What changed in this filing

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Item 3. Legal Proceedings

2024-02-20 compared with 2023-02-21 · 38 added, 40 removed, 118 unchanged (40% of the section changed)

17 unchanged sentences

The 1981 agreement, and a subsequent 1983 settlement agreement, outlined the parties’ rights and obligations concerning past and future claims and lawsuits involving Aqua-Chem.

Cleaver-Brooks, a division of Aqua-Chem, manufactured boilers, some of

which contained asbestos gaskets.

Cleaver-Brooks, a division of Aqua-Chem, manufactured boilers, some of which contained asbestos gaskets.

Aqua-Chem was first named as a defendant in asbestos lawsuits in or around 1985 and currently has approximately 15,000 active claims pending against it.

5 unchanged sentences

The complaint sought a determination of the respective rights and obligations under the insurance policies issued with regard to asbestos-related claims against Aqua-Chem.

The action also sought a monetary judgment reimbursing any amounts paid by the plaintiffs in excess of their obligations.

The action also sought a monetary

judgment reimbursing any amounts paid by the plaintiffs in excess of their obligations.

Two of the insurers, one with a $15 million policy limit and one with a $25 million policy limit, asserted cross-claims against the Company, alleging that the Company and/or its insurers are responsible for Aqua-Chem’s asbestos liabilities before any obligation is triggered on the part of the cross-claimant insurers to pay for such costs under their policies.

2 unchanged sentences

On July 24, 2007, the Wisconsin trial court entered a final declaratory judgment regarding the rights and obligations of the parties under the insurance policies issued by the remaining defendant insurers, which judgment was not appealed.

The judgment directs, among other things, that each insurer whose policy is triggered is jointly and severally liable for 100 percent of Aqua-Chem’s losses up to policy limits.

The judgment directs, among other things, that each insurer whose policy is triggered is jointly and severally liable for 100% of Aqua-Chem’s losses up to policy limits.

The court’s judgment concluded the Wisconsin insurance coverage litigation.

23 unchanged sentences

taxable income that the U.S.

parent company would report as

compensation from its foreign licensees.

parent company would report as compensation from its foreign licensees.

The Company and the IRS memorialized this accord in a closing agreement resolving that dispute (“Closing Agreement”).

15 unchanged sentences

parent company in reliance upon the Closing Agreement should continue to be allowed to offset royalties, including those that would become payable to the Company in accordance with the Opinion.

The Tax Court reserved ruling on the effect of Brazilian legal restrictions on the payment of royalties by the Company’s licensee in Brazil until after the Tax Court issues its opinion in the separate case of 3M Co.

Commissioner, T.C.

5816-13 (filed March 11, 2013).

The Tax Court issued its opinion in 3M Co.’s case (“3M Co.

opinion”) on February 9, 2023.

Once the Tax Court completes its analysis of the application of the 3M Co.

opinion to the Company’s case, the Company expects the Tax Court to render another opinion, and ultimately a final decision, in the Company’s case.

On November 8, 2023, the Tax Court issued a supplemental opinion, siding with the IRS in concluding both that the blocked-income regulations apply to the Company’s operations and that the Tax Court opinion in 3M Co.

Commissioner (February 9, 2023) controlled as to the validity of those regulations.

The Company believes that the IRS and the Tax Court misinterpreted and misapplied the applicable regulations in reallocating income earned by the Company’s foreign licensees to increase the Company’s U.S.

2 unchanged sentences

In determining the amount of tax reserve to be recorded as of December 31, 2020, the Company completed the required two-step evaluation process prescribed by Accounting Standards Codification 740, Accounting for Income Taxes .

In doing so, we consulted with outside advisors, and we reviewed and considered relevant laws, rules, and regulations, including, but not limited to, the Opinion and relevant caselaw.

In doing so, we consulted with outside advisors, and we reviewed and considered relevant laws, rules, and regulations, including, but not limited to, the Opinions and relevant caselaw.

We also considered our intention to vigorously defend our positions and assert our various well-founded legal claims via every available avenue of appeal.

We concluded, based on the technical and legal merits of the Company’s tax positions, that it is more likely than not the Company’s tax positions will ultimately be sustained on appeal.

In addition, we considered a number of alternative transfer pricing methodologies, including the methodology asserted by the IRS and affirmed in the Opinion (“Tax Court Methodology”), that could be applied by the courts upon final resolution of the litigation.

In addition, we considered a number of alternative transfer pricing methodologies, including the methodology asserted by the IRS and affirmed in the Opinions (“Tax Court Methodology”), that could be applied by the courts upon final resolution of the litigation.

Based on the required probability analysis, we determined the methodologies we believe the federal courts could ultimately order to be used in calculating the Company’s tax.

