )

Total undistributed earnings (losses) – basic $ 163,119 $ 2,006 $ ( 29,283 )

Common Stock undistributed earnings (losses) – diluted $ 123,563 $ 1,521 $ ( 22,365 )

Class B Common Stock undistributed earnings (losses) – diluted 39,556 485 ( 6,918 )

Total undistributed earnings (losses) – diluted $ 163,119 $ 2,006 $ ( 29,283 )

Numerator for basic net income (loss) per Common Stock share:

Total undistributed earnings $ 180,206 $ 163,119 $ 2,006

Common Stock undistributed earnings – basic $ 137,293 $ 124,275 $ 1,529

Class B Common Stock undistributed earnings – basic 42,913 38,844 477

Total undistributed earnings – basic $ 180,206 $ 163,119 $ 2,006

Common Stock undistributed earnings – diluted $ 136,899 $ 123,563 $ 1,521

Class B Common Stock undistributed earnings – diluted 43,307 39,556 485

Total undistributed earnings – diluted $ 180,206 $ 163,119 $ 2,006

Numerator for basic net income per Common Stock share:

Dividends on Common Stock $ 7,141 $ 7,141 $ 7,141

Common Stock undistributed earnings (losses) – basic 124,275 1,529 ( 22,365 )

Numerator for basic net income (loss) per Common Stock share $ 131,416 $ 8,670 $ ( 15,224 )

Numerator for basic net income (loss) per Class B Common Stock share:

Common Stock undistributed earnings – basic 137,293 124,275 1,529

Numerator for basic net income per Common Stock share $ 144,434 $ 131,416 $ 8,670

Numerator for basic net income per Class B Common Stock share:

Dividends on Class B Common Stock $ 2,233 $ 2,233 $ 2,228

Class B Common Stock undistributed earnings (losses) – basic 38,844 477 ( 6,918 )

Numerator for basic net income (loss) per Class B Common Stock share $ 41,077 $ 2,705 $ ( 4,706 )

Numerator for diluted net income (loss) per Common Stock share:

Class B Common Stock undistributed earnings – basic 42,913 38,844 477

Numerator for basic net income per Class B Common Stock share $ 45,146 $ 41,077 $ 2,705

Numerator for diluted net income per Common Stock share:

Dividends on Common Stock $ 7,141 $ 7,141 $ 7,141

Dividends on Class B Common Stock assumed converted to Common Stock 2,233 2,233 2,228

Common Stock undistributed earnings (losses) – diluted 163,119 2,006 ( 29,283 )

Numerator for diluted net income (loss) per Common Stock share $ 172,493 $ 11,375 $ ( 19,930 )

Numerator for diluted net income (loss) per Class B Common Stock share:

Common Stock undistributed earnings – diluted 180,206 163,119 2,006

Numerator for diluted net income per Common Stock share $ 189,580 $ 172,493 $ 11,375

Numerator for diluted net income per Class B Common Stock share:

Dividends on Class B Common Stock $ 2,233 $ 2,233 $ 2,228

Class B Common Stock undistributed earnings (losses) – diluted 39,556 485 ( 6,918 )

Numerator for diluted net income (loss) per Class B Common Stock share $ 41,789 $ 2,713 $ ( 4,706 )

Class B Common Stock undistributed earnings – diluted 43,307 39,556 485

Numerator for diluted net income per Class B Common Stock share $ 45,540 $ 41,789 $ 2,713

(in thousands, except per share data) 2021 2020 2019

Denominator for basic net income (loss) per Common Stock and Class B Common Stock share:

Denominator for basic net income per Common Stock and Class B Common Stock share:

Common Stock weighted average shares outstanding – basic 7,141 7,141 7,141

Class B Common Stock weighted average shares outstanding – basic 2,232 2,232 2,229

Denominator for diluted net income (loss) per Common Stock and Class B Common Stock share:

Denominator for diluted net income per Common Stock and Class B Common Stock share:

Common Stock weighted average shares outstanding – diluted (assumes conversion of Class B Common Stock to Common Stock) 9,400 9,427 9,417

Class B Common Stock weighted average shares outstanding – diluted 2,259 2,286 2,276

Basic net income (loss) per share:

Basic net income per share:

Common Stock $ 20.23 $ 18.40 $ 1.21

Class B Common Stock $ 20.23 $ 18.40 $ 1.21

Diluted net income (loss) per share:

Diluted net income per share:

Common Stock $ 20.17 $ 18.30 $ 1.21

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NOTES TO TABLE

(1) For purposes of the diluted net income (loss) per share computation for Common Stock, all shares of Class B Common Stock are assumed to be converted;

therefore, 100 % of undistributed earnings (losses) is allocated to Common Stock.

(2) For purposes of the diluted net income (loss) per share computation for Class B Common Stock, weighted average shares of Class B Common Stock are assumed to be outstanding for the entire period and not converted.

(3) For periods presented during which the Company has net income, the denominator for diluted net income per share for Common Stock and Class B Common Stock included the dilutive effect of shares relative to the Long-Term Performance Equity Plan and the Performance Unit Award Agreement.

For periods presented during which the Company has net loss, the unvested performance units granted pursuant to the Long-Term Performance Equity Plan and the Performance Unit Award Agreement are excluded from the calculation of diluted net loss per share, as the effect of these awards would be anti-dilutive.

(1) For purposes of the diluted net income per share computation for Common Stock, all shares of Class B Common Stock are assumed to be converted;

therefore, 100 % of undistributed earnings is allocated to Common Stock.

(2) For purposes of the diluted net income per share computation for Class B Common Stock, weighted average shares of Class B Common Stock are assumed to be outstanding for the entire period and not converted.

