XML 21 R10.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Acquisitions and Divestitures | 9 Months Ended
--- | ---
Oct. 01, 2017
Business Combinations [Abstract] |
Acquisitions and Divestitures | 2.Acquisitions and Divestitures As part of The Coca‑Cola Company’s plans to refranchise its North American bottling territories, the Company has engaged in a series of transactions since April 2013 with The Coca‑Cola Company and Coca‑Cola Refreshments USA, Inc. (“CCR”), a wholly-owned subsidiary of The Coca‑Cola Company, to significantly expand the Company’s distribution and manufacturing operations. This expansion includes acquisition of the rights to serve additional distribution territories previously served by CCR (the “Expansion Territories”) and related distribution assets, as well as the acquisition of regional manufacturing facilities previously owned by CCR (the “Expansion Facilities”) and related manufacturing assets (collectively, the “Expansion Transactions”). Year-to-Date 2017 Expansion Transactions During the first quarter of 2017, the Company acquired distribution rights and related assets for the following Expansion Territories: Anderson, Bloomington, Fort Wayne, Indianapolis, Lafayette, South Bend and Terre Haute, Indiana and Columbus and Mansfield, Ohio. Additionally, during the first quarter of 2017, the Company acquired Expansion Facilities and related manufacturing assets located in Indianapolis and Portland, Indiana. During the second quarter of 2017, the Company acquired distribution rights and related assets for the following Expansion Territories: Akron, Elyria, Toledo, Willoughby and Youngstown, Ohio. Additionally, during the second quarter of 2017, the Company acquired an Expansion Facility and related manufacturing assets located in Twinsburg, Ohio. Collectively, these Expansion Transactions completed during the first three quarters of 2017 are the “YTD 2017 Expansion Transactions.” Details of the YTD 2017 Expansion Transactions are included below. Anderson, Fort Wayne, Lafayette, South Bend and Terre Haute, Indiana Expansion Territories Acquisitions (“January 2017 Expansion Transaction”) On January 27, 2017, the Company completed a portion of the transactions contemplated by a distribution and asset purchase agreement entered into by the Company and CCR in September 2016 (the “September 2016 Distribution APA”) by acquiring distribution rights and related assets in Expansion Territories previously served by CCR through CCR’s facilities and equipment located in Anderson, Fort Wayne, Lafayette, South Bend and Terre Haute, Indiana. The closing of the January 2017 Expansion Transaction occurred for a cash purchase price of $31.6 million, which will remain subject to adjustment in accordance with the terms and conditions of the September 2016 Distribution APA. Bloomington and Indianapolis, Indiana and Columbus and Mansfield, Ohio Expansion Territories Acquisitions and Indianapolis and Portland, Indiana Expansion Facilities Acquisitions (“March 2017 Expansion Transactions”) On March 31, 2017, the Company completed the final transactions contemplated by (i) the September 2016 Distribution APA, by acquiring distribution rights and related assets in Expansion Territories previously served by CCR through CCR’s facilities and equipment located in Bloomington and Indianapolis, Indiana and Columbus and Mansfield, Ohio, and (ii) a manufacturing asset purchase agreement entered into by the Company and CCR in September 2016 (the “September 2016 Manufacturing APA”), by acquiring Expansion Facilities and related manufacturing assets located in Indianapolis and Portland, Indiana. The closing of the March 2017 Expansion Transactions occurred for a cash purchase price of $108.7 million, which will remain subject to adjustment in accordance with the terms and conditions