What changed in this filing

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Item 3. Legal Proceedings

2025-02-20 compared with 2024-02-20 · 57 added, 27 removed, 129 unchanged (39% of the section changed)

25 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.

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.

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.

Aqua-Chem and the Company filed and obtained a partial summary judgment determination in the coverage action that the insurers for Aqua-Chem and the Company were jointly and severally liable for coverage amounts, but reserving judgment on other defenses that might apply.

33 unchanged sentences

Using the new tax calculation methodology, the IRS reallocated over $9 billion of income to the U.S.

parent company from its foreign licensees for tax years 2007 through 2009.

parent company from its foreign licensees

for tax years 2007 through 2009.

Consistent with the Closing Agreement, the IRS did not assert penalties, and it has yet to do so.

9 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.

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.

On November 8, 2023, the Tax Court issued a supplemental opinion siding with the IRS in concluding both that certain U.S.

tax regulations (known as the blocked-income regulations) that address the effect of certain Brazilian legal restrictions on royalty payments by the Company’s licensee in Brazil 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.

1 unchanged sentence

Moreover, the Company believes that the retroactive imposition of such tax liability using a calculation methodology different from that previously agreed upon by the IRS and the Company, and audited by the IRS for over a decade, is unconstitutional.

The Company intends to assert its claims on appeal and vigorously defend its position.

The Company intends to assert its claims on appeal and vigorously defend its positions.

In addition, for its litigation with the IRS and for purposes of its appeal of the Tax Court decision, the Company is currently evaluating the implications of several significant administrative law cases recently decided by the U.S.

Supreme Court, most notably Loper Bright v.

Raimondo , which overruled Chevron U.S.A., Inc.

NRDC (“ Chevron ”).

Since 1984, Chevron had required that courts defer to agency interpretations of statutes and agency action.

EPA and Garland v.

Cargill , two of the recent decisions, the U.S.

Supreme Court demonstrated how courts are to rule on agency interpretations and actions without the deference previously required by Chevron .

On August 2, 2024, the Tax Court entered a decision reflecting additional federal income tax of $ 2.7 billion for the 2007 through 2009 tax years.

With applicable interest, the total liability for the 2007 through 2009 tax years resulting from the Tax Court’s decision is $ 6.0 billion, for which the IRS issued the Company invoices on September 3, 2024.

The Company paid those invoices (“IRS Tax Litigation Deposit”) on September 10, 2024, which stopped interest from accruing on the additional tax due for the 2007 through 2009 tax years.

That amount, plus interest earned, would be refunded in full or in part if the Company’s tax positions are ultimately sustained on appeal.

For the year ended December 31, 2024, the Company recorded net interest income of $ 77 million related to this tax payment in the line item income taxes in our consolidated statement of income, in accordance with our accounting policy.

The payment of the IRS invoices and the related accrued interest were recorded in the line item other noncurrent assets in our consolidated balance sheet as of December 31, 2024.

On October 22, 2024, the Company appealed the Tax Court’s decision to the U.S.

Court of Appeals for the Eleventh Circuit.

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 .

5 unchanged sentences

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 Opinions 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, 2024.

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 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.

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.

However, based on the required probability analysis and the accrual of interest through the current reporting period, we updated our tax reserve as of December 31, 2024 to $ 474 million.

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 adjustments proposed by the IRS and sustained by the Tax Court could ultimately be upheld.

In that event, the Company would not receive a refund of the applicable portion or all of the $ 6.0 billion it paid in response to the IRS invoices issued in September 2024 and the related accrued interest receivable of $ 103 million as of December 31, 2024.

Additionally, the Company would likely be subject to significant additional liabilities 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 Opinions for the 2010 through 2024 tax years, 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.

This impact would include taxes and interest accrued through December 31, 2024.

The calculations incorporated the estimated impact of correlative adjustments to the previously accrued transition tax payable under the Tax Reform Act.

The Company estimates that the potential aggregate incremental tax and interest liability could be approximately $ 16 billion as of December 31, 2023.

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, 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.

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, plus accrued interest, would be refunded if the Company were to prevail on appeal.

The Company estimates that the potential aggregate remaining incremental tax and interest liability for the tax years 2010 through 2024 could be approximately $ 12 billion as of December 31, 2024.

Additional income tax and interest on any unpaid potential liabilities for the 2010 through 2024 tax years 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 2025, assuming similar facts and circumstances as of December 31, 2024, would result in an incremental annual tax liability that would increase the Company’s effective tax rate by approximately 3.5 %.

Environmental Matters

On June 20, 2024, the Mayor and City Council of Baltimore filed a lawsuit against the Company and several unrelated parties in the Circuit Court for Baltimore City, Maryland, concerning the environmental impacts of plastic packaging on the city’s lands and waterways.

The complaint asserts claims for (a) violations of various state statutes and local ordinances that prohibit littering or improper dumping of waste on public or private property;

(b) unfair, abusive or deceptive trade practices;

(d) design defects;

(e) public nuisance;

(f) failure to warn;

and (g) negligence.

The complaint seeks injunctive relief, compensatory damages and punitive damages but does not specify an amount of damages sought.

The Company believes it has strong defenses to the claims.

On October 30, 2024, Los Angeles County Counsel filed a lawsuit against the Company, Reyes Coca-Cola Bottling, LLC, as well as other unrelated parties in the Superior Court for the State of California for the County of Los Angeles concerning the environmental impacts of plastic packaging on coastal areas and waterways.

The complaint asserts (a) state-law claims for public nuisance;

(b) violations of California’s Unfair Competition Law;

and (c) violations of California’s False Advertising Law.

The complaint seeks injunctive relief, restitution and civil penalties but does not specify an amount of damages sought.

The Company believes it has strong defenses to the claims.

The Company removed the action to federal court in December 2024.

MINE SAFETY DISCLOSURES

11 unchanged sentences

Henrique Braun

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

56 Chief Operating Officer since January 2025 and Executive Vice President since January 2024.

President, International Development, with oversight of seven of the Company’s operating units, from January 2023 to December 2024.

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

8 unchanged sentences

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

Nikolaos Koumettis 60 President, Europe operating unit since January 2021, and prior to that, President of the Europe, Middle East and Africa Group from January 2019 to December 2020.

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.

Name Age Position

Mann 52 Executive Vice President since January 2024 and President, North America operating unit since January 2023.

9 unchanged sentences

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

Name Age Position

Bruno Pietracci 50 President, Latin America operating unit since February 2023, and prior to that, President of the Africa operating unit from January 2021 to January 2023.

9 unchanged sentences

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