What changed in this filing

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Item 1. Financial Statements

2024-07-31 compared with 2024-05-06 · 204 added, 115 removed, 683 unchanged (32% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

First Quarter

Second Quarter First Half

(in thousands, except per share data) 2024 2023 2024 2023

6 unchanged sentences

Mark-to-market on acquisition related contingent consideration 27,826 25,520 22,285 67,174

Pension plan settlement expense — 39,777 — 39,777

Other expense, net 709 2,268 1,537 4,537

18 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

First Quarter

Second Quarter First Half

(in thousands) 2024 2023 2024 2023

Net income $ 172,812 $ 122,319 $ 338,553 $ 240,446

Other comprehensive (loss) income, net of tax:

Other comprehensive income (loss), net of tax:

Defined benefit plans reclassification including pension costs:

Actuarial gain — 735

Actuarial loss — ( 2,221 ) — ( 1,486 )

Prior service credits 3 3 6 6

Pension plan settlement — 30,041 — 30,041

Postretirement benefits reclassification including benefit costs:

Actuarial gain 20 — 40 —

Unrealized loss on short-term investments ( 176 ) —

Other comprehensive (loss) income, net of tax ( 153 ) 738

Unrealized gain (loss) on short-term investments 3 — ( 173 ) —

Other comprehensive income (loss), net of tax 26 27,823 ( 127 ) 28,561

Comprehensive income $ 172,838 $ 150,142 $ 338,426 $ 269,007

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data) March 29, 2024 December 31, 2023

(in thousands, except share data) June 28, 2024 December 31, 2023

Current Assets:

22 unchanged sentences

Accounts payable to The Coca‑Cola Company 248,640 139,499

Share repurchase obligation to The Coca-Cola Company 553,723 —

Other accrued liabilities 254,649 237,994

21 unchanged sentences

Treasury stock, at cost:

Common Stock – 3,062,374 shares

Common Stock – 3,675,384 and 3,062,374 shares, respectively

( 634,988 ) ( 60,845 )

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

First Quarter

(in thousands) 2024 2023

4 unchanged sentences

Amortization of intangible assets and deferred proceeds, net 11,725 11,770

Deferred income taxes 56,616 40,743

Fair value adjustment of acquisition related contingent consideration 22,285 67,174

Deferred income taxes 2,264 ( 7,848 )

Loss on sale of property, plant and equipment 2,257 4,128

Amortization of debt costs 689 494

Pension plan settlement expense — 39,777

Change in current assets less current liabilities 257 ( 41,957 )

6 unchanged sentences

Additions to property, plant and equipment ( 159,400 ) ( 92,893 )

Investment in equity method investees ( 3,632 ) —

Proceeds from the disposal of short-term investments 16,643 —

Investment in equity method investees ( 6,549 ) ( 6,033 )

Proceeds from the sale of property, plant and equipment 250 267

1 unchanged sentence

Cash Flows from Financing Activities:

Proceeds from bond issuance $ 1,200,000 $ —

Cash dividends paid ( 159,353 ) ( 37,495 )

Payments of acquisition related contingent consideration ( 23,676 ) ( 13,376 )

Payments on financing lease obligations ( 601 ) ( 558 )

Payments related to share repurchases ( 14,471 ) —

Debt issuance fees ( 12,212 ) ( 154 )

Net cash used in financing activities $ ( 165,020 ) $ ( 40,019 )

Net (decrease) increase in cash during period $ ( 234,009 ) $ 92,133

Payments on financing lease obligations ( 1,221 ) ( 1,130 )

Net cash provided by (used in) financing activities $ 989,067 $ ( 52,155 )

Net increase in cash during period $ 1,064,019 $ 232,524

Cash at beginning of period 635,269 197,648

1 unchanged sentence

Significant non-cash investing and financing activities:

Share repurchase obligation to The Coca-Cola Company $ 553,723 $ —

Additions to property, plant and equipment accrued and recorded in accounts payable, trade 29,542 23,435

12 unchanged sentences

Stock Treasury Stock - Class B Common Stock Total

Balance on March 29, 2024 $ 11,431 $ 1,633 $ 135,953 $ 1,517,852 $ ( 4,429 ) $ ( 60,845 ) $ ( 409 ) $ 1,601,186

Net income — — — 172,812 — — — 172,812

Other comprehensive income, net of tax — — — — 26 — — 26

Dividends declared:

Common Stock ($ 0.50 per share)

— — — ( 4,185 ) — — — ( 4,185 )

Class B Common Stock ($ 0.50 per share)

— — — ( 502 ) — — — ( 502 )

Share repurchases (1)

— — — — — ( 574,143 ) — ( 574,143 )

Balance on June 28, 2024 $ 11,431 $ 1,633 $ 135,953 $ 1,685,977 $ ( 4,403 ) $ ( 634,988 ) $ ( 409 ) $ 1,195,194

Balance on December 31, 2023 $ 11,431 $ 1,633 $ 135,953 $ 1,352,111 $ ( 4,276 ) $ ( 60,845 ) $ ( 409 ) $ 1,435,598

6 unchanged sentences

— — — ( 502 ) — — — ( 502 )

Balance on March 29, 2024 $ 11,431 $ 1,633 $ 135,953 $ 1,517,852 $ ( 4,429 ) $ ( 60,845 ) $ ( 409 ) $ 1,601,186

Share repurchases (1)

— — — — — ( 574,143 ) — ( 574,143 )

Balance on June 28, 2024 $ 11,431 $ 1,633 $ 135,953 $ 1,685,977 $ ( 4,403 ) $ ( 634,988 ) $ ( 409 ) $ 1,195,194

(1) The share repurchases relate to shares repurchased in a tender offer and a separate share repurchase obligation to The Coca‑Cola Company, both of which are further discussed in Note 2 below.

