EXHIBIT 13.1
FINANCIAL REVIEW INCORPORATING THE COCA-COLA COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS AND SUBSIDIARIES
Management's primary objective is to maximize share-owner value over time.
To accomplish this objective, The Coca-Cola Company and subsidiaries (the
Company) have developed a comprehensive business strategy that emphasizes
maximizing long-term cash flows. This strategy focuses on continuing aggressive
investment in the high-return soft drink business, increasing returns on
existing investments and optimizing the cost of capital through appropriate
financial policies. The success of this strategy is evidenced by the growth in
the Company's cash flows and earnings, its increased returns on total capital
and equity and the total return to its share owners over time.
INVESTMENTS
The Company has a global business system which distributes its products in
more than 195 countries. With this pervasive global business system in place,
the Company is well positioned to capitalize on new investment opportunities
as they arise. Within the last two years, the Company has gained entry
into several countries, such as Romania and India. The Company has also rapidly
expanded its system across relatively untapped markets such as China,
East Central Europe and Indonesia.
Management seeks investments that strategically enhance existing operations
and offer cash returns that exceed the Company's long-term after-tax
weighted average cost of capital, estimated by management to be approximately
11 percent as of January 1, 1994. The Company's soft drink business generates
inherent high returns on capital, providing an attractive area for continued
investment. With international per capita consumption of Company products at
only 11 percent of the U.S. level, attractive investment opportunities exist
in many international markets for the Company and its bottlers to expand
production and distribution systems. Even in countries such as the United
States, which have more developed soft drink markets, additional high-return
investments can be made to increase product choices and availability,
enhance marketing focus and improve overall efficiency. The Company has
already benefited from the continued consolidation of production
and distribution networks, plus investment in the latest technology and
information systems.
Capital expenditures on property, plant and equipment and the
percentage distribution by geographic area for 1993, 1992 and 1991 are
as follows (dollars in millions):
Year Ended December 31, 1993 1992 1991
- ------------------------------------------------------------------------------------------
Capital expenditures $800 $1,083 $792
- ------------------------------------------------------------------------------------------
United States 23% 22% 25%
Africa 1% 1% 1%
European Community 33% 41% 45%
Latin America 19% 20% 14%
Northeast Europe/Middle East 18% 13% 8%
Pacific & Canada 6% 3% 7%
==========================================================================================
In addition to capital expenditures, the Company has made significant
investments in bottling operations over the last decade. The principal
objective of these investments is to ensure strong and efficient production,
distribution and marketing systems in order to maximize long-term growth in
volume, cash flows and share-owner value of both the bottler and the Company.
When considered appropriate, the Company makes equity investments in bottling
companies (typically between 20 percent and 50 percent). Through these
investments, the Company is able to help focus and improve sales and marketing
programs, assist in the development of effective business and information
systems
FINANCIAL REVIEW INCORPORATING THE COCA-COLA COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS AND SUBSIDIARIES
and help establish capital structures appropriate for these respective
operations. In 1993, the Company purchased a 30 percent interest in Coca-Cola
FEMSA, S.A. de C.V. (Coca-Cola FEMSA) to assist in further strengthening
important bottling territories in Mexico. Also in 1993, the Company purchased
shares which constitute a 10 percent voting interest in Panamerican Beverages,
Inc., which owns operations in Mexico, Brazil and Colombia.
In certain situations, management believes it is advantageous to own a
controlling interest in bottling operations. In 1989, the Company purchased the
largest of the Coca-Cola bottling operations in France to improve the
distribution system and customer relationships in that country. To compensate
for limited local resources in eastern Germany, the Company invested directly
in a wholly owned bottling subsidiary that could quickly capitalize on soft
drink opportunities.
In restructuring the bottling system, the Company periodically takes
temporary majority ownership positions in bottlers. The length of ownership is
influenced by various factors, including operational changes, management
changes and the process of identifying appropriate new investors.
At December 31, 1993, the Company owned approximately 51 percent of Coca-Cola
Amatil Limited, an Australian-based bottler of Company products. The Company
intends to reduce its ownership interest to below 50 percent within the next
year. Accordingly, the investment has been accounted for by the equity method
of accounting.
At December 31, 1993, the Company had $69 million of investments that
represented majority interests in companies other than Coca-Cola Amatil that
were not consolidated. These investments were accounted for by the cost or
equity methods, depending on the circumstances. These investments relate
primarily to temporary majority interests that management expects to reduce to
below 50 percent. For example, the Company recently reduced its voting and
economic ownership interest in The Coca-Cola Bottling Company of New York, Inc.
to below 50 percent, consistent with its stated intention of ending temporary
control after completing certain organizational changes. Based on management's
estimates, the aggregate fair values of these majority-owned investments
exceeded their carrying values at December 31, 1993.
In 1993, the Company's consolidated bottling, canning and fountain/post-mix
operations produced and distributed approximately 16 percent of worldwide unit
case volume. Equity investee bottlers produced and distributed an additional 38
percent of worldwide unit case volume.
The following table illustrates the excess of the calculated fair values,
based on quoted closing prices of publicly traded shares, for selected bottling
investments over the Company's carrying values (in millions):
Carrying Fair
December 31, Value Value Excess
===========================================================================================
1993
Coca-Cola Amatil Limited $ 592 $1,202 $ 610
Coca-Cola Enterprises Inc. 498 859 361
Coca-Cola FEMSA, S.A. de C.V. 206 467 261
Coca-Cola Beverages Ltd. 18 98 80
Coca-Cola Bottling Co. Consolidated 86 101 15
- -------------------------------------------------------------------------------------------
Equity Method Investees $1,400 $2,727 $1,327
===========================================================================================
Selected Cost Method Investees
Grupo Continental, S.A. $ 3 $ 84 $ 81
Panamerican Beverages, Inc. 32 112 80
===========================================================================================
FINANCIAL REVIEW INCORPORATING THE COCA-COLA COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS AND SUBSIDIARIES
INCREASING RETURNS
The Company manages its concentrate and bottling operations to increase volume
and its share of soft drink sales, while at the same time optimizing profit
margins. The Company also provides expertise and resources to its equity
investees to strengthen their businesses and to build long-term volume, cash
flows and share-owner value.
Through cost control, efficient allocation of marketing resources and price
increases generally in line with local inflation, the Company was able to
maintain or improve margins in 1993 despite difficult economic climates in many
international markets.
Increases in per capita consumption of soft drinks in the industry and the
Company's share of industry sales drive the success of the Company's
investments. In emerging markets, the Company's primary emphasis is raising the
per capita consumption levels by expanding availability of the Company's
products. In these emerging markets, investments are made in the basic
infrastructure of the system: facilities, distribution networks and sales
equipment. These investments are made primarily through local bottlers,
matching their local expertise with the Company's focus and experience.
Point-of-sale merchandising and product sampling are used to establish consumer
awareness, building product acceptability. As demand expands, the Company
increases consumer awareness of its products to improve the Company's share of
industry sales. Advertising is used to expand the consumer's perception of
appropriate consumption occasions. New products and larger packages provide the
consumer with a wider array of choices.
Growth in volume and the Company's share of industry sales also depend, in
part, on continuous reinvestment in advertising. Advertising establishes and
builds affinity for the Company's trademarks in the minds of the consumers.
Advertising expenditures were $1.1 billion in 1993 and 1992 and $1.0 billion in
1991.
Volume and profits have benefited from the Company's ownership of and
investments in bottling operations. While the bottling business has relatively
lower margins on revenue compared to the concentrate business, aggressive
investment in soft drink infrastructure has resulted in growth in profits,
share of sales and unit case volume at the bottler level, which in turn
generates gallon shipment gains for the concentrate business.
Equity income, which primarily represents returns from the Company's
unconsolidated bottling investments, was $91 million in 1993. The Company's
joint ventures and investments in bottling entities include Coca-Cola
Enterprises Inc., Coca-Cola Amatil, Coca-Cola FEMSA and Coca-Cola & Schweppes
Beverages Ltd.
FINANCIAL POLICIES
Maximizing share-owner value necessitates optimizing the Company's cost of
capital through appropriate financial policies.
Debt Financing: The Company maintains debt levels considered prudent
based on the Company's cash flows, interest coverage and the percentage of debt
to the Company's total capital. The Company's overall cost of capital is
lowered by the use of debt financing, resulting in increased return to share
owners.
The Company's capital structure and financial policies have resulted in
long-term credit ratings of "AA" from Standard & Poor's and "Aa3" from Moody's,
as well as the highest credit ratings available for its commercial paper
programs. The Company's strong financial position and cash flows allow for
opportunistic access to financing in financial markets around the world.
Foreign Currency Management: With approximately 79 percent of operating
income in 1993 generated by operations outside the United States, foreign
currency management is a key element of the Company's financial policies. The
FINANCIAL REVIEW INCORPORATING THE COCA-COLA COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS AND SUBSIDIARIES
Company benefits from operating in a number of different currencies, because
weakness in any particular currency is often offset by strengths in other
currencies. The Company closely monitors its exposure to fluctuations in
currencies and, where cost-justified, adopts strategies to reduce the impact of
these fluctuations on the Company's financial performance. These strategies
include engaging in various hedging activities to manage income and cash flows
denominated in foreign currencies, and using foreign currency borrowings when
appropriate to finance investments outside the United States.
Share Repurchases: In July 1992, the Board of Directors authorized a plan to
repurchase up to 100 million additional shares of the Company's common stock
through the year 2000. In 1993, the Company repurchased 13 million shares
approved under this plan and approximately 1 million additional shares to
complete its 1989 share repurchase plan of 80 million shares. The total cost of
these 1993 repurchases was approximately $586 million. From the inception of
share repurchase programs in 1984 to December 31, 1993, the Company has
repurchased 429 million shares at a total cost of approximately $5.8 billion.
This represents over 26 percent of the Company's common shares that were
outstanding at the beginning of 1984. In 1993, the Company purchased an
additional 3 million shares of common stock for treasury related to the
exercise of stock options by employees.
Dividend Policy: Strong earnings growth has enabled the Company to increase
the cash dividend per common share by an average annual compound growth rate of
12 percent since December 31, 1983. The annual common stock dividend was $.68
per share, $.56 per share and $.48 per share in 1993, 1992 and 1991,
respectively. At its February 1994 meeting, the Board of Directors increased
the quarterly dividend per common share to $.195, equivalent to a full-year
common dividend of $.78 in 1994. This is the 32nd consecutive year in which
the Board of Directors has approved common stock dividend increases.
With approval from the Board of Directors, management has maintained a common
stock dividend payout ratio of approximately 40 percent of net income.
The 1993 dividend payout ratio was 41 percent.
MEASURING PERFORMANCE
A significant portion of the increase in the rate of growth of the Company's
earnings, returns and cash flows can be attributed to the Company's actions to
increase its investments in the high-margin, high-return soft drink business;
increase share of sales and volume growth for its products; and manage its
existing asset base effectively and efficiently.
Economic Profit and Economic Value Added provide management a framework
to measure the impact of value-oriented actions. Economic Profit is defined as
net operating profit after taxes in excess of a computed capital charge for
average operating capital employed. Economic Value Added represents the growth
in Economic Profit from year to year.
Over the last 10 years, Economic Profit has increased at an average annual
compound rate of 27 percent, resulting in Economic Value Added to the Company
of $1.4 billion. Over the same period, the Company's stock price has increased
at an average rate of 26 percent. Management believes that, over the long term,
growth in Economic Profit, or Economic Value Added, will have a positive impact
on the growth in share-owner value.
TOTAL RETURN TO SHARE OWNERS
During the past decade, share owners of the Company have enjoyed an excellent
return on their investment. A $100 investment in the Company's common stock at
December 31, 1983, together with reinvested dividends, would be worth
FINANCIAL REVIEW INCORPORATING THE COCA-COLA COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS AND SUBSIDIARIES
approximately $1,286 at December 31, 1993, an average annual compound return
of 29 percent.
ECONOMIC PROFIT AND COMPANY STOCK PRICE
(GRAPHIC MATERIAL OMITTED)
Year Ended December 31, Compound
--------------------------- Growth
1983 1993 Rate
- -------------------------------------------------------------------------------
Economic Profit (In millions) $138 $1,495 27%
Stock Price $4.46 $44.63 26%
===============================================================================
Over the last 10 years, economic profit has increased at an average rate of 27
percent, while the Company's stock has increased on average 26 percent.
MANAGEMENT'S DISCUSSION AND ANALYSIS
LINES OF BUSINESS
Soft Drinks: The Company is the largest manufacturer, marketer and distributor
of soft drink concentrates and syrups in the world. It manufactures soft drink
concentrates and syrups, which it sells to bottling and canning operations, and
manufactures fountain/post-mix soft drink syrups, which it sells to authorized
fountain wholesalers and some fountain retailers. The Company has substantial
equity investments in numerous soft drink bottling and canning operations, and
it owns and operates certain bottling and canning operations outside the United
States.