(3) For periods presented during which the Company has net income, the denominator for diluted net income per share for Common Stock and Class B Common Stock includes the dilutive effect of shares relative to the Long-Term Performance Equity Plan and the Performance Unit Award Agreement.

For periods presented during which the Company has net loss, the unvested performance units granted pursuant to the Long-Term Performance Equity Plan and the Performance Unit Award Agreement are excluded from the computation of diluted net loss per share, as the effect would have been anti-dilutive.

See Note 2 for additional information on the Long-Term Performance Equity Plan and the Performance Unit Award Agreement.

(4) The Long-Term Performance Equity Plan awards may be settled in cash and/or shares of the Company’s Class B Common Stock.

Once an election has been made to settle an award in cash, the dilutive effect of shares relative to such award is prospectively removed from the denominator for the calculation of diluted net income (loss) per share.

Once an election has been made to settle an award in cash, the dilutive effect of shares relative to such award is prospectively removed from the denominator in the computation of diluted net income per share.

(5) The Company did no t have anti-dilutive shares for any periods presented.

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Repair parts $ 26,643 $ 26,811

Prepaid taxes 8,428 4,359

Commodity hedges at fair market value 7,714 2,417

Prepaid software 7,038 6,650

Prepaid marketing 4,380 4,773

Commodity hedges at fair market value 2,417 1,007

Prepayments for sponsorship contracts 569 8,696

Prepaid taxes 4,079 8,428

Other prepaid expenses and other current assets 28,214 25,067

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Assets Held for Sale

The Company is in the process of integrating its Memphis, Tennessee manufacturing plant with its West Memphis, Arkansas operations, which is expected to greatly expand its West Memphis production capabilities and to reduce its overall production costs.

Additionally, the Company is planning to open a new, automated distribution center in Whitestown, Indiana by the spring of 2021, which will allow the Company to consolidate its Anderson, Bloomington, Lafayette, Shelbyville and Speedway, Indiana warehousing and distribution operations into this one new facility.

The increased capacity and automation in Whitestown will allow the Company to optimize its supply chain and to better serve its customers and consumers in Indiana and the surrounding areas.

As of December 31, 2020, certain locations of the Company, which are primarily those included in the Company’s supply chain optimization discussed above, met the accounting guidance criteria to be classified as assets held for sale.

All locations classified as held for sale are included in the Nonalcoholic Beverages segment.

There are not any liabilities held for sale associated with these locations and none meet the accounting guidance criteria to be classified as discontinued operations.

As of December 31, 2021, certain properties owned by the Company met the accounting guidance criteria to be classified as assets held for sale.

The properties primarily relate to warehousing and distribution operations that have been consolidated into new facilities.

All properties classified as held for sale are included in the Nonalcoholic Beverages segment.

There are not any liabilities held for sale associated with these properties and none meet the accounting guidance criteria to be classified as discontinued operations..

Following is a summary of the assets held for sale:

(in thousands) December 31, 2020

(in thousands) December 31, 2021 December 31, 2020

Land $ 2,906 $ 2,559

Buildings and leasehold and land improvements 3,974 3,870

Assets held for sale $ 6,429

An impairment of $ 1.6 million was recorded in 2020 for these locations as a result of the net book value exceeding the agreed upon purchase price of one of the locations.

This impairment was recorded within cost of sales on the consolidated statements of operations and within impairment of property, plant and equipment on the consolidated statements of cash flows.

Total assets held for sale $ 6,880 $ 6,429

An impairment of $ 1.6 million was recorded in 2020 for the locations classified as assets held for sale as of December 31, 2020 as a result of the net book value exceeding the agreed upon purchase price of one of the locations.

This impairment was recorded within cost of sales on the consolidated statements of operations and within impairment and abandonment of property, plant and equipment on the consolidated statements of cash flows.

Property, Plant and Equipment, Net

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Financing leases 3.1 % 3.2 %

Following is a summary of the Company’s leases within the Company’s consolidated statements of operations:

Following is a summary of the Company’s leases within the consolidated statements of operations:

(in thousands) 2021 2020 2019

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Total lease cost $ 51,587 $ 46,534 $ 41,106

(1) During 2018, the Company had depreciation expense from capital leases of $ 5.9 million and interest expense on capital lease obligations of $ 3.3 million.

The future minimum lease payments related to the Company’s leases include renewal options the Company has determined to be reasonably certain and exclude payments to landlords for real estate taxes and common area maintenance.

Following is a summary of future minimum lease payments for all noncancelable operating leases and financing leases as of December 31, 2021 :

(in thousands) Operating Leases Financing Leases Total

(in thousands) Operating Leases Financing Leases

2022 $ 26,026 $ 7,145

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Following is a summary of future minimum lease payments for all noncancelable operating leases and financing leases as of December 31, 2020:

(in thousands) Operating Leases Financing Leases Total

(in thousands) Operating Leases Financing Leases

2021 $ 24,056 $ 7,079

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Principal payments on financing lease obligations $ 4,778 $ 5,861 $ 8,656

$ 5,861 $ 8,656

Total cash flows from financing activities impact $ 4,778 $ 5,861 $ 8,656

(1) During 2018, the Company had principal payments on capital lease obligations of $ 8.1 million and interest payments on capital lease obligations of $ 3.3 million.

As of December 31, 2020, the Company did not have future lease commitments that had not yet commenced.

As of December 31, 2021, the Company had four operating lease commitments that had not yet commenced.

These lease commitments have a lease term of approximately three to five years and are expected to commence during the first quarter of 2022.

The additional lease liability associated with these lease commitments is expected to be $ 6.1 million.

