The Coca-Cola Company Reports 2010 Third Quarter and Year-to-Date Results
Today, our Company reports solid performance, with quarterly results exceeding all long-term growth targets. Our momentum advances from a position of strength as we continue to gain global volume and value share in both core sparkling and still beverages. The acquisition of Coca-Cola Enterprises' North American business closed early in Q4 in line with our commitment, and integration efforts are well on track.
-- Strong worldwide volume growth of 5% in the quarter, ahead of our
long-term target, with balanced quality growth around the world,
including 2% North America growth and 6% international growth.
Year-to-date worldwide volume grew 5%. Volume growth was led by brand
Coca-Cola, up 4% in the quarter and year-to-date.
-- Third quarter reported EPS was $0.88, up 9%, with comparable EPS up 12%
to $0.92, ahead of our long-term target.
-- Reported net revenues grew 5% in the quarter and year-to-date, with
comparable currency neutral net revenue growth of 8% in Q3, ahead of our
long-term target.
-- Reported operating income increased 9% in the quarter and 13%
year-to-date. Comparable currency neutral operating income grew 14% in
Q3, ahead of our long-term target.
-- Global volume and value share gains continued in both core sparkling and
still beverages. Grew total nonalcoholic ready-to-drink (NARTD) beverage
value share globally while maintaining volume share.
-- Strong cash flow continued, with year-to-date cash from operations up
15% to $7.2 billion.
-- Integration efforts of Coca-Cola Enterprises' (CCE) North American
business remain well on track, with expected synergies of at least $350
million per year, phased in over the next 4 years.
ATLANTA--(BUSINESS WIRE)-- The Coca-Cola Company reports strong third quarter operating results, with volume increasing 5% in both the quarter and year-to-date, ahead of our long-term growth target and cycling 2% volume growth in the prior year quarter. Importantly, North America volume grew 2% in the quarter, building on our momentum in this key market as we continue to evolve our franchise system and integrate the acquisition of CCE's North American business.
International volume increased 6% in the quarter. Eurasia and Africa volume grew 12% in the quarter, with broad-based growth across all business units and beverage categories, including 30% volume growth in Russia and double-digit growth in Turkey, Southern Eurasia and East and Central Africa. India achieved its 17th consecutive quarter of volume growth despite record rainfall in the quarter and cycling very strong 37% growth in the prior year quarter. Pacific volume grew 11% in the quarter, cycling 6% growth in the prior year quarter. These results were supported by 12% growth in China, as well as growth of 11% in Japan, 19% in the Philippines and 13% in Korea. Latin America volume grew 4% in the quarter, cycling 7% growth in the prior year quarter, with Brazil volume up 13%. Mexico posted even volume results despite adverse weather and cycling 9% growth in the prior year quarter. Europe volume was slightly positive in the quarter, rounding to even, a sequential improvement supported by mid single-digit volume growth in France and the Nordic Region as well as volume growth in Great Britain, Germany and Northern Central Europe. These positive results were partially offset by continuing macro-economic pressures in South and Eastern Europe and the Adriatic Region.
Strong growth continued in countries with per capita consumption of Company brands less than 150 eight-ounce servings per year, with volume up 10% in the quarter and year-to-date in those countries.
We gained value share and maintained volume share in total NARTD beverages driven by volume and value share gains across core sparkling beverages, still beverages, juices and juice drinks, sports drinks and packaged water. We also gained volume share in energy drinks. Internationally, we gained volume and value share in total NARTD beverages.
Incremental volume was evenly balanced between sparkling and still beverages. Total sparkling beverage volume increased 3% in the quarter with international sparkling volume increasing 4%. Brand Coca-Cola grew 4% in the quarter and year-to-date, with growth across many markets in the quarter, including Russia (+34%), Brazil (+14%), the Philippines (+12%), Japan (+9%), South Africa (+5%), France (+3%) and Germany (+2%). Total still beverage volume increased 11% in the quarter, led by continued growth in sports drinks, juices and juice drinks, teas and water brands. Still beverage volume increased 13% internationally.
Muhtar Kent, Chairman and Chief Executive Officer of The Coca-Cola Company said, "We are very pleased with our third quarter performance. We successfully completed our acquisition of CCE's North American business and the sale of our Norway and Sweden bottling operations to CCE, on plan and in line with our commitment. And we closed this transaction on the heels of a strong quarter. We continue to build on our momentum, delivering solid volume, revenue and profit growth this quarter, with our results exceeding all of our long-term targets and generating sustainable value for our shareowners. This quarter, once again, underscores how we are advancing our 2020 Vision from a position of strength as we enter a new era of growth for The Coca-Cola Company. Together, in close alignment with our global bottling partners, we are executing with excellence around the world. Our strategies, our brands, our marketing, our innovation, our partnerships and our people are defining new growth opportunities today and shaping our system's vision for this decade.
