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Item 1. Financial Statements

2024-10-30 compared with 2024-07-31 · 123 added, 137 removed, 750 unchanged (26% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Second Quarter First Half

Third Quarter First Nine Months

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

4 unchanged sentences

Income from operations 227,055 216,260 701,601 655,984

Interest (income) expense, net ( 1,620 ) 1,353 ( 4,336 ) 4,282

Interest expense (income), net 2,187 ( 1,516 ) ( 2,149 ) 2,766

Mark-to-market on acquisition related contingent consideration 68,592 18,864 90,877 86,038

20 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Second Quarter First Half

Third Quarter First Nine Months

(in thousands) 2024 2023 2024 2023

Net income $ 115,624 $ 92,093 $ 454,177 $ 332,539

Other comprehensive income (loss), net of tax:

Other comprehensive income, net of tax:

Defined benefit plans reclassification including pension costs:

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

Actuarial gain (loss) — 1,183 — ( 303 )

Prior service credits 3 3 9 9

2 unchanged sentences

Actuarial gain 20 — 60 —

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

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

Unrealized gain on short-term investments 428 — 255 —

Other comprehensive income, net of tax 451 57,214 324 85,775

Comprehensive income $ 116,075 $ 149,307 $ 454,501 $ 418,314

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(in thousands, except share data) September 27, 2024 December 31, 2023

Current Assets:

22 unchanged sentences

Accounts payable to The Coca‑Cola Company 229,181 139,499

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

Other accrued liabilities 276,743 237,994

12 unchanged sentences

30,000,000 shares authorized;

11,431,367 shares issued

10,832,748 and 11,431,367 shares issued, respectively

10,833 11,431

16 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

First Nine Months

(in thousands) 2024 2023

15 unchanged sentences

Cash Flows from Investing Activities:

Purchases of short-term investments $ ( 213,123 ) $ —

Additions to property, plant and equipment $ ( 287,333 ) $ ( 152,260 )

Purchases of short-term investments ( 283,488 ) —

Proceeds from the disposal of short-term investments 72,232 —

4 unchanged sentences

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

Payments related to share repurchases ( 574,009 ) —

Cash dividends paid ( 163,733 ) ( 42,182 )

Payments of acquisition related contingent consideration ( 44,243 ) ( 20,979 )

Payments related to share repurchases ( 14,471 ) —

Debt issuance fees ( 15,365 ) ( 244 )

5 unchanged sentences

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 $ 34,791 $ 32,388

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

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

Net income — — — 115,624 — — — 115,624

7 unchanged sentences

( 598 ) — — ( 559,084 ) — 559,682 — —

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

Balance on September 27, 2024 $ 10,833 $ 1,633 $ 135,953 $ 1,216,235 $ ( 3,952 ) $ ( 75,306 ) $ ( 409 ) $ 1,284,987

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

Net income — — — 454,177 — — — 454,177

Other comprehensive loss, net of tax — — — — ( 127 ) — — ( 127 )

Other comprehensive income, net of tax — — — — 324 — — 324

Dividends declared:

5 unchanged sentences

( 598 ) — — ( 559,084 ) — ( 14,461 ) — ( 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.

Balance on September 27, 2024 $ 10,833 $ 1,633 $ 135,953 $ 1,216,235 $ ( 3,952 ) $ ( 75,306 ) $ ( 409 ) $ 1,284,987

(1) The share repurchases relate to shares repurchased in a tender offer and a separate share repurchase transaction with a subsidiary of 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

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

Net income — — — 92,093 — — — 92,093

5 unchanged sentences

— — — ( 503 ) — — — ( 503 )

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

Balance on September 29, 2023 $ 11,431 $ 1,633 $ 135,953 $ 1,435,627 $ 938 $ ( 60,845 ) $ ( 409 ) $ 1,524,328

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

— — — ( 1,005 ) — — — ( 1,005 )

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

Balance on September 29, 2023 $ 11,431 $ 1,633 $ 135,953 $ 1,435,627 $ 938 $ ( 60,845 ) $ ( 409 ) $ 1,524,328

See accompanying notes to condensed consolidated financial statements.

9 unchanged sentences

The condensed consolidated financial statements presented are:

• 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 financial position as of September 27, 2024 and December 31, 2023.

• The results of operations, comprehensive income and changes in stockholders’ equity for the three-month periods ended September 27, 2024 (the “third quarter” of fiscal 2024 (“2024”)) and September 29, 2023 (the “third quarter” of fiscal 2023 (“2023”)) and the nine-month periods ended September 27, 2024 (the “first nine months” of 2024) and September 29, 2023 (the “first nine months” of 2023).