Distribution Agreements, Net

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Distribution agreements, net $ 836,777 $ 853,753

A reconciliation of the activity for distribution agreements, net in 2020 and 2019 is as follows:

Following is a summary of activity for distribution agreements, net during 2021 and 2020:

(in thousands) 2021 2020

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Ending balance - distribution agreements, net $ 836,777 $ 853,753

Subsequent to year-end, the Company entered into an agreement with a related party to acquire $ 30.1 million of additional distribution rights with an estimated useful life of 40 years.

Assuming no impairment of distribution agreements, net, amortization expense in future years based upon recorded amounts as of December 31, 2021 will be $ 24.9 million for each fiscal year 2022 through 2026.

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Accrued insurance costs $ 51,645 $ 48,318

Accrued marketing costs 38,539 34,947

Current portion of acquisition related contingent consideration 51,518 36,020

Accrued marketing costs 32,249 38,539

Employee and retiree benefit plan accruals 32,007 31,653

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Accrued taxes (other than income taxes) 6,638 6,178

Checks and transfers yet to be presented for payment from zero balance cash accounts 2,793 20,199

Federal income taxes — 1,651

Commodity hedges at fair market value — 1,174

All other accrued expenses 33,973 25,727

Total other accrued liabilities $ 226,769 $ 205,141

The Company has taken advantage of certain provisions of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), which allow an employer to defer the deposit and payment of the employer’s portion of social security taxes that would otherwise be due on or after March 27, 2020 and before January 1, 2021.

The Company has taken advantage of certain provisions of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), which allowed an employer to defer the deposit and payment of the employer’s portion of social security taxes that would otherwise have been due on or after March 27, 2020 and before January 1, 2021.

The law permits an employer to deposit half of these deferred payments by December 31, 2021 and the other half by December 31, 2022.

The Company intends to repay a portion of the deferred payroll taxes in the next 12 months and has classified this portion as current.

During 2021, the Company repaid the portion of the deferred payroll taxes classified as current as of December 31, 2020.

The Company intends to repay the remaining portion of the deferred payroll taxes during 2022, and, thus, classified the remaining balance as current as of December 31, 2021.

Derivative Financial Instruments

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While the Company would be exposed to credit loss in the event of nonperformance by these counterparties, the Company does not anticipate nonperformance by these counterparties.

Commodity derivative instruments held by the Company are marked to market on a monthly basis and recognized in earnings consistent with the expense classification of the underlying hedged item.

Commodity derivative instruments held by the Company are marked to market on a monthly basis and are recognized in earnings consistent with the expense classification of the underlying hedged item.

The Company generally pays a fee for these commodity derivative instruments, which is amortized over the corresponding period of each commodity derivative instrument.

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Selling, delivery and administrative expenses 1,772 791 3,536

Total gain (loss) $ 2,787 $ 10,138 $ ( 14,725 )

Total gain $ 5,241 $ 2,787 $ 10,138

All commodity derivative instruments are recorded at fair value as either assets or liabilities in the consolidated balance sheets.

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Total assets $ 7,714 $ 2,473

Other accrued liabilities $ — $ 1,174

Total liabilities $ — $ 1,174

The following table summarizes the Company’s gross commodity derivative instrument assets and gross commodity derivative instrument liabilities in the consolidated balance sheets:

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Unobservable inputs that are not corroborated by market data.

The following methods and assumptions were used by the Company in estimating the fair values of its financial instruments.

The below methods and assumptions were used by the Company in estimating the fair values of its financial instruments.

There were no transfers of assets or liabilities between levels in any period presented.

Financial Instrument Fair Value

Level Method and Assumptions

Level Methods and Assumptions

Deferred compensation plan assets and liabilities Level 1 The fair value of the Company’s nonqualified deferred compensation plan for certain executives and other highly compensated employees is based on the fair values of associated assets and liabilities, which are held in mutual funds and are based on the quoted market values of the securities held within the mutual funds.

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Deferred compensation plan liabilities 51,742 51,742 51,742 — —

Commodity derivative instruments 1,174 1,174 — 1,174 —

Long-term debt 940,465 1,015,700 — 1,015,700 —

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The acquisition related contingent consideration was valued using a probability weighted discounted cash flow model based on internal forecasts and the WACC derived from market data, which are considered Level 3 inputs.

Each reporting period, the Company adjusts its acquisition related contingent consideration liability related to the distribution territories to fair value by discounting future expected sub-bottling payments required under the CBA using the Company’s estimated WACC.

The future expected sub-bottling payments extend through the life of applicable distribution assets acquired from CCR, which is generally 40 years.

Each reporting period, the Company adjusts its acquisition related contingent consideration liability related to the distribution territories subject to sub-bottling fees to fair value by discounting future expected sub-bottling payments required under the CBA using the Company’s estimated WACC.

The future expected sub-bottling payments extend through the life of the applicable distribution assets acquired from CCR, which is generally 40 years.

As a result, the fair value of the acquisition related contingent consideration liability is impacted by the Company’s WACC, management’s estimate of the amounts that will be paid in the future under the CBA, and current sub-bottling payments (all Level 3 inputs).

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Ending balance - Level 3 liability $ 542,105 $ 434,694

As of December 31, 2020 and December 29, 2019, discount rates of 7.5 % and 7.1 %, respectively, were utilized in the valuation of the Company’s acquisition related contingent consideration liability.

The decrease in the fair value of the acquisition related contingent consideration liability in 2020, as compared to 2019, was primarily driven by the increase in the discount rate used to calculate fair value and changes in future cash flow projections of the distribution territories subject to sub-bottling fees.

The increase in the fair value of the acquisition related contingent consideration liability in 2019 was primarily driven by changes in future cash flow projections of the distribution territories subject to sub-bottling fees and a decrease in the discount rate used to calculate fair value.

These fair value adjustments were recorded in other expense, net in the consolidated statements of operations.