"We are now intensely focused on driving a fast and seamless integration effort in our North America operations. This evolution of our franchise system is an important milestone in realizing our 2020 Vision, strengthening our commitment to best serve our customers and consumers and facilitating our ability to achieve sustainable and profitable growth in this, our flagship market.
"We see a world where today's consumers are valuing companies and brands as much on the quality of their ideals as the quality of the products and services they provide. Ideals like community, fun, happiness and the hope for a better tomorrow. This is what inspires our Company and our system and the long-term value we can create for our consumers and shareowners."
FINANCIAL HIGHLIGHTS
-- Third quarter and year-to-date 2010 reported net revenues increased 5%.
Third quarter reported net revenue growth includes a negative 3% impact
due to the deconsolidation of certain entities required by a change in
accounting guidance. Comparable currency neutral net revenues increased
8% for the quarter, reflecting a 7% increase in concentrate sales.
Price/mix for the quarter was up 1%, with our positive revenue
management strategies offsetting the expected impact of geographic mix.
Year-to-date comparable currency neutral net revenues increased 5%, in
line with our long-term growth target.
-- Reported operating income increased 9% in the quarter and 13%
year-to-date. Third quarter 2010 comparable currency neutral operating
income increased 14%. This was driven by strong top-line performance as
well as a continued focus on cost management and the leveraging of
productivity initiatives. Currency had minimal impact on operating
income in the quarter. Year-to-date comparable currency neutral
operating income increased 11%.
-- Year-to-date cash from operations increased 15%.
-- There were no share repurchases during the first three quarters of 2010
due to the CCE transaction, which was finalized after the close of the
third quarter. However, we expect to repurchase approximately $2 billion
in shares by the end of 2010.
-- Productivity initiatives are well on plan and we remain on track to
achieve our target of $500 million in annualized savings by year-end
2011.
OPERATING REVIEW
Three Months Ended October 1, 2010
% Favorable / (Unfavorable)
Comparable
Currency
Unit Case Operating
Net Revenues Neutral
Volume Income
Operating
Income
Total Company 5 5 9 14
Eurasia & Africa 12 16 20 19
Europe 0 (3) (4) 1
Latin America 4 4 11 16
North America 2 2 16 14
Pacific 11 21 33 26
Bottling Investments (3) (2) (6) 44
Nine Months Ended October 1, 2010
% Favorable / (Unfavorable)
Comparable
Currency
Unit Case Operating
Net Revenues Neutral
Volume Income
Operating
Income
Total Company 5 5 13 11
Eurasia & Africa 11 17 23 15
Europe 0 2 3 3
Latin America 5 10 21 21
North America 1 0 9 7
Pacific 8 9 11 5
Bottling Investments 1 3 63 47
Eurasia & Africa
-- Our Eurasia and Africa Group's volume increased 12% in the quarter,
cycling 2% growth in the prior year quarter. Year-to-date volume
increased 11%, cycling 4% growth in the prior year. Net revenues for the
quarter increased 16%, reflecting a 13% increase in concentrate sales, a
2% positive currency impact and 1% positive price/mix. Reported
operating income increased 20% in the quarter. Comparable currency
neutral operating income increased 19% in the quarter due to the
increase in revenues, partially offset by increased investments in the
business.
-- In Eurasia and Africa, sparkling beverages increased 10% and still
beverages increased 21% in the quarter, with brand Coca-Cola growing
10%. Volume growth was broad-based, with every business unit growing
volume in the quarter. In Russia, we gained volume and value share in
total NARTD beverages, as well as in sparkling beverages, sports drinks
and packaged water, with value share gains in juices and juice drinks.
Volume in Russia was up 30%, cycling negative volume in the prior year
quarter, as volume growth for brand Coca-Cola, the single largest NARTD
brand in Russia, has continued to accelerate through the year. Africa
also reported strong volume growth in the quarter with the East and
Central Region growing double digits and both South Africa and the North
and West Region growing 6%. Volume in Turkey was up double digits with
strong Ramadan activation in the quarter. India achieved its 17th
consecutive quarter of volume growth despite record rainfall in the
quarter and cycling very strong 37% growth in the prior year quarter.
Europe
-- Our Europe Group's volume in the quarter was slightly positive, rounding
to even, cycling a decline of 2% in the prior year quarter. Year-to-date
volume declined slightly, also rounding to even, cycling a decline of 1%
in the prior year period. Reported net revenues for the quarter
decreased 3%, driven by a 6% negative impact of currency and partially
offset by positive concentrate sales and positive price/mix. Comparable
currency neutral net revenues increased 1% in the quarter. Reported
operating income decreased 4% in the quarter driven by the negative
impact of currency. Comparable currency neutral operating income
increased 1%, driven by positive price/mix and tight expense management,
partially offset by the timing of marketing expenses.
