|
--Worldwide brand Coca-Cola growth of 3% year-to-date
--Volume and value share gains continued in total nonalcoholic ready-to-drink beverages
--Strong cash from operations, up 15% year-to-date
--Third Quarter and Year-to-Date 2012 Highlights
--Strong global volume growth of 4% in the quarter and 5% year-to-date, with volume growth across every geographic operating group in the quarter. North America volume grew 2% in the quarter and year-to-date, and international volume grew 5% in the quarter and year-to-date.
--Third quarter reported net revenues grew 1% and comparable currency neutral net revenues grew 6%. Year-to-date reported net revenues grew 3% and comparable currency neutral net revenues grew 6%.
--Third quarter reported operating income and comparable currency neutral operating income both grew 1%, in line with our expectations. Year-to-date reported operating income grew 5% and comparable currency neutral operating income grew 4%.
--Currency represented a 5% headwind on comparable net revenues and a 7% headwind on comparable operating income in the quarter.
--Third quarter reported EPS was $0.50, up 4%, and comparable EPS was $0.51, down 2%. Year-to-date reported and comparable EPS were both $1.56, up 5% and 2%, respectively.
--Year-to-date cash from operations was up a strong 15%.
The Coca-Cola Company today reported strong third quarter and
year-to-date 2012 results, with solid volume and revenue growth, and
continued volume and value share gains in total nonalcoholic
ready-to-drink (NARTD) beverages, as well as across nearly every
beverage category in which the Company competes.
Muhtar Kent, Chairman and Chief Executive Officer of The Coca-Cola
Company said, "We are pleased with our third quarter and year-to-date
results. We continue to deliver consistent and solid performance, with
our business growing worldwide volume by 4% in the quarter and 5%
year-to-date. Importantly, we realized growth in the quarter across all
five of our global geographic operating groups, despite continued
volatility in the worldwide economy. We have been able to crack the
calculus for growth in this environment. We have done this by
consistently investing in our system and our brands to ensure that our
global portfolio is more relevant and healthier today than it has ever
been. We remain resolutely focused on ensuring that we leverage our
wonderful heritage and fuse it with what is expected by our consumers
today in order to earn and sustain our place in their daily lives
tomorrow."
PERFORMANCE HIGHLIGHTS
The Coca-Cola Company reported strong worldwide volume growth of 4% in
the third quarter and 5% year-to-date. Volume growth in the quarter was
well-balanced around the world, with growth in all geographic operating
groups as well as growth across both developed markets (+2%) and
emerging markets (+7%). The Company reported solid growth in key
developed markets, including North America (+2%), Japan (+2%) and Europe
(+1%), which reported growth across all business units in the quarter.
In addition, the Company delivered strong volume growth in key emerging
markets such as Thailand (+19%) and India (+15%) in the quarter. Our
China business delivered 2% volume growth in the quarter and 6% growth
year-to-date.
In the third quarter, we grew global volume and value share in total
NARTD beverages, with volume and value share gains across nearly every
beverage category in which we compete. Brand health remains consistently
strong, with continued improvements in favorite brand scores and growth
among consumers who enjoy at least one product from our broad portfolio
of beverage brands per week. Through our occasion-based brand, package,
price and channel segmentation strategy, we remain closely connected to
our consumers with a dual focus on recruitment and affordability. Our
immediate consumption beverage volume continues to grow, up 4% globally
in the quarter and 5% year-to-date.
Worldwide sparkling beverage volume grew 3% in the quarter and
year-to-date. This represents nearly 450 million incremental unit cases
year-to-date, or the equivalent of adding another Russia to our global
business. We grew volume and value share in global core sparkling
beverages in the quarter, led by brand Coca-Cola and reflecting a
balanced portfolio approach to growth in the core sparkling beverage
category. Worldwide brand Coca-Cola volume grew 2% in the quarter and 3%
year-to-date, with growth in the quarter across diverse markets,
including India (+34%), Russia (+18%), Brazil (+3%), Mexico (+3%) and
South Africa (+2%). In addition, worldwide Fanta volume grew 7% in the
quarter and 5% year-to-date, and Sprite volume grew 4% in the quarter
and 5% year-to-date, as we leveraged global marketing campaigns in
locally relevant ways.
Worldwide still beverage volume grew 10% in the quarter and 9%
year-to-date, with solid growth across beverage categories, including
packaged water, juices and juice drinks, ready-to-drink tea and coffee,
sports drinks and energy drinks. Excluding the impact of acquisitions,
still beverage volume grew 8% in the quarter and year-to-date. We grew
global volume and value share in total still beverages and delivered
share gains across all still beverage categories in which we compete.
Ready-to-drink tea volume grew 13% in the quarter, with continued strong
performance of key brands such as Gold Peak and Honest Tea in North
America, Ayataka green tea in Japan and Fuze Tea, which we continued to
expand across markets worldwide during the quarter. Packaged water
volume grew 10% in the quarter, driven by our focus on innovative and
sustainable packaging and immediate consumption occasions, most recently
with our new "PlantBottle with a Twist" campaign, first aired during the
summer 2012 Olympic Games. Energy drinks volume grew 19% in the quarter
driven by growth across our global portfolio of energy brands.
OPERATING REVIEW
------------------------------------------------------
Three Months Ended September 28, 2012
% Favorable / (Unfavorable)
--------------------------------------------
Unit Case Net Operating Comparable
Volume Revenues Income Currency
Neutral
Operating
Income
Total Company 4 1 1 1
--------- ---- ---- -----
Eurasia & Africa 11 4 (4 ) 11
--------- ---- ---- ---- -----
Europe 1 (8 ) (14 ) (8 )
--------- ---- ---- ---- ---- ----- ----
Latin America 5 0 (5 ) 9
--------- ---- ---- ---- -----
North America 2 5 34 3
--------- ---- ---- -----
Pacific 3 (4 ) (1 ) (2 )
--------- ---- ---- ---- ---- ----- ----
Bottling Investments 8 (2 ) (42 ) (14 )
--------- ---- ---- ---- ---- ----- ----
Nine Months Ended September 28, 2012
% Favorable / (Unfavorable)
--------------------------------------------
Unit Case Net Operating Comparable
Volume Revenues Income Currency
Neutral
Operating
Income
Total Company 5 3 5 4
--------- ---- ---- -----
Eurasia & Africa 11 4 4 15
--------- ---- ---- -----
Europe 0 (7 ) (8 ) (4 )
--------- ---- ---- ---- ---- ----- ----
Latin America 5 1 0 11
--------- ---- ---- -----
North America 2 5 12 (1 )
--------- ---- ---- ----- ----
Pacific 6 5 13 5
--------- ---- ---- -----
Bottling Investments 11 3 (11 ) 5
--------- ---- ---- ---- -----
Eurasia & Africa
--
Our Eurasia and Africa Group’s volume grew 11% in the quarter and
year-to-date (up 8% and 9%, respectively, excluding the benefit of
acquired volume), cycling 6% growth in the prior year quarter. Growth
in the quarter was led by India, up 15%, Middle East and North Africa,
up 22% (up 12% excluding the benefit of acquired volume), Russia, up
7% and South Africa, up 7%. Reported net revenues for the quarter
increased 4%, reflecting a 10% increase in concentrate sales and
positive price/mix of 5%, partially offset by an 11% currency impact.
Concentrate sales in the quarter and year-to-date were slightly ahead
of unit case volume (excluding acquired volume) primarily due to
timing. For the full year, we expect concentrate sales to be roughly
in line with unit case sales. Comparable currency neutral net revenues
increased 15% in the quarter. Reported operating income declined 4% in
the quarter. Comparable currency neutral operating income increased
11% in the quarter, driven by pricing and product mix, partially
offset by increased investments in the business.
--
During the quarter, Eurasia and Africa grew volume and value share in
total NARTD beverages as well as in core sparkling beverages, juices
and juice drinks, sports drinks and ready-to-drink tea. Sparkling
beverage volume grew 9% in the quarter, led by brand Coca-Cola, which
grew 10%. Sprite volume grew 10% in the quarter and Fanta volume grew
6%. Still beverage volume grew 21% in the quarter, including the
benefit of acquired volume which added 12 points of growth. In India,
we gained volume and value share in total NARTD beverages as well as
in sparkling and still beverages in the quarter, with both sparkling
and still beverage volume growth of 15%. India sparkling beverage
growth was driven by a strong system focus behind brand Coca-Cola as
well as customized integrated marketing campaigns centered on music
and sports. During the quarter, brand Coca-Cola volume in India grew
34% and Sprite grew 15%, with balanced growth across our portfolio of
package sizes. India still beverage volume growth was driven by strong
performance in juices and juice drinks, including Minute Maid Pulpy
and Maaza mango juice drink. Russia volume growth in the quarter was
led by our sparkling beverage brands, including brand Coca-Cola, up
18%, Fanta, up 15% and Sprite, up 7%. We gained volume and value share
in core sparkling and still beverages in Russia, with a strong
marketing campaign tied to the 2012 Olympic Games as well as a
continued focus on packaging segmentation to drive household
penetration.
Europe
--
Our Europe Group’s volume grew 1% in the quarter, cycling even
performance in the prior year quarter, with volume growth in all
business units despite ongoing macroeconomic uncertainty across the
region and poor weather in the first half of the quarter. Year-to-date
volume was even. Reported net revenues declined 8% in the quarter,
reflecting a 3% increase in concentrate sales offset by unfavorable
price/mix of 4% and a 7% currency impact. Concentrate sales in the
quarter were ahead of unit case sales due to timing. Year-to-date
concentrate sales were broadly in line with unit case sales.
Comparable currency neutral net revenues were even in the quarter.
Reported operating income declined 14% in the quarter. Comparable
currency neutral operating income declined 8% in the quarter,
reflecting shifts in product and channel mix across markets, input
cost pressures, incremental investments related to the 2012 Olympic
Games, and timing of marketing expenses.
--
During the quarter, the Europe Group maintained share in core
sparkling and still beverages. Europe sparkling beverage volume grew
1% in the quarter and still beverage volume grew 6%. We continued to
leverage integrated marketing campaigns centered on our 2012 Olympic
Games partnership, summer activities and Coke and Meals programming.
Germany volume grew 3% in the quarter, cycling 4% growth in the prior
year quarter, driven by Olympics activation, music-themed integrated
marketing campaigns, a continued focus on low-calorie and no-calorie
sparkling beverages and packaging segmentation to drive recruitment
and household penetration. The Central and Southern Europe region grew
volume low single digits, with brand Coca-Cola up mid single digits
driven by robust Coke and Meals activation. Volume in both the
Northwest Europe & Nordics and Iberia regions was positive, rounding
to even in the quarter.
Latin America
--
Our Latin America Group’s volume grew 5% in the quarter and
year-to-date, cycling 7% growth in the prior year quarter. Reported
net revenues for the quarter were even, reflecting concentrate sales
growth of 8% and positive price/mix of 6%, offset by a currency impact
of 13% and a 1% impact related to structural change. Concentrate sales
in the quarter were ahead of unit case volume due to timing.
Year-to-date concentrate sales were in line with unit case volume.
Comparable currency neutral net revenues increased 12% in the quarter.
Reported operating income declined 5% in the quarter, with comparable
currency neutral operating income up 9%, primarily reflecting solid
volume growth and favorable pricing across the group, partially offset
by continued investments in the business, including some initial
expenses related to the 2014 World Cup.
--
During the quarter, the Latin America Group gained volume and value
share in total NARTD beverages. All business units in Latin America
grew volume in the quarter, with 6% growth in Mexico, Brazil and South
Latin, and 3% growth in Latin Center, all driven by a continued focus
on affordability using refillable packages, activation of the summer
2012 Olympic Games, and recruitment through investment in immediate
consumption and the continued placement of new cold drink equipment.