• The changes in cash flows for the first nine months of 2024 and the first nine months 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.

21 unchanged sentences

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.

As of September 27, 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, par value $ 1.00 per share (“Class B Common Stock”), which represented approximately 72 % of the total voting power of the Company’s outstanding Common Stock, par value $ 1.00 per share (“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 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.

As of September 27, 2024, The Coca‑Cola Company owned shares of the Company’s Common Stock representing approximately 7 % 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.

6 unchanged sentences

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.

In accordance with the terms and conditions of the Tender Offer, the Company repurchased 14,391.5 shares of its Common Stock at a purchase 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 Share Repurchase was conditioned on, among other things, the 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.

On July 5, 2024, the Company repurchased and retired 598,619 shares of its Common Stock in the Share Repurchase at a purchase price of $ 925 per share, for an aggregate purchase price of $ 553.7 million.

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

Second Quarter First Half

Third Quarter First Nine Months

(in thousands) 2024 2023 2024 2023

2 unchanged sentences

Payments made by The Coca-Cola Company to the Company 65,592 67,890 184,794 170,824

(1) This excludes acquisition related sub-bottling payments made by the Company to CCR (as defined below), a wholly owned subsidiary of The Coca‑Cola Company.

(1) This excludes acquisition related sub-bottling payments made by the Company to CCR (as defined below), a wholly owned subsidiary of The Coca‑Cola Company, as well as the payment made to repurchase shares pursuant to the Purchase Agreement entered into on May 6, 2024 with CCCBI (as further discussed above).

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 condensed consolidated statements of operations and represent the primary components of the soft drink products the Company manufactures and distributes.

8 unchanged sentences

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 $ 23.7 million in the first half of 2024 and $ 13.4 million in the first half of 2023.

Acquisition related sub-bottling payments to CCR were $ 44.2 million in the first nine months of 2024 and $ 21.0 million in the first nine months 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) June 28, 2024 December 31, 2023

(in thousands) September 27, 2024 December 31, 2023

Current portion of acquisition related contingent consideration $ 75,742 $ 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 June 28, 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 September 27, 2024 and $ 20.9 million as of December 31, 2023.

South Atlantic Canners, Inc.

2 unchanged sentences

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’s investment in SAC, which was classified as other assets in the condensed consolidated balance sheets, was $ 23.1 million as of September 27, 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 $ 4.5 million in the first half of 2024 and $ 4.6 million in the first half 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 $ 6.9 million in both the first nine months of 2024 and the first nine months 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 $ 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.

The Company had rebates due from CCBSS of $ 19.8 million as of September 27, 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 $ 23.6 million as of June 28, 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 $ 23.8 million as of September 27, 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 $ 13.0 million in the first half of 2024 and $ 13.6 million in the first half of 2023.

The Company incurred service fees to CONA of $ 20.2 million in the first nine months of 2024 and $ 20.6 million in the first nine months 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 $ 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.

The principal balance outstanding under this lease was $ 20.1 million on September 27, 2024 and $ 22.5 million on December 31, 2023.

Rental payments for this lease were $ 1.0 million in both the third quarter of 2024 and the third quarter of 2023 and $ 3.0 million and $ 2.9 million in the first nine months of 2024 and the first nine months of 2023, respectively.

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.

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 $ 2.3 million in both the third quarter of 2024 and the third quarter of 2023 and $ 8.1 million and $ 8.0 million in the first nine months of 2024 and the first nine months of 2023, respectively.

Revenue Recognition

2 unchanged sentences

Bottle/can sales include products packaged primarily in plastic bottles and aluminum cans.

Bottle/can net pricing is based on the invoice price charged to customers reduced by any promotional allowances.

Bottle/can net pricing is based on the invoice price charged to

customers reduced by any promotional allowances.

Bottle/can net pricing per unit is impacted by the price charged per package, the sales volume generated for each package and the channels in which those packages are sold.

5 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 half of 2024 and the first half of 2023.

Point in time sales accounted for approximately 98 % of the Company’s net sales in both the first nine months of 2024 and the first nine months 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:

Second Quarter First Half

Third Quarter First Nine Months

(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 $ 5.0 million as of June 28, 2024 and $ 4.5 million as of December 31, 2023.

The Company’s reserve for customer returns was $ 5.2 million as of September 27, 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 half of 2024 and the first half of 2023:

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

First Nine Months

(in thousands) 2024 2023

5 unchanged sentences

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

Asset information is not provided to the CODM.

Segment asset information is not provided to the CODM.