of the September 2016 Distribution APA and the September 2016 Manufacturing APA. Akron, Elyria, Toledo, Willoughby and Youngstown, Ohio Expansion Territories Acquisitions and Twinsburg, Ohio Expansion Facility Acquisition (“April 2017 Expansion Transactions”) On April 28, 2017, the Company completed the transactions contemplated by (i) a distribution asset purchase agreement entered into by the Company and CCR in April 2017 (the “April 2017 Distribution APA”), by acquiring distribution rights and related assets in Expansion Territories previously served by CCR through CCR’s facilities and equipment located in Akron, Elyria, Toledo, Willoughby and Youngstown, Ohio, and (ii) a manufacturing asset purchase agreement entered into by the Company and CCR in April 2017 (the “April 2017 Manufacturing APA”), by acquiring an Expansion Facility and related manufacturing assets located in Twinsburg, Ohio. The closing of the April 2017 Expansion Transactions occurred for a cash purchase price of $87.7 million, which will remain subject to adjustment in accordance with the terms of the April 2017 Distribution APA and the April 2017 Manufacturing APA. The fair value of acquired assets and assumed liabilities of the YTD 2017 Expansion Transactions as of the acquisition dates is summarized as follows:
(in thousands) |  | January 2017 Expansion Transaction |  |  | March 2017 Expansion Transactions |  |  | April 2017 Expansion Transactions |  |  | Total YTD 2017 Expansion Transactions |
Cash |  | $ | 107 |  |  | $ | 211 |  |  | $ | 103 |  |  | $ | 421 |
Inventories |  |  | 5,953 |  |  |  | 21,108 |  |  |  | 14,554 |  |  |  | 41,615 |
Prepaid expenses and other current assets |  |  | 1,155 |  |  |  | 5,117 |  |  |  | 4,350 |  |  |  | 10,622 |
Accounts receivable from The Coca-Cola Company |  |  | 1,042 |  |  |  | 1,807 |  |  |  | 1,000 |  |  |  | 3,849 |
Property, plant and equipment |  |  | 25,708 |  |  |  | 81,638 |  |  |  | 53,818 |  |  |  | 161,164 |
Other assets (including deferred taxes) |  |  | 886 |  |  |  | 4,363 |  |  |  | 482 |  |  |  | 5,731 |
Goodwill |  |  | 800 |  |  |  | 8,605 |  |  |  | 9,630 |  |  |  | 19,035 |
Distribution agreements |  |  | 9,300 |  |  |  | 18,900 |  |  |  | 8,600 |  |  |  | 36,800 |
Customer lists |  |  | 1,350 |  |  |  | 1,500 |  |  |  | 950 |  |  |  | 3,800 |
Total acquired assets |  | $ | 46,301 |  |  | $ | 143,249 |  |  | $ | 93,487 |  |  | $ | 283,037 |
Current liabilities (acquisition related contingent consideration) |  | $ | 727 |  |  | $ | 1,921 |  |  | $ | 227 |  |  | $ | 2,875 |
Other current liabilities |  |  | 324 |  |  |  | 3,760 |  |  |  | 1,186 |  |  |  | 5,270 |
Other liabilities (acquisition related contingent consideration) |  |  | 13,408 |  |  |  | 26,260 |  |  |  | 3,543 |  |  |  | 43,211 |
Other liabilities |  |  | 239 |  |  |  | 2,604 |  |  |  | 626 |  |  |  | 3,469 |
Total assumed liabilities |  | $ | 14,698 |  |  | $ | 34,545 |  |  | $ | 5,582 |  |  | $ | 54,825 |
The goodwill for the YTD 2017 Expansion Transactions is included in the Nonalcoholic Beverages segment and is primarily attributed to operational synergies and the workforce acquired. Goodwill of $2.1 million and $15.0 million is expected to be deductible for tax purposes for the March 2017 Expansion Transactions and the April 2017 Expansion Transactions, respectively. No goodwill is expected to be deductible for tax purposes for the January 2017 Expansion Transaction. Identifiable intangible assets acquired by the Company in the YTD 2017 Expansion Transactions consist of distribution agreements and customer lists, which have an estimated useful life of 40 years and 12 years, respectively. 