-- Volume performance in the quarter was positively impacted by mid
single-digit volume growth in France and the Nordic Region as well as
volume growth in Great Britain, Germany and Northern Central Europe.
Coca-Cola Zero volume grew 9% in the quarter and still beverage volume
was up 5%. In a quarter of aggressive price competition, we were pleased
to see NARTD volume share gains in France and Spain with the continued
success of Coca-Cola Zero and a renewed focus on delivering value to the
consumer. Europe also gained volume and value share in still beverages,
sports drinks and energy drinks. Volume results in Europe were impacted
by ongoing challenges in South and Eastern Europe and the Adriatic
Region, and we continue to monitor consumer confidence throughout Europe
as economic challenges persist and consumer confidence remains weak.
Latin America
-- Our Latin America Group delivered volume growth of 4% in the quarter,
cycling 7% growth in the prior year quarter. Year-to-date volume grew
5%, cycling 6% growth in the prior year. Brand Coca-Cola volume was up
4% in the quarter and 5% year-to-date driven by strong activation of our
FIFA World CupTM programs. Reported net revenues for the quarter
increased 4%, reflecting positive price/mix of 10% and concentrate sales
growth of 8%, partially offset by a 1% currency impact and the impact of
the deconsolidation of certain entities required by a change in
accounting guidance. Reported operating income was up 11% in the
quarter, with comparable currency neutral operating income up 16%,
primarily reflecting favorable volume and pricing and the continued
management of expenses.
-- Solid volume growth in the quarter was led by a 13% increase in Brazil
and a 6% increase in our South Latin Region. Brazil's focus on
single-serve and returnable packaging has resulted in steady volume
growth as well as strong volume and value share gains in total NARTD,
sparkling and still beverages. During the quarter, brand Coca-Cola was
up 14% in Brazil. Mexico posted even volume results despite adverse
weather and cycling 9% growth in the prior year quarter. Importantly,
Mexico continued to gain volume and value share in total NARTD beverages
including both sparkling and still beverage categories.
-- In the quarter the Latin America Group gained volume and value share in
total NARTD beverages including volume and value share gains in
sparkling and still beverages.
North America
-- Our North America Group's volume grew 2% during the quarter with volume
and value share gains across most categories, driven by a continued
focus on a well-defined brand, price, package and channel strategy.
Year-to-date volume grew 1%, cycling a decline of 2% in the prior year.
Net revenues for the quarter increased 2%, reflecting a 2% increase in
concentrate sales and positive price/mix, partially offset by the impact
of the deconsolidation of certain entities required by a change in
accounting guidance. Reported operating income increased 16%, while
comparable currency neutral operating income increased 14% in the
quarter reflecting the impact of higher concentrate sales and positive
pricing as well as tight expense management and favorable timing of
general and administrative expenses.
-- Volume for sparkling beverages was even in the quarter, and we continue
to lead the industry in building strong value-creating brands. Our total
sparkling portfolio grew volume and value share and we increased our
favorite brand score advantage versus our primary competitor. Coca-Cola
Zero delivered double-digit volume growth for the 18th consecutive
quarter. Sprite growth continued and Fanta had its strongest quarter of
the year.
-- North America still beverage volume was up 8%, led by strong
double-digit growth of Powerade (+32%) and Trademark Simply (+23%).
During the quarter, we gained volume and value share in juices and juice
drinks, sports drinks and ready-to-drink tea. In addition, the glaceau
business grew mid single digits in North America and vitaminwater
trademark grew low single digits. We have now grown volume share in
still beverages for 11 of the past 13 quarters and value share for 12 of
the last 13 quarters.
Pacific
-- Our Pacific Group delivered volume growth of 11% in the quarter, cycling
6% growth in the prior year quarter. These results were supported by 12%
growth in China, as well as growth of 11% in Japan, 19% in the
Philippines and 13% in Korea. Year-to-date volume grew 8%, cycling 5%
growth in the prior year. Net revenues for the quarter increased 21%,
primarily reflecting a 10% increase in concentrate sales, a 7% positive
currency impact and positive price/mix. Reported operating income
increased 33% in the quarter. Comparable currency neutral operating
income increased 26% in the quarter, reflecting the improvement in the
top line coupled with tight expense controls, partially offset by higher
marketing expenses due to timing.