Foods: The foods business sector's principal business is processing and
marketing juice and juice-drink products. It is the largest marketer of juice
and juice-drink products in both the United States and the world.
VOLUME
Soft Drinks: The Company measures soft drink volume in two ways: gallon
shipments of concentrates and syrups, and equivalent unit cases of finished
product. Gallon shipments represent the primary business of the Company since
they measure concentrates and syrups sold by the Company to its bottling
system. Most of the Company's revenues are based on this measure of wholesale
activity. The Company also monitors unit case volume, a measure of finished
product sold by the bottling system to retail customers, who make sales to
consumers. Management believes unit case volume more accurately measures the
underlying strength of the global business system because it measures trends at
the retail level and is less impacted by inventory management practices at the
wholesale level. Fountain/post-mix syrups sold by the Company directly to
customers are included in both measures simultaneously.
For the years 1993 and 1992, the Company increased unit case and gallon
volume in its worldwide markets. The percentage increases over the prior year
by geographic group and in total are as follows:
Year Ended December 31, 1993 1992
- ---------------------------------------------------------------------------------------------
Unit Unit
Cases Gallons Cases Gallons
- ---------------------------------------------------------------------------------------------
Worldwide 5% 4% 3% 3%
=============================================================================================
International Sector 6% 5% 4% 3%
Africa 4% 6% 7% 10%
European Community 1% 2% 5% 3%
Latin America 6% 6% 0% 0%
Northeast Europe/Middle East 19% 20% 21% 22%
Pacific 7% 3% 3% 2%
=============================================================================================
North America Sector (1) 5% 2% 2% 1%
United States 5% 2% 2% 2%
=============================================================================================
(1) Consists of United States and Canada
FINANCIAL REVIEW INCORPORATING THE COCA-COLA COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS AND SUBSIDIARIES
Worldwide soft drink unit case volume increased 5 percent in 1993 as the
Company expanded into new markets in East Central Europe, the Middle East and
the Pacific. Volume increases in these new markets more than offset weaker than
expected results in the more established markets of Europe and Japan, which
suffered from record-setting cold and rainy summer seasons as well as weak
economic environments. Each region experienced a volume increase over 1992
results, which were also negatively impacted by difficult economic environments
in a number of the Company's major markets, including the United States and
Brazil.
In 1993, unit case growth in the newly created Africa group was led by a 12
percent increase in Nigeria, resulting from increased product availability and
promotions.
A cool and wet summer season slowed unit case growth in the European
Community in 1993. Volume in Great Britain increased 6 percent in 1993 after
growing only 3 percent in 1992.
Volume in Latin America recovered in 1993, with Mexico reporting unit case
growth of 8 percent. Volume in 1992 was even with the prior year primarily
because of an 18 percent decrease in unit cases in Brazil, where severe
economic conditions eroded consumer purchasing power. This decline was offset
by unit case volume growth of 3 percent in Mexico and 30 percent in Argentina
in 1992.
Volume growth in Northeast Europe and the Middle East was driven by expansion
into new markets in Poland, Romania and the remaining countries of East Central
Europe and continued expansion of the Company's infrastructure in many existing
markets.
In the Pacific, unit case growth in 1993 was driven by a 38 percent increase
in China and a 22 percent increase in Australia. Unit case volume in Japan for
1993 was even with the prior year, reflecting the cold and wet summer. In 1992,
unit cases increased 2 percent in Japan and 29 percent in China, offsetting a 1
percent decrease in the Philippines, where natural disasters hampered
distribution.
In the United States, growth in the Company's fountain business drove unit
case volume growth of 5 percent in 1993. Slow economic recovery impacted volume
in 1992.
Foods
Year Ended December 31, 1993 1992
- -------------------------------------------------------------------------------------
Total Volume 16% 0 %
Orange Juice 18% (7)%
Other Juice Drinks 14% 5 %
=====================================================================================
Total unit volume in the foods business sector increased by 16 percent
in 1993, driven by aggressive pricing and marketing. Total unit volume in the
foods business sector was unchanged in 1992 following a 12 percent increase in
volume in the prior year.
FINANCIAL REVIEW INCORPORATING THE COCA-COLA COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS AND SUBSIDIARIES
OPERATIONS
Net Operating Revenues and Gross Margin: In 1993, revenues for the Company's
soft drink business increased 7 percent, reflecting an increase in gallon
shipments and continued expansion of bottling and canning operations, partially
offset by the adverse effect of a stronger U.S. dollar versus most key foreign
currencies. Revenues for the foods business sector increased 5 percent in 1993,
as volume increases more than offset price reductions.
For the Company's soft drink business, revenues grew 15 percent in 1992,
primarily due to gallon shipment increases, favorable exchange movement,
price increases and continued expansion of bottling and canning operations.
Revenues for the foods business sector in 1992 increased 2 percent primarily
due to price increases.
On a consolidated basis, the Company's worldwide net revenues grew 7 percent
in 1993 while gross profit grew 10 percent. The Company's gross margin
expanded to 63 percent in 1993 from 61 percent in 1992 due to lower costs for
aspartame and orange solids. Gross profits grew 16 percent in 1992 on
consolidated revenue growth of 13 percent.
Selling, Administrative and General Expenses: Selling expenses were $4.4
billion in 1993, $4.0 billion in 1992 and $3.5 billion in 1991. The increase in
1993 was due primarily to increased promotional activity. The increase in 1992
was due primarily to higher marketing investments in line with expansion of the
business.
Administrative and general expenses were $1.3 billion in 1993, $1.2 billion
in 1992 and $1.1 billion in 1991. The increases for both years were due
primarily to expansion of the business, particularly newly formed,
Company-owned bottling operations. Also, administrative and general expenses in
1993 include provisions of $63 million related to increasing efficiencies in
European, domestic and corporate operations. Administrative and general
expenses, as a percentage of net operating revenues, were approximately 10
percent in 1993 and 1992 and 9 percent in 1991.
Operating Income and Operating Margin: Operating income grew 12 percent in
1993, after increasing 19 percent in 1992. Operating margins grew to 22 percent
in 1993 from 21 percent in 1992. The expansion in operating margins resulted
from gross margin expansion.
MARGIN ANALYSIS
(Graphic Material Omitted)
Year Ended December 31, 1991 1992 1993
- --------------------------------------------------------------------------------
Net Operating Revenues (In billions) $11.6 $13.1 $14.0
Gross Margin 60% 61% 63%
Operating Margin 20% 21% 22%
================================================================================
The Company's gross profit and operating income have increased due to both
growth in revenues and expansion of margins.
Interest Income and Interest Expense: In 1993, interest expense was
approximately even with the prior year while interest income decreased 12
percent. Interest income and interest expense declined in 1992, primarily due
to lower interest rates.
Equity Income: Equity income increased 40 percent in 1993 due primarily to
new bottling investments and improved results at Coca-Cola Amatil and Coca-Cola
Nestle Refreshments, offset by the results at the Company's Canadian affiliate,
Coca-Cola Beverages Ltd. In the fourth quarter, Coca-Cola Beverages recorded a
pretax restructuring charge of $126 million, which reduced the Company's
equity income by $42 million.
Equity income increased 63 percent, to $65 million, in 1992 due primarily to
one-time charges recorded by Coca-Cola Enterprises in 1991, partially offset by
increased start-up costs of Coca-Cola Nestle Refreshments in 1992.
Other Income (Deductions)-Net: In 1993, other income (deductions)-net increased
$86 million, primarily due to gains on sales of certain real estate and
FINANCIAL REVIEW INCORPORATING THE COCA-COLA COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS AND SUBSIDIARIES
bottling investments. This includes a $50 million pretax gain recognized on
the sale of citrus groves in the United States and a $34 million pretax gain
recognized on the sale of property no longer required as a result of a
consolidation of manufacturing operations in Japan.
Other income (deductions)-net in 1992 was lower than 1991 due to nonrecurring
gains recorded in 1991.
Gain on Issuance of Stock by Coca-Cola Amatil: In the fourth quarter of
1993, Coca-Cola Amatil purchased a bottling operation in Indonesia by
issuing approximately 8 million shares of common stock, which resulted in
a noncash pretax gain of $12 million for the Company.
Income Taxes: The Company's effective tax rate was 31.3 percent in 1993, 31.4
percent in 1992 and 32.1 percent in 1991. The Company's effective tax rate
reflects the favorable U.S. tax treatment from manufacturing facilities in
Puerto Rico that operate under a negotiated exemption grant as well as the tax
benefit derived from significant operations outside the United States which are
taxed at rates lower than the U.S. statutory rate of 35 percent. Changes to
U.S. tax law enacted in 1993 will limit the utilization of the favorable tax
treatment from operations in Puerto Rico beginning in 1994, and will exert
upward pressure on the Company's effective tax rate.
Transition Effect of Changes in Accounting Principles: As of January 1, 1993,
the Company recognized an after-tax charge of $12 million resulting from the
adoption of Statement of Financial Accounting Standards No. 112, Employers'
Accounting for Postemployment Benefits (SFAS 112). The cumulative charge
consists primarily of health benefits for surviving spouses and disabled
employees.
As of January 1, 1992, the Company recognized an after-tax charge of $219
million resulting from the adoption of Statement of Financial Accounting
Standards No. 106, Employers' Accounting for Postretirement Benefits Other
Than Pensions (SFAS 106). The cumulative charge consists of postretirement
health care and life insurance benefit obligations to employees of the Company
and the Company's portion of postretirement benefit obligations of its equity
investees. The Company elected to absorb this charge immediately rather than
amortize the obligation over a period of up to 20 years.
Income Per Common Share: Accelerated by the Company's share repurchase
program, income per common share before changes in accounting principles grew
17 percent and 18 percent in 1993 and 1992, respectively. Net income per common
share grew 33 percent in 1993, reflecting the $.17 per share impact of the
adoption of SFAS 106 in 1992.
LIQUIDITY AND CAPITAL RESOURCES
One of the Company's financial strengths is its ability to generate cash from
operations in excess of requirements for capital reinvestment and dividends.
Free Cash Flow: Free Cash Flow is the cash from operations remaining after
the Company has satisfied its business reinvestment opportunities. Management
focuses on growing long-term Free Cash Flow to achieve management's primary
objective, maximizing share-owner value. The Company uses Free Cash Flow,
along with borrowings, to make share repurchases and dividend payments. The
consolidated statements of cash flows are summarized as follows (in millions):
Year Ended December 31, 1993 1992 1991
- -----------------------------------------------------------------------
Cash flows provided by (used in):
Operations $ 2,508 $ 2,232 $ 2,084
Investment activities (885) (1,359) (1,124)
- -----------------------------------------------------------------------
Free Cash Flow 1,623 873 960
Cash flows provided by (used in):
Financing (1,540) (917) (1,331)
Exchange (41) (58) -
- -----------------------------------------------------------------------
Increase (decrease) in cash $ 42 $ (102) $ (371)
=======================================================================
FINANCIAL REVIEW INCORPORATING THE COCA-COLA COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS AND SUBSIDIARIES
Cash provided by operations continued to grow in 1993, reaching $2.5 billion,
resulting from growth in net income before the noncash charges for depreciation
and amortization. In 1992, cash from operations totaled $2.2 billion, a 7
percent increase over 1991. After extensive investment in eastern Europe and
other emerging markets during 1992, the Company's purchases of property, plant
and equipment declined $283 million in 1993. This decline, coupled with the
receipt of proceeds on the sales of real estate in Japan and the United States
and various bottling investments, resulted in a decrease in cash used in
investment activities in 1993. Cash used in investment activities increased in
1992 due primarily to purchases of property, plant and equipment, investments
and acquisitions of bottling operations, offset by the collection of certain
finance subsidiary receivables added in 1991.
The finance subsidiary made additional borrowings in 1993 to fund
increased receivables. The increase in marketable securities and other assets in
1993 and 1992 was primarily attributed to an increase in marketable
securities held in accordance with a negotiated income tax exemption grant for
the Company's manufacturing facilities in Puerto Rico. The balance also
increased due to additional deferred tax assets in 1993. Timing of tax payments,
including those attributable to the sales of real estate, resulted in an
increase in accrued taxes of 33 percent in 1993. In 1992, payments collected by
the finance subsidiary were used to reduce notes payable. The noncash charge for
the change in accounting for postretirement benefits other than pensions
resulted in an increase in other long-term liabilities and a decrease in
deferred tax liabilities in 1992.