As a result of this analysis, we recorded a tax reserve of $ 438 million during the year ended December 31, 2020 related to the application of the resulting methodologies as well as the different tax treatment applicable to dividends originally paid to the U.S.

parent company by its foreign licensees, in reliance upon the Closing Agreement, that would be recharacterized as royalties in accordance with the Opinion and the Company’s analysis.

parent company by its foreign licensees, in reliance upon the Closing Agreement, that would be recharacterized as royalties in accordance with the Opinions and the Company’s analysis.

The Company’s conclusion that it is more likely than not the Company’s tax positions will ultimately be sustained on appeal is unchanged as of December 31, 2023.

However, we updated our calculation of the methodologies we believe the federal courts

could ultimately order to be used in calculating the Company’s tax.

However, we updated our calculation of the methodologies we believe the federal courts could ultimately order to be used in calculating the Company’s tax.

As a result of the application of the required probability analysis to these updated calculations and the accrual of interest through the current reporting period, we updated our tax reserve as of December 31, 2023 to $ 439 million.

While the Company strongly disagrees with the IRS’ positions and the portions of the Opinion affirming such positions, it is possible that some portion or all of the adjustment proposed by the IRS and sustained by the Tax Court could ultimately be upheld.

While the Company strongly disagrees with the IRS’ positions and the portions of the Opinions affirming such positions, it is possible that some portion or all of the adjustment proposed by the IRS and sustained by the Tax Court could ultimately be upheld.

In that event, the Company would likely be subject to significant additional liabilities for tax years 2007 through 2009, and potentially also for subsequent years, which could have a material adverse impact on the Company’s financial position, results of operations and cash flows.

The Company calculated the potential impact of applying the Tax Court Methodology to reallocate income from foreign licensees potentially covered within the scope of the Opinion, assuming such methodology were to be ultimately upheld by the courts, and the IRS were to decide to apply that methodology to subsequent years, with consent of the federal courts.

courts, and the IRS were to decide to apply that methodology to subsequent years, with consent of the federal courts.

This impact would include taxes and interest accrued through December 31, 2023 for the 2007 through 2009 litigated tax years and for subsequent tax years from 2010 through 2023.

2 unchanged sentences

Additional income tax and interest would continue to accrue until the time any such potential liability, or portion thereof, were to be paid.

We currently project the continued application of the Tax Court Methodology in future years, assuming similar facts and circumstances as of December 31, 2022, would result in an incremental annual tax liability that would increase the Company’s effective tax rate by approximately 3.5 percent.

The Company does not know when the Tax Court will issue its opinion regarding the effect of Brazilian legal restrictions on the payment of royalties by the Company’s licensee in Brazil for the 2007 through 2009 tax years.

After the Tax Court issues its opinion on the Company’s Brazilian licensee, the Company and the IRS will be provided time to agree on the tax impact, if any, of both opinions, after which the Tax Court would render a final decision in the case.

We currently project the continued application of the Tax Court Methodology in future years, assuming similar facts and circumstances as of December 31, 2023, would result in an incremental annual tax liability that would increase the Company’s effective tax rate by approximately 3.5 %.

The Company and the IRS are now in the process of agreeing on the tax impacts of the Opinions.

Subsequent to the completion of this process, the Tax Court will render a decision in the case.

The Company will have 90 days thereafter to file a notice of appeal to the U.S.

Court of Appeals for the Eleventh Circuit and pay the tax liability and interest related to the 2007 through 2009 tax years.

Court of Appeals for the Eleventh Circuit.

The IRS will then seek to collect, and the Company expects to pay, any additional tax related to the 2007 through 2009 tax years reflected in the Tax Court decision (and interest thereon).

The Company currently estimates that the payment to be made at that time related to the 2007 through 2009 tax years, which is included in the above estimate of the potential aggregate incremental tax and interest liability, would be approximately $ 5.8 billion (including interest accrued through December 31, 2023), plus any additional interest accrued through the time of payment.

Some or all of this amount would be refunded if the Company were to prevail on appeal.

Some or all of this amount, plus accrued interest, would be refunded if the Company were to prevail on appeal.

MINE SAFETY DISCLOSURES

4 unchanged sentences

Manuel Arroyo

55 Chief Marketing Officer since January 2020 and, prior to that, President of the Asia Pacific Group from January 2019 to December 2020.

56 Executive Vice President since January 2024.

Global Chief Marketing Officer since January 2020 and, prior to that, President of the Asia Pacific Group from January 2019 to December 2020.

President of the Mexico business unit from July 2017 to December 2018, and prior to that, General Manager for Iberia from February 2017.

3 unchanged sentences

Henrique Braun

54 President, International Development, with oversight of seven of the Company’s operating units, since January 2023, and prior to that, President of the Latin America operating unit from October 2020.

55 Executive Vice President since January 2024 and President, International Development, with oversight of seven of the Company’s operating units, since January 2023.

President of the Latin America operating unit from October 2020 to December 2022.