(in thousands, except per share data) Common

7 unchanged sentences

Stock Treasury Stock - Class B Common Stock Total

Balance on March 31, 2023 $ 11,431 $ 1,633 $ 135,953 $ 1,230,589 $ ( 84,099 ) $ ( 60,845 ) $ ( 409 ) $ 1,234,253

Net income — — — 122,319 — — — 122,319

Other comprehensive income, net of tax — — — — 27,823 — — 27,823

Dividends declared:

Common Stock ($ 0.50 per share)

— — — ( 4,185 ) — — — ( 4,185 )

Class B Common Stock ($ 0.50 per share)

— — — ( 502 ) — — — ( 502 )

Balance on June 30, 2023 $ 11,431 $ 1,633 $ 135,953 $ 1,348,221 $ ( 56,276 ) $ ( 60,845 ) $ ( 409 ) $ 1,379,708

Balance on December 31, 2022 $ 11,431 $ 1,633 $ 135,953 $ 1,112,462 $ ( 84,837 ) $ ( 60,845 ) $ ( 409 ) $ 1,115,388

6 unchanged sentences

— — — ( 502 ) — — — ( 502 )

Balance on March 31, 2023 $ 11,431 $ 1,633 $ 135,953 $ 1,230,589 $ ( 84,099 ) $ ( 60,845 ) $ ( 409 ) $ 1,234,253

Balance on June 30, 2023 $ 11,431 $ 1,633 $ 135,953 $ 1,348,221 $ ( 56,276 ) $ ( 60,845 ) $ ( 409 ) $ 1,379,708

See accompanying notes to condensed consolidated financial statements.

9 unchanged sentences

The condensed consolidated financial statements presented are:

• The financial position as of March 29, 2024 and December 31, 2023.

• The results of operations, comprehensive income and changes in stockholders’ equity for the three-month periods ended March 29, 2024 (the “first quarter” of fiscal 2024 (“2024”)) and March 31, 2023 (the “first quarter” of fiscal 2023 (“2023”)).

• The changes in cash flows for the first quarter of 2024 and the first quarter of 2023.

• The financial position as of June 28, 2024 and December 31, 2023.

• The results of operations, comprehensive income and changes in stockholders’ equity for the three-month periods ended June 28, 2024 (the “second quarter” of fiscal 2024 (“2024”)) and June 30, 2023 (the “second quarter” of fiscal 2023 (“2023”)) and the six-month periods ended June 28, 2024 (the “first half” of 2024) and June 30, 2023 (the “first half” of 2023).

• The changes in cash flows for the first half of 2024 and the first half of 2023.

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and the instructions to Form 10-Q and Article 10 of Regulation S-X.

9 unchanged sentences

Any changes in critical accounting estimates are discussed with the Audit Committee of the Company’s Board of Directors during the quarter in which a change is contemplated and prior to making such change.

See Note 6 for discussion related to the Company’s new short-term investments during the first quarter of 2024.

Recently Issued Accounting Pronouncements

9 unchanged sentences

Related Party Transactions

Frank Harrison, III

As of June 28, 2024, J.

Frank Harrison, III, Chairman of the Board of Directors and Chief Executive Officer of the Company, controlled 1,004,394 shares of the Company’s Class B Common Stock, which represented approximately 71 % of the total voting power of the Company’s outstanding Common Stock and Class B Common Stock on a consolidated basis.

The Coca‑Cola Company

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 the Company’s soft drink products, either concentrate or syrup, are manufactured.

As of March 29, 2024, J.

As of March 29, 2024, The Coca‑Cola Company owned shares of the Company’s Common Stock representing approximately 9 % of the total voting power of the Company’s outstanding Common Stock and Class B Common Stock on a consolidated basis.

As of June 28, 2024, The Coca‑Cola Company owned shares of the Company’s Common Stock representing approximately 9 % of the total voting power of the Company’s outstanding 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.

3 unchanged sentences

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

On May 6, 2024, the Company announced its intention to purchase up to $ 3.10 billion in value of its Common Stock through both a modified “Dutch auction” tender offer (the “Tender Offer”) for up to $ 2.00 billion of its Common Stock and a separate share purchase agreement (the “Purchase Agreement”) with Carolina Coca-Cola Bottling Investments, Inc., an indirect wholly owned subsidiary of The Coca‑Cola Company (“CCCBI”).

On May 20, 2024, the Company launched its offer to purchase, for cash, shares of its Common Stock at prices specified by the tendering stockholders of not less than $ 850 nor greater than $ 925 per share, with shares having an aggregate purchase price of no more than $ 2.00 billion.

On June 21, 2024, the Company announced the final results of the Tender Offer, which expired on June 18, 2024.

In accordance with the terms and conditions of the Tender Offer, the Company repurchased 14,391.5 shares of its Common Stock at a price of $ 925 per share, for an aggregate purchase price of $ 13.3 million, excluding fees and expenses relating to the Tender Offer.

The shares repurchased represented 0.2 % of the shares of the Company’s Common Stock that were issued and outstanding as of June 18, 2024.

Pursuant to the Purchase Agreement entered into on May 6, 2024 with CCCBI, the Company agreed to purchase and CCCBI agreed to sell, at the purchase price in the Tender Offer, a number of shares of the Company’s Common Stock (the “Share Repurchase”) such that CCCBI would beneficially own shares of the Company’s Common Stock representing 21.5 % of the Company’s total outstanding shares of Common Stock and Class B Common Stock immediately following the closing of the Share Repurchase (calculated assuming all issued and outstanding shares of Class B Common Stock were converted into Common Stock and taking into account the shares of Common Stock purchased in the Tender Offer, which is referred to herein as the “fully diluted calculation”).