Sparkling beverage volume was up 3%, with a strong focus on developing
and growing our portfolio of flavored sparkling brands. Brand
Coca-Cola volume grew 3% in the quarter while Fanta was up 7% and
Sprite was up 6%. Still beverage volume grew 14% in the quarter,
driven by ready-to-drink tea, up strong double digits as a result of
the newly launched Fuze Tea, as well as 33% growth in sports drinks,
12% growth in packaged water and 8% growth in juices and juice drinks.
Both Mexico and Brazil grew volume and value share in the quarter in
total NARTD beverages as well as in sparkling and still beverages,
with a continued focus on both single-serve and returnable packaging.
North America
--
Our North America Group’s volume grew 2% in the quarter and
year-to-date, cycling 1% organic growth in the prior year quarter.
Reported net revenues for the quarter increased 5%, reflecting volume
growth of 2% as well as positive price/mix of 3% and a 1% benefit from
structural changes, primarily the acquisition of Great Plains
Coca-Cola Bottling Company. Currency unfavorably affected reported net
revenues by 1%. Third quarter reported operating income grew 34%,
which includes the effect of items impacting comparability,
principally net gains/losses related to our economic hedges, primarily
commodities, as well as costs related to the integration of the former
North America business of Coca-Cola Enterprises (CCE). Comparable
currency neutral operating income grew 3% in the quarter, a sequential
improvement from the first half of 2012, reflecting positive volume
growth and pricing, partially offset by higher commodity costs and
ongoing investment in marketplace executional capabilities.
--
During the quarter, North America gained volume and value share in
total NARTD beverages as we continue to build strong value-creating
brands and strengthen customer service. In addition, we gained volume
share and maintained value share in sparkling beverages. We gained
both volume and value share in still beverages, with volume and value
share gains across multiple still beverage categories, including
juices and juice drinks, functional hydration, sports drinks, energy
drinks and ready-to-drink teas and coffees. Sparkling beverage volume
was even in the quarter with sparkling beverage price/mix growth of
3%, as we maintained the price increases put in place over the past
year. Coca-Cola Zero volume grew 9% in the quarter. Fanta volume was
up 5% in the quarter and Seagram’s grew 11% in the quarter driven by
the continued expansion of Seagram’s Sparkling Seltzer Water. Still
beverage volume grew 7% in the quarter, led by Powerade growth of 9%
with strong 2012 Olympic Games activation and the new "Power Through"
campaign as well as double-digit growth in Gold Peak tea and Fuze tea.
Our portfolio of juice and juice drink brands grew 6% in the quarter,
driven by growth in juice drinks and the Minute Maid Light portfolio,
while our premium chilled orange juice continued to gain value share.
Our water business grew 4% as Dasani maintained its premium pricing
position in the mainstream water segment, supported by our PlantBottle
PET packaging.
Pacific
--
Our Pacific Group’s volume grew 3% in the quarter and 6% year-to-date,
cycling 5% growth in the prior year quarter. Reported net revenues for
the quarter declined 4%, reflecting 3% concentrate sales growth,
offset by unfavorable price/mix of 6% and a 1% impact due to
structural change. Concentrate sales in the quarter were in line with
unit case sales. For the full year, we expect concentrate sales to be
roughly in line with unit case sales. Comparable currency neutral net
revenues decreased 3% in the quarter. Reported operating income
decreased 1% in the quarter, reflecting shifts in product, channel and
geographic mix. In addition, third quarter reported operating income
reflects a 1% currency benefit. Comparable currency neutral operating
income decreased 2% in the quarter and increased 5% year-to-date.
--
During the quarter, the Pacific Group gained share in core sparkling
and still beverages. Volume growth in the quarter was broad-based,
with 2% growth in Japan and China, and double-digit growth in both
Thailand and South Korea. Philippines volume was even in the quarter
as multiple typhoons impacted the overall industry, yet we grew brand
Coca-Cola 2% and gained volume and value share in sparkling beverages.
Pacific Group sparkling beverage volume grew 1% in the quarter, led by
13% growth in Fanta and 3% growth in Sprite. Still beverage volume
grew 6% in the quarter, with double-digit growth in packaged water, 7%
growth in ready-to-drink tea and 4% growth in sports drinks. Japan’s
sparkling beverage volume declined 5% in the quarter, principally due
to the cycling of new product launches, and still beverage volume grew
5%. Our Japan business continued to gain share in total NARTD
beverages as well as volume and value share in still beverages in the
quarter. This positive result was driven by the sustained momentum of
our Georgia coffee brand as well as water and sports drink category
offerings, which led to consistent volume growth across channels,
including convenience retail outlets, drug stores and supermarkets.
Our business in China delivered 2% volume growth in the quarter, while
cycling 11% growth in the prior year quarter. Year-to-date growth in
China is a solid 6%, cycling 15% growth in the prior year. We remain
encouraged and excited about our opportunities in this region and
continue to believe that China will serve as a long-term growth driver
for our business despite a changing competitive landscape and the
current softness in the macroeconomy. Importantly, and in alignment
with our strategic priorities in China, we are growing transactions
ahead of volume through a broad range of package offerings, with total
transactions up 10% and sparkling transactions up 7% year-to-date.
China sparkling beverages gained volume and value share in the quarter.
Bottling Investments
--
Our Bottling Investments Group’s volume grew 4% in the quarter on a
comparable basis after adjusting for the effect of structural changes,
primarily the acquisition of the Vietnam, Cambodia and Guatemala
bottling operations. Reported volume, including the benefit of these
acquisitions, grew 8% in the quarter. The growth in comparable volume
was primarily driven by India and Germany, with volume growth and
share gains in core sparkling beverages across most of the group’s
markets, led by growth in brand Coca-Cola. Reported net revenues for
the quarter declined 2%. This reflects the 4% growth in comparable
unit case volume, positive price/mix of 1% and a 4% benefit due to
structural changes, offset by a currency impact of 11%. Comparable
currency neutral net revenues increased 9% in the quarter. Reported
operating income in the quarter decreased 42% due to currency as well
as the impact of structural changes. Comparable currency neutral
operating income decreased 14% in the quarter, reflecting the increase
in revenues resulting from volume growth and positive pricing in
select markets, offset by shifts in package and channel mix and
continued investments in our in-market capabilities.
FINANCIAL REVIEW
Third quarter reported net revenues grew 1%, with comparable net
revenues also up 1%. This reflects a 5% increase in concentrate sales;
slightly positive price/mix, rounding to even, driven by the cycling of
higher price/mix comparisons from the prior year; and a 1% benefit due
to structural changes, principally the acquisition of bottling
operations. Currency had a 5% unfavorable effect on net revenues in the
quarter. As a result, comparable currency neutral net revenues grew 6%
in the quarter, in line with our long-term target. Unit case sales
slightly lagged concentrate sales in the quarter. For the full year, we
expect unit case sales to be in line with concentrate sales. Our
price/mix results in the quarter were in line with our expectations, as
the quarter is cycling higher price/mix comparisons from the prior year.
Despite the tougher comparisons, we continued to grow global NARTD value
share for the 21st consecutive quarter. We estimate our
full-year 2012 consolidated price/mix results to be 1% to 2%, in line
with our long-term target range.
Reported cost of goods sold was even in the quarter, with comparable
cost of goods sold up 3% in the quarter, reflecting moderately higher
commodity costs compared to the prior year quarter, primarily in North
America and the Bottling Investments Group. Currency decreased
comparable cost of goods sold by 4% in the quarter. Items impacting
comparability in the quarter primarily included net gains/losses on
commodities hedging. We currently estimate full-year incremental
commodity costs of approximately $225 million compared to the prior year.
Reported SG&A expenses grew 2% in the quarter and comparable SG&A
expenses increased 3% in the quarter. Currency decreased comparable SG&A
expenses by 4% in the quarter. Operating expense leverage in the quarter
declined by 4 points, consistent with the outlook we provided in our
second quarter 2012 earnings call. On a full-year basis, we expect to
achieve slightly positive operating expense leverage, as we will benefit
from two additional selling days in the fourth quarter.
Third quarter reported operating income increased 1%, with comparable
currency neutral operating income also up 1%. Items impacting
comparability increased third quarter operating income by $3 million in
2012 and decreased third quarter operating income by $212 million in
2011. Currency reduced comparable operating income by 7% in the quarter.
Including our hedge positions, current spot rates and the cycling of our
prior year rates, we estimate currency will have a mid
single-digit unfavorable impact on operating income in the fourth
quarter and for the full year.
Year-to-date net share repurchases totaled $2.3 billion. These
repurchases are in line with the targeted range of $2.5 to $3.0 billion
in net share repurchases for the full year. Following shareowner
approval, the Company amended its certificate of incorporation on July
27, 2012, to increase the number of authorized shares of common stock
from 5.6 billion to 11.2 billion and effect a two-for-one stock split of
the common stock. Accordingly, all share and per share data now reflects
the impact of the increase in authorized shares and the stock split. The
stock split will not affect the targeted net share repurchase range for
the full year.
Third quarter reported EPS was $0.50 and comparable EPS was $0.51. Items
impacting comparability reduced third quarter 2012 reported EPS by a net
$0.01 and reduced third quarter 2011 reported EPS by a net $0.04. In
both periods, these items included restructuring charges, costs related
to global productivity initiatives, gains/charges related to equity
investees, net gains/losses related to our economic hedges, primarily
commodities, and certain tax matters. Items impacting comparability in
third quarter 2012 also included charges related to changes in the
structure of Beverage Partners Worldwide (BPW) and charges related to
the supply of Brazilian orange juice. Items impacting comparability in
third quarter 2011 also included CCE integration costs.
Year-to-date cash from operations increased 15%. Excluding incremental
pension contributions made in first quarter 2012 and 2011, cash from
operations also increased 15%.
Effective Tax Rate
The reported effective tax rate for the quarter was 24.5%. The
underlying effective tax rate on operations for the quarter was 24.0%.
The variance between the reported rate and the underlying rate was due
to the tax effect of various items impacting comparability, separately
disclosed in this document in the Reconciliation of GAAP and Non-GAAP
Financial Measures schedule.
The underlying effective tax rate does not reflect the impact of
significant or unusual items and discrete events, which, if and when
they occur, are separately recognized in the appropriate period.
Items Impacting Prior Year Results
First quarter 2011 results included a net charge of $0.04 per share due
to restructuring charges, costs related to global productivity
initiatives and the CCE integration, and charges related to the natural
disasters in Japan, partially offset by a gain on the sale of the
Company’s stake in Chilean bottler Coca-Cola Embonor S.A.
Second quarter 2011 results included a net gain of $0.03 per share due
to a noncash gain on the adjustment to fair value of our investment in
Mexican bottler Grupo Continental S.A.B., partially offset by
restructuring charges, costs related to global productivity initiatives
and the CCE integration, and charges related to the natural disasters in
Japan.
Third quarter 2011 results included a net charge of $0.04 per share due
to restructuring charges and costs related to global productivity
initiatives and the CCE integration.
NOTES
--
All references to growth rate percentages, share and cycling of growth
rates compare the results of the period to those of the prior year
comparable period.
--
"Concentrate sales" represents the amount of concentrates, syrups,
beverage bases and powders sold by, or used in finished beverages sold
by, the Company to its bottling partners or other customers.
--
"Sparkling beverages" means NARTD beverages with carbonation,
including energy drinks and carbonated waters and flavored waters.
--
"Still beverages" means nonalcoholic beverages without carbonation,
including noncarbonated waters, flavored waters and enhanced waters,
juices and juice drinks, teas, coffees, sports drinks and
noncarbonated energy drinks.
--
All references to volume and volume percentage changes indicate unit
case volume, except for the reference to volume included in the
explanation of net revenue growth for North America. This North
America volume represents Coca-Cola Refreshments’ unit case sales
(which are equivalent to concentrate sales) plus non-Company-owned
bottling operations’ concentrate sales. All volume percentage changes,
unless otherwise noted, are computed based on average daily sales.
"Unit case" means a unit of measurement equal to 24 eight-ounce
servings of finished beverage. "Unit case volume" means the number of
unit cases (or unit case equivalents) of Company beverages directly or
indirectly sold by the Company and its bottling partners to customers.