Financing: Financing activities primarily represent the Company's net
borrowing activities, dividend payments and share repurchases. Cash used in
financing activities totaled $1.5 billion in 1993, $917 million in 1992 and
$1.3 billion in 1991. The change between years was due primarily to net
reductions of debt in 1993 and 1991 compared to net borrowings in 1992. Cash
used to purchase common stock for treasury decreased to $680 million in 1993,
from $1.3 billion in 1992.
The Company aggressively manages its mix of short-term versus long-term debt
to lower its overall cost of borrowing. This process, coupled with the share
repurchase program and investment activity, resulted in current liabilities
exceeding current assets at December 31, 1993.
The Company manages its debt levels based on the following financial
measurements and ratios:
Year Ended December 31, 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------
Net debt (in billions) $ 1.6 $ 1.8 $ 1.0
Net debt to net capital 26% 32% 19%
Free cash flow to net debt 100% 48% 95%
Interest coverage 18x 16x 13x
Ratio of earnings to fixed charges 15.7x 14.1x 11.6x
===============================================================================================================
Debt levels are measured excluding the debt of the Company's finance
subsidiary, and are net of cash, cash equivalents and marketable securities in
excess of operating requirements and net of temporary bottling investments.
At December 31, 1993, the Company had $1.4 billion in lines of credit and
other short-term credit facilities contractually available, under which $150
FINANCIAL REVIEW INCORPORATING THE COCA-COLA COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS AND SUBSIDIARIES
million was outstanding. Included were $1.0 billion in lines designated to
support commercial paper and other borrowings, under which no amounts were
outstanding at December 31, 1993.
Exchange: International operations are subject to certain opportunities and
risks, including currency fluctuations and government actions. The Company
closely monitors its methods of operating in each country and adopts strategies
responsive to changing economic and political environments.
The Company uses approximately 46 functional currencies. In 1993, 1992 and
1991, weighted average exchange rates for certain key foreign currencies that
are traded on exchange markets strengthened (weakened) against the U.S. dollar
as follows:
Year Ended December 31, 1993 1992 1991
- --------------------------------------------------------------------------------------------------
Key market-traded currencies (3)% 5 % 1 %
Australian dollar (7)% (5)% 1 %
British pound (15)% 1 % (1)%
Canadian dollar (8)% (4)% 1 %
German mark (5)% 8 % (3)%
Japanese yen 15 % 6 % 8 %
==================================================================================================
The change in the foreign currency translation adjustment in 1993 was due
primarily to the weakening of certain European currencies against the U.S.
dollar. Exchange losses recorded in other income (deductions)-net amounted to
$74 million in 1993, $25 million in 1992 and $22 million in 1991. Exchange
losses include the remeasurement of certain currencies into functional
currencies and costs of hedging certain transaction and balance sheet
exposures. Additional information concerning the Company's hedging activities
is presented on page 63.
IMPACT OF INFLATION AND CHANGING PRICES
Inflation is a factor in many markets around the world and consequently impacts
the way the Company operates. In general, management believes the Company is
able to increase prices to counteract the effects of increasing costs and
generate sufficient cash flows to maintain its productive capability.
ADDITIONAL INFORMATION
For additional information concerning the Company's operations, cash flows,
liquidity and capital resources, this analysis should be read in conjunction
with the information on pages 54 through 72 of this report. Additional
information concerning operations in different lines of business and geographic
areas is presented on pages 69 and 70.
SELECTED FINANCIAL DATA THE COCA-COLA COMPANY AND SUBSIDIARIES
Compound Growth Rates Year Ended December 31,
-------------------------- ------------------------------
(In millions except per share data, ratios and growth rates) 5 Years 10 Years 1993 (2) 1992 (3),(4)
- ------------------------------------------------------------------------------------------------------------------------------------
SUMMARY OF OPERATIONS
Net operating revenues 11.6% 10.7% $13,957 $13,074
Cost of goods sold 8.5% 7.2% 5,160 5,055
- ----------------------------------------------------------------------------------------------------------------------------------
Gross profit 13.7% 13.5% 8,797 8,019
Selling, administrative and general expenses 13.4% 13.2% 5,695 5,249
- ----------------------------------------------------------------------------------------------------------------------------------
Operating income 14.2% 14.1% 3,102 2,770
Interest income 144 164
Interest expense 168 171
Equity income 91 65
Other income (deductions)-net 4 (82)
Gain on issuance of stock by subsidiaries 12 -
- ------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before income taxes
and changes in accounting principles 14.4% 13.8% 3,185 2,746
Income taxes 13.2% 10.3% 997 863
- ------------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before changes
in accounting principles 15.0% 15.8% $ 2,188 $ 1,883
====================================================================================================================================
Net income 15.8% 14.6% $ 2,176 $ 1,664
Preferred stock dividends - -
- ------------------------------------------------------------------------------------------------------------------------------------
Net income available to common share owners 16.0% 14.6% $ 2,176 $ 1,664
====================================================================================================================================
Average common shares outstanding 1,302 1,317
PER COMMON SHARE DATA
Income from continuing operations before changes
in accounting principles 17.8% 18.4% $ 1.68 $ 1.43
Net income 18.7% 17.3% 1.67 1.26
Cash dividends 17.8% 11.9% .68 .56
Market price at December 31 31.9% 25.9% 44.63 41.88
BALANCE SHEET DATA
Cash, cash equivalents and current marketable securities $ 1,078 $ 1,063
Property, plant and equipment-net 3,729 3,526
Depreciation 333 310
Capital expenditures 800 1,083
Total assets 12,021 11,052
Long-term debt 1,428 1,120
Total debt 3,100 3,207
Share-owners' equity 4,584 3,888
Total capital (1) 7,684 7,095
OTHER KEY FINANCIAL MEASURES (1)
Total-debt-to-total-capital 40.3% 45.2%
Net-debt-to-net-capital 26.2% 31.9%
Return on common equity 51.7% 46.4%
Return on capital 31.2% 29.4%
Dividend payout ratio 40.6% 44.3%
Economic profit $ 1,495 $ 1,293
====================================================================================================================================
(1) See Glossary on page 76.
Following are the above-referenced definitions extracted from page 76:
GLOSSARY OF TERMS
DIVIDEND PAYOUT RATIO: Calculated by dividing cash dividends on common
stock by net income available to common share owners.
ECONOMIC PROFIT: Represents net operating profit after taxes in excess
of a computed capital charge for average operating capital employed.
NET DEBT AND NET CAPITAL: Net of cash, cash equivalents and marketable
securities in excess of operating requirements and temporary bottling
investments. The net-debt-to-net-capital ratio excludes debt and excess
cash of the Company's finance subsidiary.
RETURN ON CAPITAL: Calculated by dividing income from continuing
operations before changes in accounting principles less tax-adjusted
interest expense by average total capital.
RETURN ON COMMON EQUITY: Calculated by dividing income from continuing
operations before changes in accounting principles less preferred stock
dividends by average common share-owners' equity.
TOTAL CAPITAL: Equals share-owners' equity plus interest-bearing debt.
(2) In 1993, the Company adopted SFAS No. 112, Employers' Accounting for
Postemployment Benefits.
(3) In 1992, the Company adopted SFAS No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions.
(4) The Company adopted SFAS No. 109, Accounting for Income Taxes, in 1992 by
restating financial statements beginning in 1989.
SELECTED FINANCIAL DATA THE COCA-COLA COMPANY AND SUBSIDIARIES
Year Ended December 31,
- ---------------------------------------------------------------------------------------------------------------------------------
1991 (4) 1990 (4) 1989 (4) 1988 1987 1986 1985 1984 1983
- ---------------------------------------------------------------------------------------------------------------------------------
$ 11,572 $ 10,236 $ 8,622 $ 8,065 $ 7,658 $ 6,977 $ 5,879 $ 5,442 $ 5,056
4,649 4,208 3,548 3,429 3,633 3,454 2,909 2,738 2,580
- ---------------------------------------------------------------------------------------------------------------------------------
6,923 6,028 5,074 4,636 4,025 3,523 2,970 2,704 2,476
4,604 4,076 3,348 3,038 2,701 2,626 2,163 1,855 1,648
- ---------------------------------------------------------------------------------------------------------------------------------
2,319 1,952 1,726 1,598 1,324 897 807 849 828
175 170 205 199 232 154 151 133 90
192 231 308 230 297 208 196 128 77
40 110 75 92 64 45 52 42 35
41 13 66 (33) - 35 69 13 2
- - - - 40 375 - - -
- ----------------------------------------------------------------------------------------------------------------------------------
2,383 2,014 1,764 1,626 1,363 1,298 883 909 878
765 632 553 537 496 471 314 360 374
- ----------------------------------------------------------------------------------------------------------------------------------
$ 1,618 $ 1,382 $ 1,211 $ 1,089 $ 867 $ 827 $ 569 $ 549 $ 504
===================================================================================================================================
$ 1,618 $ 1,382 $ 1,537 $ 1,045 $ 916 $ 934 $ 722 $ 629 $ 559
1 18 21 7 - - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
$ 1,617 $ 1,364 $ 1,516 (5) $ 1,038 $ 916 $ 934 $ 722 $ 629 $ 559
===================================================================================================================================
1,333 1,337 1,384 1,458 1,509 1,547 1,573 1,587 1,635
$ 1.21 $ 1.02 $ .86 $ .74 $ .57 $ .53 $ .36 $ .35 $ .31
1.21 1.02 1.10 (5) .71 .61 .60 .46 .40 .34
.48 .40 .34 .30 .28 .26 .25 .23 .22
40.13 23.25 19.31 11.16 9.53 9.44 7.04 5.20 4.46
$ 1,117 $ 1,492 $ 1,182 $ 1,231 $ 1,489 $ 895 $ 843 $ 768 $ 559
2,890 2,386 2,021 1,759 1,602 1,538 1,483 1,284 1,247
254 236 181 167 152 151 130 119 111
792 593 462 387 304 346 412 300 324
10,189 9,245 8,249 7,451 8,606 7,675 6,341 5,241 4,540
985 536 549 761 909 996 801 631 428
2,288 2,537 1,980 2,124 2,995 1,848 1,280 1,310 520
4,239 3,662 3,299 3,345 3,187 3,479 2,948 2,751 2,912
6,527 6,199 5,279 5,469 6,182 5,327 4,228 4,061 3,432
35.1% 40.9% 37.5% 38.8% 48.4% 34.7% 30.3% 32.3% 15.2%
19.2% 23.7% 14.7% 18.9% 15.4% 10.9% 15.6% 19.7% 5.6%
41.3% 41.4% 39.4% 34.7% 26.0% 25.7% 20.0% 19.4% 17.7%
27.5% 26.8% 26.5% 21.3% 18.3% 20.1% 16.8% 16.7% 16.4%
39.5% 39.2% 31.0% (5) 42.1% 46.0% 43.1% 53.8% 57.9% 65.3%
$ 1,029 $ 878 $ 821 $ 748 $ 417 $ 311 $ 269 $ 268 $ 138
===================================================================================================================================
(5) Net income available to common share owners in 1989 includes after-tax gains
of $604 million ($.44 per common share) from the sales of the Company's
equity interest in Columbia Pictures Entertainment, Inc. and the Company's
bottled water business and the transition effect of $265 million related to
the change in accounting for income taxes. Excluding these nonrecurring
items, the dividend payout ratio in 1989 was 39.9 percent.