The Share Repurchase was conditioned on, among other things, completion of the Tender Offer and, in the case of CCCBI’s obligation to close, the purchase price being no less than $ 925 per share.

Based on the fully diluted calculation following the expiration of the Tender Offer, the Company announced on June 21, 2024 its intention to purchase 598,619 shares of its Common Stock from CCCBI in the Share Repurchase at a price of $ 925 per share, for an aggregate purchase price of $ 553.7 million.

The $ 553.7 million aggregate purchase price is reflected as share repurchase obligation to The Coca‑Cola Company in the condensed consolidated balance sheet as of June 28, 2024.

The shares repurchased pursuant to the Purchase Agreement are classified as treasury stock in the condensed consolidated balance sheet as of June 28, 2024.

The closing of the Share Repurchase occurred on July 5, 2024, the 11 th business day after the expiration of the Tender Offer.

After the Share Repurchase was completed, The Coca‑Cola Company beneficially owned shares of the Company’s Common Stock representing 21.5 % of the Company’s total outstanding shares of Common Stock and Class B Common Stock and approximately 7 % of the total voting power of the Company’s outstanding Common Stock and Class B Common Stock on a consolidated basis.

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

First Quarter

Second Quarter First Half

(in thousands) 2024 2023 2024 2023

11 unchanged sentences

The Company, The Coca‑Cola Company and CCR entered into comprehensive beverage agreements (collectively, the “CBA”), related to a multi-year series of transactions, which were completed in October 2017, through which the Company acquired and exchanged distribution territories and manufacturing plants (the “System Transformation”).

The CBA requires the Company to make quarterly acquisition related 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 CBA requires the Company to make quarterly acquisition related 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.

These acquisition related sub-bottling payments are based on gross profit derived from the Company’s sales of certain beverages and beverage products that are sold under the same trademarks that identify a covered beverage, a beverage product or certain cross-licensed brands applicable to the System Transformation.

Acquisition related sub-bottling payments to CCR were $ 9.7 million in the first quarter of 2024 and $ 6.5 million in the first quarter of 2023.

Acquisition related sub-bottling payments to CCR were $ 23.7 million in the first half of 2024 and $ 13.4 million in the first half of 2023.

The following table summarizes the liability recorded by the Company to reflect the estimated fair value of contingent consideration related to future expected acquisition related sub-bottling payments to CCR:

(in thousands) March 29, 2024 December 31, 2023

(in thousands) June 28, 2024 December 31, 2023

Current portion of acquisition related contingent consideration $ 74,313 $ 64,528

4 unchanged sentences

The Company accounts for Southeastern as an equity method investment.

The Company’s investment in Southeastern, which was classified as other assets in the condensed consolidated balance sheets, was $ 21.4 million as of March 29, 2024 and $ 20.9 million as of December 31, 2023.

The Company’s investment in Southeastern, which was classified as other assets in the condensed consolidated balance sheets, was $ 21.4 million as of June 28, 2024 and $ 20.9 million as of December 31, 2023.

South Atlantic Canners, Inc.

1 unchanged sentence

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

The Company accounts for SAC as an equity method investment.

The Company’s investment in SAC, which was classified as other assets in the condensed consolidated balance sheets, was $ 19.1 million as of March 29, 2024 and $ 17.2 million as of December 31, 2023.

The Company accounts for SAC as an equity method

The Company’s investment in SAC, which was classified as other assets in the condensed consolidated balance sheets, was $ 21.0 million as of June 28, 2024 and $ 17.2 million as of December 31, 2023.

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 recorded as a reduction to cost of sales in the condensed consolidated statements of operations, were $ 2.3 million in the first quarter of 2024 and $ 2.2 million in the first quarter of 2023.

Proceeds from management fees received from SAC, which were recorded as a reduction to cost of sales in the condensed consolidated statements of operations, were $ 4.5 million in the first half of 2024 and $ 4.6 million in the first half of 2023.

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

2 unchanged sentences

CCBSS negotiates the procurement for the majority of the Company’s raw materials, excluding concentrate, and the Company receives a rebate from CCBSS for the purchase of these raw materials.

The Company had rebates due from CCBSS of $ 21.1 million on March 29, 2024 and $ 14.3 million on December 31, 2023, which were classified as accounts receivable, other in the condensed consolidated balance sheets.

The Company had rebates due from CCBSS of $ 12.0 million as of June 28, 2024 and $ 14.3 million as of December 31, 2023, which were classified as accounts receivable, other in the condensed consolidated balance sheets.

Changes in rebates receivable relate to volatility in raw material prices and the timing of cash receipts of rebates.

2 unchanged sentences

The Company accounts for CONA as an equity method investment.

The Company’s investment in CONA, which was classified as other assets in the condensed consolidated balance sheets, was $ 22.9 million as of March 29, 2024 and $ 22.1 million as of December 31, 2023.

The Company’s investment in CONA, which was classified as other assets in the condensed consolidated balance sheets, was $ 23.6 million as of June 28, 2024 and $ 22.1 million as of December 31, 2023.

Pursuant to an amended and restated master services agreement with CONA, the Company is authorized to use the Coke One North America system (the “CONA System”), a uniform information technology system developed to promote operational efficiency and uniformity among North American Coca‑Cola bottlers.

In exchange for the Company’s rights to use the CONA System and receive CONA-related services, it is charged service fees by CONA.

The Company incurred service fees to CONA of $ 5.7 million in the first quarter of 2024 and $ 6.4 million in the first quarter of 2023.