--
Year-to-date 2012 financial results were impacted by one less selling
day. Fourth quarter 2012 financial results will benefit from two
additional selling days. Unit case volume results are not impacted by
the variance in selling days due to the average daily sales
computation referenced above.
--
Due to the refocusing in 2012 of the Beverage Partners Worldwide (BPW)
ready-to-drink tea joint venture with Nestle S.A. (Nestle), we have
eliminated the BPW joint venture volume and associated concentrate
sales from our reported results for both 2011 and 2012 in those
countries in which the joint venture is being phased out during 2012.
In addition, we have eliminated the Nestea licensed volume and
associated concentrate sales in the U.S. due to our current U.S.
license agreement with Nestle terminating at the end of 2012. These
changes did not materially impact the Company’s reported volume
results for third quarter or year-to-date 2012 on a consolidated basis
or for any individual operating group. However, these changes
increased the Company’s reported third quarter and year-to-date 2012
volume for still beverages by 2 points and 1 point, respectively, and
ready-to-drink tea by 12 points and 8 points, respectively.
--
The Company reports its financial results in accordance with
accounting principles generally accepted in the United States (GAAP).
However, management believes that certain non-GAAP financial measures
provide users with additional meaningful financial information that
should be considered when assessing our ongoing performance.
Management also uses these non-GAAP financial measures in making
financial, operating and planning decisions and in evaluating the
Company’s performance. Non-GAAP financial measures should be viewed in
addition to, and not as an alternative for, the Company’s reported
results prepared in accordance with GAAP. Our non-GAAP financial
information does not represent a comprehensive basis of accounting.
CONFERENCE CALL
We are hosting a conference call with investors and analysts to discuss
third quarter and year-to-date 2012 results today, October 16, 2012 at
9:30 a.m. EDT. We invite investors to listen to a live audiocast of the
conference call at our website, http://www.thecoca-colacompany.com
in the "Investors" section. A replay in downloadable MP3 format and
transcript of the call will also be available within 24 hours after the
audiocast on our website. Further, the "Investors" section of our
website includes a reconciliation of non-GAAP financial measures that
may be used periodically by management when discussing our financial
results with investors and analysts to our results as reported under
GAAP.
THE COCA-COLA COMPANY AND SUBSIDIARIES
-------------------------------------------------------------------------------------------------------
Condensed Consolidated Statements of
Income
-------------------------------------------------------------------------------------------------------
(UNAUDITED)
(In millions except per share data)
Three Months Ended
--------------------------------------------------
September 28, September 30, % Change
2012 2011
------------ ------------- ---------------
As Adjusted(1)
----------------
Net Operating Revenues $ 12,340 $ 12,248 1
Cost of goods sold 4,853 4,875 0
--------------------------------------------------------------- -------------- -------------- --------------
Gross Profit 7,487 7,373 2
Selling, general and administrative expenses 4,630 4,523 2
Other operating charges 64 96 --
--------------------------------------------------------------- -------------- -------------- --------------
Operating Income 2,793 2,754 1
Interest income 118 141 (16 )
Interest expense 102 116 (12 )
Equity income (loss) -- net 252 180 40
Other income (loss) -- net 23 (32 ) --
--------------------------------------------------------------- -------------- --------------- --------------
Income Before Income Taxes 3,084 2,927 5
Income taxes 755 681 11
--------------------------------------------------------------- -------------- -------------- --------------
Consolidated Net Income 2,329 2,246 4
Less: Net income attributable to noncontrolling interests 18 22 (18 )
--------------------------------------------------------------- -------------- -------------- -------------- -
Net Income Attributable to Shareowners of The Coca-Cola Company $ 2,311 $ 2,224 4
--------------------------------------------------------------- ------ ------ ------ ------ --------------
Diluted Net Income Per Share(2,3) $ 0.50 $ 0.48 4
--------------------------------------------------------------- ------ ------ ------ ------ --------------
Average Shares Outstanding -- Diluted(2,3) 4,587 4,653
--------------------------------------------------------------- -------------- --------------
(1) Effective January 1, 2012, the Company elected to
change our accounting methodology for determining the
market-related value of assets for our U.S. qualified defined
benefit pension plans. The Company’s change in accounting
methodology has been applied retrospectively, and we have adjusted
all prior period financial information presented herein as
required.
(2) For the three months ended September28, 2012 and
September30, 2011, basic net income per share was $0.51 for 2012
and $0.49 for 2011 based on average shares outstanding -- basic of
4,502 for 2012 and 4,571 for 2011. Basic net income per share and
diluted net income per share are calculated based on net income
attributable to shareowners of The Coca-Cola Company.
(3)Following shareowner approval, the Company amended
its certificate of incorporation on July 27, 2012, to increase the
number of authorized shares of common stock from 5.6 billion to
11.2 billion and effect a two-for-one stock split of the common
stock. Accordingly, all share and per share data presented herein
reflects the impact of the increase in authorized shares and the
stock split.
THE COCA-COLA COMPANY AND SUBSIDIARIES
------------------------------------------------------------------------------------------------------
Condensed Consolidated Statements of
Income
------------------------------------------------------------------------------------------------------
(UNAUDITED)
(In millions except per share data)
Nine Months Ended
-------------------------------------------------
September 28, September 30, % Change
2012 2011
------------ ------------ ---------------
As Adjusted(1)
---------------
Net Operating Revenues $ 36,562 $ 35,502 3
Cost of goods sold 14,425 13,812 4
--------------------------------------------------------------- -------------- -------------- --------------
Gross Profit 22,137 21,690 2
Selling, general and administrative expenses 13,308 13,016 2
Other operating charges 233 457 --
--------------------------------------------------------------- -------------- -------------- --------------
Operating Income 8,596 8,217 5
Interest income 345 356 (3 )
Interest expense 302 313 (4 )
Equity income (loss) -- net 637 535 19
Other income (loss) -- net 156 447 --
--------------------------------------------------------------- -------------- -------------- --------------
Income Before Income Taxes 9,432 9,242 2
Income taxes 2,236 2,273 (2 )
--------------------------------------------------------------- -------------- -------------- -------------- -
Consolidated Net Income 7,196 6,969 3
Less: Net income attributable to noncontrolling interests 43 42 2
--------------------------------------------------------------- -------------- -------------- --------------
Net Income Attributable to Shareowners of The Coca-Cola Company $ 7,153 $ 6,927 3
--------------------------------------------------------------- ------ ------ ------ ------ --------------
Diluted Net Income Per Share(2,3) $ 1.56 $ 1.49 5
--------------------------------------------------------------- ------ ------ ------ ------ --------------
Average Shares Outstanding -- Diluted(2,3) 4,593 4,658
--------------------------------------------------------------- -------------- --------------
(1) Effective January 1, 2012, the Company elected to
change our accounting methodology for determining the
market-related value of assets for our U.S. qualified defined
benefit pension plans. The Company’s change in accounting
methodology has been applied retrospectively, and we have adjusted
all prior period financial information presented herein as
required.
(2)For the nine months ended September28, 2012 and
September30, 2011, basic net income per share was $1.58 for 2012
and $1.51 for 2011 based on average shares outstanding -- basic of
4,513 for 2012 and 4,579 for 2011. Basic net income per share and
diluted net income per share are calculated based on net income
attributable to shareowners of The Coca-Cola Company.
(3)Following shareowner approval, the Company amended
its certificate of incorporation on July 27, 2012, to increase the
number of authorized shares of common stock from 5.6 billion to
11.2 billion and effect a two-for-one stock split of the common
stock. Accordingly, all share and per share data presented herein
reflects the impact of the increase in authorized shares and the
stock split.
THE COCA-COLA COMPANY AND SUBSIDIARIES
------------------------------------------------------------------------------------------------------------
Condensed Consolidated Balance Sheets
------------------------------------------------------------------------------------------------------------
(UNAUDITED)
(In millions except par value)
September 28, December 31,
2012 2011
--------------- ---------------
As Adjusted(1)
------------------
ASSETS
------------------------------------------------------------------------------
Current Assets
Cash and cash equivalents $ 9,615 $ 12,803
Short-term investments 5,320 1,088
------------------------------------------------------------------------------ ---------------- ----------------
Total Cash, Cash Equivalents and Short-Term Investments 14,935 13,891
------------------------------------------------------------------------------ ---------------- ----------------
Marketable securities 3,148 144
Trade accounts receivable, less allowances of $73 and $83, 5,083 4,920
respectively
Inventories 3,447 3,092
Prepaid expenses and other assets 3,099 3,450
------------------------------------------------------------------------------ ---------------- ----------------
Total Current Assets 29,712 25,497
------------------------------------------------------------------------------ ---------------- ----------------
Equity Method Investments 8,538 7,233
Other Investments, Principally Bottling Companies 1,612 1,141
Other Assets 3,629 3,495
Property, Plant and Equipment -- net 15,388 14,939
Trademarks With Indefinite Lives 6,510 6,430
Bottlers’ Franchise Rights With Indefinite Lives 7,746 7,770
Goodwill 12,381 12,219
Other Intangible Assets 1,138 1,250
------------------------------------------------------------------------------ ---------------- ----------------
Total Assets $ 86,654 $ 79,974
------------------------------------------------------------------------------ ------- ------- ------- -------
LIABILITIES AND EQUITY
------------------------------------------------------------------------------
Current Liabilities
Accounts payable and accrued expenses $ 9,803 $ 9,009
Loans and notes payable 16,208 12,871
Current maturities of long-term debt 341 2,041
Accrued income taxes 656 362
------------------------------------------------------------------------------ ---------------- ----------------
Total Current Liabilities 27,008 24,283
------------------------------------------------------------------------------ ---------------- ----------------
Long-Term Debt 16,181 13,656
Other Liabilities 4,678 5,420
Deferred Income Taxes 5,197 4,694
The Coca-Cola Company Shareowners’ Equity
Common stock, $0.25 par value; Authorized -- 11,200 shares; Issued 1,760 1,760
-- 7,040 and 7,040 shares, respectively(2)
Capital surplus 11,280 10,332
Reinvested earnings 57,320 53,621
Accumulated other comprehensive income (loss) (2,941 ) (2,774 )
Treasury stock, at cost -- 2,554 and 2,514 shares, respectively(2) (34,209 ) (31,304 )
------------------------------------------------------------------------------ ----------------- -----------------
Equity Attributable to Shareowners of The Coca-Cola Company 33,210 31,635
Equity Attributable to Noncontrolling Interests 380 286
------------------------------------------------------------------------------ ---------------- ----------------
Total Equity 33,590 31,921
------------------------------------------------------------------------------ ---------------- ----------------
Total Liabilities and Equity $ 86,654 $ 79,974
------------------------------------------------------------------------------ ------- ------- ------- -------
(1)Effective January 1, 2012, the Company elected to
change our accounting methodology for determining the
market-related value of assets for our U.S. qualified defined
benefit pension plans. The Company’s change in accounting
methodology has been applied retrospectively, and we have adjusted
all prior period financial information presented herein as
required.
(2)Following shareowner approval, the Company amended
its certificate of incorporation on July 27, 2012, to increase the
number of authorized shares of common stock from 5.6 billion to
11.2 billion and effect a two-for-one stock split of the common
stock. Accordingly, all share and per share data presented herein
reflects the impact of the increase in authorized shares and the
stock split.