-- Volume in China grew 12%, with volume and value share gains in sparkling
and still beverages, led by core sparkling beverages, juices and juice
drinks and packaged water. Sparkling beverages grew high single digits
due to our continued focus on the category with enhanced brand,
commercial and franchise plans. China juices and juice drinks grew
strong double digits in the quarter due to continued momentum of Minute
Maid Orange Pulpy and other variants including Tropical Pulpy, White
Grape and Lemon, as well as the launch of Natural Refreshment. As one of
the only true multi-category beverage players in China, our system is
investing for the long term in the China marketplace - investing $2
billion from 2009 to 2011. Clearly with the dynamic consumer
fundamentals and our solid position in China, we are just getting
started in this region.
-- In Japan, volume increased 11% in the quarter driven by successful
in-market activations, strong innovation and very hot weather. Japan
grew share in total NARTD beverages, as well as in sparkling and still
beverages, driven by volume and value share gains in core sparkling
beverages, sports drinks and packaged water. Brand Coca-Cola volume grew
9% in the quarter as a result of strong programs such as the successful
FIFA World CupTM activation and our Coca-Cola Summer Promotion. Sports
drinks volume was up strong double digits. Overall, we are encouraged by
the improving trends in Japan this past quarter and believe we are
executing the right strategies and plans. Yet we remain cautious, as we
expect the long-term economic and demographic headwinds in Japan to
continue.
Bottling Investments
-- Our Bottling Investments Group's volume increased 8% in the quarter on a
comparable basis after adjusting for the impact of the deconsolidation
of certain bottlers required by a change in accounting guidance.
Reported volume decreased by 3%. The increase in comparable volume was
driven by strong growth across most markets, especially the Philippines,
China and Brazil. In addition, Germany posted its fifth consecutive
quarter of growth. Reported net revenues for the quarter decreased 2%,
while comparable net revenues were up 7% after adjusting for the impact
of the deconsolidation. This reflects the 8% increase in volume,
partially offset by the impact of currency. Reported operating income
decreased 6%. Comparable currency neutral operating income increased 44%
reflecting the increase in revenues and the benefits of disciplined
capital investments and expense management, partially offset by
continued investment in our in-market capabilities.
FINANCIAL REVIEW
Reported net revenues for the quarter increased 5%, with comparable net revenues up 8%, reflecting a 3% impact due to the deconsolidation of certain entities required by a change in accounting guidance. Net revenues reflect a 7% increase in concentrate sales during the quarter. Concentrate sales are in line with unit case volume year-to-date at 5%. Third quarter net revenues also reflect a 1% positive impact of price/mix, as we successfully executed our revenue growth management strategies to realize positive pricing that more than offset the impact of geographic mix. This enabled us to grow global value share for the 13th consecutive quarter.
Cost of goods sold decreased 1% in the quarter. After adjusting for items impacting comparability, currency neutral cost of goods sold increased 3%, driven by increased concentrate sales.
Selling, general and administrative (SG&A) expenses increased 5% in the quarter. After adjusting for items impacting comparability, SG&A expenses increased 7% in the quarter and increased 8% on a currency neutral basis. This increase was primarily driven by continued investment behind our bottling operations and timing of marketing expenses versus the prior year as well as the cycling of lower incentive compensation expense. And we continue to focus on ongoing productivity initiatives.
Reported operating income increased 9% and our comparable operating income increased 14% in the quarter. Items impacting comparability reduced third quarter operating income by $100 million in 2010 and increased third quarter operating income by $4 million in 2009. These items were primarily related to restructuring charges and costs related to global productivity initiatives as well as costs in 2010 related to the CCE transaction. In addition, items impacting comparability in 2009 included the deconsolidation of certain entities required by a change in accounting guidance. Comparable currency neutral operating income was up 14% in the quarter as currency had minimal impact on comparable operating income in the quarter.
For the third quarter of 2010, our reported earnings per share were $0.88, an increase of 9%. Reported earnings per share for the third quarter of 2010 included a net charge of $0.04 and for the third quarter of 2009 included a net charge of $0.01. The net charge in both years included restructuring charges and costs related to global productivity initiatives. The net charge in 2010 also included costs related to the CCE transaction. After considering the items impacting comparability, earnings per share for the quarter were $0.92, an increase of 12%.
Cash from operations was $7.2 billion for the first nine months of the year as compared with $6.3 billion in the prior year, an increase of 15%. This increase was primarily driven by our improved performance, including the effect of currency.
In anticipation of closing our acquisition of CCE's North American business and the sale of our Norway and Sweden bottling operations to CCE, the Company and CCE agreed to make the required cash payments on the last day of our third quarter. As a result, the Company made a cash payment to CCE of approximately $1.3 billion and received a cash payment from CCE of approximately $0.9 billion. In the event the transaction did not close, both parties would have been required to return the cash received. Therefore, the cash payment to CCE ($1.3 billion) was classified in prepaid expenses and other assets and the cash payment received from CCE ($0.9 billion) was classified in accounts payable and accrued expenses in our consolidated balance sheet. The cash payment and cash receipt were classified as acquisitions and investments, principally beverage and bottling companies and trademarks and proceeds from disposals of bottling companies and other investments, respectively, in our consolidated statement of cash flows.