The Company incurred service fees to CONA of $ 13.0 million in the first half of 2024 and $ 13.6 million in the first half of 2023.

Related Party Leases

3 unchanged sentences

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

The principal balance outstanding under this lease was $ 21.7 million on March 29, 2024 and $ 22.5 million on December 31, 2023.

Rental payments for this lease were $ 1.0 million in both the first quarter of 2024 and the first quarter of 2023.

The principal balance outstanding under this lease was $ 20.9 million on June 28, 2024 and $ 22.5 million on December 31, 2023.

Rental payments for this lease were $ 1.0 million in both the second quarter of 2024 and the second quarter of 2023 and $ 2.0 million in both the first half of 2024 and the first half of 2023.

Long-Term Performance Equity Plan

4 unchanged sentences

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

Compensation expense for the Long-Term Performance Equity Plan, which was included in selling, delivery and administrative expenses in the condensed consolidated statements of operations, was $ 3.8 million and $ 3.7 million in the second quarter of 2024 and the second quarter of 2023, respectively, and $ 5.8 million and $ 5.7 million in the first half of 2024 and the first half of 2023, respectively.

Revenue Recognition

10 unchanged sentences

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”).

Point in time sales accounted for approximately 98 % of the Company’s net sales in both the first quarter of 2024 and the first quarter of 2023.

Point in time sales accounted for approximately 98 % of the Company’s net sales in both the first half of 2024 and the first half of 2023.

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”).

5 unchanged sentences

The following table represents a disaggregation of revenue from contracts with customers:

First Quarter

Second Quarter First Half

(in thousands) 2024 2023 2024 2023

11 unchanged sentences

Returned product is recognized as a reduction to net sales.

The Company’s reserve for customer returns was $ 4.8 million as of March 29, 2024 and $ 4.5 million as of December 31, 2023.

The Company’s reserve for customer returns was $ 5.0 million as of June 28, 2024 and $ 4.5 million as of December 31, 2023.

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.

Accounts receivable balances are written off when determined uncollectible and are recognized as a reduction to the allowance for credit losses.

Following is a summary of activity for the allowance for credit losses during the first quarter of 2024 and the first quarter of 2023:

First Quarter

Following is a summary of activity for the allowance for credit losses during the first half of 2024 and the first half of 2023:

(in thousands) 2024 2023

10 unchanged sentences

The Company’s segment results are as follows:

First Quarter

Second Quarter First Half

(in thousands) 2024 2023 2024 2023

4 unchanged sentences

Consolidated net sales $ 1,795,943 $ 1,738,832 $ 3,387,569 $ 3,310,474

(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.

First Quarter

(in thousands) 2024 2023

Income from operations:

6 unchanged sentences

Consolidated depreciation and amortization $ 47,658 $ 43,676 $ 94,409 $ 87,185

(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 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:

First Quarter

Second Quarter First Half

(in thousands, except per share data) 2024 2023 2024 2023

11 unchanged sentences

Total undistributed earnings – diluted $ 168,125 $ 117,632 $ 179,200 $ 202,951

Second Quarter First Half

(in thousands, except per share data) 2024 2023 2024 2023

Numerator for basic net income per Common Stock share:

15 unchanged sentences

Numerator for diluted net income per Class B Common Stock share $ 18,882 $ 13,359 $ 36,602 $ 26,202

First Quarter

(in thousands, except per share data) 2024 2023

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

20 unchanged sentences

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

(6) The Company repurchased 14,391.5 shares of its Common Stock in the Tender Offer, which expired on June 18, 2024, and was obligated to repurchase 598,619 shares of its Common Stock pursuant to the Purchase Agreement.

See Note 2 for additional information on the Tender Offer and the Purchase Agreement.

Short-Term Investments

1 unchanged sentence

Short-term investments that are not classified as held-to-maturity are carried at fair value and classified as available-for-sale.

As of March 29, 2024, all of the Company’s short-term investments were classified as available-for-sale.

As of June 28, 2024, all of the Company’s short-term investments were classified as available-for-sale.

As of December 31, 2023, the Company did not have any short-term investments.

1 unchanged sentence

Unrealized gains and losses, net of tax, on available-for-sale investments are included in the condensed consolidated balance sheet as a component of accumulated other comprehensive income (loss).

As of March 29, 2024, the Company’s available-for-sale investments consisted of the following cost, unrealized positions and estimated fair value, disaggregated by class of instrument:

As of June 28, 2024, the Company’s available-for-sale investments consisted of the following cost, unrealized positions and estimated fair value, disaggregated by class of instrument:

Gross Unrealized

5 unchanged sentences

Total short-term investments $ 198,999 $ 9 $ ( 237 ) $ 198,771

As of March 29, 2024, all of the Company’s available-for-sale investments were classified as short-term investments in the condensed consolidated balance sheet and had weighted average maturities of less than one year.

The Company did not identify any other-than-temporary impairment on its available-for-sale investments during the first quarter of 2024.

The sale and/or maturity of available-for-sale investments resulted in the following realized activity during the first quarter of 2024:

First Quarter

As of June 28, 2024, all of the Company’s available-for-sale investments were classified as short-term investments in the condensed consolidated balance sheet and had weighted average maturities of less than one year.

The Company did not identify any other-than-temporary impairment on its available-for-sale investments during the first half of 2024.

The sale and/or maturity of available-for-sale investments resulted in the following realized activity during the second quarter of 2024 and the first half of 2024:

Second Quarter First Half

(in thousands) 2024 2024

2 unchanged sentences

Proceeds 15,527 16,643

There was no realized activity during the first quarter of 2023, as the Company did not have any short-term investments during that period.