2016 Expansion Transactions During 2016, the Company acquired distribution rights and related assets for the following Expansion Territories: Easton, Salisbury, Capitol Heights, La Plata, Baltimore, Hagerstown and Cumberland, Maryland; Richmond, Yorktown and Alexandria, Virginia; Cincinnati, Dayton, Lima and Portsmouth, Ohio; and Louisa, Kentucky. The Company also acquired Expansion Facilities and related manufacturing assets in Sandston, Virginia; Silver Spring and Baltimore, Maryland; and Cincinnati, Ohio during 2016. Collectively, these are the “2016 Expansion Transactions.” Details of the 2016 Expansion Transactions are included below. Easton and Salisbury, Maryland and Richmond and Yorktown, Virginia Expansion Territories Acquisitions and Sandston, Virginia Expansion Facility Acquisition (“January 2016 Expansion Transactions”) An asset purchase agreement entered into by the Company and CCR in September 2015 (the “September 2015 APA”) contemplated, in part, the Company’s acquisition of distribution rights and related assets in Expansion Territories previously served by CCR through CCR’s facilities and equipment located in Easton and Salisbury, Maryland and Richmond and Yorktown, Virginia. In addition, an asset purchase agreement entered into by the Company and CCR in October 2015 (the “October 2015 APA”) contemplated, in part, the Company’s acquisition of an Expansion Facility and related manufacturing assets in Sandston, Virginia. The closing of the January 2016 Expansion Transactions occurred on January 29, 2016, for a cash purchase price of $65.7 million. During the second quarter of 2017, the cash purchase price for the January 2016 Expansion Transactions increased by $9.4 million, which remains payable to The Coca‑Cola Company, as a result of net working capital and other fair value adjustments. As these adjustments were made beyond one year from the acquisition date, the Company recorded the adjustments through its consolidated condensed statements of operations. The cash purchase price for the January 2016 Expansion Transactions will remain subject to adjustment in accordance with the terms and conditions of the September 2015 APA and the October 2015 APA. Alexandria, Virginia and Capitol Heights and La Plata, Maryland Expansion Territories Acquisitions (“April 1, 2016 Expansion Transaction”) The September 2015 APA also contemplated the Company’s acquisition of distribution rights and related assets in Expansion Territories previously served by CCR through CCR’s facilities and equipment located in Alexandria, Virginia and Capitol Heights and La Plata, Maryland. The closing of the April 1, 2016 Expansion Transaction occurred on April 1, 2016, for a cash purchase price of $35.6 million, which will remain subject to adjustment in accordance with the terms and conditions of the September 2015 APA. Baltimore, Hagerstown and Cumberland, Maryland Expansion Territories Acquisitions and Silver Spring and Baltimore, Maryland Expansion Facilities Acquisitions (“April 29, 2016 Expansion Transactions”) On April 29, 2016, the Company completed the remaining transactions contemplated by (i) the September 2015 APA, by acquiring distribution rights and related assets in Expansion Territories previously served by CCR through CCR’s facilities and equipment located in Baltimore, Hagerstown and Cumberland, Maryland, and (ii) the October 2015 APA, by acquiring Expansion Facilities and related manufacturing assets in Silver Spring and Baltimore, Maryland. The closing of the April 29, 2016 Expansion Transactions occurred for a cash purchase price of $69.0 million, which will remain subject to adjustment in accordance with the terms and conditions of the September 2015 APA and the October 2015 APA. Cincinnati, Dayton, Lima and Portsmouth, Ohio and Louisa, Kentucky Expansion Territories Acquisitions and Cincinnati, Ohio Expansion Facility Acquisition (“October 2016 Expansion Transactions”) On October 28, 2016, the Company completed the initial transactions