Effective Tax Rate
The reported effective tax rate for the quarter was 23.4%. The underlying effective tax rate on operations for the quarter was 22.6%, reflecting an underlying annual rate of 23%. The variance between the reported rate and the underlying rate was due to the tax impact of various items impacting comparability, separately disclosed in this document in the Reconciliation of GAAP and Non-GAAP Financial Measures schedule.
Our underlying effective tax rate does not reflect the impact of significant or unusual items and discrete events, which, if and when they occur, are separately recognized in the appropriate period.
Items Impacting Prior Year Results
First quarter 2009 results included a net charge of $0.07 per share primarily related to restructuring charges and asset write-downs.
Second quarter 2009 results included a net charge of $0.04 per share primarily related to restructuring charges and asset write-downs.
Third quarter 2009 results included a net charge of $0.01 per share primarily related to restructuring charges and costs related to global productivity initiatives.
NOTES
-- All references to growth rate percentages, share and cycling of growth
rates compare the results of the period to those of the prior year
comparable period.
-- "Concentrate sales" represents the amount of concentrates, syrups,
beverage bases and powders sold by, or used in finished beverages sold
by, the Company to its bottling partners or other customers.
-- "Sparkling beverages" means NARTD beverages with carbonation, including
energy drinks and carbonated waters and flavored waters.
-- "Still beverages" means nonalcoholic beverages without carbonation,
including noncarbonated waters, flavored waters and enhanced waters,
juices and juice drinks, teas, coffees and sports drinks.
-- All references to volume and volume percentage changes indicate unit
case volume. All volume percentage changes are computed based on average
daily sales. "Unit case" means a unit of measurement equal to 24
eight-ounce servings of finished beverage. "Unit case volume" means the
number of unit cases (or unit case equivalents) of Company beverages
directly or indirectly sold by the Company and its bottling partners to
customers.
-- Year-to-date 2010 results were impacted by one fewer selling day in the
first quarter, which will be offset by the impact of one additional
selling day in fourth quarter 2010 results.
-- Comparable results for the third quarter and year-to-date 2010 reflect
the impact of the deconsolidation of certain entities required by a
change in accounting guidance.
-- Our long-term growth targets referenced in this release are on a
comparable currency neutral basis and exclude structural changes.
-- All references to operating expense leverage indicate currency neutral
operating expense leverage. This is calculated by subtracting comparable
currency neutral gross profit growth from comparable currency neutral
operating income growth.
CONFERENCE CALL
We are hosting a conference call with investors and analysts to discuss our third quarter and year-to-date 2010 results today at 9:30 a.m. (EDT). We invite investors to listen to the live audiocast of the conference call at our website, http://www.thecoca-colacompany.com in the "Investors" section. A replay in downloadable MP3 format will also be available within 24 hours after the audiocast on our website. Further, the "Investors" section of our website includes a reconciliation of non-GAAP financial measures that may be used periodically by management when discussing our financial results with investors and analysts to our results as reported under GAAP.
THE COCA-COLA COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(UNAUDITED)
(In millions except per share data)
Three Months Ended
October 1, 2010 October 2, 2009 % Change
Net Operating Revenues $ 8,426 $ 8,044 5
Cost of goods sold 2,918 2,934 (1)
Gross Profit 5,508 5,110 8
Selling, general and 3,064 2,912 5
administrative expenses
Other operating charges 100 48 --
Operating Income 2,344 2,150 9
Interest income 93 67 39
Interest expense 80 89 (10)
Equity income (loss) - net 355 282 26
Other income (loss) - net (12 ) 33 --
Income Before Income Taxes 2,700 2,443 11
Income taxes 633 523 21
Consolidated Net Income 2,067 1,920 8
Less: Net income attributable to 12 24 (50)
noncontrolling interests
Net Income Attributable to
Shareowners of The Coca-Cola $ 2,055 $ 1,896 8
Company
Diluted Net Income Per Share* $ 0.88 $ 0.81 9
Average Shares Outstanding - 2,336 2,332
Diluted*
For the three months ended October 1, 2010 and October 2, 2009, "Basic Net Income Per Share" was $0.89 for 2010 and $0.82 for 2009 based on "Average * Shares Outstanding - Basic" of 2,310 for 2010 and 2,316 for 2009. Basic net income per share and diluted net income per share are calculated based on net income attributable to shareowners of The Coca-Cola Company.