There was no realized activity during the second quarter of 2023 or the first half of 2023, as the Company did not have any short-term investments during those periods.

Inventories consisted of the following:

(in thousands) March 29, 2024 December 31, 2023

(in thousands) June 28, 2024 December 31, 2023

Finished products $ 220,046 $ 207,912

4 unchanged sentences

Prepaid expenses and other current assets consisted of the following:

(in thousands) March 29, 2024 December 31, 2023

(in thousands) June 28, 2024 December 31, 2023

Repair parts $ 32,137 $ 35,256

Prepaid software 11,423 9,427

Prepaid taxes 9,195 9,020

Prepaid marketing 5,925 4,703

Commodity hedges at fair market value 3,574 3,747

Prepaid taxes 1,412 9,020

Other prepaid expenses and other current assets 28,754 26,432

2 unchanged sentences

The principal categories and estimated useful lives of property, plant and equipment, net were as follows:

(in thousands) March 29, 2024 December 31, 2023 Estimated Useful Lives

(in thousands) June 28, 2024 December 31, 2023 Estimated Useful Lives

Land $ 99,858 $ 99,858

11 unchanged sentences

Following is a summary of the weighted average remaining lease term and the weighted average discount rate for the Company’s leases:

March 29, 2024 December 31, 2023

June 28, 2024 December 31, 2023

Weighted average remaining lease term:

5 unchanged sentences

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

First Quarter

Second Quarter First Half

(in thousands) 2024 2023 2024 2023

5 unchanged sentences

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 March 29, 2024:

Following is a summary of future minimum lease payments for all noncancelable operating leases and financing leases as of June 28, 2024:

(in thousands) Operating Leases Financing Leases

24 unchanged sentences

Following is a summary of the Company’s leases within the condensed consolidated statements of cash flows:

First Quarter

(in thousands) 2024 2023

8 unchanged sentences

Distribution agreements, net, which are amortized on a straight-line basis and have estimated useful lives of 20 to 40 years, consisted of the following:

(in thousands) March 29, 2024 December 31, 2023

(in thousands) June 28, 2024 December 31, 2023

Distribution agreements at cost $ 990,191 $ 990,191

3 unchanged sentences

Customer lists, net, which are amortized on a straight-line basis and have estimated useful lives of five to 12 years, consisted of the following:

(in thousands) March 29, 2024 December 31, 2023

(in thousands) June 28, 2024 December 31, 2023

Customer lists at cost $ 25,288 $ 25,288

8 unchanged sentences

All outstanding amounts related to suppliers participating in the SCF program are recorded in accounts payable, trade in the condensed consolidated balance sheets, and associated payments are included in operating activities in the condensed consolidated statements of cash flows.

The Company’s outstanding confirmed obligations included in accounts payable, trade in the condensed consolidated balance sheets were $ 50.2 million as of March 29, 2024 and $ 55.1 million as of December 31, 2023.

The Company’s outstanding confirmed obligations included in accounts payable, trade in the condensed consolidated balance sheets were $ 55.4 million as of June 28, 2024 and $ 55.1 million as of December 31, 2023.

Other Accrued Liabilities

Other accrued liabilities consisted of the following:

(in thousands) March 29, 2024 December 31, 2023

(in thousands) June 28, 2024 December 31, 2023

Current portion of acquisition related contingent consideration $ 74,313 $ 64,528

18 unchanged sentences

The following table summarizes pre-tax changes in the fair values of the Company’s commodity derivative instruments and the classification of such changes in the condensed consolidated statements of operations:

First Quarter

Second Quarter First Half

(in thousands) 2024 2023 2024 2023

1 unchanged sentence

Selling, delivery and administrative expenses 254 ( 224 ) 211 ( 2,914 )

Total loss $ ( 1,199 ) $ ( 3,085 )

Total gain (loss) $ 1,329 $ ( 1,321 ) $ 130 $ ( 4,406 )

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

2 unchanged sentences

The following table summarizes the fair values of the Company’s commodity derivative instruments and the classification of such instruments in the condensed consolidated balance sheets:

(in thousands) March 29, 2024 December 31, 2023

(in thousands) June 28, 2024 December 31, 2023

Prepaid expenses and other current assets $ 3,574 $ 3,747

Other assets 303 —

Total assets $ 3,877 $ 3,747

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

(in thousands) March 29, 2024 December 31, 2023

(in thousands) June 28, 2024 December 31, 2023

Gross commodity derivative instrument assets $ 3,877 $ 3,747

1 unchanged sentence

The following table summarizes the Company’s outstanding commodity derivative instruments:

(in thousands) March 29, 2024 December 31, 2023

(in thousands) June 28, 2024 December 31, 2023

Notional amount of outstanding commodity derivative instruments $ 52,445 $ 50,187

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The following tables summarize the carrying amounts and the fair values by level of the Company’s deferred compensation plan assets and liabilities, short-term investments, commodity derivative instruments, long‑term debt and acquisition related contingent consideration:

March 29, 2024

June 28, 2024

(in thousands) Carrying

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A summary of the Level 3 activity is as follows:

First Quarter

Second Quarter First Half

(in thousands) 2024 2023 2024 2023

2 unchanged sentences

Reclassification to current payables ( 6,200 ) ( 700 ) ( 10,700 ) ( 900 )

(Decrease) increase in fair value ( 5,541 ) 41,654

Increase in fair value 27,826 25,520 22,285 67,174

Ending balance - Level 3 liability $ 657,246 $ 594,389 $ 657,246 $ 594,389

As of March 29, 2024 and March 31, 2023, a WACC of 8.9 % and 8.7 %, respectively, was 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 the first quarter of 2024 was primarily driven by an increase in the WACC used to calculate the fair value of the liability, partially offset by higher projections of future cash flows in the distribution territories subject to acquisition related sub-bottling payments.