CONSOLIDATED BALANCE SHEETS THE COCA-COLA COMPANY AND SUBSIDIARIES
December 31, 1993 1992
- ----------------------------------------------------------------------------------------------------------------
(In millions except share data)
ASSETS
CURRENT
Cash and cash equivalents $ 998 $ 956
Marketable securities, at cost 80 107
- ----------------------------------------------------------------------------------------------------------------
1,078 1,063
Trade accounts receivable, less allowances of
$39 in 1993 and $33 in 1992 1,210 1,055
Finance subsidiary receivables 33 31
Inventories 1,049 1,019
Prepaid expenses and other assets 1,064 1,080
- ----------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 4,434 4,248
- ----------------------------------------------------------------------------------------------------------------
INVESTMENTS AND OTHER ASSETS
Investments
Coca-Cola Enterprises Inc. 498 518
Coca-Cola Amatil Limited 592 548
Other, principally bottling companies 1,125 1,097
Finance subsidiary receivables 226 95
Marketable securities and other assets 868 637
- ----------------------------------------------------------------------------------------------------------------
3,309 2,895
- ----------------------------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT
Land 197 203
Buildings and improvements 1,616 1,529
Machinery and equipment 3,380 3,137
Containers 403 374
- ----------------------------------------------------------------------------------------------------------------
5,596 5,243
Less allowances for depreciation 1,867 1,717
- ----------------------------------------------------------------------------------------------------------------
3,729 3,526
- ----------------------------------------------------------------------------------------------------------------
GOODWILL AND OTHER INTANGIBLE ASSETS 549 383
- ----------------------------------------------------------------------------------------------------------------
$ 12,021 $11,052
================================================================================================================
LIABILITIES AND SHARE-OWNERS' EQUITY
CURRENT
Accounts payable and accrued expenses $ 2,217 $ 2,253
Loans and notes payable 1,409 1,967
Finance subsidiary notes payable 244 105
Current maturities of long-term debt 19 15
Accrued taxes 1,282 963
- ----------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 5,171 5,303
- ----------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT 1,428 1,120
- ----------------------------------------------------------------------------------------------------------------
OTHER LIABILITIES 725 659
- ----------------------------------------------------------------------------------------------------------------
DEFERRED INCOME TAXES 113 82
- ----------------------------------------------------------------------------------------------------------------
SHARE-OWNERS' EQUITY
Common stock, $.25 par value-
Authorized: 2,800,000,000 shares
Issued: 1,703,526,299 shares in 1993; 1,696,202,840 shares in 1992 426 424
Capital surplus 1,086 871
Reinvested earnings 9,458 8,165
Unearned compensation related to
outstanding restricted stock (85) (100)
Foreign currency translation adjustment (420) (271)
- ----------------------------------------------------------------------------------------------------------------
10,465 9,089
Less treasury stock, at cost
(406,072,817 common shares in 1993; 389,431,622 common shares in 1992) 5,881 5,201
- ----------------------------------------------------------------------------------------------------------------
4,584 3,888
- ----------------------------------------------------------------------------------------------------------------
$ 12,021 $11,052
================================================================================================================
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF INCOME THE COCA-COLA COMPANY AND SUBSIDIARIES
Year Ended December 31, 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------
(In millions except per share data)
NET OPERATING REVENUES $ 13,957 $ 13,074 $ 11,572
Cost of goods sold 5,160 5,055 4,649
- ---------------------------------------------------------------------------------------------------------------
GROSS PROFIT 8,797 8,019 6,923
Selling, administrative and general expenses 5,695 5,249 4,604
- ---------------------------------------------------------------------------------------------------------------
OPERATING INCOME 3,102 2,770 2,319
Interest income 144 164 175
Interest expense 168 171 192
Equity income 91 65 40
Other income (deductions)-net 4 (82) 41
Gain on issuance of stock by Coca-Cola Amatil 12 - -
- ---------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND
CHANGES IN ACCOUNTING PRINCIPLES 3,185 2,746 2,383
Income taxes 997 863 765
- ---------------------------------------------------------------------------------------------------------------
INCOME BEFORE CHANGES IN
ACCOUNTING PRINCIPLES 2,188 1,883 1,618
Transition effects of changes in
accounting principles
Postemployment benefits (12) - -
Postretirement benefits other than pensions
Consolidated operations - (146) -
Equity investments - (73) -
- ---------------------------------------------------------------------------------------------------------------
NET INCOME 2,176 1,664 1,618
Preferred stock dividends - - 1
- ---------------------------------------------------------------------------------------------------------------
NET INCOME AVAILABLE TO COMMON SHARE OWNERS $ 2,176 $ 1,664 $ 1,617
===============================================================================================================
INCOME PER COMMON SHARE
Before changes in accounting principles $ 1.68 $ 1.43 $ 1.21
Transition effects of changes in
accounting principles
Postemployment benefits ( .01) - -
Postretirement benefits other than pensions
Consolidated operations - ( .11) -
Equity investments - ( .06) -
- ---------------------------------------------------------------------------------------------------------------
NET INCOME PER COMMON SHARE $ 1.67 $ 1.26 $ 1.21
===============================================================================================================
AVERAGE COMMON SHARES OUTSTANDING 1,302 1,317 1,333
===============================================================================================================
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS THE COCA-COLA COMPANY AND SUBSIDIARIES
Year Ended December 31, 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------
(In millions)
OPERATING ACTIVITIES
Net income $ 2,176 $ 1,664 $ 1,618
Transition effects of changes
in accounting principles 12 219 -
Depreciation and amortization 360 322 261
Deferred income taxes (62) (27) (94)
Equity income, net of dividends (35) (30) (16)
Foreign currency adjustments 9 24 66
Gains on sales of assets (84) - (35)
Other noncash items 78 103 33
Net change in operating assets and liabilities 54 (43) 251
- -----------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 2,508 2,232 2,084
- -----------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Decrease (increase) in current
marketable securities 29 (52) 3
Additions to finance subsidiary receivables (177) (54) (210)
Collections of finance subsidiary receivables 44 254 52
Acquisitions and purchases of investments (816) (717) (399)
Proceeds from disposals of investments and
other assets 621 247 180
Purchases of property, plant and equipment (800) (1,083) (792)
Proceeds from disposals of property, plant
and equipment 312 47 44
All other investing activities (98) (1) (2)
- -----------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (885) (1,359) (1,124)
- -----------------------------------------------------------------------------------------------------------------
Net cash provided by operations
after reinvestment 1,623 873 960
- -----------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Issuances of debt 445 1,381 990
Payments of debt (567) (432) (1,246)
Preferred stock redeemed - - (75)
Common stock issued 145 131 39
Purchases of common stock for treasury (680) (1,259) (399)
Dividends (common and preferred) (883) (738) (640)
- -----------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (1,540) (917) (1,331)
- -----------------------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (41) (58) -
- -----------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
Net increase (decrease) during the year 42 (102) (371)
Balance at beginning of year 956 1,058 1,429
- -----------------------------------------------------------------------------------------------------------------
Balance at end of year $ 998 $ 956 $ 1,058
=================================================================================================================
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF SHARE-OWNERS' EQUITY THE COCA-COLA COMPANY
AND SUBSIDIARIES
Outstanding Foreign
Three Years Ended Preferred Common Capital Reinvested Restricted Currency Treasury
December 31, 1993 Stock Stock Surplus Earnings Stock Translation Stock
- ---------------------------------------------------------------------------------------------------------------------------------
(In millions except per share data)
BALANCE DECEMBER 31, 1990 $ 75 $ 420 $ 513 $6,261 $ (68) $ 4 $ (3,543)
Sales of stock to employees exercising
stock options - 1 38 - - - (2)
Tax benefit from employees' stock
option and restricted stock plans - - 20 - - - -
Translation adjustments - - - - - (9) -
Stock issued under restricted stock plans,
less amortization of $22 - 1 69 - (47) - -
Purchases of common stock for treasury - - - - - - (397)
Redemption of preferred stock (75) - - - - - -
Net income - - - 1,618 - - -
Dividends
Preferred - - - (1) - - -
Common (per share-$.48) - - - (639) - - -
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1991 - 422 640 7,239 (115) (5) (3,942)
Sales of stock to employees exercising
stock options - 2 129 - - - (34)
Tax benefit from employees' stock
option and restricted stock plans - - 93 - - - -
Translation adjustments - - - - - (266) -
Stock issued under restricted stock plans,
less amortization of $25 - - 9 - 15 - -
Purchases of common stock for treasury - - - - - - (1,225)
Net income - - - 1,664 - - -
Common dividends (per share-$.56) - - - (738) - - -
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1992 - 424 871 8,165 (100) (271) (5,201)
Sales of stock to employees exercising
stock options - 2 143 - - - (94)
Tax benefit from employees' stock
option and restricted stock plans - - 66 - - - -
Translation adjustments - - - - - (149) -
Stock issued under restricted stock plans,
less amortization of $19 - - 6 - 15 - -
Purchases of common stock for treasury - - - - - - (586)
Net income - - - 2,176 - - -
Common dividends (per share-$.68) - - - (883) - - -
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1993 $ - $ 426 $1,086 $9,458 $ (85) $ (420) $ (5,881)
===================================================================================================================================
See Notes to Consolidated Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THE COCA-COLA COMPANY
AND SUBSIDIARIES
1. ACCOUNTING POLICIES
The significant accounting policies and practices followed by The Coca-Cola
Company and subsidiaries (the Company) are as follows:
CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
all subsidiaries except where control is temporary or does not rest with the
Company. The Company's investments in companies in which it has the ability to
exercise significant influence over operating and financial policies, including
certain investments where there is a temporary majority interest, are accounted
for by the equity method. Accordingly, the Company's share of the net earnings
of these companies is included in consolidated net income. The Company's
investments in other companies are carried at cost. All significant
intercompany accounts and transactions are eliminated.
Certain amounts in the prior years' financial statements have been
reclassified to conform to the current-year presentation.
NET INCOME PER COMMON SHARE
Net income per common share is computed by dividing net income less dividends
on preferred stock by the weighted average number of common shares outstanding.
CASH EQUIVALENTS
Marketable securities that are highly liquid and have maturities of three
months or less at the date of purchase are classified as cash equivalents.
INVENTORIES
Inventories are valued at the lower of cost or market. In general, cost is
determined on the basis of average cost or first-in, first-out methods.
However, for certain inventories, cost is determined on the last-in, first-out
(LIFO) method. The excess of current costs over LIFO stated values amounted to
approximately $9 million and $24 million at December 31, 1993 and 1992,
respectively.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost, less allowances for
depreciation. Property, plant and equipment are depreciated principally by the
straight-line method over the estimated useful lives of the assets.
GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets are stated on the basis of cost and are
being amortized, principally on a straight-line basis, over the estimated
future periods to be benefited (not exceeding 40 years). Accumulated
amortization was approximately $50 million and $26 million at December 31, 1993
and 1992, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THE COCA-COLA COMPANY
AND SUBSIDIARIES
CHANGES IN ACCOUNTING PRINCIPLES
Statement of Financial Accounting Standards No. 112, Employers' Accounting for
Postemployment Benefits (SFAS 112), was adopted as of January 1, 1993. SFAS 112
requires employers to accrue the costs of benefits to former or inactive
employees after employment, but before retirement. The Company recorded an
accumulated obligation of $12 million, which is net of deferred taxes of $8
million. The increase in annual pretax postemployment benefits expense in 1993
was immaterial to Company operations.
In 1993, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards No. 115, Accounting for Certain Investments in
Debt and Equity Securities (SFAS 115). SFAS 115 requires that the carrying
value of certain investments be adjusted to their fair value. The Company's
required adoption date is January 1, 1994. The Company expects to record an
increase to share-owners' equity of approximately $65 million in 1994 from the
adoption of SFAS 115.
2. INVENTORIES
Inventories consist of the following (in millions):
December 31, 1993 1992
- -----------------------------------------------------------------------------------------------------------------
Raw materials and supplies $ 689 $ 620
Work in process 4 23
Finished goods 356 376
- -----------------------------------------------------------------------------------------------------------------
$1,049 $1,019
=================================================================================================================
3. BOTTLING INVESTMENTS
The Company invests in bottling companies to ensure the strongest and most
efficient production, distribution and marketing systems possible.
COCA-COLA ENTERPRISES INC.
Coca-Cola Enterprises is the largest bottler of Company products in the world.
The Company owns approximately 44 percent of the outstanding common stock of
Coca-Cola Enterprises, and, accordingly, accounts for its investment by the
equity method of accounting. A summary of financial information for Coca-Cola
Enterprises is as follows (in millions):
December 31, 1993 1992
- --------------------------------------------------------------------------------------------------------
Current assets $ 746 $ 701
Noncurrent assets 7,936 7,384
- --------------------------------------------------------------------------------------------------------
Total assets $8,682 $8,085
========================================================================================================
Current liabilities $1,007 $1,304
Noncurrent liabilities 6,415 5,527
- --------------------------------------------------------------------------------------------------------
Total liabilities $7,422 $6,831
========================================================================================================
Share-owners' equity $1,260 $1,254
========================================================================================================
Company equity investment $ 498 $ 518
========================================================================================================
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THE COCA-COLA COMPANY
AND SUBSIDIARIES
Year Ended December 31, 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------
Net operating revenues $5,465 $5,127 $3,915
Cost of goods sold 3,372 3,219 2,420
- -----------------------------------------------------------------------------------------------------------------
Gross profit $2,093 $1,908 $1,495
=================================================================================================================
Operating income $ 385 $ 306 $ 120
=================================================================================================================
Operating cash flow(1) $ 804 $ 695 $ 538
=================================================================================================================
Loss before changes
in accounting principles $ (15) $ (15) $ (83)
=================================================================================================================
Net loss available
to common share owners $ (15) $ (186) $ (92)
=================================================================================================================
Company equity loss $ (6) $ (6) $ (40)
=================================================================================================================
(1) Excludes nonrecurring charges.
The above 1992 net loss of Coca-Cola Enterprises includes $171 million of
noncash, after-tax charges resulting from the adoption of Statement of
Financial Accounting Standards No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions (SFAS 106) and Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes (SFAS
109) as of January 1, 1992. The Company's financial statements reflect the
adoption of SFAS 109 by Coca-Cola Enterprises as if it occurred on January 1,
1989.