contemplated by (i) the September 2016 Distribution APA, by acquiring distribution rights and related assets in Expansion Territories previously served by CCR through CCR’s facilities and equipment located in Cincinnati, Dayton, Lima and Portsmouth, Ohio and Louisa, Kentucky, and (ii) the September 2016 Manufacturing APA, by acquiring an Expansion Facility and related manufacturing assets located in Cincinnati, Ohio. The closing of the October 2016 Expansion Transactions occurred for a cash purchase price of $98.2 million, which will remain subject to adjustment in accordance with the terms and conditions of the September 2016 Distribution APA and the September 2016 Manufacturing APA. The fair value of acquired assets and assumed liabilities of the 2016 Expansion Transactions as of the acquisition dates is summarized as follows:
(in thousands) |  | January 2016 Expansion Transactions |  |  | April 1, 2016 Expansion Transaction |  |  | April 29, 2016 Expansion Transactions |  |  | October 2016 Expansion Transactions |  |  | Total 2016 Expansion Transactions |
Cash |  | $ | 179 |  |  | $ | 219 |  |  | $ | 161 |  |  | $ | 150 |  |  | $ | 709 |
Inventories |  |  | 10,159 |  |  |  | 3,748 |  |  |  | 13,850 |  |  |  | 18,513 |  |  |  | 46,270 |
Prepaid expenses and other current assets |  |  | 2,775 |  |  |  | 1,945 |  |  |  | 3,774 |  |  |  | 4,228 |  |  |  | 12,722 |
Accounts receivable from The Coca-Cola Company |  |  | 1,121 |  |  |  | 1,162 |  |  |  | 1,126 |  |  |  | 1,327 |  |  |  | 4,736 |
Property, plant and equipment |  |  | 46,149 |  |  |  | 54,135 |  |  |  | 57,738 |  |  |  | 67,943 |  |  |  | 225,965 |
Other assets (including deferred taxes) |  |  | 2,351 |  |  |  | 1,541 |  |  |  | 5,514 |  |  |  | 682 |  |  |  | 10,088 |
Goodwill |  |  | 9,396 |  |  |  | 1,962 |  |  |  | 8,368 |  |  |  | 8,343 |  |  |  | 28,069 |
Distribution agreements |  |  | 750 |  |  |  | - |  |  |  | 22,000 |  |  |  | 63,900 |  |  |  | 86,650 |
Customer lists |  |  | 550 |  |  |  | - |  |  |  | 1,450 |  |  |  | 2,600 |  |  |  | 4,600 |
Total acquired assets |  | $ | 73,430 |  |  | $ | 64,712 |  |  | $ | 113,981 |  |  | $ | 167,686 |  |  | $ | 419,809 |
Current liabilities (acquisition related contingent consideration) |  | $ | 361 |  |  | $ | 742 |  |  | $ | 1,307 |  |  | $ | 3,318 |  |  | $ | 5,728 |
Other current liabilities |  |  | 591 |  |  |  | 4,231 |  |  |  | 5,482 |  |  |  | 8,513 |  |  |  | 18,817 |
Accounts payable to The Coca-Cola Company |  |  | 650 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 650 |
Other liabilities (acquisition related contingent consideration) |  |  | 6,144 |  |  |  | 23,924 |  |  |  | 35,561 |  |  |  | 57,066 |  |  |  | 122,695 |
Other liabilities |  |  | - |  |  |  | 266 |  |  |  | 2,635 |  |  |  | 573 |  |  |  | 3,474 |
Total assumed liabilities |  | $ | 7,746 |  |  | $ | 29,163 |  |  | $ | 44,985 |  |  | $ | 69,470 |  |  | $ | 151,364 |
The goodwill for the 2016 Expansion Transactions is included in the Nonalcoholic Beverages segment and is primarily attributed to operational synergies and the workforce acquired. Goodwill of $15.4 million and $14.4 million is expected to be deductible for tax purposes for the January 2016 Expansion Transactions and the October 2016 Expansion Transactions, respectively. No goodwill is expected to be deductible for tax purposes for the April 1, 2016 Expansion Transaction or the April 29, 2016 Expansion Transactions. Identifiable intangible assets acquired by the Company in the 2016 Expansion Transactions consist of distribution agreements and customer lists, which have an estimated useful life of 40 years and 12 years, respectively. The Company has preliminarily allocated the purchase prices of the YTD 2017 Expansion Transactions and the 2016 Expansion Transactions to the individual acquired assets and assumed