THE COCA-COLA COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(UNAUDITED)
(In millions except per share data)
Nine Months Ended
October 1, 2010 October 2, 2009 % Change
Net Operating Revenues $ 24,625 $ 23,480 5
Cost of goods sold 8,414 8,437 0
Gross Profit 16,211 15,043 8
Selling, general and 8,647 8,380 3
administrative expenses
Other operating charges 274 212 --
Operating Income 7,290 6,451 13
Interest income 220 184 20
Interest expense 246 271 (9)
Equity income (loss) - net 847 609 39
Other income (loss) - net (109 ) 13 --
Income Before Income Taxes 8,002 6,986 15
Income taxes 1,927 1,658 16
Consolidated Net Income 6,075 5,328 14
Less: Net income attributable to 37 47 (21)
noncontrolling interests
Net Income Attributable to
Shareowners of The Coca-Cola $ 6,038 $ 5,281 14
Company
Diluted Net Income Per Share* $ 2.59 $ 2.27 14
Average Shares Outstanding - 2,329 2,324
Diluted*
For the nine months ended October 1, 2010 and October 2, 2009, "Basic Net Income Per Share" was $2.62 for 2010 and $2.28 for 2009 based on "Average * Shares Outstanding - Basic" of 2,307 for 2010 and 2,314 for 2009. Basic net income per share and diluted net income per share are calculated based on net income attributable to shareowners of The Coca-Cola Company.
THE COCA-COLA COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(UNAUDITED)
(In millions except par value)
October 1, 2010 December 31, 2009
Assets
Current Assets
Cash and cash equivalents $ 10,509 $ 7,021
Short-term investments 2,644 2,130
Total Cash, Cash Equivalents and 13,153 9,151
Short-Term Investments
Marketable securities 112 62
Trade accounts receivable, less allowances 3,720 3,758
of $48 and $55, respectively
Inventories 2,259 2,354
Prepaid expenses and other assets 3,248 2,226
Assets held for sale 613 -
Total Current Assets 23,105 17,551
Equity Method Investments 6,870 6,217
Other Investments, Principally Bottling 610 538
Companies
Other Assets 2,100 1,976
Property, Plant and Equipment - net 9,145 9,561
Trademarks With Indefinite Lives 6,403 6,183
Goodwill 3,882 4,224
Other Intangible Assets 1,974 2,421
Total Assets $ 54,089 $ 48,671
Liabilities and Equity
Current Liabilities
Accounts payable and accrued expenses $ 7,691 $ 6,657
Loans and notes payable 8,390 6,749
Current maturities of long-term debt 547 51
Accrued income taxes 429 264
Liabilities held for sale 214 -
Total Current Liabilities 17,271 13,721
Long-Term Debt 4,456 5,059
Other Liabilities 2,777 2,965
Deferred Income Taxes 1,384 1,580
The Coca-Cola Company Shareowners' Equity
Common stock, $0.25 par value; Authorized
- 5,600 shares; Issued - 3,520 and 3,520 880 880
shares, respectively
Capital surplus 9,013 8,537
Reinvested earnings 44,541 41,537
Accumulated other comprehensive income (1,381 ) (757 )
(loss)
Treasury stock, at cost - 1,205 and 1,217 (25,147 ) (25,398 )
shares, respectively
Equity Attributable to Shareowners of The 27,906 24,799
Coca-Cola Company
Equity Attributable to Noncontrolling 295 547
Interests
Total Equity 28,201 25,346
Total Liabilities and Equity $ 54,089 $ 48,671
THE COCA-COLA COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flow
(UNAUDITED)
(In millions)
Nine Months Ended
October 1, 2010 October 2, 2009
Operating Activities
Consolidated net income $ 6,075 $ 5,328
Depreciation and amortization 934 905
Stock-based compensation expense 185 142
Deferred income taxes 46 26
Equity income or loss, net of dividends (567 ) (428 )
Foreign currency adjustments 109 15
Gains on sales of assets, including bottling (48 ) (33 )
interests
Other operating charges 111 134
Other items 87 187
Net change in operating assets and 292 (6 )
liabilities
Net cash provided by operating activities 7,224 6,270
Investing Activities
Purchases of short-term investments (3,252 ) -
Proceeds from disposals of short-term 2,742 -
investments
Acquisitions and investments, principally
beverage and bottling companies and (1,798 ) (286 )
trademarks
Purchases of other investments (65 ) (20 )
Proceeds from disposals of bottling 1,050 102
companies and other investments
Purchases of property, plant and equipment (1,335 ) (1,399 )
Proceeds from disposals of property, plant 94 34
and equipment
Other investing activities (149 ) 9
Net cash provided by (used in) investing (2,713 ) (1,560 )
activities
Financing Activities
Issuances of debt 8,611 11,149
Payments of debt (6,983 ) (9,408 )
Issuances of stock 535 232
Purchases of stock for treasury (3 ) (6 )
Dividends (3,034 ) (2,850 )
Other financing activities (11 ) (1 )
Net cash provided by (used in) financing (885 ) (884 )
activities
Effect of Exchange Rate Changes on Cash and (138 ) 319
Cash Equivalents
Cash and Cash Equivalents
Net increase (decrease) during the period 3,488 4,145
Balance at beginning of period 7,021 4,701
Balance at end of period $ 10,509 $ 8,846
THE COCA-COLA COMPANY AND SUBSIDIARIES
Operating Segments
(UNAUDITED)
(In Millions)
Three Months Ended
Net Operating Revenues Operating Income (Loss) Income (Loss) Before Income
Taxes
October October October October October October
1, 2, 1, 2, 1, 2,
% Fav. / % Fav. / % Fav. /
2010 2009 2010 2009 2010 2009
(Unfav.) (Unfav.) (Unfav.)
(1) (5) (2) (6) (2), (3), (6), (7),
(4) (8)
Eurasia & $ 624 $ 537 16 $ 221 $ 184 20 $ 217 $ 182 19
Africa
Europe 1,338 1,380 (3 ) 742 774 (4 ) 748 784 (5 )
Latin 1,048 1,004 4 616 557 11 617 554 11
America
North 2,171 2,119 2 503 433 16 501 435 15
America
Pacific 1,538 1,269 21 586 442 33 588 435 35
Bottling 2,159 2,212 (2 ) 78 83 (6 ) 432 369 17
Investments
Corporate 12 12 0 (402 ) (323 ) (24 ) (403 ) (316 ) (28 )
Eliminations (464 ) (489 ) -- -- -- -- -- -- --
Consolidated $ 8,426 $ 8,044 5 $ 2,344 $ 2,150 9 $ 2,700 $ 2,443 11
Intersegment revenues for the three months ended October 1, 2010, were
(1) approximately $25 million for Eurasia and Africa, $231 million for Europe,
$60 million for Latin America, $12 million for North America, $109 million
for Pacific and $27 million for Bottling Investments.
Operating income (loss) and income (loss) before income taxes for the three
months ended October 1, 2010, were reduced by approximately $1 million for
Eurasia and Africa, $13 million for Europe, $8 million for Pacific, $12
million for Bottling Investments and $68 million for Corporate, primarily
due to the Company's ongoing productivity, integration and restructuring
(2) initiatives and transaction costs incurred in connection with our
acquisition of CCE's North American business and the sale of our Norwegian
and Swedish bottling operations to CCE. Operating income (loss) and income
(loss) before income taxes for the three months ended October 1, 2010, were
increased by approximately $2 million for North America due to the
refinement of previously established restructuring accruals.
Income (loss) before income taxes for the three months ended October 1,
2010, was reduced by approximately $10 million for Bottling Investments.
This net charge was primarily attributable to the Company's proportionate
(3) share of transaction costs recorded by CCE, which was partially offset by
our proportionate share of a foreign currency remeasurement gain recorded
by an equity method investee. The components of the net charge were
individually insignificant.
Income (loss) before income taxes for the three months ended October 1,
(4) 2010, was increased by approximately $23 million for Corporate due to the
gain on the sale of 50 percent of our investment in Leao Junior, S.A., a
Brazilian tea company.
Intersegment revenues for the three months ended October 2, 2009, were
(5) approximately $72 million for Eurasia and Africa, $243 million for Europe,
$44 million for Latin America, $7 million for North America, $87 million
for Pacific and $36 million for Bottling Investments.
Operating income (loss) and income (loss) before income taxes for the three
months ended October 2, 2009, were reduced by approximately $2 million for
(6) Europe, $2 million for North America, $1 million for Pacific, $18 million
for Bottling Investments and $25 million for Corporate, primarily as a
result of the Company's ongoing productivity, integration and restructuring
initiatives.
Income (loss) before income taxes for the three months ended October 2,
(7) 2009, was reduced by approximately $5 million for Bottling Investments and
$1 million for Corporate, primarily attributable to our proportionate share
of restructuring charges recorded by equity method investees.
Income (loss) before income taxes for the three months ended October 2,
(8) 2009, was increased by approximately $10 million for Corporate due to
realized gains on the sale of equity securities that were classified as
available-for-sale.
THE COCA-COLA COMPANY AND SUBSIDIARIES
Operating Segments
(UNAUDITED)
(In Millions)
Nine Months Ended
Net Operating Revenues Operating Income (Loss) Income (Loss) Before Income Taxes
October 1, October 2,
October 1, October 2, October October
% Fav. / 1, 2, % Fav. / 2010 2009 % Fav. /
2010 2009
(Unfav.) 2010 2009 (Unfav.) (2), (3), (8), (9), (Unfav.)