The anticipated amount the Company could pay annually under the acquisition related contingent consideration arrangements for the distribution territories subject to sub-bottling fees is expected to be in the range of $ 28 million to $ 52 million.

As of December 31, 2021 and December 31, 2020, discount rates of 7.5 % were utilized in the valuation of the Company’s acquisition related contingent consideration liability.

The increase in the fair value of the acquisition related contingent consideration liability in 2021 was primarily driven by higher projections of future cash flows in the distribution territories subject to sub-bottling fees.

This fair value adjustment was recorded in other expense, net in the consolidated statement of operations.

The Company anticipates that the amount it could pay annually under the acquisition related contingent consideration arrangements for the distribution territories subject to sub-bottling fees will be in the range of $ 35 million to $ 62 million.

The current income tax provision represents the estimated amount of income taxes paid or payable for the year, as well as changes in estimates from prior years.

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State 15,444 11,541 4,173

Total current provision (benefit) $ 50,206 $ 11,678 $ ( 7,497 )

Total current provision $ 74,752 $ 50,206 $ 11,678

Federal $ ( 4,966 ) $ 8,052 $ 4,514

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Income tax expense $ 65,569 $ 58,943 $ 15,665

The Company’s effective income tax rate, calculated by dividing income tax expense by income (loss) before income taxes, was 24.5 % for 2020, 45.8 % for 2019 and ( 14.1 )% for 2018.

The Company’s effective income tax rate, calculated by dividing income tax expense by income before taxes, was 25.7 % for 2021, 24.5 % for 2020 and 45.8 % for 2019.

The following table provides a reconciliation of income tax expense at the statutory federal rate to actual income tax expense:

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tax expense % pre-tax

Statutory (income) / expense $ 50,618 21.0 % $ 7,187 21.0 % $ ( 2,790 ) 21.0 %

Statutory expense $ 53,581 21.0 % $ 50,618 21.0 % $ 7,187 21.0 %

State income taxes, net of federal benefit 9,522 3.7 9,258 3.8 1,352 4.0

Nondeductible compensation 3,545 1.4 3,007 1.3 4,313 12.6

Noncontrolling interest – Piedmont ( 2,447 ) ( 1.0 ) ( 1,826 ) ( 5.3 ) ( 1,238 ) 9.3

Valuation allowance change ( 1,900 ) ( 0.8 ) 1,290 3.8 1,566 ( 11.8 )

Meals, entertainment and travel expense 2,028 0.8 1,476 0.6 2,440 7.1

Nondeductible fees and expenses 311 0.1 887 2.6 568 ( 4.3 )

Adjustment for uncertain tax positions ( 984 ) ( 0.4 ) 114 — ( 805 ) ( 2.4 )

Adjustment for federal tax legislation — — — — ( 1,989 ) 15.0

Valuation allowance change ( 902 ) ( 0.4 ) ( 1,900 ) ( 0.8 ) 1,290 3.8

Nondeductible fees and expenses 47 — 311 0.1 887 2.6

Noncontrolling interest – Piedmont — — ( 2,447 ) ( 1.0 ) ( 1,826 ) ( 5.3 )

Other, net ( 1,268 ) ( 0.4 ) ( 1,494 ) ( 0.5 ) 827 2.4

Income tax expense $ 65,569 25.7 % $ 58,943 24.5 % $ 15,665 45.8 %

The Company’s effective income tax rate, calculated by dividing income tax expense by income (loss) before income taxes minus net income attributable to noncontrolling interest, was 25.5 % for 2020, 57.9 % for 2019 and ( 10.3 )% for 2018.

The Company’s effective income tax rate, calculated by dividing income tax expense by income before taxes minus net income attributable to noncontrolling interest, was 25.5 % for 2020 and 57.9 % for 2019.

The Company had no net income attributable to noncontrolling interest during 2021.

The Company records liabilities for uncertain tax positions related to income tax positions.

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Deferred revenue 26,852 27,882

Deferred compensation 26,269 26,788

Accrued liabilities 26,253 22,341

Deferred compensation 24,018 26,269

Postretirement benefits 13,969 14,726

1 unchanged sentence

Transactional costs 3,976 4,451

Charitable contribution carryover 3,236 6,622

Net operating loss carryforwards 1,628 2,012

Financing lease agreements 1,820 1,618

Net operating loss carryforwards 1,418 1,628

Charitable contribution carryover 631 3,236

Other 3,199 10,138

8 unchanged sentences

Patronage dividend ( 2,369 ) ( 4,555 )

Investment in Piedmont — ( 23,287 )

Deferred income tax liabilities $ ( 407,309 ) $ ( 399,843 )

1 unchanged sentence

The Company’s deferred income tax assets and liabilities are subject to adjustment in future periods based on the Company’s ongoing evaluations of such deferred assets and liabilities and new information available to the Company.

During 2020, an indirect wholly owned subsidiary of the Company purchased the remaining 22.7 % general partnership interest in Piedmont from an indirect wholly owned subsidiary of The Coca‑Cola Company, which resulted in the elimination of the Investment in Piedmont deferred tax liability.

For income tax purposes, the tax effects of this purchase were recorded through additional paid in capital in the consolidated balance sheet as of December 31, 2020.

Valuation allowances are recognized on deferred tax assets if the Company believes it is more likely than not that some or all of the deferred tax assets will not be realized.

8 unchanged sentences

The Company also has a Long-Term Performance Equity Plan, as discussed in Note 2.

Pursuant to the Supplemental Savings Incentive Plan, as amended and restated effective November 1, 2011, eligible participants may elect to defer a portion of their annual salary and bonus.

Pursuant to the Supplemental Savings Incentive Plan, as amended and restated effective November 1, 2011, and as further amended thereafter, eligible participants may elect to defer a portion of their annual salary and bonus.