liabilities. The valuations are subject to adjustment as additional information is obtained. Any adjustments made beyond one year from each transaction’s acquisition date are recorded through the Company’s consolidated condensed statements of operations. YTD 2017 Expansion Transactions and 2016 Expansion Transactions Financial Results The financial results of the YTD 2017 Expansion Transactions and the 2016 Expansion Transactions have been included in the Company’s consolidated condensed financial statements from their respective acquisition dates. These Expansion Transactions contributed the following amounts to the Company’s consolidated condensed statement of operations:
|  | Third Quarter |  |  | First Three Quarters |
(in thousands) |  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Net sales from 2016 Expansion Transactions |  | $ | 257,238 |  |  | $ | 174,420 |  |  | $ | 761,653 |  |  | $ | 372,550 |
Net sales from YTD 2017 Expansion Transactions |  |  | 221,034 |  |  |  | - |  |  |  | 454,174 |  |  |  | - |
Total impact to net sales |  | $ | 478,272 |  |  | $ | 174,420 |  |  | $ | 1,215,827 |  |  | $ | 372,550 |
Operating income from 2016 Expansion Transactions |  | $ | 7,153 |  |  | $ | 2,512 |  |  | $ | 16,504 |  |  | $ | 17,220 |
Operating income from YTD 2017 Expansion Transactions |  |  | 3,176 |  |  |  | - |  |  |  | 13,595 |  |  |  | - |
Total impact to income from operations |  | $ | 10,329 |  |  | $ | 2,512 |  |  | $ | 30,099 |  |  | $ | 17,220 |
The Company incurred transaction related expenses for these Expansion Transactions of $5.6 million in the first three quarters of 2017 and $5.1 million in the first three quarters of 2016. These expenses are included within selling, delivery and administrative expenses on the consolidated condensed statements of operations. YTD 2017 Expansion Transactions and 2016 Expansion Transactions Pro Forma Financial Information The purpose of the pro forma is to present the net sales and the income from operations of the combined entity as though the YTD 2017 Expansion Transactions and the 2016 Expansion Transactions had occurred as of the beginning of 2016. The pro forma combined net sales and income from operations do not necessarily reflect what the combined Company’s net sales and income from operations would have been had the acquisitions occurred at the beginning of 2016. The pro forma financial information also may not be useful in predicting the future financial results of the combined company. The actual results may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The following tables represent the Company’s unaudited pro forma net sales and unaudited pro forma income from operations for the YTD 2017 Expansion Transactions and the 2016 Expansion Transactions.
|  | Third Quarter |  |  | First Three Quarters |
(in thousands) |  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Net sales as reported |  | $ | 1,162,526 |  |  | $ | 849,028 |  |  | $ | 3,197,519 |  |  | $ | 2,314,868 |
Pro forma adjustments (unaudited) |  |  | - |  |  |  | 299,639 |  |  |  | 215,242 |  |  |  | 1,066,001 |
Net sales pro forma (unaudited) |  | $ | 1,162,526 |  |  | $ | 1,148,667 |  |  | $ | 3,412,761 |  |  | $ | 3,380,869 |
|  | Third Quarter |  |  | First Three Quarters |
(in thousands) |  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Income from operations as reported |  | $ | 36,130 |  |  | $ | 39,801 |  |  | $ | 97,051 |  |  | $ | 106,938 |
Pro forma adjustments (unaudited) |  |  | - |  |  |  | 11,073 |  |  |  | 9,328 |  |  |  | 49,761 |
Income from operations pro forma (unaudited) |  | $ | 36,130 |  |  | $ | 50,874 |  |  | $ | 106,379 |  |  | $ | 156,699 |

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
Name: | us-gaap_MergersAcquisitionsAndDispositionsDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration