Item 2.05 Costs Associated with Exit or Disposal Activities.
On August 28, 2020, The Coca-Cola Company (the "Company") announced strategic
steps to reorganize its business for future growth. The Company will create new
operating units focused on regional and local execution that will work closely
with five marketing category leadership teams that span the globe to rapidly
scale ideas. The structure will be supported by the Company's newly created
Platform Services organization, which will provide global services and enhanced
expertise across a range of critical capabilities.
The Company's structural changes will result in the reallocation of people and
resources, which will include voluntary and involuntary reductions in employees.
The first stage of reductions will be carried out through a voluntary separation
program that will give eligible employees the option of taking a separation
package that will include severance benefits consisting of cash, equity and
health and welfare coverage. The voluntary program will first be offered to
approximately 4,000 employees in the United States, Canada and Puerto Rico who
have a most-recent hire date on or before September 1, 2017. A similar program
will be offered in many countries internationally. The voluntary program is
expected to reduce the number of involuntary separations.
The Company expects to record approximately $350 million to $550 million in
severance, stock compensation and employee benefits related expenses as a result
of these actions. The Company expects that these expenses will primarily be
incurred beginning in the third quarter of 2020 and continuing through the first
quarter of 2021. These amounts are estimates. Actual amounts may vary based on a
number of factors, including, but not limited to, the number of employees who
are impacted through both the voluntary and involuntary workforce reductions.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
As discussed above, the Company will create nine new operating units in order to
help streamline the organization by replacing current business units and groups.
The Company's current model includes 17 business units that sit under four
geographical segments, plus Global Ventures and the Bottling Investments Group.
Moving forward, the operational side of the business will consist of nine
operating units that will sit under our four geographical segments, along with
Global Ventures and the Bottling Investments Group. Upon completion of these
structural changes, Manuel Arroyo will continue in his role as Chief Marketing
Officer but will no longer serve as President, Asia Pacific Group.
Item 8.01. Other Events.
The Company's August 28, 2020 press release announcing the strategic steps the
Company is taking to reorganize the business is attached hereto as Exhibit 99.1
and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
99.1 Press Release of The Coca-Cola Company, dated August 28, 2020.
Forward-Looking Statements
This Current Report on Form 8-K may contain statements, estimates or projections
that constitute "forward-looking statements" as defined under U.S. federal
securities laws. Generally, the words "believe," "expect," "intend," "estimate,"
"anticipate," "project," "will" and similar expressions identify forward-looking
statements, which generally are not historical in nature. Forward-looking
statements are subject to certain risks and uncertainties that could cause The
Coca-Cola Company's actual results to differ materially from its historical
experience and our present expectations or projections. These risks include, but
are not limited to, the negative impacts of the novel coronavirus (COVID-19)
pandemic on our business; obesity and other health-related concerns; evolving
consumer product and shopping preferences; increased competition; water scarcity
and poor quality; increased demand for food products and decreased agricultural
productivity; product safety and quality concerns; perceived negative health
consequences of certain ingredients, such as non-nutritive sweeteners and
biotechnology-derived substances, and of other substances present in our
beverage products or packaging materials; an inability to be successful in our
innovation activities; an inability to protect our information systems against
service interruption, misappropriation of data or breaches of security; failure
to comply with personal data protection and privacy laws; failure to digitize
the Coca-Cola system; changes in the retail landscape or the loss of key retail
or foodservice customers; an inability to expand operations in emerging and
developing markets; fluctuations in foreign currency exchange rates; interest
rate increases; an inability to maintain good relationships with our bottling
partners; a deterioration in our bottling partners' financial condition;
increases in income tax rates, changes in income tax laws or unfavorable
resolution of tax matters; increased or new indirect taxes in the United States
and throughout the world; an inability to successfully manage the possible
negative consequences of our productivity initiatives; an inability to attract
or retain a highly skilled and diverse workforce; increased cost, disruption of
supply or shortage of energy or fuel; increased cost, disruption of supply or
shortage of ingredients, other raw materials, packaging materials, aluminum cans
and other containers; increasing concerns about the environmental impact of
plastic bottles and other plastic packaging materials; changes in laws and
regulations relating to beverage containers and packaging; significant
additional labeling or warning requirements or limitations on the marketing or
sale of our products; unfavorable general economic conditions in the United
States; unfavorable economic and political conditions in international markets;
litigation or legal proceedings; conducting business in markets with high-risk
legal compliance environments; failure by our third-party service providers and
business partners to satisfactorily fulfill their commitments and
responsibilities; failure to adequately protect, or disputes relating to,
trademarks, formulae and other intellectual property rights; adverse weather
conditions; climate change and legal or regulatory responses thereto; damage to
our brand image, corporate reputation and social license to operate from
negative publicity, whether or not warranted, concerning product safety or
quality, workplace and human rights, obesity or other issues; changes in, or
failure to comply with, the laws and regulations applicable to our products or
our business operations; changes in accounting standards; an inability to
achieve our overall long-term growth objectives; deterioration of global credit
market conditions; default by or failure of one or more of our counterparty
financial institutions; an inability to renew collective bargaining agreements
on satisfactory terms, or we or our bottling partners experience strikes, work
stoppages or labor unrest; future impairment charges; multi-employer pension
plan withdrawal liabilities in the future; an inability to successfully
integrate and manage our company-owned or -controlled bottling operations or
other acquired businesses or brands; an inability to successfully manage our
refranchising activities; failure to realize a significant portion of the
anticipated benefits of our strategic relationship with Monster Beverage
Corporation; global or regional catastrophic events; and other risks discussed
in our filings with the SEC, including our Annual Report on Form 10-K for the
year ended December 31, 2019 and our subsequently filed Quarterly Reports on
Form 10-Q, which filings are available from the SEC. You should not place undue
reliance on forward-looking statements, which speak only at the date they are
made. We undertake no obligation to publicly update or revise any
forward-looking statements.
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