Participants are immediately vested in all deferred contributions they make and become fully vested in Company contributions upon completion of five years of service with the Company, termination of employment due to death or retirement or a change in control.

30 unchanged sentences

Total liability - Officer Retention Plan $ 41,044 $ 42,781

Under the Long-Term Performance Plan, as amended and restated effective January 1, 2018, the Compensation Committee establishes dollar amounts to which a participant shall be entitled upon attainment of the applicable performance measures.

Bonus awards under the Long-Term Performance Plan are made based on the relative achievement of performance measures in terms of the Company-

sponsored objectives or objectives related to the performance of the individual participant or of the subsidiary, division, department, region or function in which the participant is employed.

Under the Long-Term Performance Plan, as amended and restated effective January 1, 2018, the Compensation Committee of the Board of Directors establishes dollar amounts to which a participant shall be entitled upon attainment of the applicable performance measures.

Bonus awards under the Long-Term Performance Plan are made based on the relative achievement of performance

measures in terms of the Company-sponsored objectives or objectives related to the performance of the individual participant or of the subsidiary, division, department, region or function in which the participant is employed.

The liability under this plan was as follows:

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There are two Company-sponsored pension plans.

The Primary Plan was frozen as of June 30, 2006 and no benefits accrued to participants after this date.

The Primary Plan was frozen as of June 30, 2006 and no benefits accrued to participants after that date.

The Bargaining Plan is for certain employees under collective bargaining agreements.

1 unchanged sentence

Contributions to the plans are based on actuarially determined amounts and are limited to the amounts currently deductible for income tax purposes.

Each year, the Company updates its mortality assumptions used in the calculation of its pension liability using The Society of Actuaries’ latest mortality tables.

In 2020 and 2019, the mortality table reflected a lower increase in longevity.

The Company updates its mortality assumptions used in the calculation of its pension liability each year using The Society of Actuaries’ latest mortality tables and mortality projection scales.

The following tables set forth pertinent information for the two Company-sponsored pension plans:

3 unchanged sentences

Interest cost 9,846 10,957

Actuarial loss 31,300 47,651

Actuarial (gain) loss ( 12,735 ) 31,300

Benefits paid ( 13,410 ) ( 12,647 )

3 unchanged sentences

The accumulated benefit obligation was $ 359.5 million on December 31, 2021 and $ 368.2 million on December 31, 2020.

The decrease in the discount rates in 2020, as compared to 2019, and, in 2019, as compared to 2018, was the primary driver of actuarial losses in both 2020 and 2019.

The increase in the discount rates in 2021, as compared to 2020, was the primary driver of actuarial gains in 2021.

The decrease in discount rates in 2020, as compared to 2019, was the primary driver of actuarial losses in 2020.

The actuarial gains and losses, net of tax, were recorded in accumulated other comprehensive loss in the consolidated balance sheets.

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Employer contributions 6,800 16,250

Benefits paid ( 13,930 ) ( 13,918 )

Benefits and expenses paid ( 14,676 ) ( 13,930 )

Ending balance - plan assets at fair value $ 328,250 $ 319,699

40 unchanged sentences

The objective of the Company’s investment philosophy is to earn the plans’ targeted rate of return over longer periods without assuming excess investment risk.

The weighted average expected long-term rate of return assumption for the pension plan assets, which will be used to compute 2021 net periodic pension costs, is based upon target asset allocation and is determined using forward-looking performance and duration assumptions in the context of historical returns and volatilities for each asset class.

The weighted average expected long-term rate of return assumption for the pension plan assets, which will be used to compute 2022 net periodic pension costs, is based

upon target asset allocation and is determined using forward-looking performance and duration assumptions in the context of historical returns and volatilities for each asset class.

The Company evaluates the rate of return assumption on an annual basis.

The Company’s

pension plans target asset allocation for 2021, actual asset allocation at December 31, 2020 and December 29, 2019, and the weighted average expected long-term rate of return by asset category for the Primary Plan were as follows:

The Company’s pension plans target asset allocation for 2022, actual asset allocation at December 31, 2021 and December 31, 2020, and the weighted average expected long-term rate of return by asset category for the Primary Plan were as follows:

Percentage of Plan

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Pension plan assets - equity securities 18,867 106,424

106,424 89,861

Pension plan assets - cash and cash equivalents 8,713 7,463

Total pension plan assets $ 328,250 $ 319,699

(1) The Company had other Level 1 pension plan assets related to its equity securities of $ 0.6 million in 2019.

401(k) Savings Plan

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Benefits paid ( 3,313 ) ( 3,184 )

Medicare Part D subsidy reimbursement — 86

Benefit obligation at end of year $ 65,156 $ 67,665

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Benefits paid ( 3,313 ) ( 3,184 )

Medicare Part D subsidy reimbursement — 86

Fair value of plan assets at end of year $ — $ —

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The Company does not anticipate withdrawing from the Teamsters Plan.

In 2015, the Company increased its contribution rates to the Teamsters Plan, with additional increases occurring annually, as part of a rehabilitation plan, which was incorporated into the renewal of collective bargaining agreements with the unions effective April 28, 2014 and adopted by the Company as a rehabilitation plan effective January 1, 2015.

April 28, 2014 and adopted by the Company as a rehabilitation plan effective January 1, 2015.

This is a result of the Teamsters Plan being certified by its actuary as being in “critical” status for the plan year beginning January 1, 2013.