THE COCA-COLA COMPANY AND SUBSIDIARIES
-------------------------------------------------------------------------------------------------
Condensed Consolidated Statements of Cash
Flows
-------------------------------------------------------------------------------------------------
(UNAUDITED)
(In millions)
Nine Months Ended
-------------------------------------
September 28, September 30,
2012 2011
--------------- ---------------
As Adjusted(1)
------------------
Operating Activities
Consolidated net income $ 7,196 $ 6,969
Depreciation and amortization 1,469 1,423
Stock-based compensation expense 254 268
Deferred income taxes 156 199
Equity (income) loss -- net of dividends (338 ) (172 )
Foreign currency adjustments (106 ) 35
Significant (gains) losses on sales of assets -- net (108 ) (104 )
Other operating charges 98 188
Other items 61 (330 )
Net change in operating assets and liabilities (842 ) (1,676 )
------------------------------------------------------------------- ----------------- -----------------
7,840 6,800
Net cash provided by operating activities
------------------------------------------------------------------- -------------- --------------
Investing Activities
Purchases of short-term investments (7,015 ) (4,036 )
Proceeds from disposals of short-term investments 2,745 3,026
Acquisitions and investments (1,166 ) (310 )
Purchases of other investments (4,756 ) (611 )
Proceeds from disposals of bottling companies and other investments 1,703 468
Purchases of property, plant and equipment (1,971 ) (1,915 )
Proceeds from disposals of property, plant and equipment 73 66
Other investing activities (12 ) (102 )
------------------------------------------------------------------- ----------------- -----------------
Net cash provided by (used in) investing activities (10,399 ) (3,414 )
------------------------------------------------------------------- ----------------- -----------------
Financing Activities
Issuances of debt 32,888 22,623
Payments of debt (28,790 ) (17,095 )
Issuances of stock 1,319 1,382
Purchases of stock for treasury (3,619 ) (3,608 )
Dividends (2,304 ) (2,159 )
Other financing activities 107 33
------------------------------------------------------------------- ---------------- ----------------
Net cash provided by (used in) financing activities (399 ) 1,176
------------------------------------------------------------------- ----------------- ----------------
Effect of Exchange Rate Changes on Cash and Cash Equivalents (230 ) (397 )
------------------------------------------------------------------- ----------------- -----------------
Cash and Cash Equivalents
Net increase (decrease) during the period (3,188 ) 4,165
Balance at beginning of period 12,803 8,517
------------------------------------------------------------------- ---------------- ----------------
Balance at end of period $ 9,615 $ 12,682
------------------------------------------------------------------- ------- ------- ------- -------
(1) Effective January 1, 2012, the Company elected to
change our accounting methodology for determining the
market-related value of assets for our U.S. qualified defined
benefit pension plans. The Company’s change in accounting
methodology has been applied retrospectively, and we have adjusted
all prior period financial information presented herein as
required.
THE COCA-COLA COMPANY AND SUBSIDIARIES
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Operating Segments
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
(In millions)
Three Months Ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Net Operating Revenues Operating Income (Loss)(1) Income (Loss) Before Income Taxes(1)
-------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------
September 28, September 30, % Fav. / September 28, September 30, % Fav. / September 28, September 30, % Fav. /
2012 2011 (Unfav.) 2012 2011 (Unfav.) 2012 2011 (Unfav.)
-------------- -------------- ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Eurasia & Africa $ 749 $ 718 4 $ 254 $ 265 (4 ) $ 258 $ 258 0
Europe 1,289 1,399 (8 ) 698 810 (14 ) 716 821 (13 )
Latin America 1,226 1,226 0 734 773 (5 ) 734 772 (5 )
North America 5,670 5,387 5 832 618 34 838 621 35
Pacific 1,595 1,655 (4 ) 603 608 (1 ) 606 609 0
Bottling Investments 2,208 2,264 (2 ) 44 76 (42 ) 269 266 1
Corporate 26 34 (23 ) (372 ) (396 ) 6 (337 ) (420 ) 20
Eliminations (423 ) (435 ) -- -- -- -- -- -- --
-------------------- ---------------- ---------------- -------------- ---------------- ---------------- -------------- ---------------- ---------------- --------------
Consolidated $ 12,340 $ 12,248 1 $ 2,793 $ 2,754 1 $ 3,084 $ 2,927 5
-------------------- ---- ------ ---- ------ -------------- ------- ------- ------- ------- -------------- ------- ------- ------- ------- --------------
(1) Effective January 1, 2012, the Company elected to
change our accounting methodology for determining the
market-related value of assets for our U.S. qualified defined
benefit pension plans. The Company’s change in accounting
methodology has been applied retrospectively, and we have adjusted
all prior period financial information presented herein as
required.
Note:Certain growth rates may not recalculate using the rounded
dollar amounts provided.
During the three months ended September 28, 2012, the results of our
operating segments were impacted by the following items:
--
Intersegment revenues were $29 million for Eurasia and Africa, $165
million for Europe, $55 million for Latin America, $1 million for
North America, $147 million for Pacific and $26 million for Bottling
Investments.
--
Operating income (loss) and income (loss) before income taxes were
reduced by $48 million for North America, $1 million for Pacific, $14
million for Bottling Investments and $10 million for Corporate due to
charges related to the Company’s productivity and reinvestment program
as well as other restructuring initiatives. Operating income (loss)
and income (loss) before income taxes were increased by $1 million for
Pacific and $5 million for Corporate due to the refinement of
previously established accruals related to the Company’s 2008-2011
productivity initiatives. Operating income (loss) and income (loss)
before income taxes were increased by $5 million for North America due
to the refinement of previously established accruals related to the
Company’s integration of CCE’s former North America business.
--
Operating income (loss) and income (loss) before income taxes were
reduced by $9 million for North America due to costs associated with
the Company detecting residues of carbendazim, a fungicide that is not
registered in the U.S. for use on citrus products, in orange juice
imported from Brazil for distribution in the U.S. As a result, the
Company began purchasing additional supplies of Florida orange juice
at a higher cost than Brazilian orange juice.
--
Income (loss) before income taxes was reduced by $1 million for Latin
America, $1 million for North America, $2 million for Pacific and was
increased by $1 million for Eurasia and Africa and $3 million for
Europe due to changes in the structure of Beverage Partners Worldwide
("BPW"), our 50/50 joint venture with Nestle S.A. ("Nestle") in the
ready-to-drink tea category.
--
Income (loss) before income taxes was reduced by $10 million for
Bottling Investments due to the Company’s proportionate share of
unusual or infrequent items recorded by certain of our equity method
investees.
During the three months ended September 30, 2011, the results of our
operating segments were impacted by the following items:
--
Intersegment revenues were $34 million for Eurasia and Africa, $192
million for Europe, $64 million for Latin America, $121 million for
Pacific and $24 million for Bottling Investments.
--
Operating income (loss) and income (loss) before income taxes were
reduced by $2 million for Europe, $2 million for Latin America, $52
million for North America, $2 million for Pacific, $14 million for
Bottling Investments and $26 million for Corporate due to the
Company’s productivity, integration and restructuring initiatives as
well as costs associated with the merger of Embotelladoras Arca,
S.A.B. de C.V. ("Arca") and Grupo Continental S.A.B. ("Contal").
--
Operating income (loss) and income (loss) before income taxes were
reduced by $2 million for North America and were increased by
$1 million for Pacific due to charges associated with the earthquake
and tsunami that devastated northern and eastern Japan on March 11,
2011.
--
Income (loss) before income taxes was reduced by $36 million for
Bottling Investments due to the Company’s proportionate share of
unusual or infrequent items recorded by certain of our equity method
investees.
--
Income (loss) before income taxes was reduced by $5 million for
Corporate due to the net charge we recognized on the repurchase and/or
exchange of certain long-term debt assumed in connection with our
acquisition of CCE’s former North America business.
--
Income (loss) before income taxes was reduced by $5 million for
Corporate due to the finalization of working capital adjustments
related to the sale of all our ownership interests in Coca-Cola
Drikker AS (our "Norwegian bottling operation") and Coca-Cola Drycker
Sverige AB (our "Swedish bottling operation") to Coca-Cola
Enterprises, Inc. ("New CCE").
--
Income (loss) before income taxes was reduced by $3 million for
Corporate due to the impairment of an investment in an entity
accounted for under the equity method of accounting.
THE COCA-COLA COMPANY AND SUBSIDIARIES
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Operating Segments
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
(In millions)
Nine Months Ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Net Operating Revenues Operating Income (Loss)(1) Income (Loss) Before Income Taxes(1)
-------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------
September 28, September 30, % Fav. / September 28, September 30, % Fav. / September 28, September 30, % Fav. /
2012 2011 (Unfav.) 2012 2011 (Unfav.) 2012 2011 (Unfav.)
-------------- -------------- ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Eurasia & Africa $ 2,273 $ 2,178 4 $ 896 $ 860 4 $ 911 $ 856 6
Europe 3,980 4,262 (7 ) 2,290 2,497 (8 ) 2,340 2,536 (8 )
Latin America 3,557 3,513 1 2,164 2,163 0 2,164 2,174 0
North America 16,388 15,578 5 2,039 1,821 12 2,066 1,827 13
Pacific 4,689 4,481 5 1,999 1,769 13 1,998 1,771 13
Bottling Investments 6,808 6,614 3 169 189 (11 ) 750 700 7
Corporate 108 125 (13 ) (961 ) (1,082 ) 11 (797 ) (622 ) (28 )
Eliminations (1,241 ) (1,249 ) -- -- -- -- -- -- --
-------------------- ---------------- ---------------- -------------- ---------------- ---------------- -------------- ---------------- ---------------- --------------
Consolidated $ 36,562 $ 35,502 3 $ 8,596 $ 8,217 5 $ 9,432 $ 9,242 2
-------------------- ---- ------ ---- ------ -------------- ------- ------- ------- ------- -------------- ------- ------- ------- ------- --------------
(1) Effective January 1, 2012, the Company elected to
change our accounting methodology for determining the
market-related value of assets for our U.S. qualified defined
benefit pension plans. The Company’s change in accounting
methodology has been applied retrospectively, and we have adjusted
all prior period financial information presented herein as
required.
Note:Certain growth rates may not recalculate using the rounded
dollar amounts provided.
During the nine months ended September 28, 2012, the results of our
operating segments were impacted by the following items:
--
Intersegment revenues were $126 million for Eurasia and Africa, $488
million for Europe, $176 million for Latin America, $13 million for
North America, $372 million for Pacific and $66 million for Bottling
Investments.
--
Operating income (loss) and income (loss) before income taxes were
reduced by $157 million for North America, $1 million for Pacific, $45
million for Bottling Investments and $18 million for Corporate due to
charges related to the Company’s productivity and reinvestment program
as well as other restructuring initiatives. Operating income (loss)
and income (loss) before income taxes were increased by $3 million for
Europe, $1 million for Pacific and $5 million for Corporate due to the
refinement of previously established accruals related to the Company’s
2008-2011 productivity initiatives. Operating income (loss) and income
(loss) before income taxes were increased by $5 million for North
America due to the refinement of previously established accruals
related to the Company’s integration of CCE’s former North America
business.
--
Operating income (loss) and income (loss) before income taxes were
reduced by $20 million for North America due to changes in the
Company’s ready-to-drink tea strategy as a result of our current U.S.
license agreement with Nestle terminating at the end of 2012.
--
Operating income (loss) and income (loss) before income taxes were
reduced by $21 million for North America due to costs associated with
the Company detecting residues of carbendazim, a fungicide that is not
registered in the U.S. for use on citrus products, in orange juice
imported from Brazil for distribution in the U.S. As a result, the
Company began purchasing additional supplies of Florida orange juice
at a higher cost than Brazilian orange juice.
--
Income (loss) before income taxes was increased by $92 million for
Corporate due to a gain the Company recognized as a result of an
equity method investee issuing additional shares of its own stock
during the period at a per share amount greater than the carrying
amount of the Company’s per share investment.
--
Income (loss) before income taxes was increased by $33 million for
Bottling Investments due to the Company’s proportionate share of
unusual or infrequent items recorded by certain of our equity method
investees.
--
Income (loss) before income taxes was reduced by $2 million for
Eurasia and Africa, $3 million for Europe, $3 million for Latin
America, $1 million for North America and $5 million for Pacific due
to changes in the structure of BPW, our 50/50 joint venture with
Nestle in the ready-to-drink tea category.