This fair value adjustment was recorded in mark-to-market on acquisition related contingent consideration in the condensed consolidated statement of operations for the first quarter of 2024.

As of June 28, 2024 and June 30, 2023, a WACC of 9.0 % and 8.9 %, respectively, was 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 the first half of 2024 was primarily driven by higher projections of future cash flows in the distribution territories subject to acquisition related sub-bottling payments, partially offset by an increase in the WACC used to calculate the fair value of the liability.

This fair value adjustment was recorded in mark-to-market on acquisition related contingent consideration in the condensed consolidated statement of operations for the first half of 2024.

For the next five future years, the Company anticipates that the amount it could pay annually under the acquisition related contingent consideration arrangements for the distribution territories subject to acquisition related sub-bottling payments will be in the range of approximately $ 50 million to $ 75 million.

The Company’s effective income tax rate was 25.6 % for the first quarter of 2024 and 25.8 % for the first quarter of 2023.

The Company’s income tax expense was $ 57.1 million for the first quarter of 2024 and $ 41.1 million for the first quarter of 2023.

The increase in income tax expense was primarily attributable to higher income before taxes during the first quarter of 2024 compared to the first quarter of 2023.

The Company had uncertain tax positions, including accrued interest, of $ 0.4 million on both March 29, 2024 and December 31, 2023, all of which would affect the Company’s effective income tax rate if recognized.

The Company’s effective income tax rate was 25.6 % for the first half of 2024 and 25.8 % for the first half of 2023.

The Company’s income tax expense was $ 116.5 million for the first half of 2024 and $ 83.5 million for the first half of 2023.

The increase in income tax expense was primarily attributable to higher income before taxes during the first half of 2024 compared to the first half of 2023.

The Company had uncertain tax positions, including accrued interest, of $ 0.4 million on both June 28, 2024 and December 31, 2023, all of which would affect the Company’s effective income tax rate if recognized.

While it is expected the amount of uncertain tax positions may change in the next 12 months, the Company does not expect such change would have a material impact on the condensed consolidated financial statements.

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See Note 22 for additional information related to the impact on accumulated other comprehensive loss of the Primary Plan termination during 2023.

The components of net periodic pension cost related to the Bargaining Plan during the first quarter of 2024 and both the Bargaining Plan and the Primary Plan during the first quarter of 2023 were as follows:

First Quarter

The components of total pension expense were as follows:

Second Quarter First Half

(in thousands) 2024 2023 2024 2023

5 unchanged sentences

Net periodic pension cost 921 2,671 1,842 5,341

Settlement expense — 39,777 — 39,777

Total pension expense $ 921 $ 42,448 $ 1,842 $ 45,118

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

The Company did not make any contributions to the Bargaining Plan during the first quarter of 2024.

The Company did not make any contributions to the Bargaining Plan during the first half of 2024.

The Company does not expect cash contributions to the Bargaining Plan to exceed $ 2 million during 2024.

4 unchanged sentences

The components of net periodic postretirement benefit cost were as follows:

First Quarter

Second Quarter First Half

(in thousands) 2024 2023 2024 2023

5 unchanged sentences

Other liabilities consisted of the following:

(in thousands) March 29, 2024 December 31, 2023

(in thousands) June 28, 2024 December 31, 2023

Noncurrent portion of acquisition related contingent consideration $ 582,933 $ 604,809

8 unchanged sentences

Rate Interest

Nonpublic March 29,

Nonpublic June 28,

2024 December 31,

Senior bonds (1)

Senior bonds (the “2025 Senior Bonds”) (1)

11/25/2025 3.800 % Semi-annually Public $ 350,000 $ 350,000

Senior notes 10/10/2026 3.930 % Quarterly Nonpublic 100,000 100,000

Senior bonds (the “2029 Senior Bonds”) (2)

6/1/2029 5.250 % Semi-annually Public 700,000 —

Revolving credit facility (3)

1 unchanged sentence

Senior notes 3/21/2030 3.960 % Quarterly Nonpublic 150,000 150,000

Senior notes 3/21/2030 3.96 % Quarterly Nonpublic 150,000 150,000

Senior bonds (the “2034 Senior Bonds”) (4)

6/1/2034 5.450 % Semi-annually Public 500,000 —

Unamortized discount on senior bonds (1)(2)(4)

11/25/2025 ( 15 ) ( 17 )

Various ( 1,624 ) ( 17 )

Debt issuance costs ( 13,274 ) ( 824 )

Total long-term debt $ 1,785,102 $ 599,159

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

(1) The 2025 Senior Bonds were issued at 99.975 % of par.

(2) The 2029 Senior Bonds were issued at 99.843 % of par.

(3) The Company’s revolving credit facility has an aggregate maximum borrowing capacity of $ 500 million.

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.

(4) The 2034 Senior Bonds were issued at 99.893 % of par.

The Company mitigates its financing risk by using multiple financial institutions and only entering into credit arrangements with institutions with investment grade credit ratings.

The Company monitors counterparty credit ratings on an ongoing basis.

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.

The agreements under which the Company’s nonpublic debt was issued include two financial covenants:

On May 29, 2024, the Company completed the issuance and sale of $ 700 million aggregate principal amount of the 2029 Senior Bonds and $ 500 million aggregate principal amount of the 2034 Senior Bonds.

The 2029 Senior Bonds and the 2034 Senior Bonds are the Company’s senior unsecured obligations and rank equally with the Company’s existing senior unsecured and unsubordinated indebtedness.