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Accruals for executive benefit plans 147,135 144,101

Noncurrent deferred proceeds from Territory Conversion Fee 80,591 82,877

Noncurrent deferred proceeds from Legacy Facilities Credit 28,770 29,569

Noncurrent deferred proceeds from related parties 106,304 109,361

Noncurrent portion of deferred payroll taxes under CARES Act — 18,706

1 unchanged sentence

Total other liabilities $ 758,610 $ 679,280

In 2017, The Coca‑Cola Company agreed to provide the Company a fee to compensate the Company for the net economic impact of changes made by The Coca‑Cola Company to the authorized pricing on sales of covered beverages produced at certain manufacturing plants owned by the Company (the “Legacy Facilities Credit”), which was recorded as a deferred liability and will be amortized as a reduction to cost of sales over a period of 40 years.

Also in 2017, upon the conversion of the Company’s then-existing bottling agreements pursuant to the CBA, the Company received a fee from CCR (the “Territory Conversion Fee”), which was recorded as a deferred liability and will be amortized as a reduction to cost of sales over a period of 40 years.

Together, the Legacy Facilities Credit and the Territory Conversion Fee are “deferred proceeds from related parties.”

Long-Term Debt

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Senior notes 2/27/2023 3.28 % Semi-annually Nonpublic 125,000 125,000

Revolving credit facility (2)

2021 Term Loan Facility (2)

7/9/2024 Variable Varies Nonpublic — —

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11/25/2025 3.80 % Semi-annually Public 350,000 350,000

2021 Revolving Credit Facility 7/9/2026 Variable Varies Nonpublic — —

Senior notes 10/10/2026 3.93 % Quarterly Nonpublic 100,000 100,000

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Total long-term debt $ 723,443 $ 940,465

(1) The Company intends to refinance principal payments due in the next 12 months under the term loan facility, and has the capacity to do so under its revolving credit facility, which is classified as long-term debt, and the Company is not restricted by any subjective acceleration clause within the revolving credit agreement.

As such, any amounts due in the next 12 months were classified as noncurrent.

(2) The Company’s revolving credit facility has an aggregate maximum borrowing capacity of $ 500 million, which may be increased at the Company’s option to $ 750 million, subject to obtaining commitments from the lenders and satisfying other conditions specified in the credit agreement.

The Company currently believes all banks participating in the revolving credit facility have the ability to and will meet any funding requests from the Company.

(1) As of December 31, 2020, the 2016 Term Loan Facility (as defined below) balance was classified as long term as the Company intended to refinance outstanding principal payments due in the next 12 months using the 2018 Revolving Credit Facility (as defined below), which was classified as long-term debt, and the Company was not restricted by any subjective acceleration clause within the agreement for the 2018 Revolving Credit Facility.

(2) The 2021 Term Loan Facility was fully repaid during the fourth quarter of 2021.

(3) The senior bonds due in 2025 were issued at 99.975 % of par.

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(in thousands) Debt Maturities

Fiscal 2021 $ 217,500

Fiscal 2022 —

Fiscal 2023 125,000

Fiscal 2024 —

Fiscal 2025 350,000

Thereafter 150,000

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The Company monitors counterparty credit ratings on an ongoing basis.

In 2019, the Company entered into a $ 100 million fixed rate swap maturing June 7, 2021 , to hedge a portion of the interest rate risk on the Company’s term loan facility.

This interest rate swap is designated as a cash flow hedging instrument and changes in its fair value are not expected to be material to the consolidated balance sheets.

Changes in the fair value of this interest rate swap were classified as accumulated other comprehensive loss on the consolidated balance sheets and included in the consolidated statements of comprehensive income.

On June 7, 2021, the Company used a combination of cash on hand and borrowings under its previous revolving credit facility (the “2018 Revolving Credit Facility”) to repay the remaining balance of its previous term loan facility (the “2016 Term Loan Facility”) that matured on that date.

On July 9, 2021, the Company entered into a credit agreement, providing for a five-year unsecured revolving credit facility with an aggregate maximum borrowing capacity of $ 500 million (the “2021 Revolving Credit Facility”), maturing on July 9, 2026.

Borrowings under the 2021 Revolving Credit Facility bear interest at a base rate or adjusted LIBOR, at the Company’s option, plus an applicable rate, depending on the rating for the Company’s long-term senior unsecured, non-credit-enhanced debt (“Debt Rating”).

The 2021 Revolving Credit Facility’s underlying credit agreement includes successor LIBOR rate provisions, providing that the Secured Overnight Funding Rate will be used as the LIBOR replacement rate for borrowings under the facility after June 30, 2023, unless the Company and its lenders agree to an alternative reference rate based on prevailing market convention at the replacement date.

In addition, the Company must pay a facility fee on the lenders’ aggregate commitments under the 2021 Revolving Credit Facility ranging from 0.060 % to 0.175 % per annum, depending on the Company’s Debt Rating.

The Company currently believes all banks participating in the 2021 Revolving Credit Facility have the ability to and will meet any funding requests from the Company.

The 2021 Revolving Credit Facility replaced the 2018 Revolving Credit Facility, which had a maturity date of June 8, 2023.

Also on July 9, 2021, the Company entered into a term loan agreement, providing for a three-year senior unsecured term loan facility in the aggregate principal amount of $ 70 million (the “2021 Term Loan Facility”), maturing on July 9, 2024.

Borrowings under the 2021 Term Loan Facility bore interest at a base rate or adjusted LIBOR, at the Company’s option, plus an applicable rate, depending on the Company’s Debt Rating.

The entire amount of the 2021 Term Loan Facility was fully drawn on July 9, 2021.

used approximately $ 55 million of the proceeds of the 2021 Term Loan Facility to repay outstanding indebtedness under the 2018 Revolving Credit Facility and used the remaining proceeds for general corporate purposes.

During the fourth quarter of 2021, the Company repaid the $ 70 million of borrowings outstanding under the 2021 Term Loan Facility.