The 1991 results of Coca-Cola Enterprises include pretax restructuring
charges of $152 million and a pretax charge of $15 million to increase
insurance reserves.
In a 1991 merger, Coca-Cola Enterprises acquired Johnston Coca-Cola Bottling
Group, Inc. (Johnston) for approximately $196 million in cash and 13 million
shares of Coca-Cola Enterprises common stock. The Company exchanged its 22
percent ownership interest in Johnston for approximately $81 million in cash
and approximately 50,000 shares of Coca-Cola Enterprises common stock,
resulting in a pretax gain of $27 million to the Company. The Company's
ownership interest in Coca-Cola Enterprises was reduced from 49 percent to
approximately 44 percent as a result of this transaction.
If the Johnston acquisition had been completed on January 1, 1991, Coca-Cola
Enterprises' 1991 pro forma net loss available to common share owners would
have been approximately $137 million. Summarized financial information and net
concentrate/syrup sales related to Johnston prior to its acquisition by
Coca-Cola Enterprises have been combined with other equity investments below.
Net concentrate/syrup sales to Coca-Cola Enterprises were $961 million in
1993, $889 million in 1992 and $626 million in 1991. Coca-Cola Enterprises
purchases sweeteners through the Company under a pass-through arrangement, and,
accordingly, related collections from Coca-Cola Enterprises and payments to
suppliers are not included in the Company's consolidated statements of income.
These transactions amounted to $211 million in 1993, $225 million in 1992 and
$185 million in 1991. The Company also provides certain administrative and
other services to Coca-Cola Enterprises under negotiated fee arrangements.
The Company engages in a wide range of marketing programs, media advertising
and other similar arrangements to promote the sale of Company
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THE COCA-COLA COMPANY
AND SUBSIDIARIES
products in territories in which Coca-Cola Enterprises operates. The Company's
direct support for certain Coca-Cola Enterprises' marketing activities and
participation with Coca-Cola Enterprises in cooperative advertising and other
marketing programs amounted to approximately $256 million in 1993, $253 million
in 1992 and $199 million in 1991.
In April 1993, the Company purchased majority ownership interests in two
bottling companies in Tennessee along with the rights to purchase the remaining
minority interests. Such ownership interests and a bottling operation in the
Netherlands were sold to Coca-Cola Enterprises in June 1993. The Company
received approximately $260 million in cash plus the assumption of indebtedness
and carrying costs resulting in an after-tax gain of $11 million or
approximately $.01 per share.
In 1992, the Company sold 100 percent of the common stock of the Erie,
Pennsylvania, Coca-Cola bottler to Coca-Cola Enterprises for approximately $11
million, which approximated the Company's original investment plus carrying
costs. In January 1994, the Company sold common stock representing a 9 percent
voting interest in The Coca-Cola Bottling Company of New York, Inc. (CCNY) to
Coca-Cola Enterprises for approximately $6 million, which approximated the
Company's investment.
If valued at the December 31, 1993, quoted closing price of the publicly
traded Coca-Cola Enterprises shares, the calculated value of the Company's
investment in Coca-Cola Enterprises would have exceeded its carrying value by
approximately $361 million.
OTHER EQUITY INVESTMENTS
The Company owns approximately 51 percent of Coca-Cola Amatil, an
Australian-based bottler of Company products. In the fourth quarter of 1993,
Coca-Cola Amatil issued approximately 8 million shares of stock to acquire the
Company's franchise bottler in Jakarta, Indonesia. This transaction resulted in
a pretax gain of approximately $12 million and diluted the Company's ownership
interest to the present level. The Company intends to reduce its ownership
interest in Coca-Cola Amatil to below 50 percent. Accordingly, the investment
has been accounted for by the equity method of accounting.
At December 31, 1993, the excess of the Company's investment over its equity
in the underlying net assets of Coca-Cola Amatil was approximately $191
million, which is being amortized over 40 years. The Company recorded equity
income from Coca-Cola Amatil of $40 million, $28 million and $15 million in
1993, 1992 and 1991, respectively. These amounts are net of the amortization
charges discussed above.
In January 1993, Coca-Cola Amatil sold its snack-food segment for
approximately $299 million, and recognized a gain of $169 million. The
Company's ownership interest in the sale proceeds received by Coca-Cola Amatil
approximated the carrying value of the Company's investment in the snack-food
segment.
In 1993, the Company acquired a 30 percent equity interest in Coca-Cola
FEMSA, S.A. de C.V., which operates bottling facilities in the Valley of Mexico
and Mexico's southeastern region, for $195 million. At December 31, 1993, the
excess of the Company's investment over its equity in the underlying net assets
of Coca-Cola FEMSA was approximately $130 million, which is being amortized
over 40 years.
Also in 1993, the Company entered into a joint venture with Coca-Cola
Bottling Co. Consolidated (Consolidated), establishing the Piedmont Coca-Cola
Bottling Partnership (Piedmont), which will operate certain bottling
territories in the United States acquired from each company. The Company has
made a cash contribution of $70 million to the partnership for a 50 percent
ownership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THE COCA-COLA COMPANY
AND SUBSIDIARIES
interest. Consolidated has contributed bottling assets valued at
approximately $48 million and approximately $22 million in cash for the
remaining 50 percent interest. Piedmont has purchased assets and stock of
certain bottling companies from the Company for approximately $163 million,
which approximated the Company's carrying cost, and certain bottling assets
from Consolidated for approximately $130 million. The Company beneficially owns
a 30 percent economic interest and a 23 percent voting interest in
Consolidated.
Operating results include the Company's proportionate share of income from
equity investments since the respective dates of investment. A summary of
financial information for the Company's equity investments, other than
Coca-Cola Enterprises, is as follows (in millions):
December 31, 1993 1992
- -------------------------------------------------------------------------------------------------------------------
Current assets $ 2,294 $ 1,945
Noncurrent assets 4,780 4,172
- -------------------------------------------------------------------------------------------------------------------
Total assets $ 7,074 $ 6,117
===================================================================================================================
Current liabilities $ 1,926 $ 2,219
Noncurrent liabilities 2,366 1,720
- -------------------------------------------------------------------------------------------------------------------
Total liabilities $ 4,292 $ 3,939
===================================================================================================================
Share-owners' equity $ 2,782 $ 2,178
===================================================================================================================
Company equity investments $ 1,629 $ 1,387
===================================================================================================================
Year Ended December 31, 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------
Net operating revenues $ 8,168 $ 7,027 $ 7,877
Cost of goods sold 5,385 4,740 5,244
- -------------------------------------------------------------------------------------------------------------------
Gross profit $ 2,783 $ 2,287 $ 2,633
===================================================================================================================
Operating income $ 673 $ 364 $ 560
===================================================================================================================
Operating cash flow $ 984 $ 923 $ 979
===================================================================================================================
Income before changes
in accounting principles $ 258 $ 199 $ 214
===================================================================================================================
Net income $ 258 $ 74 $ 214
===================================================================================================================
Company equity income $ 97 $ 71 $ 80
===================================================================================================================
Equity investments include certain non-bottling investees.
Net income for the Company's equity investments in 1993 reflects an $86
million after-tax charge recorded by Coca-Cola Beverages Ltd., related to
restructuring its operations in Canada.
Net sales to equity investees, other than Coca-Cola Enterprises, were $1.2
billion in 1993 and $1.3 billion in 1992 and 1991. The Company participates in
various marketing, promotional and other activities with these investees, the
majority of which are located outside the United States.
If valued at the December 31, 1993, quoted closing prices of shares actively
traded on stock markets, the net calculated value of the Company's
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THE COCA-COLA COMPANY
AND SUBSIDIARIES
equity investments in publicly traded bottlers, other than Coca-Cola
Enterprises, would have exceeded the Company's carrying value by approximately
$966 million.
The consolidated balance sheet caption Other, principally bottling
companies, also includes various investments that are accounted for by the cost
method.
4. FINANCE SUBSIDIARY
Coca-Cola Financial Corporation (CCFC) provides loans and other forms of
financing to Coca-Cola bottlers and customers for the acquisition of
sales-related equipment and for other business purposes. The approximate
contractual maturities of finance receivables for the five years succeeding
December 31, 1993, are as follows (in millions):
1994 1995 1996 1997 1998
- -------------------------------------------------------------------------------------------
$ 33 $ 32 $ 31 $ 16 $ 118
===========================================================================================
These amounts do not reflect possible prepayments or renewals.
In 1993, CCFC provided a $100 million subordinated loan to CCNY and issued a
$50 million letter of credit on CCNY's behalf of which $18 million was
outstanding at December 31, 1993.
In connection with the 1991 acquisition of Sunbelt Coca-Cola Bottling
Company, Inc. by Consolidated, CCFC purchased 25,000 shares of Consolidated
preferred stock for $50 million, provided to Consolidated a $153 million bridge
loan and issued a $77 million letter of credit on Consolidated's behalf.
Consolidated redeemed the 25,000 shares of preferred stock for $50 million plus
accrued dividends in 1992. Consolidated also repaid all amounts due under the
bridge loan in 1992. In 1993, the letter of credit was withdrawn.
5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following (in millions):
December 31, 1993 1992
- ------------------------------------------------------------------------------------------------------------------
Accrued marketing $ 371 $ 374
Container deposits 122 117
Accrued compensation 119 99
Accounts payable and
other accrued expenses 1,605 1,663
- ------------------------------------------------------------------------------------------------------------------
$2,217 $2,253
==================================================================================================================
6. SHORT-TERM BORROWINGS AND CREDIT ARRANGEMENTS
Loans and notes payable consist primarily of commercial paper issued in the
United States. At December 31, 1993, the Company had $1.4 billion in lines of
credit and other short-term credit facilities contractually available, under
which $150 million was outstanding. Included were $1.0 billion in lines
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THE COCA-COLA COMPANY
AND SUBSIDIARIES
designated to support commercial paper and other borrowings, under which no
amounts were outstanding at December 31, 1993. These facilities are subject to
normal banking terms and conditions. Some of the financial arrangements require
compensating balances, none of which are presently significant to the Company.
7. ACCRUED TAXES
Accrued taxes consist of the following (in millions):
December 31, 1993 1992
- --------------------------------------------------------------------------------------------------------------
Income taxes $1,106 $820
Sales, payroll and other taxes 176 143
- --------------------------------------------------------------------------------------------------------------
$1,282 $963
==============================================================================================================
8. LONG-TERM DEBT
Long-term debt consists of the following (in millions):
December 31, 1993 1992
- -------------------------------------------------------------------------------------------------------------------
7 3/4% U.S. dollar notes due 1996 $ 250 $ 250
5 3/4% Japanese yen notes due 1996 270 241
5 3/4% German mark notes due 1998(1) 147 156
7 7/8% U.S. dollar notes due 1998 249 249
6 5/8% U.S. dollar notes due 2002 149 149
6% U.S. dollar notes due 2003 150 -
7 3/8% U.S. dollar notes due 2093 148 -
Other, due 1994 to 2013(2) 84 90
- -------------------------------------------------------------------------------------------------------------------
1,447 1,135
Less current portion 19 15
- -------------------------------------------------------------------------------------------------------------------
$1,428 $1,120
===================================================================================================================
(1) Portions of these notes have been swapped for liabilities denominated in
other currencies.
(2) The weighted average interest rate is approximately 7.8 percent.
Maturities of long-term debt for the five years succeeding December 31, 1993,
are as follows (in millions):
1994 1995 1996 1997 1998
- -----------------------------------------------------------------------------------------
$19 $43 $527 $5 $400
=========================================================================================
The above notes include various restrictions, none of which are
presently significant to the Company.
Interest paid was approximately $158 million, $174 million and $160
million in 1993, 1992 and 1991, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THE COCA-COLA COMPANY
AND SUBSIDIARIES
9. FINANCIAL INSTRUMENTS
The carrying amounts reflected in the consolidated balance sheets for cash,
cash equivalents, loans and notes payable approximate the respective fair
values due to the short maturities of these instruments. The fair values for
marketable debt and equity securities, investments, receivables, long-term debt
and hedging instruments are based primarily on quoted market prices for those
or similar instruments. A comparison of the carrying value and fair value of
these financial instruments is as follows (in millions):
Carrying Fair
December 31, Value Value
- -------------------------------------------------------------------------------------------------------------------
1993
Current marketable securities $ 80 $ 102
Investments (1) 88 259
Finance subsidiary receivables 259 265
Marketable securities and other assets 868 865
Long-term debt (1,447) (1,531)
Hedging instruments 31 (142)
===================================================================================================================
1992
Current marketable securities $ 107 $ 125
Investments(1) 258 300
Finance subsidiary receivables 126 135
Marketable securities and other assets 637 636
Long-term debt (1,135) (1,156)
Hedging instruments 102 99
==================================================================================================================
(1) The consolidated balance sheet caption, Other, principally bottling
companies, also includes equity investments of $1.0 billion and $839
million at December 31, 1993 and 1992, respectively.