The Company believes three operating segments exist.

2 unchanged sentences

The Company’s segment results are as follows:

Second Quarter First Half

Third Quarter First Nine Months

(in thousands) 2024 2023 2024 2023

16 unchanged sentences

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

Second Quarter First Half

Third Quarter First Nine Months

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

11 unchanged sentences

Total undistributed earnings – diluted $ 111,244 $ 87,406 $ 290,444 $ 290,357

Second Quarter First Half

Third Quarter First Nine Months

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

38 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.

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

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

(7) On August 20, 2024, the Company announced that its Board of Directors had approved a new share repurchase program under which the Company is authorized to repurchase up to $ 1.00 billion of the Company’s Common Stock.

The new share repurchase authorization is discretionary and has no expiration date.

As of September 27, 2024, the Company had not repurchased any shares of Common Stock under the new share repurchase program.

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

As of September 27, 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 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:

As of September 27, 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 $ 214,706 $ 339 $ ( 1 ) $ 215,044

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

Gross realized gains $ — $ —

Gross realized losses — —

Proceeds 15,527 16,643

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.

As of September 27, 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 nine months of 2024.

The sale and/or maturity of available-for-sale investments resulted in proceeds of $ 55.6 million and $ 72.2 million during the third quarter of 2024 and the first nine months of 2024, respectively.

There were no gross realized gains or losses in the third quarter of 2024 or the first nine months of 2024.

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

Inventories consisted of the following:

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

(in thousands) September 27, 2024 December 31, 2023

Finished products $ 218,246 $ 207,912

4 unchanged sentences

Prepaid expenses and other current assets consisted of the following:

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

(in thousands) September 27, 2024 December 31, 2023

Repair parts $ 32,946 $ 35,256

Prepaid software 9,078 9,427

Prepaid taxes 7,763 9,020

Prepaid marketing 6,372 4,703

Commodity hedges at fair market value 4,087 3,747

Prepaid taxes 1,412 9,020

Other prepaid expenses and other current assets 33,175 26,432

2 unchanged sentences

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

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

(in thousands) September 27, 2024 December 31, 2023 Estimated Useful Life

Land $ 132,543 $ 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:

June 28, 2024 December 31, 2023

September 27, 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:

Second Quarter First Half

Third Quarter First Nine Months

(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 June 28, 2024:

Following is a

summary of future minimum lease payments for all noncancelable operating leases and financing leases as of September 27, 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 Nine Months

(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) June 28, 2024 December 31, 2023

(in thousands) September 27, 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) June 28, 2024 December 31, 2023

(in thousands) September 27, 2024 December 31, 2023

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

2 unchanged sentences

Supply Chain Finance Program

The Company has an agreement with a third-party financial institution to facilitate a supply chain finance (“SCF”) program, which allows qualifying suppliers to sell their receivables from the Company to the financial institution.

The Company has an agreement with a third-party financial institution to facilitate a supply chain finance program (“SCF program”), which allows qualifying suppliers to sell their receivables from the Company to the financial institution.

The participating suppliers negotiate their outstanding receivable arrangements and associated fees directly with the financial institution, and the Company is not party to those agreements.

3 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 $ 55.4 million as of June 28, 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 $ 59.8 million as of September 27, 2024 and $ 55.1 million as of December 31, 2023.

Other Accrued Liabilities

Other accrued liabilities consisted of the following:

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

(in thousands) September 27, 2024 December 31, 2023

Current portion of acquisition related contingent consideration $ 75,742 $ 64,528

2 unchanged sentences

Employee and retiree benefit plan accruals 33,045 34,203

Accrued taxes (other than income taxes) 8,174 7,474

Accrued interest payable 27,418 2,520

Accrued taxes (other than income taxes) 8,812 7,474

All other accrued expenses 29,579 19,430

12 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:

Second Quarter First Half

Third Quarter First Nine Months

(in thousands) 2024 2023 2024 2023

6 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) June 28, 2024 December 31, 2023

(in thousands) September 27, 2024 December 31, 2023

Prepaid expenses and other current assets $ 4,087 $ 3,747

2 unchanged sentences

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) June 28, 2024 December 31, 2023

(in thousands) September 27, 2024 December 31, 2023

Gross commodity derivative instrument assets $ 4,672 $ 3,747

1 unchanged sentence

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

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

(in thousands) September 27, 2024 December 31, 2023

Notional amount of outstanding commodity derivative instruments $ 61,455 $ 50,187

9 unchanged sentences

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.

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 prices of the securities held within the mutual funds.