During the nine months ended September 30, 2011, the results of our
operating segments were impacted by the following items:
--
Intersegment revenues were $124 million for Eurasia and Africa, $537
million for Europe, $205 million for Latin America, $11 million for
North America, $306 million for Pacific and $66 million for Bottling
Investments.
--
Operating income (loss) and income (loss) before income taxes were
reduced by $9 million for Eurasia and Africa, $5 million for Europe,
$3 million for Latin America, $229 million for North America, $3
million for Pacific, $58 million for Bottling Investments and $100
million for Corporate, primarily due to the Company’s productivity,
integration and restructuring initiatives as well as costs associated
with the merger of Arca and Contal.
--
Operating income (loss) and income (loss) before income taxes were
reduced by $2 million for North America and $82 million for Pacific
due to charges associated with the earthquake and tsunami that
devastated northern and eastern Japan on March 11, 2011.
--
Operating income (loss) and income (loss) before income taxes were
reduced by $19 million for North America due to the amortization of
favorable supply contracts acquired in connection with our acquisition
of CCE’s former North America business.
--
Income (loss) before income taxes was increased by a net $417 million
for Corporate, primarily due to the gain the Company recognized as a
result of the merger of Arca and Contal.
--
Income (loss) before income taxes was increased by $102 million for
Corporate due to the gain on the sale of our investment in Coca-Cola
Embonor S.A. ("Embonor"), a bottling partner with operations primarily
in Chile. Prior to this transaction, the Company accounted for our
investment in Embonor under the equity method of accounting.
--
Income (loss) before income taxes was reduced by $41 million for
Corporate due to the impairment of an investment in an entity
accounted for under the equity method of accounting.
--
Income (loss) before income taxes was reduced by $40 million for
Bottling Investments due to the Company’s proportionate share of
unusual or infrequent items recorded by certain of our equity method
investees.
--
Income (loss) before income taxes was reduced by $8 million for
Corporate due to the net charge we recognized on the repurchase and/or
exchange of certain long-term debt assumed in connection with our
acquisition of CCE’s former North America business.
--
Income (loss) before income taxes was reduced by $5 million for
Corporate due to the finalization of working capital adjustments
related to the sale of our Norwegian and Swedish bottling operations
to New CCE.
THE COCA-COLA COMPANY AND SUBSIDIARIES
--------------------------------------
Reconciliation of GAAP and Non-GAAP
Financial Measures
--------------------------------------
(UNAUDITED)
The Company reports its financial results in accordance with accounting
principles generally accepted in the United States ("GAAP" or referred
to herein as "reported"). However, management believes that certain
non-GAAP financial measures provide users with additional meaningful
financial information that should be considered when assessing our
ongoing performance. Management also uses these non-GAAP financial
measures in making financial, operating and planning decisions and in
evaluating the Company’s performance. Non-GAAP financial measures should
be viewed in addition to, and not as an alternative for, the Company’s
reported results prepared in accordance with GAAP. Our non-GAAP
financial information does not represent a comprehensive basis of
accounting.
ITEMS IMPACTING COMPARABILITY
The following information is provided to give qualitative and
quantitative information related to items impacting comparability. Items
impacting comparability are not defined terms within GAAP. Therefore,
our non-GAAP financial information may not be comparable to similarly
titled measures reported by other companies. We determine which items to
consider as "items impacting comparability" based on how management
views our business; makes financial, operating and planning decisions;
and evaluates the Company’s ongoing performance. Items such as charges,
gains and accounting changes which are viewed by management as impacting
only the current period or the comparable period, but not both, or as
relating to different and unrelated underlying activities or events
across comparable periods, are generally considered "items impacting
comparability". In addition, we provide the impact that changes in
foreign currency exchange rates had on our financial results ("currency
neutral").
Asset Impairments and Restructuring
Asset Impairments
During the three and nine months ended September 30, 2011, the Company
recorded impairment charges of $3 million and $41 million, respectively,
due to the impairment of an investment in an entity accounted for under
the equity method of accounting. These impairment charges were recorded
in the line item other income (loss) -- net.
Restructuring
During the three and nine months ended September 28, 2012, the Company
recorded charges of $14 million and $44 million, respectively,
associated with the integration of our German bottling and distribution
operations as well as other restructuring initiatives outside the scope
of our recently announced productivity and reinvestment program. These
restructuring charges were recorded in the line item other operating
charges. See below for a discussion of our productivity and reinvestment
program.
During the three and nine months ended September 30, 2011, the Company
recorded charges of $18 million and $79 million, respectively,
associated with the integration of our German bottling and distribution
operations as well as other restructuring initiatives outside the scope
of our productivity initiatives and the integration of CCE’s former
North America business. These restructuring charges were recorded in the
line item other operating charges. See below for a discussion of our
productivity and CCE integration initiatives.
Productivity and Reinvestment
During the three and nine months ended September 28, 2012, the Company
recorded charges of $59 million and $177 million, respectively, in the
line item other operating charges related to our productivity and
reinvestment program which was announced in February 2012. This program
will further enable our efforts to strengthen our brands and reinvest
our resources to drive long-term profitable growth. The first component
of this program is a new global productivity initiative focused around
four primary areas: global supply chain optimization; global marketing
and innovation effectiveness; operating expense leverage and operational
excellence; and data and information technology systems standardization.
The second component of our productivity and reinvestment program
involves beginning a new integration initiative in North America related
to our acquisition of CCE’s former North America business. The Company
has identified incremental synergies in North America, primarily in the
area of our North American product supply, which will better enable us
to serve our customers and consumers. We believe our new integration
efforts will result in costs of approximately $300 million.
As a combined productivity and reinvestment program, the Company
anticipates generating annualized savings of $550 to $650 million which
will be phased in over four years starting in 2012. We expect to begin
fully realizing the annual benefits of these savings in 2015, the final
year of the program. See below for a discussion of the Company’s
productivity and CCE integration initiatives that were completed in 2011.
Productivity Initiatives
During the three and nine months ended September 28, 2012, the Company
reversed charges of $6 million and $9 million, respectively, related to
previously established accruals associated with our 2008-2011
productivity initiatives.
During the three and nine months ended September 30, 2011, the Company
recorded charges of $22 million and $76 million, respectively, related
to our 2008-2011 productivity initiatives. These initiatives were
focused on providing additional flexibility to invest for growth and
impacted a number of areas, including aggressively managing operating
expenses supported by lean techniques; redesigning key processes to
drive standardization and effectiveness; better leveraging our size and
scale; and driving savings in indirect costs. These initiatives
delivered annualized savings of over $500 million beginning in 2011,
exceeding the upper end of the Company’s original savings target of $400
to $500 million.
Equity Investees
During the three and nine months ended September 28, 2012, the Company
recorded a charge of $10 million and a gain of $33 million,
respectively, in the line item equity income (loss) -- net. These amounts
represent the Company’s proportionate share of unusual or infrequent
items recorded by certain of our equity method investees.
During the three and nine months ended September 30, 2011, the Company
recorded charges of $36 million and $40 million, respectively, in the
line item equity income (loss) -- net. These charges represent the
Company’s proportionate share of unusual or infrequent items recorded by
certain of our equity method investees.
CCE Transaction
During the three and nine months ended September 28, 2012, the Company
reversed charges of $5 million related to previously established
accruals associated with the Company’s integration of CCE’s former North
America business.
During the three and nine months ended September 30, 2011, the Company
recorded charges of $54 million and $241 million, respectively, related
to our integration of CCE’s former North America business. These charges
were primarily due to the development, design and initial implementation
of our future operating framework in North America. The Company realized
nearly $350 million in annualized savings by the end of 2011 and
incurred total costs of $488 million related to this program since its
inception. This initiative was completed at the end of 2011. See above
for a discussion of the Company’s recently announced productivity and
reinvestment program which involves beginning a new integration
initiative in North America related to our acquisition of CCE’s former
North America business.
Transaction Gains
During the nine months ended September 28, 2012, the Company recognized
a gain of $92 million as a result of an equity method investee issuing
additional shares of its own stock during the period at a per share
amount greater than the carrying amount of the Company’s per share
investment. The Company recorded this gain in the line item other income
(loss) -- net.
During the nine months ended September 30, 2011, the Company recognized
a net gain of $417 million, primarily due to the merger of Arca and
Contal, two bottling partners headquartered in Mexico, into a combined
entity known as Arca Contal. The Company recorded this gain in the line
item other income (loss) -- net. Prior to this transaction, the Company
held an investment in Contal that we accounted for under the equity
method of accounting. The merger of the two companies was a noncash
transaction that resulted in Contal shareholders trading their existing
Contal shares for new shares in Arca Contal at a specified exchange
rate. Subsequent to this transaction, the Company holds an investment in
Arca Contal that we account for as an available-for-sale security.
During the three and nine months ended September 30, 2011, the Company
also recorded charges of $9 million and $35 million, respectively,
related to costs associated with the merger of Arca and Contal. The
Company recorded these charges in the line item other operating charges.
In addition to the gain on the exchange of our shares in Contal, the
Company recognized a gain of $102 million during the nine months ended
September 30, 2011, as a result of the sale of our investment in
Embonor, a bottling partner with operations primarily in Chile. Prior to
this transaction, the Company accounted for our investment in Embonor
under the equity method of accounting. The Company recorded this gain in
the line item other income (loss) -- net.
Certain Tax Matters
During the three months ended September 28, 2012, and September 30,
2011, the Company recorded a net tax charge of $7 million and a net tax
benefit of $4 million, respectively, related to amounts required to be
recorded for changes to our uncertain tax positions, including interest
and penalties.
During the nine months ended September 28, 2012, and September 30, 2011,
the Company recorded a net tax benefit of $26 million and a net tax
charge of $15 million, respectively, related to amounts required to be
recorded for changes to our uncertain tax positions, including interest
and penalties. The net tax benefit recorded during the nine months ended
September 28, 2012, also included the impact of the reversal of certain
valuation allowances.
Other Items
Impact of Natural Disasters
On March 11, 2011, a major earthquake struck off the coast of Japan,
resulting in a tsunami that devastated the northern and eastern regions
of the country. As a result of these events, the Company made a donation
to the Coca-Cola Japan Reconstruction Fund which has helped rebuild
schools and community facilities across the impacted areas of the
country. During the three and nine months ended September 30, 2011, the
Company recorded total charges of $1 million and $84 million,
respectively, related to these events. These charges were primarily
related to the Company’s donation and assistance provided to certain
bottling partners in the affected regions.
Economic (Nondesignated) Hedges
The Company uses derivatives as economic hedges to mitigate the price
risk associated with the purchase of materials used in the manufacturing
process as well as the purchase of vehicle fuel. Although these
derivatives were not designated and/or did not qualify for hedge
accounting, they are effective economic hedges. The changes in fair
values of these economic hedges are immediately recognized into earnings.
The Company excludes the net impact of mark-to-market adjustments for
outstanding hedges and realized gains/losses for settled hedges from our
non-GAAP financial information until the period in which the underlying
exposure being hedged impacts our condensed consolidated statement of
income. We believe this adjustment provides meaningful information
related to the benefits of our economic hedging activities. During the
three and nine months ended September 28, 2012, the net impact of the
Company’s adjustment related to our economic hedging activities
described above resulted in a decrease to our non-GAAP operating income
of $74 million and $77 million, respectively. During the three and nine
months ended September 30, 2011, the net impact of the Company’s
adjustment related to our economic hedging activities described above
resulted in an increase to our non-GAAP operating income of $113 million
and $103 million, respectively.
Repurchase of Long-Term Debt
During the three and nine months ended September 30, 2011, the Company
recorded net charges of $5 million and $8 million, respectively, related
to the repurchase and/or exchange of certain long-term debt that we
assumed in connection with our acquisition of CCE’s former North America
business.
Beverage Partners Worldwide and License Agreement with Nestle S.A.
During the nine months ended September 28, 2012, the Company recorded
charges of $14 million due to changes in the structure of Beverage
Partners Worldwide ("BPW"), our 50/50 joint venture with Nestle S.A.