The 2029 Senior Bonds mature on June 1, 2029 and the 2034 Senior Bonds mature on June 1, 2034, in each case, unless earlier redeemed or repurchased by the Company.

The 2029 Senior Bonds bear interest at a rate of 5.250 % per annum and the 2034 Senior Bonds bear interest at a rate of 5.450 % per annum.

The Company will pay interest on the 2029 Senior Bonds and the 2034 Senior Bonds semi-annually in arrears on June 1 and December 1 of each year, commencing December 1, 2024.

On June 10, 2024, the Company entered into a term loan agreement, providing for a senior unsecured term loan facility in the aggregate principal amount of up to $ 800 million, maturing on June 10, 2027, and a senior unsecured term loan facility in the aggregate principal amount of up to $ 500 million, maturing on June 10, 2029 (collectively, the “Term Loan Facilities”).

The Company did not draw any loans under the Term Loan Facilities during the second quarter of 2024.

On June 20, 2024, the Company gave notice, effective as of June 27, 2024, of its permanent reduction to $ 0 of the commitments under the Term Loan Facilities.

Upon the effectiveness of the notice, the aggregate commitments under the Term Loan Facilities were reduced in accordance with their terms from $ 1.30 billion to $ 0 .

As of June 28, 2024, there were no amounts outstanding under the Term Loan Facilities.

Also on June 10, 2024, the Company entered into an amended and restated credit agreement (the “Revolving Credit Facility Agreement”), providing for a five-year unsecured revolving credit facility with an aggregate maximum borrowing capacity of $ 500 million (the “Revolving Credit Facility”), maturing on June 10, 2029.

The Revolving Credit Facility Agreement replaced the Company’s previous credit agreement, dated as of July 9, 2021.

Subject to obtaining commitments from lenders and satisfying other conditions specified therein, at the Company’s option, the Revolving Credit Facility may be increased by up to $ 250 million.

Borrowings under the Revolving Credit Facility bear interest at a per annum rate equal to, at the Company’s option, either (i) Base Rate (as defined in the Revolving Credit Facility Agreement) plus an applicable rate or (ii) Term SOFR (as defined in the Revolving Credit Facility Agreement) plus the SOFR Adjustment (as defined in the Revolving Credit Facility Agreement) and an applicable rate, depending on the rating for the Company’s long-term senior unsecured, non-credit-enhanced debt (“Debt Rating”).

In addition, the Company must pay a facility fee on the lenders’ aggregate commitments under the 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 Revolving Credit Facility have the ability to and will meet any funding requests from the Company.

The indentures under which the 2025 Senior Bonds, the 2029 Senior Bonds and the 2034 Senior Bonds were issued do not include financial covenants, but do limit the incurrence of certain liens and encumbrances as well as indebtedness by the Company’s subsidiaries in excess of certain amounts.

The agreements under which the Company’s nonpublic debt, including the Revolving Credit Facility, was issued include two financial covenants:

a consolidated cash flow/fixed charges ratio and a consolidated funded indebtedness/cash flow ratio, each as defined in the respective agreement.

The Company was in compliance with these covenants as of March 29, 2024.

These covenants have not restricted, and are not expected to restrict, the Company’s liquidity or capital resources.

The Company was in compliance with these covenants as of June 28, 2024.

These covenants have not restricted the Company’s liquidity or capital resources.

All outstanding long-term debt has been issued by the Company and none has been issued by any of its subsidiaries.

3 unchanged sentences

The Company is obligated to purchase at least 80 % of its requirements of plastic bottles for certain designated territories from Southeastern.

The Company is also obligated to purchase 17.5 million cases of finished product from SAC on an annual basis through June 2024.

The Company purchased 6.1 million cases and 6.2 million cases of finished product from SAC in the first quarter of 2024 and the first quarter of 2023, respectively.

The Company was also obligated to purchase 17.5 million cases of finished product from SAC on an annual basis through June 2024.

Beginning in July 2024, the Company is also obligated to purchase 16.0 million cases of finished product from SAC on an annual basis through June 2034.

The Company purchased 11.9 million cases and 13.1 million cases of finished product from SAC in the first half of 2024 and the first half of 2023, respectively.

The following table summarizes the Company’s purchases from these manufacturing cooperatives:

First Quarter

Second Quarter First Half

(in thousands) 2024 2023 2024 2023

3 unchanged sentences

The Company guarantees a portion of SAC’s debt, which matures in 2028, based on the ratio of SAC’s total liabilities to SAC’s shareholders’ equity as of December 31 of each year.

As of March 29, 2024 and December 31, 2023, the amount of the Company’s guarantee of SAC’s debt was $ 0 and $ 9.5 million, respectively.

As of June 28, 2024 and December 31, 2023, the amount of the Company’s guarantee of SAC’s debt was $ 0 and $ 9.5 million, respectively.

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.

3 unchanged sentences

The Company monitors its investment in SAC and would be required to write down its investment if an impairment, other than a temporary impairment, was identified.

No impairment of the Company’s investment in SAC was identified as of March 29, 2024, and there was no impairment identified in 2023.

No impairment of the Company’s investment in SAC was identified as of June 28, 2024, and there was no impairment identified in 2023.

Other Commitments and Contingencies

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 both March 29, 2024 and December 31, 2023.

These letters of credit totaled $ 39.0 million on June 28, 2024 and $ 37.6 million on December 31, 2023.

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

As of March 29, 2024, the future payments related to these contractual arrangements, which expire at various dates through 2033, amounted to $ 135.1 million.

As of June 28, 2024, the future payments related to these contractual arrangements, which expire at various dates through 2033, amounted to $ 141.1 million.