HEDGING TRANSACTIONS
The Company has entered into hedging transactions to reduce its exposure to
adverse fluctuations in interest and foreign exchange rates. While the hedging
instruments are subject to the risk of loss from changes in exchange rates,
these losses would generally be offset by gains on the exposures being hedged.
Realized and unrealized gains and losses on hedging instruments that are
designated and effective as hedges of firmly committed foreign currency
transactions are recognized in income in the same period as the hedged
transaction. Approximately $9 million of losses realized on settled contracts
entered into as hedges of firmly committed transactions in 1994, 1995 and 1996,
were deferred at December 31, 1993.
From time to time, the Company purchases foreign currency option contracts to
hedge anticipated transactions over the succeeding three years. Net unrealized
gains/losses from hedging anticipated transactions were not material at
December 31, 1993 or 1992.
At December 31, 1993 and 1992, the Company had forward exchange contracts,
swaps, options and other financial market instruments, principally to exchange
foreign currencies for U.S. dollars, of $4.6 billion and $4.9 billion,
respectively. These amounts are representative of amounts maintained throughout
1993. Maturities of financial market instruments held at December 31, 1993, are
as follows (in millions):
1994 1995 1996 1997 through 2003
- -------------------------------------------------------------------------
$ 2,266 $ 753 $ 666 $ 961
=========================================================================
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THE COCA-COLA COMPANY
AND SUBSIDIARIES
Although pretax losses recognized on hedging transactions in 1993 amounted to
$29 million, such losses were fully offset by income recognized on the
exposures being hedged.
GUARANTEES
At December 31, 1993, the Company was contingently liable for guarantees of
indebtedness owed by third parties of $140 million, of which $39 million is
related to independent bottling licensees. In the opinion of management, it is
not probable that the Company will be required to satisfy these guarantees. The
fair value of these contingent liabilities is immaterial to the Company's
consolidated financial statements.
10. PREFERRED STOCK
The Company canceled the 3,000 issued shares of its $1 par value Cumulative
Money Market Preferred Stock (MMP) in 1993 and returned the shares to the
status of authorized but unissued shares. None of the MMP had been outstanding
since 1991, when the final 750 shares of the 3,000 shares originally issued
were redeemed.
11. COMMON STOCK
Common shares outstanding and related changes for the three years ended
December 31, 1993, are as follows (in millions):
1993 1992 1991
- ---------------------------------------------------------------------------------------------
Outstanding at January 1, 1,307 1,329 1,336
Issued to employees
exercising stock options 7 9 4
Issued under restricted
stock plans - - 3
Purchased for treasury
Share repurchase programs (14) (30) (14)
Stock option plan activity (3) (1) -
- ---------------------------------------------------------------------------------------------
Outstanding at December 31, 1,297 1,307 1,329
=============================================================================================
12. RESTRICTED STOCK, STOCK OPTIONS AND OTHER STOCK PLANS
The Company sponsors restricted stock award plans, stock option plans,
Incentive Unit Agreements and Performance Unit Agreements.
Under the amended 1989 Restricted Stock Award Plan and the amended 1983
Restricted Stock Award Plan (the Restricted Stock Plans), 20 million and 12
million shares of restricted common stock, respectively, may be granted to
certain officers and key employees of the Company.
At December 31, 1993, 17 million shares were available for grant under the
Restricted Stock Plans. The participant is entitled to vote and receive
dividends on the shares, and, under the 1983 Restricted Stock Award Plan, the
participant is reimbursed by the Company for income taxes imposed on the award,
but not for taxes generated by the reimbursement payment. The shares are
subject to certain transfer restrictions and may be forfeited if the
participant leaves the Company
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THE COCA-COLA COMPANY
AND SUBSIDIARIES
for reasons other than retirement, disability or death, absent a change
in control of the Company. On July 18, 1991, the Restricted Stock Plans were
amended to specify age 62 as the minimum retirement age. The 1983 Restricted
Stock Award Plan was further amended to conform to the terms of the 1989
Restricted Stock Award Plan by requiring a minimum of five years of service
between the date of the award and retirement. The amendments affect shares
granted after July 18, 1991.
Under the Company's 1991 Stock Option Plan (the Option Plan), a maximum of 60
million shares of the Company's common stock may be issued or transferred to
certain officers and employees pursuant to stock options and stock appreciation
rights granted under the Option Plan. The stock appreciation rights permit the
holder, upon surrendering all or part of the related stock option, to receive
cash, common stock or a combination thereof, in an amount up to 100 percent of
the difference between the market price and the option price. No stock
appreciation rights have been granted since 1990, and the Company presently
does not intend to grant additional stock appreciation rights in the future.
Options outstanding at December 31, 1993, also include various options granted
under previous plans. Further information relating to options is as follows (in
millions, except per share amounts):
1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------
Outstanding at January 1, 31 36 33
Granted 6 4 8
Exercised (7) (9) (4)
Canceled - - (1)
- -----------------------------------------------------------------------------------------------------------------
Outstanding at December 31, 30 31 36
=================================================================================================================
Exercisable at December 31, 22 23 24
=================================================================================================================
Shares available at December 31,
for options that may be granted 45 51 55
=================================================================================================================
Prices per share
Exercised $4-$41 $4-$28 $3-$28
Unexercised at December 31, $5-$44 $4-$41 $4-$30
=================================================================================================================
In 1988, the Company entered into Incentive Unit Agreements, whereby, subject
to certain conditions, certain officers were given the right to receive cash
awards based on the market value of 1.2 million shares of the Company's common
stock at the measurement dates. Under the Incentive Unit Agreements, the
employee is reimbursed by the Company for income taxes imposed when the value
of the units is paid, but not for taxes generated by the reimbursement payment.
As of December 31, 1993, 400,000 units had been paid and 800,000 units were
outstanding.
In 1985, the Company entered into Performance Unit Agreements, whereby
certain officers were given the right to receive cash awards based on the
difference in the market value of approximately 2.2 million shares of the
Company's common stock at the measurement dates and the base price of $5.16,
the market value as of January 2, 1985. As of December 31, 1993, 780,000 units
have been paid and approximately 1.4 million units were outstanding.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THE COCA-COLA COMPANY
AND SUBSIDIARIES
13. PENSION BENEFITS
The Company sponsors and/or contributes to pension plans covering substantially
all U.S. employees and certain employees in international locations. The
benefits are primarily based on years of service and the employees'
compensation for certain periods during the last years of employment. Pension
costs are generally funded currently, subject to regulatory funding
limitations. The Company also sponsors nonqualified, unfunded defined benefit
plans for certain officers and other employees. In addition, the Company and
its subsidiaries have various pension plans and other forms of postretirement
arrangements outside the United States.
Total pension expense for all benefit plans, including defined benefit plans,
amounted to approximately $57 million in 1993, $49 million in 1992 and $42
million in 1991. Net periodic pension cost for the Company's defined benefit
plans consists of the following (in millions):
U.S. Plans International Plans
---------------------------- ----------------------------
Year Ended December 31, 1993 1992 1991 1993 1992 1991
- ------------------------------------------------------------------------------------------ ----------------------------
Service cost-benefits earned during the period $ 17 $ 15 $ 13 $ 17 $ 18 $ 16
Interest cost on projected benefit obligation 53 50 46 22 20 18
Actual return on plan assets (77) (36) (113) (27) (19) (18)
Net amortization and deferral 31 (9) 71 13 3 1
- ------------------------------------------------------------------------------------------ ---------------------------
Net periodic pension cost $ 24 $ 20 $ 17 $ 25 $ 22 $ 17
========================================================================================== ===========================
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THE COCA-COLA COMPANY
AND SUBSIDIARIES
The funded status for the Company's defined benefit plans is as follows (in
millions):
U.S. Plans
---------------------------------------
Assets Exceed Accumulated
Accumulated Benefits
Benefits Exceed Assets
- --------------------------------------------------------------------------------- --------------------
December 31, 1993 1992 1993 1992
- --------------------------------------------------------------------------------- --------------------
Actuarial present value of
benefit obligations
Vested benefit obligation $ 481 $401 $ 109 $ 82
================================================================================= ====================
Accumulated benefit obligation $ 523 $431 $ 111 $ 89
================================================================================= ====================
Projected benefit obligation $ 598 $520 $ 133 $ 101
Plan assets at fair value(1) 631 587 2 1
- --------------------------------------------------------------------------------- --------------------
Plan assets in excess of (less than) projected benefit
obligation 33 67 (131)(2) (100)(2)
Unrecognized net (asset) liability at transition (34) (37) 17 19
Unrecognized prior service cost 8 23 15 3
Unrecognized net (gain) loss (24) (61) 36 24
Adjustment required to recognize minimum liability - - (46) (33)
- --------------------------------------------------------------------------------- --------------------
Accrued pension asset (liability) included
in the consolidated balance sheet $ (17) $ (8) $(109) $ (87)
================================================================================= ====================
(1) Primarily listed stocks, bonds and government securities.
(2) Substantially all of this amount relates to nonqualified,
unfunded defined benefit plans.
International Plans
------------------------------------------------
Assets Exceed Accumulated
Accumulated Benefits
Benefit Exceed Assets
- ------------------------------------------------------------------------------- --------------------------
December 31, 1993 1992 1993 1992
- ------------------------------------------------------------------------------- --------------------------
Actuarial present value of
benefit obligations
Vested benefit obligation $139 $119 $110 $ 90
=============================================================================== ==========================
Accumulated benefit obligation $151 $127 $126 $100
=============================================================================== ==========================
Projected benefit obligation $196 $167 $177 $148
Plan assets at fair value(1) 200 188 94 73
- ------------------------------------------------------------------------------- --------------------------
Plan assets in excess of (less than) projected benefit
obligation 4 21 (83) (75)
Unrecognized net (asset) liability at transition (16) (6) 34 33
Unrecognized prior service cost - - 9 8
Unrecognized net (gain) loss 28 2 (3) (3)
Adjustment required to recognize minimum liability - - (7) (3)
- ------------------------------------------------------------------------------- --------------------------
Accrued pension asset (liability) included
in the consolidated balance sheet $ 16 $ 17 $(50) $(40)
=============================================================================== ==========================
(1) Primarily listed stocks, bonds and government securities.
(2) Substantially all of this amount relates to nonqualified,
unfunded defined benefit plans.
The assumptions used in computing the preceding information are as follows:
International Plans
U.S. Plans (weighted average rates)
----------------------------- -------------------------
Year Ended December 31, 1993 1992 1991 1993 1992 1991
- ---------------------------------------------------------------------------------- -------------------------
Discount rates 7 1/4% 8 1/2% 9% 6 1/2% 7% 7 1/2%
Rates of increase in compensation levels 4 3/4% 6% 6% 5% 5 1/2% 6%
Expected long-term rates of return on assets 9 1/2% 9 1/2% 9 1/2% 7% 7% 7 1/2%
================================================================================== =========================
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THE COCA-COLA COMPANY
AND SUBSIDIARIES
14. OTHER POSTRETIREMENT BENEFITS
The Company has plans providing postretirement health care and life insurance
benefits to substantially all U.S. employees and certain employees in
international locations who retire with a minimum of five years of service. The
Company adopted SFAS 106 for all U.S. and international plans as of January 1,
1992. In 1992, the Company recorded an accumulated obligation for consolidated
operations of $146 million, which is net of $92 million in deferred tax
benefits. The Company also recorded an additional charge of $73 million, net of
$13 million of deferred tax benefits, representing the Company's proportionate
share of accumulated postretirement benefit obligations recognized by bottling
investees accounted for by the equity method.