President of the Brazil business unit from September 2016 to September 2020, and President of the Greater China and Korea business unit from April 2013 to August 2016.

Lisa Chang 54 Senior Vice President and Chief People Officer since March 2019 when she joined the Company.

Prior to that, Senior Vice President and Chief Human Resources Officer for AMB Group LLC, which is the investment management and shared services arm of The Blank Family of Businesses, from 2014 through 2018.

Lisa Chang 55 Executive Vice President since January 2024 and Global Chief People Officer since March 2019 when she joined the Company.

Senior Vice President from March 2019 to December 2023.

Senior Vice President and Chief Human Resources Officer for AMB Group LLC, which is the investment management and shared services arm of The Blank Family of Businesses, from 2014 through 2018.

Prior to joining AMB Group LLC, Vice President of Human Resources for International at Equifax Inc.

from 2013 through 2014, where she led human resources for all of its global locations.

Name Age Position

Monica Howard Douglas 50 Senior Vice President and General Counsel since April 2021, and prior to that, Chief Compliance Officer and Associate General Counsel of the North America operating unit from January 2018.

Monica Howard Douglas 51 Executive Vice President since January 2024 and Global General Counsel since April 2021.

Senior Vice President from April 2021 to December 2023, and Chief Compliance Officer and Associate General Counsel of the North America operating unit from January 2018 to April 2021.

Legal Director for the Southern and East Africa business unit from September 2013 to December 2017, and Vice President of Supply Chain and Consumer Affairs and Senior Managing Counsel, Coca-Cola Refreshments, from 2008 to September 2013.

Nikolaos Koumettis 58 President of the Europe operating unit since January 2021, and prior to that, President of the Europe, Middle East and Africa Group from January 2019.

Nikolaos Koumettis 59 President, Europe operating unit since January 2021, and prior to that, President of the Europe, Middle East and Africa Group from January 2019.

President of the Central and Eastern Europe business unit from April 2016 to December 2018, and President of the Central and Southern Europe business unit from April 2011 to April 2016.

Mann 50 President of the North America operating unit since January 2023 and Senior Vice President since May 2017.

Name Age Position

Mann 51 Executive Vice President since January 2024 and President, North America operating unit since January 2023.

Senior Vice President from May 2017 to December 2023.

President, Global Ventures from January 2019 to December 2022, Chief People Officer from May 2017 to March 2019, and Chief of Staff for James Quincey, then President and Chief Operating Officer and later Chief Executive Officer, from October 2015 to October 2018.

3 unchanged sentences

President of the Asia Pacific Group from August 2016 to December 2018, and President of the South Latin business unit from January 2013 to August 2016.

Beatriz Perez 53 Senior Vice President and Chief Communications, Sustainability and Strategic Partnerships Officer since May 2017.

Beatriz Perez 54 Executive Vice President since January 2024 and Global Chief Communications, Sustainability and Strategic Partnerships Officer since May 2017.

Senior Vice President from May 2017 to December 2023.

Served as the Company’s first Chief Sustainability Officer from July 2011 to April 2017, and as Vice President, Global Partnerships and Licensing, Retail and Attractions from July 2016 to April 2017.

Chair of The Coca-Cola Foundation, Inc., the Company’s primary international philanthropic arm, since October 2017.

Bruno Pietracci 48 President of the Latin America operating unit since February 2023, and prior to that, President of the Africa operating unit from January 2021 to January 2023.

Bruno Pietracci 49 President, Latin America operating unit since February 2023, and prior to that, President of the Africa operating unit from January 2021 to January 2023.

President of the Africa and Middle East business unit from February 2020 to December 2020, President of the South and East Africa business unit from July 2018 to January 2020, and Vice President of operations for the Europe, Middle East and Africa Group from November 2016 to June 2018.

Nancy Quan 56 Senior Vice President since January 2019.

Chief Technical and Innovation Officer since February 2021, and prior to that, Chief Technical Officer from January 2019, and Chief Technical Officer of Coca-Cola North America from July 2016.

Nancy Quan 57 Executive Vice President since January 2024, and prior to that, Senior Vice President from January 2019 to December 2023.

Global Chief Technical and Innovation Officer since February 2021, Chief Technical Officer from January 2019 to February 2021, and Chief Technical Officer of Coca-Cola North America from July 2016 to December 2018.

Global R&D Officer from January 2012 to July 2016.

2 unchanged sentences

President from August 2015 to December 2018, and Chief Operating Officer from August 2015 to April 2017.

Brian Smith 67 Senior Executive since October 2022, and prior to that, President and Chief Operating Officer from January 2019.

President of the Europe, Middle East and Africa Group from August 2016 to December 2018, and President of the Latin America Group from January 2013 to August 2016.

Smith will retire from the Company on February 28, 2023.

All executive officers serve at the pleasure of the Board of Directors.

1 unchanged sentence

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

What changed 10-K

Item 3. Legal Proceedings