The indenture under which the Company’s senior bonds were issued does not include financial covenants but does limit the incurrence of certain liens and encumbrances as well as indebtedness by the Company’s subsidiaries in excess of certain amounts.

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Total purchases from manufacturing cooperatives $ 294,541 $ 281,517 $ 292,517

The Company guarantees a portion of SAC’s debt, which expires at various dates through 2024.

The amount guaranteed was $ 14.7 million on both December 31, 2020 and December 29, 2019.

The Company guarantees a portion of SAC’s debt, which expires in 2024.

The amount guaranteed was $ 9.5 million on December 31, 2021 and $ 14.7 million on December 31, 2020.

In the event SAC fails to fulfill its commitments under the related debt, the Company would be responsible for payment to the lenders up to the level of the guarantee.

6 unchanged sentences

The Company has standby letters of credit, primarily related to its property and casualty insurance programs.

These letters of credit totaled $ 37.6 million on December 31, 2020 and $ 35.6 million on December 29, 2019.

These letters of credit totaled $ 37.6 million on both December 31, 2021 and December 31, 2020.

The Company participates in long-term marketing contractual arrangements with certain prestige properties, athletic venues and other locations.

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Total approximate percent of the Company’s total net sales 23 % 24 % 21 %

The Company purchases a majority of its aluminum cans from two domestic suppliers and all of the plastic bottles used in its manufacturing plants from two manufacturing cooperatives it co-owns with several other Coca‑Cola bottlers.

In 2020, the COVID-19 pandemic impacted the supply of aluminum cans and, as a result, the Company changed its typical sourcing model and sourced aluminum cans from international locations.

The Company purchases all of the plastic bottles used in its manufacturing plants from Southeastern and Western Container, two manufacturing cooperatives the Company co-owns with several other Coca‑Cola bottlers, and a majority of its aluminum cans from two domestic suppliers.

The Company began sourcing aluminum cans from international locations in 2020.

See Note 2 and Note 20 for additional information.

The Company is exposed to price risk on commodities such as aluminum, corn and PET resin, which affects the cost of raw materials used in the production of its finished products.

The Company is exposed to price risk on commodities such as aluminum, corn and PET resin (a petroleum- or plant-based product), which affects the cost of raw materials used in the production of its finished products.

The Company both produces and procures these finished products.

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Further, the Company is exposed to commodity price risk on crude oil, which impacts the Company’s cost of fuel used in the movement and delivery of the Company’s products.

The Company participates in commodity hedging and risk mitigation programs administered both by CCBSS and by the Company.

The Company participates in commodity hedging and risk mitigation programs, including programs administered by CCBSS and programs we administer.

Certain liabilities of the Company, including floating rate debt, retirement benefit obligations and the Company’s pension liability, are subject to risk of changes in both long-term and short-term interest rates.

4 unchanged sentences

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) (“AOCI(L)”) is comprised of adjustments to the Company’s pension and postretirement medical benefit plans, the interest rate swap on the Company’s term loan facility and the foreign currency translation for a subsidiary of the Company that performs data analysis and provides consulting services outside the United States.

Accumulated other comprehensive income (loss) (“AOCI(L)”) is comprised of adjustments to the Company’s pension and postretirement medical benefit plans and the foreign currency translation for a subsidiary of the Company that performs data analysis and provides consulting services outside the United States.

Following is a summary of AOCI(L) for 2021, 2020 and 2019:

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Actuarial loss $ ( 93,847 ) $ 14,897 $ ( 3,658 ) $ 4,954 $ ( 1,228 ) $ ( 78,882 )

Prior service costs ( 7 ) — — 19 ( 4 ) 8

Prior service credits 8 — — 3 — 11

Net postretirement benefits activity:

Actuarial loss ( 4,328 ) 3,414 ( 838 ) 682 ( 169 ) ( 1,239 )

Prior service credits ( 624 ) — — — — ( 624 )

Prior service costs ( 624 ) — — — — ( 624 )

Interest rate swap (1)

( 556 ) — — 739 ( 183 ) —

Foreign currency translation adjustment 14 — — ( 32 ) 9 ( 9 )

1 unchanged sentence

Total AOCI(L) $ ( 119,053 ) $ 18,311 $ ( 4,496 ) $ 6,346 $ ( 1,571 ) $ ( 100,463 )

(1) In 2019, the Company entered into a $ 100 million fixed rate swap to hedge a portion of the interest rate risk on the 2016 Term Loan Facility, both of which matured on June 7, 2021.

This interest rate swap was designated as a cash flow hedging instrument and changes in its fair value were not material to the consolidated balance sheets.

Gains (Losses) During the Period Reclassification to Income

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Actuarial loss $ ( 93,174 ) $ ( 5,521 ) $ 1,369 $ 4,619 $ ( 1,140 ) $ ( 93,847 )

Prior service costs ( 24 ) — — 22 ( 5 ) ( 7 )

Prior service credits (costs) ( 7 ) — — 19 ( 4 ) 8

Net postretirement benefits activity:

Actuarial loss ( 1,191 ) ( 4,555 ) 1,129 383 ( 94 ) ( 4,328 )

Prior service credits 351 — — ( 1,293 ) 318 ( 624 )

Prior service costs ( 624 ) — — — — ( 624 )

Interest rate swap ( 270 ) — — ( 378 ) 92 ( 556 )

11 unchanged sentences

Actuarial loss ( 4,902 ) 4,192 ( 1,031 ) 730 ( 180 ) ( 1,191 )

Prior service credits 1,744 — — ( 1,847 ) 454 351

Prior service credits (costs) 351 — — ( 1,293 ) 318 ( 624 )

Interest rate swap — — — ( 359 ) 89 ( 270 )

Foreign currency translation adjustment — — — ( 19 ) 3 ( 16 )