Net periodic cost for the Company's postretirement health care and life
insurance benefits consists of the following (in millions):
Year Ended December 31, 1993 1992
- ----------------------------------------------------------------------------------------------------------------
Service cost $ 10 $ 9
Interest cost 21 20
Other (1) -
- ----------------------------------------------------------------------------------------------------------------
$ 30 $ 29
================================================================================================================
The Company contributes to a Voluntary Employees' Beneficiary Association
trust that will be used to partially fund health care benefits for future
retirees. The Company is funding benefits to the extent contributions are
tax-deductible, which under current legislation is limited. In general, retiree
health benefits are paid as covered expenses are incurred. The funded status
for the Company's postretirement health care and life insurance plans is as
follows (in millions):
December 31, 1993 1992
- ----------------------------------------------------------------------------------------------------------------
Accumulated postretirement
benefit obligations:
Retirees $ 132 $ 111
Fully eligible active plan participants 35 34
Other active plan participants 131 113
- ----------------------------------------------------------------------------------------------------------------
Total benefit obligation 298 258
Plan assets at fair value (1) 42 24
- ----------------------------------------------------------------------------------------------------------------
Plan assets less than benefit obligation (256) (234)
Unrecognized net loss 23 -
- ----------------------------------------------------------------------------------------------------------------
Accrued postretirement benefit
liability included in the
consolidated balance sheet $(233) $(234)
================================================================================================================
(1) Consists of corporate bonds, government securities and short-term
investments.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THE COCA-COLA COMPANY
AND SUBSIDIARIES
The assumptions used in computing the preceding information are as follows:
Year Ended December 31, 1993 1992
- ----------------------------------------------------------------------------------------------------------------
Discount Rate 7 1/4% 8 1/2%
Rate of increase in compensation levels 4 3/4% 6%
- ----------------------------------------------------------------------------------------------------------------
The rate of increase in the per capita costs of covered health care benefits
is assumed to be 11 percent in 1994, decreasing gradually to 5 1/2 percent by
the year 2005. Increasing the assumed health care cost trend rate by 1
percentage point would increase the accumulated postretirement benefit
obligation as of December 31, 1993, by approximately $35 million and increase
net periodic postretirement benefit cost by approximately $4 million in 1993.
15. INCOME TAXES
Income before income taxes and changes in accounting principles consists of the
following (in millions):
Year Ended December 31, 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------
United States $1,035 $ 762 $ 648
International 2,150 1,984 1,735
- ---------------------------------------------------------------------------------------------------------------
$3,185 $2,746 $2,383
===============================================================================================================
Income tax expense (benefit) consists of the following (in millions):
United State &
Year Ended December 31, States Local International Total
- ---------------------------------------------------------------------------------------------------------
1993
Current $356 $34 $669 $1,059
Deferred(1) (64) 5 (3) (62)
1992
Current $278 $36 $576 $ 890
Deferred(1) (60) (1) 34 (27)
1991
Current $233 $31 $595 $ 859
Deferred (89) (5) - (94)
=========================================================================================================
(1) Additional deferred tax benefits of $8 million in 1993 and $105 million
in 1992 have been included in the SFAS 112 and SFAS 106 transition effect
charges, respectively.
The Company made income tax payments of approximately $650 million, $856
million and $672 million in 1993, 1992 and 1991, respectively.
A reconciliation of the statutory U.S. federal rate and effective rates is
as follows:
Year Ended December 31, 1993 1992 1991
- --------------------------------------------------------------------------------------------------------
Statutory U.S. federal rate 35.0% 34.0% 34.0%
State income taxes-net of
federal benefit 1.0 1.0 1.0
Earnings in jurisdictions taxed
at rates different from the
statutory U.S. federal rate (5.1) (3.8) (3.1)
Equity income (1.7) (1.0) (.6)
Other-net 2.1 1.2 .8
- --------------------------------------------------------------------------------------------------------
31.3% 31.4% 32.1%
========================================================================================================
The tax effects of temporary differences and carryforwards that give rise to
significant portions of deferred tax assets and liabilities consist of the
following (in millions):
December 31, 1993 1992
- ---------------------------------------------------------------------------------------------------------------
Deferred tax assets:
Benefit plans $ 298 $ 297
Liabilities and reserves 177 119
Net operating loss carryforwards 141 101
Other 120 84
- ---------------------------------------------------------------------------------------------------------------
Gross deferred tax assets 736 601
Valuation allowance (75) (63)
- ---------------------------------------------------------------------------------------------------------------
Total $ 661 $ 538
===============================================================================================================
Deferred tax liabilities:
Property, plant and equipment $ 342 $ 312
Equity investments 180 197
Intangible assets 52 68
Other 61 43
- ---------------------------------------------------------------------------------------------------------------
Total $ 635 $ 620
===============================================================================================================
Net deferred tax asset (liability)(1) $ 26 $ (82)
===============================================================================================================
(1) Deferred tax assets of $139 million have been included in the consolidated
balance sheet caption marketable securities and other assets at December 31,
1993.
At December 31, 1993, the Company had $403 million of operating loss
carryforwards available to reduce future taxable income of certain
international subsidiaries. Loss carryforwards of $293 million must be utilized
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THE COCA-COLA COMPANY
AND SUBSIDIARIES
within the next five years, and $110 million can be utilized over an
indefinite period. A valuation allowance has been provided for a portion of the
deferred tax assets related to these loss carryforwards.
As the result of changes in U.S. tax law, the Company was required to record
charges for additional taxes and tax-related expenses that reduced net income
by approximately $51 million in 1993. The Company's effective tax rate reflects
the favorable U.S. tax treatment from manufacturing facilities in Puerto Rico
that operate under a negotiated exemption grant that expires December 31, 2009,
as well as the tax benefit derived from significant operations outside the
United States, which are taxed at rates lower than the U.S. statutory rate of
35 percent. Changes to U.S. tax law enacted in 1993 will limit the utilization
of the favorable tax treatment from operations in Puerto Rico beginning in
1994, and will exert upward pressure on the Company's effective tax rate.
Appropriate U.S. and international taxes have been provided for earnings of
subsidiary companies that are expected to be remitted to the parent company.
The cumulative amount of unremitted earnings of international subsidiaries that
are expected to be indefinitely reinvested, exclusive of amounts that, if
remitted, would result in little or no tax, is approximately $426 million at
December 31, 1993. The taxes that would be paid upon remittance of these
earnings are approximately $149 million.
16. NET CHANGE IN OPERATING ASSETS AND LIABILITIES
The changes in operating assets and liabilities, net of effects of acquisitions
and divestitures of businesses and unrealized exchange gains/losses, are as
follows (in millions):
Year Ended December 31, 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------
Increase in trade
accounts receivable $(151) $(147) $ (32)
Increase in inventories (41) (138) (3)
Increase in prepaid expenses
and other assets (76) (112) (326)
Increase (decrease) in
accounts payable
and accrued expenses (44) 405 267
Increase in accrued taxes 355 57 244
Increase (decrease) in
other liabilities 11 (108) 101
- ----------------------------------------------------------------------------------------------------------
$ 54 $ (43) $ 251
==========================================================================================================
17. ACQUISITIONS AND INVESTMENTS
During 1993, the Company's acquisition and investment activity, which includes
investments in bottling operations in Mexico, Belgium and the United States,
totaled $816 million. During 1992 and 1991, the Company's acquisition and
investment activity totaled $717 million and $399 million, respectively. None
of the acquisitions in 1992 or 1991 were individually significant.
As discussed in Note 3, the Company purchased bottling operations in
Tennessee that were subsequently sold to Coca-Cola Enterprises along with a
bottling operation in the Netherlands. Note 3 also includes a discussion of the
Company's 1993 investments in bottling operations in Mexico and in the United
States.
The acquisitions have been accounted for by the purchase method of
accounting, and, accordingly, their results have been included in the
consolidated financial statements from their respective dates of acquisition.
Had the results of these businesses been included in operations commencing with
1991, the reported results would not have been materially affected.
18. NONRECURRING ITEMS
Upon a favorable court decision in 1993, the Company reversed the previously
recorded reserves for bottler litigation, resulting in a $13 million reduction
to selling, administrative and general expenses and a $10 million reduction to
interest expense. Selling, administrative and general expenses for 1993 also
include provisions of $63 million to increase efficiencies in European,
domestic and corporate operations. Also in 1993, equity income has been reduced
by $42 million related to restructuring charges recorded by Coca-Cola Beverages
Ltd.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THE COCA-COLA COMPANY
AND SUBSIDIARIES
Other income (deductions)-net includes a $50 million pretax gain recorded
by the foods business sector upon the sale of citrus groves in the United
States, and a $34 million pretax gain recognized on the sale of property no
longer required as a result of a consolidation of manufacturing operations in
Japan.
Other income (deductions)-net in 1991 includes a $69 million pretax gain on
the sale of property no longer required as a result of consolidating
manufacturing operations in Japan and a $27 million pretax gain on the sale of
the Company's 22 percent ownership interest in Johnston to Coca-Cola
Enterprises. Selling, administrative and general expenses and interest expense
in 1991 include the original charges of $13 million and $8 million,
respectively, for bottler litigation reversed in 1993. In addition, 1991 equity
income has been reduced by $44 million related to restructuring charges
recorded by Coca-Cola Enterprises.
NET OPERATING REVENUES BY LINE OF BUSINESS
(Graphic Material Omitted)
Year Ended December 31, 1991 1992 1993
- --------------------------------------------------------------------------
Net Operating Revenues (in millions) $11,572 $13,074 $13,957
- --------------------------------------------------------------------------
Foods 14% 13% 13%
Soft Drinks - International 63% 65% 66%
Soft Drinks - United States 23% 22% 21%
==========================================================================
OPERATING INCOME BY LINE OF BUSINESS
(Graphic Material Omitted)
Year Ended December 31, 1991 1992 1993
- --------------------------------------------------------------------------
Operating Income (in millions) $2,319 $2,770 $3,102
- --------------------------------------------------------------------------
Foods 4% 4% 4%
Soft Drinks - International 79% 80% 79%
Soft Drinks - United States 17% 16% 17%
==========================================================================
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THE COCA-COLA COMPANY
AND SUBSIDIARIES
19. LINES OF BUSINESS
The Company operates in two major lines of business: soft drinks and foods
(principally juice and juice-drink products). Information concerning operations
in these businesses is as follows (in millions):
Soft Drinks
------------------------------
United States International Foods Corporate Consolidated
- -------------------------------------------------------------------------------------------------------------------------------
1993
Net operating revenues $2,966 $9,205 $1,766 $ 20 $13,957
Operating income 618(1) 2,753 (1) 127 (396)(1) 3,102
Identifiable operating assets 1,956 5,809 761 1,280 (3) 9,806
Equity income 91 (1) 91
Investments (principally bottling companies) 2,215 2,215
Capital expenditures 136 557 30 77 800
Depreciation and amortization 91 172 38 59 360
===============================================================================================================================
1992
Net operating revenues $2,813 $8,551 $1,675 $ 35 $13,074
Operating income 510 2,521 112 (373) 2,770
Identifiable operating assets 1,812 5,251 791 1,035 (3) 8,889
Equity income 65 65
Investments (principally bottling companies) 2,163 2,163
Capital expenditures 169 736 38 140 1,083
Depreciation and amortization 87 157 35 43 322
===============================================================================================================================
1991
Net operating revenues $2,645 $7,245 $1,636 $ 46 $11,572
Operating income 469 2,141 104 (395) 2,319
Identifiable operating assets 1,447 4,742 755 1,124 (3) 8,068
Equity income 40 (2) 40
Investments (principally bottling companies) 2,121 2,121
Capital expenditures 131 547 57 57 792
Depreciation and amortization 82 112 30 37 261
===============================================================================================================================
Intercompany transfers between sectors are not material.
(1) Operating income for soft drink operations in the United States,
International operations and Corporate were reduced by $13 million, $33
million and $17 million, respectively, for provisions to increase
efficiencies. Equity income was reduced by $42 million related to
restructuring charges recorded by Coca-Cola Beverages Ltd.
(2) Reduced by $44 million related to restructuring charges recorded by
Coca-Cola Enterprises.
(3) Corporate identifiable operating assets are composed principally of
marketable securities and fixed assets.
Soft Drinks
Compound Growth Rates ------------------------------
Ending 1993 United States International Foods Consolidated
- -------------------------------------------------------------------------------------------------------------------
Net operating revenues
5 years 8% 15% 3% 12%
10 years 7% 14% 5% 11%
===================================================================================================================
Operating income
5 years 12% 16% 7% 14%
10 years 10% 17% 1% 14%
===================================================================================================================
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THE COCA-COLA COMPANY
AND SUBSIDIARIES
20. OPERATIONS IN GEOGRAPHIC AREAS
Information about the Company's operations in different geographic areas is as
follows (in millions):
Northeast
United European Latin Europe/ Pacific &
States Africa Community America Middle East Canada Corporate Consolidated
- -----------------------------------------------------------------------------------------------------------------------------------
1993
Net operating revenues $4,586 $ 255 $3,834 $1,683 $ 677 $2,902 $ 20 $13,957
Operating income 730(1) 152 872(1) 582 152 1,010 (396)(1) 3,102
Identifiable operating assets 2,682 153 2,777 1,220 604 1,090 1,280 (3) 9,806
Equity income 91 (1) 91
Investments
(principally bottling companies) 2,215 2,215
Capital expenditures 165 6 239 141 129 43 77 800
Depreciation and amortization 127 3 99 33 22 17 59 360
===================================================================================================================================
1992 (4)
Net operating revenues $4,339 $ 242 $3,984 $1,383 $ 546 $2,545 $ 35 $13,074
Operating income 608 129 889 502 108 907 (373) 2,770
Identifiable operating assets 2,563 139 2,587 1,185 435 945 1,035 (3) 8,889
Equity income 65 65
Investments
(principally bottling companies) 2,163 2,163
Capital expenditures 204 12 386 188 120 33 140 1,083
Depreciation and amortization 121 3 99 27 14 15 43 322
===================================================================================================================================
1991 (4)
Net operating revenues $4,125 $ 206 $3,338 $1,103 $ 408 $2,346 $ 46 $11,572
Operating income 560 105 768 405 99 777 (395) 2,319
Identifiable operating assets 2,161 126 2,558 815 297 987 1,124 (3) 8,068
Equity income 40 (2) 40
Investments
(principally bottling companies) 2,121 2,121
Capital expenditures 185 6 331 106 55 52 57 792
Depreciation and amortization 111 2 66 23 7 15 37 261
===================================================================================================================================
Intercompany transfers between geographic areas are not material.