Short-term investments Level 1 The fair values of the Company’s Level 1 short-term investments, which are U.S.

8 unchanged sentences

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:

June 28, 2024

September 27, 2024

(in thousands) Carrying

26 unchanged sentences

A summary of the Level 3 activity is as follows:

Second Quarter First Half

Third Quarter First Nine Months

(in thousands) 2024 2023 2024 2023

4 unchanged sentences

Ending balance - Level 3 liability $ 705,571 $ 605,650 $ 705,571 $ 605,650

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.

As of September 27, 2024 and September 29, 2023, a WACC of 8.6 % and 9.2 %, 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 during the first nine months of 2024 was primarily driven 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 nine months 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 $ 80 million.

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.

The Company’s effective income tax rate was 25.6 % for the first nine months of 2024 and 25.3 % for the first nine months of 2023.

The Company’s income tax expense was $ 156.4 million for the first nine months of 2024 and $ 112.4 million for the first nine months of 2023.

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

The Company had uncertain tax positions, including accrued interest, of $ 0.5 million on September 27, 2024 and $ 0.4 million on 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.

12 unchanged sentences

The components of total pension expense were as follows:

Second Quarter First Half

Third Quarter First Nine Months

(in thousands) 2024 2023 2024 2023

8 unchanged sentences

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 half of 2024.

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

The Company contributed $ 2.0 million to the Bargaining Plan during the first nine months of 2024 to fund the ongoing projected benefit obligation of the Bargaining Plan.

The Company does not anticipate making additional contributions to the Bargaining Plan during the fourth quarter of 2024.

Postretirement Benefits

3 unchanged sentences

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

Second Quarter First Half

Third Quarter First Nine Months

(in thousands) 2024 2023 2024 2023

5 unchanged sentences

Other liabilities consisted of the following:

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

(in thousands) September 27, 2024 December 31, 2023

Noncurrent portion of acquisition related contingent consideration $ 629,829 $ 604,809

8 unchanged sentences

Rate Interest

Nonpublic June 28,

Nonpublic September 27,

2024 December 31,

25 unchanged sentences

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.

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”).

Borrowings under the Revolving Credit Facility bear interest at a per annum rate equal to, at the Company’s option, either (i) the 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.

2 unchanged sentences

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 June 28, 2024.

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 September 27, 2024.

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

4 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 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 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 19.0 million cases and 19.3 million cases of finished product from SAC in the first nine months of 2024 and the first nine months of 2023, respectively.

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

Second Quarter First Half

Third Quarter First Nine Months

(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 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.

As of September 27, 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 June 28, 2024, and there was no impairment identified in 2023.

No impairment of the Company’s investment in SAC was identified as of September 27, 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 $ 39.0 million on June 28, 2024 and $ 37.6 million on December 31, 2023.

These letters of credit totaled $ 39.0 million on September 27, 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 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.

As of September 27, 2024, the future payments related to these contractual arrangements, which expire at various dates through 2034, amounted to $ 139.6 million.

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 second quarter of 2024 and the second quarter of 2023:

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

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

(in thousands) June 28, 2024 Pre-tax Activity Tax Effect September 27, 2024

Net pension activity:

4 unchanged sentences

Prior service costs ( 624 ) — — ( 624 )

Unrealized loss on short-term investments ( 176 ) 4 ( 1 ) ( 173 )

Unrealized (loss) gain on short-term investments ( 173 ) 566 ( 138 ) 255

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

Total AOCI(L) $ ( 4,403 ) $ 596 $ ( 145 ) $ ( 3,952 )

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.

As of September 27, 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) March 31, 2023 Pre-tax Activity Tax Effect June 30, 2023

(in thousands) June 30, 2023 Pre-tax Activity Tax Effect September 29, 2023

Net pension activity:

7 unchanged sentences

Total AOCI(L) $ ( 56,276 ) $ 78,890 $ ( 21,676 ) $ 938

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

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

(in thousands) December 31, 2023 Pre-tax Activity Tax Effect September 27, 2024

Net pension activity:

4 unchanged sentences

Prior service costs ( 624 ) — — ( 624 )

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

Unrealized gain on short-term investments — 338 ( 83 ) 255

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

Total AOCI(L) $ ( 4,276 ) $ 428 $ ( 104 ) $ ( 3,952 )

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

(in thousands) December 31, 2022 Pre-tax Activity Tax Effect September 29, 2023

Net pension activity:

9 unchanged sentences

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

First Nine Months

(in thousands) 2024 2023

11 unchanged sentences

Change in current assets less current liabilities $ 55,763 $ 35,791

Subsequent Events

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