Reclassification of stranded tax effects — — ( 19,720 ) — — ( 19,720 )

Total AOCI(L) $ ( 77,265 ) $ ( 26,663 ) $ ( 13,161 ) $ 2,769 $ ( 682 ) $ ( 115,002 )

Following is a summary of the impact of AOCI(L) on the consolidated statements of operations:

Fiscal Year 2021

(in thousands) Net Pension

8 unchanged sentences

Total after tax effect $ 3,729 $ 513 $ 556 $ ( 23 ) $ 4,775

Fiscal Year 2020

(in thousands) Net Pension

8 unchanged sentences

Total after tax effect $ 3,494 $ 289 $ ( 286 ) $ 30 $ 3,527

Fiscal Year 2019

(in thousands) Net Pension

Activity Net Postretirement

Benefits Activity Foreign Currency

Benefits Activity Interest Rate

Swap Foreign Currency

Translation Adjustment Total

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Change in current assets less current liabilities $ 30,595 $ 36,901 $ ( 31,681 )

The Company had the following net cash payments (refunds) during the period for interest and income taxes:

The Company had the following net cash payments during the period for interest and income taxes:

(in thousands) 2021 2020 2019

3 unchanged sentences

(in thousands) 2021 2020 2019

Additions to leased property under financing leases $ 61,121 $ — $ —

Right-of-use assets obtained in exchange for operating lease obligations 42,698 38,713 —

Additions to property, plant and equipment accrued and recorded in accounts payable, trade $ 35,809 $ 17,025 $ 19,452

Right-of-use assets obtained in exchange for operating lease obligations 26,907 42,698 38,713

Additions to leased property under financing leases — 61,121 —

Issuance of Class B Common Stock in connection with stock award — — 4,776

Quarterly Financial Data (Unaudited)

The unaudited quarterly financial data for the fiscal years ended December 31, 2020 and December 29, 2019 is included in the following tables.

Sales volume has historically been the highest in the second and third quarters of each fiscal year.

Additional meaningful financial information is included in the table following each presented period.

Quarter Ended

(in thousands, except per share data) March 29,

2020 June 28,

2020 September 27,

2020 December 31,

Net sales $ 1,173,021 $ 1,227,215 $ 1,328,484 $ 1,278,637

Gross profit 405,295 429,301 472,438 461,875

Income from operations 32,821 83,118 103,844 93,595

Net income attributable to Coca‑Cola Consolidated, Inc.

14,662 39,569 51,884 66,378

Basic net income per share based on net income attributable to Coca‑Cola Consolidated, Inc.:

Common Stock $ 1.56 $ 4.23 $ 5.53 $ 7.08

Class B Common Stock $ 1.56 $ 4.23 $ 5.53 $ 7.08

Diluted net income per share based on net income attributable to Coca‑Cola Consolidated, Inc.:

Common Stock $ 1.55 $ 4.19 $ 5.51 $ 7.05

Class B Common Stock $ 1.55 $ 4.18 $ 5.51 $ 7.04

Additional Information for 2020:

Quarter Ended

(in thousands) March 29,

2020 June 28,

2020 September 27,

2020 December 31,

Pre-tax income (expense) impact:

Expenses related to supply chain and asset optimization $ ( 77 ) $ ( 641 ) $ ( 3,122 ) $ ( 548 )

Income related to extra days in fiscal year (1)

(1) 2020 had four extra days compared to 2019, which resulted in an estimated $ 59 million in additional net sales, $ 22 million in additional gross profit and $ 14 million in additional SD&A expenses.

Quarter Ended

(in thousands, except per share data) March 31,

2019 June 30,

2019 September 29,

2019 December 29,

Net sales $ 1,102,912 $ 1,273,659 $ 1,271,029 $ 1,178,949

Gross profit 389,308 435,779 432,224 413,191

Income from operations 20,154 67,214 53,846 39,540

Net income (loss) attributable to Coca‑Cola Consolidated, Inc.

( 6,831 ) 15,370 13,006 ( 10,170 )

Basic net income (loss) per share based on net income (loss) attributable to Coca‑Cola Consolidated, Inc.:

Common Stock $ ( 0.73 ) $ 1.64 $ 1.39 $ ( 1.09 )

Class B Common Stock $ ( 0.73 ) $ 1.64 $ 1.39 $ ( 1.09 )

Diluted net income (loss) per share based on net income (loss) attributable to Coca‑Cola Consolidated, Inc.:

Common Stock $ ( 0.73 ) $ 1.64 $ 1.38 $ ( 1.08 )

Class B Common Stock $ ( 0.73 ) $ 1.63 $ 1.38 $ ( 1.09 )

Additional Information for 2019:

Quarter Ended

(in thousands) March 31,

2019 June 30,

2019 September 29,

2019 December 29,

Pre-tax expense impact:

Expenses related to the System Transformation $ ( 4,730 ) $ ( 2,185 ) $ — $ —

Expenses related to supply chain and asset optimization — ( 1,294 ) ( 3,581 ) ( 5,702 )

Management’s Report on Internal Control over Financial Reporting

Management of Coca-Cola Consolidated, Inc.

(the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s chief executive and chief financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

8 unchanged sentences

Based on this assessment, management determined that the Company’s internal control over financial reporting as of December 31, 2021 was effective.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2020, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, which is included in Item 8 of this report.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2021, has been audited by PricewaterhouseCoopers LLP (PCAOB ID 238 ), an independent registered public accounting firm, which is included in Item 8 of this report.

February 22, 2022

7 unchanged sentences

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

Basis for Opinions

43 unchanged sentences

The financial statement schedule required by Regulation S-X is set forth in response to Item 15 below.

The supplementary data required by Item 302 of Regulation S-K is set forth in Note 25 to the consolidated financial statements.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data