("Nestle") in the ready-to-drink tea category. In addition, during the
nine months ended September 28, 2012, the Company recorded charges of
$20 million due to changes in our ready-to-drink tea strategy as a
result of our current U.S. license agreement with Nestle terminating at
the end of 2012.
Brazilian Orange Juice
In December 2011, the Company learned that orange juice being imported
from Brazil contained residues of carbendazim, a fungicide that is not
registered in the U.S. for use on citrus products. As a result, the
Company began purchasing additional supplies of Florida orange juice at
a higher cost than Brazilian orange juice. During the three and nine
months ended September 28, 2012, the Company incurred charges of $9
million and $21 million, respectively, related to Brazilian orange
juice, including the increased raw material costs.
Currency Neutral
Management evaluates the operating performance of our Company and our
international subsidiaries on a currency neutral basis. We determine our
currency neutral operating results by dividing or multiplying, as
appropriate, our current period actual U.S. dollar operating results by
the current period actual exchange rates (that include the impact of
current period currency hedging activities), to derive our current
period local currency operating results. We then multiply or divide, as
appropriate, the derived local currency operating results by the foreign
currency exchange rates (that also include the impact of the comparable
prior period currency hedging activities) used to translate the
Company’s financial statements in the comparable prior year period to
determine what the current period U.S. dollar operating results would
have been if the foreign currency exchange rates had not changed from
the comparable prior year period.
THE COCA-COLA COMPANY AND SUBSIDIARIES
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Reconciliation of GAAP and Non-GAAP
Financial Measures
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
(In millions except per share data)
Three Months Ended September 28, 2012
---------------------------------------------------------------------------------------------------------------------------------------------------------
Net Cost of Gross Gross Selling, general Other Operating Operating
operating goods profit margin and operating income margin
revenues sold administrative charges
expenses
----------------- ---------------- ---------------- ------- --------------- ------------------------- ----------------- --------
Reported (GAAP) $ 12,340 $ 4,853 $ 7,487 60.7 % $ 4,630 $ 64 $ 2,793 22.6 %
Items Impacting Comparability:
Asset Impairments/Restructuring -- -- -- -- (14 ) 14
Productivity & Reinvestment -- -- -- -- (59 ) 59
Productivity Initiatives -- -- -- -- 6 (6 )
Equity Investees -- -- -- -- -- --
CCE Transaction -- -- -- -- 5 (5 )
Transaction Gains -- -- -- -- -- --
Certain Tax Matters -- -- -- -- -- --
Other Items 4 52 (48 ) 19 (2 ) (65 )
---------------- ---------------- ------------------ ---------------- --------------------------- -------------------
After Considering Items (Non-GAAP) $ 12,344 $ 4,905 $ 7,439 60.3 % $ 4,649 $ -- $ 2,790 22.6 %
------- ------- ------- ------- ------- ------- ---- --- ------- ------- ------- -------------- ------- ------- ---- ----
Three Months Ended September 30, 2011
---------------------------------------------------------------------------------------------------------------------------------------------------------
Net Cost of Gross Gross Selling, general Other Operating Operating
operating goods profit margin and operating income margin
revenues sold administrative charges
expenses
----------------- ---------------- ---------------- ------- --------------- ------------------------- ----------------- --------
Reported (GAAP) -- As Adjusted $ 12,248 $ 4,875 $ 7,373 60.2 % $ 4,523 $ 96 $ 2,754 22.5 %
Items Impacting Comparability:
Asset Impairments/Restructuring -- -- -- -- (18 ) 18
Productivity & Reinvestment -- -- -- -- -- --
Productivity Initiatives -- -- -- -- (22 ) 22
Equity Investees -- -- -- -- -- --
CCE Transaction -- -- -- -- (49 ) 49
Transaction Gains -- -- -- -- (9 ) 9
Certain Tax Matters -- -- -- -- -- --
Other Items (5 ) (97 ) 92 (24 ) 2 114
------------------- ------------------ ---------------- ----------------- ----------------------- ----------------
After Considering Items (Non-GAAP) $ 12,243 $ 4,778 $ 7,465 61.0 % $ 4,499 $ -- $ 2,966 24.2 %
------- ------- ------- ------- ------- ------- ---- --- ------- ------- ------- -------------- ------- ------- ---- ----
Currency Neutral:
---------------------------------------------------------------------------
Net Cost of Gross Selling, general Other Operating
operating goods profit and operating income
revenues sold administrative charges
expenses
----------------- ---------------- ---------------- --------------- ------------------------- -----------------
% Change -- Reported (GAAP) 1 0 2 2 -- 1
% Currency Impact (5) (3) (6) (4) -- (8)
% Change -- Currency Neutral Reported 6 3 7 7 -- 9
-------------------- ------------------- ------------------- ------------------ ---------------------------- --------------------
% Change -- After Considering Items 1 3 0 3 -- (6)
(Non-GAAP)
% Currency Impact After Considering Items (Non-GAAP) (5) (4) (5) (4) -- (7)
% Change -- Currency Neutral After Considering Items (Non-GAAP) 6 6 5 8 -- 1
-------------------- ------------------- ------------------- ------------------ ---------------------------- --------------------
Note: Certain columns may not add due to rounding. Certain growth
rates may not recalculate using the rounded dollar amounts
provided.
Reported currency neutral operating expense leverage for the three
months ended September28, 2012, is positive 2 percentage points,
which is calculated by subtracting reported currency neutral gross
profit growth of 7% from reported currency neutral operating
income growth of 9%. Currency neutral operating expense leverage
after considering items impacting comparability for the three
months ended September28, 2012, is negative 4percentage points,
which is calculated by subtracting currency neutral gross profit
growth after considering items impacting comparability of 5% from
currency neutral operating income growth after considering items
impacting comparability of 1%.
THE COCA-COLA COMPANY AND SUBSIDIARIES
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Reconciliation of GAAP and Non-GAAP
Financial Measures
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
(In millions except per share data)
Three Months Ended September 28, 2012
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Interest Equity Other Income Income Effective Net income Net income Diluted
expense income income before taxes tax rate attributable to attributable to net
(loss) -- (loss) -- income noncontrolling shareowners of income
net net taxes interests The Coca-Cola per share(1)
Company
---------------- ------------------- ------------------- ---------------- ---------------- ------- -------------- --------------- ------------------
Reported (GAAP) $ 102 $ 252 $ 23 $ 3,084 $ 755 24.5 % $ 18 $ 2,311 $ 0.50
Items Impacting Comparability:
Asset Impairments/Restructuring -- -- -- 14 -- -- 14 --
Productivity & Reinvestment -- -- -- 59 21 -- 38 0.01
Productivity Initiatives -- -- -- (6 ) (2 ) -- (4 ) --
Equity Investees -- 10 -- 10 1 -- 9 --
CCE Transaction -- -- -- (5 ) (2 ) -- (3 ) --
Transaction Gains -- -- -- -- -- -- -- --
Certain Tax Matters -- -- -- -- (7 ) -- 7 --
Other Items -- -- -- (65 ) (25 ) 1 (41 ) (0.01 )
---------------- ---------------- ---------------- ------------------ ------------------ ---------------- ----------------- --------------------
After Considering Items (Non-GAAP) $ 102 $ 262 $ 23 $ 3,091 $ 741 24.0 % $ 19 $ 2,331 $ 0.51
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ---- --- ------- ------- ------- ------- ------- -------
Three Months Ended September 30, 2011
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Interest Equity Other Income Income Effective Net income Net income Diluted
expense income income before taxes tax rate attributable to attributable to net
(loss) -- (loss) -- income noncontrolling shareowners of income
net net taxes interests The Coca-Cola per share(2)
Company
---------------- ------------------- ------------------- ---------------- ---------------- ------- -------------- --------------- ------------------
Reported (GAAP) -- As Adjusted $ 116 $ 180 $ (32 ) $ 2,927 $ 681 23.3 % $ 22 $ 2,224 $ 0.48
Items Impacting Comparability:
Asset Impairments/Restructuring -- -- 3 21 1 -- 20 --
Productivity & Reinvestment -- -- -- -- -- -- -- --
Productivity Initiatives -- -- -- 22 6 -- 16 --
Equity Investees -- 36 -- 36 5 -- 31 0.01
CCE Transaction -- -- 5 54 20 -- 34 0.01
Transaction Gains -- -- -- 9 3 -- 6 --
Certain Tax Matters -- -- -- -- 4 -- (4 ) --
Other Items (5 ) -- -- 119 45 -- 74 0.02
------------------ ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
After Considering Items (Non-GAAP) $ 111 $ 216 $ (24 ) $ 3,188 $ 765 24.0 % $ 22 $ 2,401 $ 0.52
------- ------- ------- ------- ------- ------- ----- ------- ------- ------- ------- ---- --- ------- ------- ------- ------- ------- -------
Interest Equity Other Income Income Net income Net income Diluted
expense income income before taxes attributable to attributable to net
(loss) -- (loss) -- income noncontrolling shareowners of income
net net taxes interests The Coca-Cola per share
Company
---------------- ------------------- ------------------- ---------------- ---------------- -------------- --------------- ------------------
% Change -- Reported (GAAP) (12) 40 -- 5 11 (18) 4 4
% Change -- After Considering Items (Non-GAAP) (8) 21 -- (3) (3) (14) (3) (2)
------------------- ---------------------- ---------------------- ------------------- ------------------- ----------------- ------------------ ---------------------
Note: Certain columns may not add due to rounding. Certain growth
rates may not recalculate using the rounded dollar amounts
provided.
(1) 4,587 million average shares outstanding -- diluted
(2) 4,653 million average shares outstanding -- diluted
THE COCA-COLA COMPANY AND SUBSIDIARIES
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Reconciliation of GAAP and Non-GAAP
Financial Measures
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
(In millions except per share data)
Nine Months Ended September 28, 2012
-------------------------------------------------------------------------------------------------------------------------------------------------------
Net Cost of Gross Gross Selling, general Other Operating Operating
operating goods profit margin and operating income margin
revenues sold administrative charges
expenses
-------------- ---------------- ---------------- ------- --------------- ------------------------- ----------------- --------
Reported (GAAP) $ 36,562 $ 14,425 $ 22,137 60.5 % $ 13,308 $ 233 $ 8,596 23.5 %
Items Impacting Comparability:
Asset Impairments/Restructuring -- -- -- -- (44 ) 44
Productivity & Reinvestment -- -- -- -- (177 ) 177
Productivity Initiatives -- -- -- -- 9 (9 )
Equity Investees -- -- -- -- -- --
CCE Transaction -- -- -- -- 5 (5 )
Transaction Gains -- -- -- -- -- --
Certain Tax Matters -- -- -- -- -- --
Other Items 5 50 (45 ) 17 (26 ) (36 )
---------------- ---------------- ------------------ ---------------- --------------------------- -------------------
After Considering Items (Non-GAAP) $ 36,567 $ 14,475 $ 22,092 60.4 % $ 13,325 $ -- $ 8,767 24.0 %
------- ------- ------- ------- ------- ------- ---- --- ------- ------- ------- -------------- ------- ------- ---- ----
Nine Months Ended September 30, 2011
-------------------------------------------------------------------------------------------------------------------------------------------------------
Net Cost of Gross Gross Selling, general Other Operating Operating
operating goods profit margin and operating income margin
revenues sold administrative charges
expenses
-------------- ---------------- ---------------- ------- --------------- ------------------------- ----------------- --------
Reported (GAAP) -- As Adjusted $ 35,502 $ 13,812 $ 21,690 61.1 % $ 13,016 $ 457 $ 8,217 23.1 %
Items Impacting Comparability:
Asset Impairments/Restructuring -- -- -- -- (79 ) 79
Productivity & Reinvestment -- -- -- -- -- --
Productivity Initiatives -- -- -- -- (76 ) 76
Equity Investees -- -- -- -- -- --
CCE Transaction -- (19 ) 19 -- (217 ) 236
Transaction Gains -- -- -- -- (35 ) 35
Certain Tax Matters -- -- -- -- -- --
Other Items 15 (92 ) 107 (30 ) (50 ) 187
---------------- ------------------ ---------------- ----------------- --------------------------- ----------------
After Considering Items (Non-GAAP) $ 35,517 $ 13,701 $ 21,816 61.4 % $ 12,986 $ -- $ 8,830 24.9 %
------- ------- ------- ------- ------- ------- ---- --- ------- ------- ------- -------------- ------- ------- ---- ----
Currency Neutral:
---------------------------------------------------------------------------
Net Cost of Gross Selling, general Other Operating
operating goods profit and operating income
revenues sold administrative charges
expenses
-------------- ---------------- ---------------- --------------- ------------------------- -----------------
% Change -- Reported (GAAP) 3 4 2 2 -- 5
% Currency Impact (4) (3) (4) (3) -- (6)
% Change -- Currency Neutral Reported 6 7 6 5 -- 10
----------------- ------------------- ------------------- ------------------ ---------------------------- --------------------
% Change -- After Considering Items 3 6 1 3 -- (1)
(Non-GAAP)
% Currency Impact After Considering Items (Non-GAAP) (4) (3) (4) (3) -- (5)
% Change -- Currency Neutral After Considering Items (Non-GAAP) 6 8 5 6 -- 4
----------------- ------------------- ------------------- ------------------ ---------------------------- --------------------
Note: Certain columns may not add due to rounding. Certain growth
rates may not recalculate using the rounded dollar amounts
provided.