Identifiable liabilities of operations outside the United States amounted to
approximately $1.9 billion at December 31, 1993 and 1992, and $1.8 billion at
December 31, 1991.
(1) Operating income for the United States, European Community and Corporate
were reduced by $13 million, $33 million and $17 million, respectively, for
provisions to increase efficiencies. Equity income was reduced by $42
million related to restructuring charges recorded by Coca-Cola Beverages
Ltd.
(2) Reduced by $44 million related to restructuring charges recorded by
Coca-Cola Enterprises.
(3) Corporate identifiable operating assets are composed principally of
marketable securities and fixed assets.
(4) In 1993, the Company divided its Northeast Europe/Africa group into the
Northeast Europe/Middle East and Africa groups. Accordingly, previous
years' results have been reclassified to reflect this change.
Northeast
Compound Growth Rates United European Latin Europe/ Pacific &
Ending 1993 States Africa Community America Middle East Canada Consolidated
- -----------------------------------------------------------------------------------------------------------------------------------
Net operating revenues
5 years 6% 11 % 19% 24% 24% 7% 12%
10 years 6% (4)% 18% 15% 21% 13% 11%
===================================================================================================================================
Operating income
5 years 11% 20 % 13% 27% 17% 12% 14%
10 years 8% 2 % 19% 24% 22% 18% 14%
===================================================================================================================================
NET OPERATING REVENUES BY GEOGRAPHIC AREA
(Graphic Material Omitted)
Year Ended December 31, 1991 1992 1993
- --------------------------------------------------------------------------
Net Operating Revenues (in millions) $11,572 $13,074 $13,957
- --------------------------------------------------------------------------
Pacific & Canada 20% 19% 21%
Northeast Europe/Middle East 3% 4% 5%
Latin America 10% 11% 12%
European Community 29% 31% 27%
Africa 2% 2% 2%
United States 36% 33% 33%
==========================================================================
OPERATING INCOME BY GEOGRAPHIC AREA
(Graphic Material Omitted)
Year Ended December 31, 1991 1992 1993
- --------------------------------------------------------------------------
Operating Income (in millions) $2,319 $2,770 $3,102
- --------------------------------------------------------------------------
Pacific & Canada 28% 29% 29%
Northeast Europe/Middle East 4% 4% 4%
Latin America 15% 16% 17%
European Community 28% 28% 25%
Africa 4% 4% 4%
United States 21% 19% 21%
==========================================================================
REPORT OF INDEPENDENT AUDITORS THE COCA-COLA COMPANY AND SUBSIDIARIES
BOARD OF DIRECTORS AND SHARE OWNERS
THE COCA-COLA COMPANY
We have audited the accompanying consolidated balance sheets of The Coca-Cola
Company and subsidiaries as of December 31, 1993 and 1992, and the related
consolidated statements of income, share-owners' equity and cash flows for each
of the three years in the period ended December 31, 1993. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of The Coca-Cola
Company and subsidiaries at December 31, 1993 and 1992, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1993, in conformity with generally accepted
accounting principles.
As discussed in Note 1 to the consolidated financial statements, in 1993 the
Company changed its method of accounting for postemployment benefits. As
discussed in Note 14 to the consolidated financial statements, in 1992 the
Company changed its method of accounting for postretirement benefits other than
pensions.
/s/ Ernst & Young
Atlanta, Georgia
January 25, 1994
QUARTERLY DATA (UNAUDITED) THE COCA-COLA COMPANY AND SUBSIDIARIES
For the years ended December 31, 1993 and 1992
(In millions except per share data)
First Second Third Fourth Full
1993 Quarter Quarter Quarter Quarter Year
- ---------------------------------------------------------------------------------------------------------------
Net operating revenues $3,056 $3,899 $3,629 $3,373 $13,957
Gross profit 1,963 2,435 2,286 2,113 8,797
Income before change in accounting principle 454 678 590 466 2,188
Net income 442 678 590 466 2,176
Income per share before change in
accounting principle .35 .52 .45 .36 1.68
Net income per share .34 .52 .45 .36 1.67
===============================================================================================================
First Second Third Fourth Full
1992 Quarter Quarter Quarter Quarter Year
- ---------------------------------------------------------------------------------------------------------------
Net operating revenues $2,772 $3,550 $3,508 $3,244 $13,074
Gross profit 1,740 2,177 2,122 1,980 8,019
Income before change in accounting principle 386 565 540 392 1,883
Net income 167 565 540 392 1,664
Income per share before change in
accounting principle .29 .43 .41 .30 1.43
Net income per share .13 .43 .41 .30 1.26
===============================================================================================================
The Company filed a Form 8-K with the Securities and Exchange Commission in January 1994 restating the 1993 quarterly reports
for the adoption of a change in accounting for postemployment benefits. The after-tax transition charge related to the restatement
reduced first quarter net income by $12 million ($.01 per share).
The third quarter of 1993 includes an after-tax impact of $47 million due to changes in U.S. tax law which reduced full year
after-tax income by $51 million ($.04 per share) and the reversal of previously recorded reserves for bottler litigation of $23
million ($.01 per share after income taxes).
The fourth quarter of 1993 includes provisions to increase efficiencies of $63 million ($.03 per share after income taxes), a
reduction of $42 million ($.02 per share after income taxes) related to restructuring charges by an equity investee, a
gain from the sale of real estate in Japan ($34 million, or $.02 per share after income taxes), a gain from the sale of citrus
groves in the United States ($50 million, or $.02 per share after income taxes) and a gain recognized on the issuance of stock by an
equity investee of $12 million ($.01 per share after income taxes).
The first quarter of 1992 includes the after-tax transition charge of $219 million related to the change in accounting for
postretirement benefits other than pensions. This charge decreased net income per share by $.16 for the quarter and $.17 for the
year. The sum of net income per share for the four quarters was $.01 higher than the reported full year amount due to rounding.
STOCK PRICES
Below are the New York Stock Exchange high, low and closing prices of The
Coca-Cola Company stock for each quarter of 1993 and 1992.
First Second Third Fourth
1993 Quarter Quarter Quarter Quarter
- -----------------------------------------------------------------------------------------------------------
High $ 44.13 $ 43.63 $ 44.75 $ 45.13
Low 40.00 37.50 41.75 40.00
Close 42.63 43.00 42.25 44.63
===========================================================================================================
First Second Third Fourth
1992 Quarter Quarter Quarter Quarter
- -----------------------------------------------------------------------------------------------------------
High $ 41.69 $ 45.13 $ 45.38 $ 44.50
Low 35.56 38.88 39.75 36.50
Close 40.88 40.00 40.50 41.88
===========================================================================================================
SHARE-OWNER INFORMATION
COMMON STOCK
Ticker symbol: KO
The Coca-Cola Company is one of 30 companies in the Dow Jones Industrial
Average.
Common stock of The Coca-Cola Company is listed and traded on the New York
Stock Exchange, which is the principal market for the common stock, and also is
traded on the Boston, Cincinnati, Midwest, Pacific and Philadelphia stock
exchanges. Outside the United States, the Company's common stock is listed and
traded on the German exchange in Frankfurt and on Swiss exchanges in Zurich,
Geneva, Bern, Basel and Lausanne.
Share owners of record at year-end: 179,165
Shares outstanding at year-end: 1.3 billion
DIVIDENDS
At its February 1994 meeting, the Company's Board of Directors increased the
quarterly dividend to 19.5 cents per share, equivalent to an annual dividend of
78 cents per share. The Company has increased dividends each of the last 32
years.
The Coca-Cola Company normally pays dividends four times a year, usually on
April 1, July 1, October 1 and December 15. The Company has paid 291
consecutive quarterly dividends beginning in 1920.
DIVIDEND AND CASH INVESTMENT PLAN
All share owners of record are invited to participate in the Dividend and Cash
Investment Plan. The Plan provides a convenient, economical and systematic
method of acquiring additional shares of the Company's common stock. The Plan
permits share owners of record to reinvest dividends from Company stock in
shares of The Coca-Cola Company. Share owners also may purchase Company stock
through voluntary cash investments of up to $60,000 per year.
All costs and commissions associated with joining and participating in the
plan are paid by the Company.
The Plan's administrator, First Chicago Trust Company of New York, purchases
stock for voluntary cash investments on or about the first of each month, and
for dividend reinvestment on April 1, July 1, October 1 and December 15.
At year-end, 48 percent of share owners of record were participants in the
Plan. In 1993, share owners invested $21.6 million in dividends and $27.5
million in cash in the Plan.
ANNUAL MEETING OF SHARE OWNERS
April 20, 1994, at 9 a.m. local time
Hotel du Pont
11th and Market Streets
Wilmington, Delaware
PUBLICATIONS
THE COMPANY'S ANNUAL REPORT ON FORM 10-K AND QUARTERLY REPORT ON FORM 10-Q ARE
AVAILABLE FREE OF CHARGE FROM THE OFFICE OF THE SECRETARY, THE COCA-COLA
COMPANY, P.O. DRAWER 1734, ATLANTA, GEORGIA 30301.
A Notice of Annual Meeting of Share Owners and Proxy Statement are furnished
to share owners in advance of the annual meeting. Progress Reports, containing
financial results and other information, are distributed quarterly to share
owners.
Also available from the Office of the Secretary are Coca-Cola, A Business
System Toward 2000: Our Mission in the 1990s and The Chronicle of Coca-Cola
Since 1886.
CORPORATE OFFICES
The Coca-Cola Company
One Coca-Cola Plaza
Atlanta, Georgia 30313
(404) 676-2121
MAILING ADDRESS
The Coca-Cola Company
P.O. Drawer 1734
Atlanta, Georgia 30301
SHARE-OWNER ACCOUNT ASSISTANCE
For address changes, dividend checks, direct deposit of dividends, account
consolidation, registration changes, lost stock certificates, stock holdings
and the Dividend and Cash Investment Plan:
Registrar and Transfer Agent
First Chicago Trust Company of New York
P.O. Box 2500
Jersey City, NJ 07303-2500
(800) 446-2617
or
(201) 324-0498
or
Office of the Secretary
The Coca-Cola Company
(404) 676-2777
INSTITUTIONAL INVESTOR INQUIRIES
(404) 676-5766
ANNUAL REPORT REQUESTS
(800) 438-2653
GRAPHICS APPENDIX LIST
FORM 10-K ANNUAL REPORT OF THE COCA-COLA COMPANY
FOR THE YEAR ENDED DECEMBER 31, 1993
EDGAR VERSION (Exhibit 13.1) TYPESET (PAPER) VERSION
Financial Review Incorporating Management's Page 47 -- bar chart depicting Economic Profit and
Discussion and Analysis; Economic Profit and Company Company Stock Price (the text and data points used in
Stock Price -- bar chart omitted this chart appear in the text of the EDGAR version).
Financial Review Incorporating Management's Page 49 -- bar chart depicting Margin Analysis (Net
Discussion and Analysis; Management's Discussion and Operating Revenues, Gross Margin and Operating
Analysis; Margin Analysis -- bar chart omitted Margin) (the text and data points used in this chart
appear in the text of the Edgar version).
Notes to Consolidated Financial Statements; Net Page 68 -- bar charts depicting Net Operating
Operating Revenues by Line of Business and Operating Revenues by Line of Business and Operating Income by
Income by Line of Business (following Note 18. Line of Business (the text and data points used in
Nonrecurring Items) -- bar charts omitted these charts appear in the text of the EDGAR
version).
Notes to Consolidated Financial Statements; Net Page 71 -- bar charts depicting Net Operating
Operating Revenues by Geographic Area and Operating Revenues by Geographic Area and Operating Income by
Income by Geographic Area (following Note 20. Geographic Area (the text and data points used in
Operations in Geographic Areas) -- bar charts these charts appear in the text of the EDGAR
omitted version).