As further discussed in Note 2, as of the end of the second quarter of 2024, the Company was obligated to purchase 598,619 shares of its Common Stock from CCCBI, in the Share Repurchase at a price of $ 925 per share, for an aggregate purchase price of $ 553.7 million.

The $ 553.7 million aggregate purchase price is reflected as share repurchase obligation to The Coca‑Cola Company in the condensed consolidated balance sheet as of June 28, 2024.

The closing of the Share Repurchase occurred on July 5, 2024.

The Company is involved in various claims and legal proceedings which have arisen in the ordinary course of its business.

Although it is difficult to predict the ultimate outcome of these claims and legal proceedings, management believes the ultimate disposition of these matters will not have a material adverse effect on the financial condition, results of operations or cash flows of the Company.

Although it is difficult to predict the ultimate outcome of these claims and legal proceedings, management believes the ultimate

disposition of these matters will not have a material adverse effect on the financial condition, results of operations or cash flows of the Company.

No material amount of loss in excess of recorded amounts is believed to be reasonably possible as a result of these claims and legal proceedings.

5 unchanged sentences

Accumulated other comprehensive income (loss) (“AOCI(L)”) is comprised of adjustments to the Company’s pension and postretirement medical benefit plans and unrealized gains/losses on the Company’s short-term investments.

Following is a summary of AOCI(L) for the first quarter of 2024 and the first quarter of 2023:

(in thousands) December 31, 2023 Pre-tax Activity Tax Effect March 29, 2024

Following is a summary of AOCI(L) for the second quarter of 2024 and the second quarter of 2023:

(in thousands) March 29, 2024 Pre-tax Activity Tax Effect June 28, 2024

Net pension activity:

7 unchanged sentences

Total AOCI(L) $ ( 4,429 ) $ 34 $ ( 8 ) $ ( 4,403 )

As of December 31, 2023 and March 29, 2024, there were no gross actuarial losses or prior service costs included in accumulated other comprehensive loss associated with the Primary Plan.

The Primary Plan settlement, which was completed during 2023, is reflected within the beginning balances above.

As of June 28, 2024, there were no gross actuarial losses or prior service costs included in accumulated other comprehensive loss associated with the Primary Plan, as the Primary Plan settlement was completed during 2023.

All pension activity during 2024 was related to the Bargaining Plan.

(in thousands) December 31, 2022 Pre-tax Activity Tax Effect March 31, 2023

(in thousands) March 31, 2023 Pre-tax Activity Tax Effect June 30, 2023

Net pension activity:

1 unchanged sentence

Prior service costs ( 102 ) 4 ( 1 ) ( 99 )

Pension plan settlement — 39,777 ( 9,736 ) 30,041

Net postretirement benefits activity:

3 unchanged sentences

Total AOCI(L) $ ( 84,099 ) $ 36,840 $ ( 9,017 ) $ ( 56,276 )

Following is a summary of AOCI(L) for the first half of 2024 and the first half of 2023:

(in thousands) December 31, 2023 Pre-tax Activity Tax Effect June 28, 2024

Net pension activity:

Actuarial gain $ 533 $ — $ — $ 533

Prior service costs ( 97 ) 8 ( 2 ) ( 91 )

Net postretirement benefits activity:

Actuarial gain 721 52 ( 12 ) 761

Prior service costs ( 624 ) — — ( 624 )

Unrealized loss on short-term investments — ( 228 ) 55 ( 173 )

Reclassification of stranded tax effects ( 4,809 ) — — ( 4,809 )

Total AOCI(L) $ ( 4,276 ) $ ( 168 ) $ 41 $ ( 4,403 )

(in thousands) December 31, 2022 Pre-tax Activity Tax Effect June 30, 2023

Net pension activity:

Actuarial loss $ ( 71,140 ) $ ( 1,968 ) $ 482 $ ( 72,626 )

Prior service costs ( 105 ) 8 ( 2 ) ( 99 )

Pension plan settlement — 39,777 ( 9,736 ) 30,041

Net postretirement benefits activity:

Actuarial gain 6,752 — — 6,752

Prior service costs ( 624 ) — — ( 624 )

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

Total AOCI(L) $ ( 84,837 ) $ 37,817 $ ( 9,256 ) $ ( 56,276 )

Supplemental Disclosures of Cash Flow Information

Changes in current assets and current liabilities affecting cash were as follows:

First Quarter

(in thousands) 2024 2023

12 unchanged sentences

Subsequent Events

On May 6, 2024, the Company announced that it intends to purchase up to $ 3.1 billion in value of its Common Stock through both a modified “Dutch auction” tender offer (the “Tender Offer”) for up to $ 2.0 billion of its Common Stock and a separate share purchase agreement (the “Purchase Agreement”) with a subsidiary of The Coca‑Cola Company.

The Company intends to fund the Tender Offer and repurchase of shares under the Purchase Agreement with a combination of new funded debt and cash on hand.

As further discussed in Note 2, based on the shares of the Company’s Common Stock the Company repurchased in the Tender Offer, which expired on June 18, 2024, the Company announced on June 21, 2024 its intention to purchase 598,619 shares of its Common Stock from CCCBI in the Share Repurchase at a price of $ 925 per share.

On July 5, 2024, the Company completed the repurchase of 598,619 shares of its Common Stock from CCCBI in the Share Repurchase for an aggregate purchase price of $ 553.7 million.

After the completion of the Share Repurchase, The Coca-Cola Company beneficially owns shares of the Company’s Common Stock representing 21.5 % of the Company’s total outstanding shares of Common Stock and Class B Common Stock and approximately 7 % of the total voting power of the Company’s outstanding Common Stock and Class B Common Stock on a consolidated basis.

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-Q

Item 1. Financial Statements