Reported currency neutral operating expense leverage for the nine
months ended September28, 2012, is positive 4 percentage points,
which is calculated by subtracting reported currency neutral gross
profit growth of 6% from reported currency neutral operating
income growth of 10%. Currency neutral operating expense leverage
after considering items impacting comparability for the nine
months ended September28, 2012, is negative 1percentage point,
which is calculated by subtracting currency neutral gross profit
growth after considering items impacting comparability of 5% from
currency neutral operating income growth after considering items
impacting comparability of 4%.
THE COCA-COLA COMPANY AND SUBSIDIARIES
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Reconciliation of GAAP and Non-GAAP
Financial Measures
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
(In millions except per share data)
Nine Months Ended September 28, 2012
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Interest Equity Other Income Income Effective Net income Net income Diluted
expense income income before taxes tax rate attributable to attributable to net
(loss) -- (loss) -- income noncontrolling shareowners of income
net net taxes interests The Coca-Cola per share(1)
Company
---------------- ------------------- ------------------- ---------------- ---------------- ------- -------------- --------------- ------------------
Reported (GAAP) $ 302 $ 637 $ 156 $ 9,432 $ 2,236 23.7 % $ 43 $ 7,153 $ 1.56
Items Impacting Comparability:
Asset Impairments/Restructuring -- -- -- 44 -- -- 44 0.01
Productivity & Reinvestment -- -- -- 177 65 -- 112 0.02
Productivity Initiatives -- -- -- (9 ) (3 ) -- (6 ) --
Equity Investees -- (33 ) -- (33 ) (2 ) -- (31 ) (0.01 )
CCE Transaction -- -- -- (5 ) (2 ) -- (3 ) --
Transaction Gains -- -- (92 ) (92 ) (33 ) -- (59 ) (0.01 )
Certain Tax Matters -- -- -- -- 26 -- (26 ) (0.01 )
Other Items -- 14 -- (22 ) (9 ) 1 (14 ) --
---------------- ---------------- ---------------- ------------------ ------------------ ---------------- ----------------- ----------------
After Considering Items (Non-GAAP) $ 302 $ 618 $ 64 $ 9,492 $ 2,278 24.0 % $ 44 $ 7,170 $ 1.56
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ---- --- ------- ------- ------- ------- ------- -------
Nine Months Ended September 30, 2011
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Interest Equity Other Income Income Effective Net income Net income Diluted
expense income income before taxes tax rate attributable to attributable to net
(loss) -- (loss) -- income noncontrolling shareowners of income
net net taxes interests The Coca-Cola per share(2)
Company
---------------- ------------------- ------------------- ---------------- ---------------- ------- -------------- --------------- ------------------
Reported (GAAP) -- As Adjusted $ 313 $ 535 $ 447 $ 9,242 $ 2,273 24.6 % $ 42 $ 6,927 $ 1.49
Items Impacting Comparability:
Asset Impairments/Restructuring -- -- 41 120 21 -- 99 0.02
Productivity & Reinvestment -- -- -- -- -- -- -- --
Productivity Initiatives -- -- -- 76 24 -- 52 0.01
Equity Investees -- 40 -- 40 6 -- 34 0.01
CCE Transaction -- -- 5 241 90 -- 151 0.03
Transaction Gains -- -- (519 ) (484 ) (205 ) -- (279 ) (0.06 )
Certain Tax Matters -- -- -- -- (15 ) -- 15 --
Other Items (8 ) -- -- 195 71 -- 124 0.03
------------------ ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
After Considering Items (Non-GAAP) $ 305 $ 575 $ (26 ) $ 9,430 $ 2,265 24.0 % $ 42 $ 7,123 $ 1.53
------- ------- ------- ------- ------- ------- ----- ------- ------- ------- ------- ---- --- ------- ------- ------- ------- ------- -------
Interest Equity Other Income Income Net income Net income Diluted
expense income income before taxes attributable to attributable to net
(loss) -- (loss) -- income noncontrolling shareowners of income
net net taxes interests The Coca-Cola per share
Company
---------------- ------------------- ------------------- ---------------- ---------------- -------------- --------------- ------------------
% Change -- Reported (GAAP) (4) 19 -- 2 (2) 2 3 5
% Change -- After Considering Items (Non-GAAP) (1) 7 -- 1 1 5 1 2
------------------- ---------------------- ---------------------- ------------------- ------------------- ----------------- ------------------ ---------------------
Note: Certain columns may not add due to rounding. Certain growth
rates may not recalculate using the rounded dollar amounts
provided.
(1)4,593 million average shares outstanding -- diluted
(2) 4,658 million average shares outstanding -- diluted
THE COCA-COLA COMPANY AND SUBSIDIARIES
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Reconciliation of GAAP and Non-GAAP
Financial Measures
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
(In millions)
Operating Income (Loss) by Segment:
-----------------------------------------------------------------------------------------------
Three Months Ended September 28, 2012
-----------------------------------------------------------------------------------------------------------------------------------------------------------------
Eurasia & Europe Latin North Pacific Bottling Corporate Consolidated
Africa America America Investments
--------------- -------------- -------------- ---------------- ---------------- -------------- ----------------- ------------------
Reported (GAAP) $ 254 $ 698 $ 734 $ 832 $ 603 $ 44 $ (372 ) $ 2,793
Items Impacting Comparability:
Asset Impairments/Restructuring -- -- -- -- -- 14 -- 14
Productivity & Reinvestment -- -- -- 48 1 -- 10 59
Productivity Initiatives -- -- -- -- (1 ) -- (5 ) (6 )
CCE Transaction -- -- -- (5 ) -- -- -- (5 )
Transaction Gains -- -- -- -- -- -- -- --
Other Items -- -- -- (71 ) -- 3 3 (65 )
---------------- ---------------- ---------------- ------------------ ---------------- ---------------- ---------------- --------------------
After Considering Items (Non-GAAP) $ 254 $ 698 $ 734 $ 804 $ 603 $ 61 $ (364 ) $ 2,790
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- --- ------- -------
Three Months Ended September 30, 2011
-----------------------------------------------------------------------------------------------------------------------------------------------------------------
Eurasia & Europe Latin North Pacific Bottling Corporate Consolidated
Africa America America Investments
--------------- -------------- -------------- ---------------- ---------------- -------------- ----------------- ------------------
Reported (GAAP) -- As Adjusted $ 265 $ 810 $ 773 $ 618 $ 608 $ 76 $ (396 ) $ 2,754
Items Impacting Comparability:
Asset Impairments/Restructuring 1 -- -- 3 -- 14 -- 18
Productivity & Reinvestment -- -- -- -- -- -- -- --
Productivity Initiatives (1 ) 2 2 -- 2 -- 17 22
CCE Transaction -- -- -- 49 -- -- -- 49
Transaction Gains -- -- -- -- -- -- 9 9
Other Items -- -- -- 116 (1 ) 2 (3 ) 114
---------------- ---------------- ---------------- ---------------- ------------------ ---------------- ------------------- ----------------
After Considering Items (Non-GAAP) $ 265 $ 812 $ 775 $ 786 $ 609 $ 92 $ (373 ) $ 2,966
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- --- ------- -------
Currency Neutral Operating Income (Loss)
by Segment:
-------------------------------------------------------------------------------------------------------------
Eurasia & Europe Latin North Pacific Bottling Corporate Consolidated
Africa America America Investments
--------------- -------------- -------------- ---------------- ---------------- -------------- ----------------- ------------------
% Change -- Reported (GAAP) (4) (14) (5) 34 (1) (42) 6 1
% Currency Impact (15) (6) (15) (1) 1 (22) (1) (8)
% Change -- Currency Neutral Reported 11 (8) 10 35 (2) (21) 7 9
------------------ ----------------- ----------------- ------------------- ------------------- ----------------- -------------------- ---------------------
% Change -- After Considering Items (Non-GAAP) (4) (14) (5) 2 (1) (34) 3 (6)
% Currency Impact After Considering Items (Non-GAAP) (15) (6) (15) 0 1 (20) 0 (7)
% Change -- Currency Neutral After Considering Items (Non-GAAP) 11 (8) 9 3 (2) (14) 2 1
------------------ ----------------- ----------------- ------------------- ------------------- ----------------- -------------------- ---------------------
Note: Certain columns may not add due to rounding.Certain growth
rates may not recalculate using the rounded dollar amounts
provided.
THE COCA-COLA COMPANY AND SUBSIDIARIES
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Reconciliation of GAAP and Non-GAAP
Financial Measures
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
(In millions)
Operating Income (Loss) by Segment:
-----------------------------------------------------------------------------------------------
Nine Months Ended September 28, 2012
---------------------------------------------------------------------------------------------------------------------------------------------------------------------
Eurasia & Europe Latin North Pacific Bottling Corporate Consolidated
Africa America America Investments
--------------- ------------------ -------------- ---------------- ---------------- -------------- ----------------- ------------------
Reported (GAAP) $ 896 $ 2,290 $ 2,164 $ 2,039 $ 1,999 $ 169 $ (961 ) $ 8,596
Items Impacting Comparability:
Asset Impairments/Restructuring (1 ) -- -- -- -- 45 -- 44
Productivity & Reinvestment 1 -- -- 157 1 -- 18 177
Productivity Initiatives -- (3 ) -- -- (1 ) -- (5 ) (9 )
CCE Transaction -- -- -- (5 ) -- -- -- (5 )
Transaction Gains -- -- -- -- -- -- -- --
Other Items -- -- -- (48 ) -- 6 6 (36 )
---------------- ---------------- ---------------- ------------------ ---------------- ---------------- ---------------- --------------------
After Considering Items (Non-GAAP) $ 896 $ 2,287 $ 2,164 $ 2,143 $ 1,999 $ 220 $ (942 ) $ 8,767
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- --- ------- -------
Nine Months Ended September 30, 2011
---------------------------------------------------------------------------------------------------------------------------------------------------------------------
Eurasia & Europe Latin North Pacific Bottling Corporate Consolidated
Africa America America Investments
--------------- ------------------ -------------- ---------------- ---------------- -------------- ----------------- ------------------
Reported (GAAP) -- As Adjusted $ 860 $ 2,497 $ 2,163 $ 1,821 $ 1,769 $ 189 $ (1,082 ) $ 8,217
Items Impacting Comparability:
Asset Impairments/Restructuring 6 -- -- 14 -- 58 1 79
Productivity & Reinvestment -- -- -- -- -- -- -- --
Productivity Initiatives 3 5 3 -- 3 -- 62 76
CCE Transaction -- -- -- 234 -- -- 2 236
Transaction Gains -- -- -- -- -- -- 35 35
Other Items -- -- -- 110 82 4 (9 ) 187
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ------------------- ----------------
After Considering Items (Non-GAAP) $ 869 $ 2,502 $ 2,166 $ 2,179 $ 1,854 $ 251 $ (991 ) $ 8,830
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- --- ------- -------
Currency Neutral Operating Income (Loss)
by Segment:
-----------------------------------------------------------------------------------------------------------------
Eurasia & Europe Latin North Pacific Bottling Corporate Consolidated
Africa America America Investments
--------------- ------------------ -------------- ---------------- ---------------- -------------- ----------------- ------------------
% Change -- Reported (GAAP) 4 (8) 0 12 13 (11) 11 5
% Currency Impact (12) (4) (11) 0 3 (20) (1) (6)
% Change -- Currency Neutral Reported 16 (4) 11 12 10 10 12 10
------------------ --------------------- ----------------- ------------------- ------------------- ----------------- -------------------- ---------------------
% Change -- After Considering Items 3 (9) 0 (2) 8 (13) 5 (1)
(Non-GAAP)
% Currency Impact After Considering Items (Non-GAAP) (12) (4) (11) 0 3 (17) 0 (5)
% Change -- Currency Neutral After Considering Items (Non-GAAP) 15 (4) 11 (1) 5 5 5 4
------------------ --------------------- ----------------- ------------------- ------------------- ----------------- -------------------- ---------------------
Note: Certain columns may not add due to rounding.Certain growth
rates may not recalculate using the rounded dollar amounts
provided.
THE COCA-COLA COMPANY AND SUBSIDIARIES
---------------------------------------------------------------------------------------------------------------------------------------
Reconciliation of GAAP and Non-GAAP
Financial Measures
---------------------------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
(In millions)
Bottling Investments Segment Information:
-----------------------------------------------------------------------------------------------------
Three Months Ended September 28, 2012
-----------------------------------------------------------------
Net operating Selling, general and Operating income
revenues administrative
expenses
-------------- ------------------ ----------------
Reported (GAAP) $ 2,208 $ 688 $ 44
Items Impacting Comparability:
Asset Impairments/Restructuring -- -- 14
Other Items -- -- 3
---------------- ---------------- ------------------
After Considering Items (Non-GAAP) $ 2,208 $ 688 $ 61
------- ------- ------- ------- -------- --------
Three Months Ended September 30, 2011
-----------------------------------------------------------------
Net operating Selling, general and Operating income
revenues administrative
expenses
-------------- ------------------ ----------------
Reported (GAAP) -- As Adjusted $ 2,264 $ 690 $ 76
Items Impacting Comparability:
Asset Impairments/Restructuring -- -- 14
Other Items -- -- 2
---------------- ---------------- ------------------
After Considering Items (Non-GAAP) $ 2,264 $ 690 $ 92
------- ------- ------- ------- -------- --------
Currency Neutral and Structural for
Bottling Investments:
-----------------------------------------------------------------------------------------------------
Net operating Selling, general and Operating income
revenues administrative
expenses
-------------- ------------------ ----------------
% Change -- Reported (GAAP) (2) 0 (42)
% Currency Impact (11) (12) (22)
% Change -- Currency Neutral Reported 9 11 (21)
% Structural Impact 4 3 (1)
% Change -- Currency Neutral Reported and Adjusted for Structural 5 8 (20)
Items
-------------- ------------------ ----------------
% Change -- After Considering Items (Non-GAAP) (2) 0 (34)
% Currency Impact After Considering Items (Non-GAAP) (11) (12) (20)
% Change -- Currency Neutral After Considering Items (Non-GAAP) 9 11 (14)
% Structural Impact After Considering Items (Non-GAAP) 4 3 (1)
% Change -- Currency Neutral After Considering Items and Adjusted for 5 8 (13)
Structural Items (Non-GAAP)
-------------- ------------------ ----------------
Note: Certain columns may not add due to rounding.Certain growth
rates may not recalculate using the rounded dollar amounts
provided.
THE COCA-COLA COMPANY AND SUBSIDIARIES
---------------------------------------------------------------------------------------------------------------------------------------
Reconciliation of GAAP and Non-GAAP
Financial Measures
---------------------------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
(In millions)
Bottling Investments Segment Information:
-----------------------------------------------------------------------------------------------------
Nine Months Ended September 28, 2012
-----------------------------------------------------------------
Net operating Selling, general and Operating income
revenues administrative
expenses
-------------- ------------------ ----------------
Reported (GAAP) $ 6,808 $ 2,074 $ 169
Items Impacting Comparability:
Asset Impairments/Restructuring -- -- 45
Other Items -- -- 6
---------------- ---------------- ------------------
After Considering Items (Non-GAAP) $ 6,808 $ 2,074 $ 220
------- ------- ------- ------- -------- --------
Nine Months Ended September 30, 2011
-----------------------------------------------------------------
Net operating Selling, general and Operating income
revenues administrative
expenses
-------------- ------------------ ----------------
Reported (GAAP) -- As Adjusted $ 6,614 $ 2,012 $ 189
Items Impacting Comparability:
Asset Impairments/Restructuring -- -- 58
Other Items -- -- 4
---------------- ---------------- ------------------
After Considering Items (Non-GAAP) $ 6,614 $ 2,012 $ 251
------- ------- ------- ------- -------- --------
Currency Neutral and Structural for
Bottling Investments:
-----------------------------------------------------------------------------------------------------
Net operating Selling, general and Operating income
revenues administrative
expenses
-------------- ------------------ ----------------
% Change -- Reported (GAAP) 3 3 (11)
% Currency Impact (8) (8) (20)
% Change -- Currency Neutral Reported 11 11 10
% Structural Impact 2 2 (2)
% Change -- Currency Neutral Reported and Adjusted for Structural 9 9 12
Items
-------------- ------------------ ----------------
% Change -- After Considering Items (Non-GAAP) 3 3 (13)
% Currency Impact After Considering Items (Non-GAAP) (8) (8) (17)
% Change -- Currency Neutral After Considering Items (Non-GAAP) 11 11 5
% Structural Impact After Considering Items (Non-GAAP) 2 2 (2)
% Change -- Currency Neutral After Considering Items and Adjusted for 9 9 6
Structural Items (Non-GAAP)
-------------- ------------------ ----------------
Note:Certain columns may not add due to rounding.Certain growth
rates may not recalculate using the rounded dollar amounts
provided.
THE COCA-COLA COMPANY AND SUBSIDIARIES
---------------------------------------------------------------------------
Reconciliation of GAAP and Non-GAAP
Financial Measures
---------------------------------------------------------------------------
(UNAUDITED)
(In millions)
Purchases and Issuances of Stock:
---------------------------------------------
Nine Months Ended Nine Months Ended
September 28, 2012 September 30, 2011
--------------- ---------------
Reported (GAAP)
Issuances of Stock $ 1,319 $ 1,382
Purchases of Stock for Treasury (3,619 ) (3,608 )
Net Change in Stock Issuance Receivables(1) (5 ) (24 )
Net Change in Treasury Stock Payables(2) (32 ) 165
----------------- ----------------
Net Treasury Share Repurchases (Non-GAAP) $ (2,337 ) $ (2,085 )
------- ------- - ------- ------- -
(1) Represents the net change in receivables related to
employee stock options exercised but not settled prior to the end
of the quarter.
(2) Represents the net change in payables for treasury
shares repurchased but not settled prior to the end of the quarter.
Consolidated Cash from Operations:
----------------------------------------------------------
Nine Months Ended Nine Months Ended
September 28, 2012 September 30, 2011
------------------ --------------------
Net Cash Provided by Net Cash Provided by
Operating Activities Operating Activities
------------------ --------------------
Reported (GAAP) $ 7,840 $ 6,800
Items Impacting Comparability:
Cash Payments Related to Pension Plan Contributions 900 769
---------------- ----------------------
After Considering Items (Non-GAAP) $ 8,740 $ 7,569
------- ------- ---------- ----------
Net Cash Provided by
Operating Activities
------------------
% Change -- Reported (GAAP) 15
% Change -- After Considering Items (Non-GAAP) 15
---------------------
Note: Certain columns may not add due to rounding. Certain growth
rates may not recalculate using the rounded dollar amounts
provided.
About The Coca-Cola Company
The Coca-Cola Company (KO) is the world’s largest beverage
company, refreshing consumers with more than 500 sparkling and still
brands. Led by Coca-Cola, the world’s most valuable brand, our Company’s
portfolio features 15 billion dollar brands including Diet Coke, Fanta,
Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply,
Georgia and Del Valle. Globally, we are the No. 1 provider of sparkling
beverages, ready-to-drink coffees, and juices and juice drinks. Through
the world’s largest beverage distribution system, consumers in more than
200 countries enjoy our beverages at a rate of 1.8 billion servings a
day. With an enduring commitment to building sustainable communities,
our Company is focused on initiatives that reduce our environmental
footprint, support active, healthy living, create a safe, inclusive work
environment for our associates, and enhance the economic development of
the communities where we operate. Together with our bottling partners,
we rank among the world’s top 10 private employers with more than
700,000 system employees. For more information, please visit www.thecoca-colacompany.com,
follow us on Twitter at twitter.com/CocaColaCo
or visit our blog at www.coca-colablog.com.
Forward-Looking Statements
This press release 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 actual results to differ materially from
The Coca-Cola Company’s historical experience and our present
expectations or projections. These risks include, but are not limited
to, obesity and other health concerns; scarcity and quality of water;
changes in the nonalcoholic beverages business environment, including
changes in consumer preferences based on health and nutrition
considerations and obesity concerns, shifting consumer tastes and needs,
changes in lifestyles and competitive product and pricing pressures;
risks related to the assets acquired and liabilities assumed in the
acquisition, as well as the integration, of Coca-Cola Enterprises Inc.’s
former North America business; continuing uncertainty in the credit and
equity market conditions; increased competition; our ability to expand
our operations in developing and emerging markets; foreign currency
exchange rate fluctuations; increases in interest rates; our ability to
maintain good relationships with our bottling partners; the financial
condition of our bottling partners; increases in income tax rates or
changes in income tax laws; increases in indirect taxes or new indirect
taxes; our ability and the ability of our bottling partners to maintain
good labor relations, including the ability to renew collective
bargaining agreements on satisfactory terms and avoid strikes, work
stoppages or labor unrest; increase in the cost, disruption of supply or
shortage of energy; increase in cost, disruption of supply or shortage
of ingredients or packaging materials; changes in laws and regulations
relating to beverage containers and packaging, including container
deposit, recycling, eco-tax and/or product stewardship laws or
regulations; adoption of significant additional labeling or warning
requirements; unfavorable general economic conditions in the United
States or other major markets; unfavorable economic and political
conditions in international markets, including civil unrest and product
boycotts; litigation uncertainties; adverse weather conditions; our
ability to maintain brand image and corporate reputation as well as
other product issues such as product recalls; changes in, or our failure
to comply with, laws and regulations applicable to our products or our
business operations; changes in accounting standards and taxation
requirements; our ability to achieve overall long-term goals; our
ability to protect our information technology infrastructure; additional
impairment charges; our ability to successfully manage Company-owned or
controlled bottling operations; the impact of climate change on our
business; global or regional catastrophic events; and other risks
discussed in our Company’s filings with the Securities and Exchange
Commission (SEC), including our Annual Report on Form 10-K, which
filings are available from the SEC. You should not place undue reliance
on forward-looking statements, which speak only as of the date they are
made. The Coca-Cola Company undertakes no obligation to publicly update
or revise any forward-looking statements.
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SOURCE: The Coca-Cola Company
The Coca-Cola Company
Investors and Analysts:
Jackson Kelly, +01 404.676.7563
or
Media:
Kent Landers, +01 404.676.2683
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