(1) (7)
(2) (8) (4), (5), (10), (11)
(6)
Eurasia & $ 1,937 $ 1,655 17 $ 781 $ 634 23 $ 794 $ 637 25
Africa
Europe 4,086 4,013 2 2,391 2,327 3 2,423 2,361 3
Latin 3,036 2,762 10 1,795 1,483 21 1,810 1,481 22
America
North 6,383 6,385 0 1,435 1,316 9 1,433 1,322 8
America
Pacific 4,055 3,731 9 1,658 1,492 11 1,659 1,475 12
Bottling 6,453 6,276 3 221 136 63 1,018 746 36
Investments
Corporate 63 64 (2 ) (991 ) (937 ) (6 ) (1,135 ) (1,036 ) (10 )
Eliminations (1,388 ) (1,406 ) -- -- -- -- -- -- --
Consolidated $ 24,625 $ 23,480 5 $ 7,290 $ 6,451 13 $ 8,002 $ 6,986 15
Intersegment revenues for the nine months ended October 1, 2010, were
(1) approximately $110 million for Eurasia and Africa, $686 million for
Europe, $171 million for Latin America, $47 million for North America,
$297 million for Pacific and $77 million for Bottling Investments.
Operating income (loss) and income (loss) before income taxes for the nine
months ended October 1, 2010, were reduced by approximately $4 million for
Eurasia and Africa, $43 million for Europe, $8 million for North America,
$13 million for Pacific, $56 million for Bottling Investments and $150
(2) million for Corporate, primarily due to the Company's ongoing
productivity, integration and restructuring initiatives and transaction
costs incurred in connection with our acquisition of CCE's North American
business and the sale of our Norwegian and Swedish bottling operations to
CCE.
Income (loss) before income taxes for the nine months ended October 1,
2010, was reduced by approximately $55 million for Bottling Investments.
This net charge was primarily attributable to the Company's proportionate
(3) share of unusual tax charges, asset impairments, restructuring charges and
transaction costs recorded by equity method investees, which were
partially offset by our proportionate share of a foreign currency
remeasurement gain recorded by an equity method investee. The components
of the net charge were individually insignificant.
Income (loss) before income taxes for the nine months ended October 1,
(4) 2010, was increased by approximately $23 million for Corporate due to the
gain on the sale of 50 percent of our investment in Leao Junior, S.A., a
Brazilian tea company.
Income (loss) before income taxes for the nine months ended October 1,
(5) 2010, was reduced by approximately $103 million for Corporate due to the
remeasurement of our Venezuelan subsidiary's net assets.
Income (loss) before income taxes for the nine months ended October 1,
(6) 2010, was reduced by approximately $23 million for Bottling Investments
and $3 million for Corporate, primarily due to other-than-temporary
impairments of available-for-sale securities.
Intersegment revenues for the nine months ended October 2, 2009, were
(7) approximately $186 million for Eurasia and Africa, $685 million for
Europe, $113 million for Latin America, $56 million for North America,
$268 million for Pacific and $98 million for Bottling Investments.
Operating income (loss) and income (loss) before income taxes for the nine
months ended October 2, 2009, were reduced by approximately $3 million for
Eurasia and Africa, $3 million for Europe, $15 million for North America,
(8) $1 million for Pacific, $109 million for Bottling Investments and $81
million for Corporate, primarily as a result of the Company's ongoing
productivity, integration and restructuring initiatives and asset
impairments.
Income (loss) before income taxes for the nine months ended October 2,
2009, was reduced by approximately $66 million for Bottling Investments
(9) and $2 million for Corporate, primarily attributable to our proportionate
share of asset impairment charges and restructuring costs recorded by
equity method investees.
Income (loss) before income taxes for the nine months ended October 2,
(10) 2009, was reduced by approximately $27 million for Corporate due to an
other-than-temporary impairment of a cost method investment.
Income (loss) before income taxes for the nine months ended October 2,
(11) 2009, was increased by approximately $10 million for Corporate due to
realized gains on the sale of equity securities that were classified as
available-for-sale.
THE COCA-COLA COMPANY AND SUBSIDIARIES
Reconciliation of GAAP and Non-GAAP Financial Measures
(UNAUDITED)
(In millions except per share data)
Three Months Ended October 1, 2010
Items Impacting Comparability
% Change -
After % Change
- After
Reported Asset Certain Considering
Productivity Equity CCE Transaction Tax Reported Considering
(GAAP) Impairments/ Items
Initiatives Investees Transaction Gain Matters (GAAP) Items
Restructuring (Non-GAAP)
(Non-GAAP)
Net Operating $8,426 $8,426 5 8 (1)
Revenues
Cost of goods 2,918 2,918 (1 ) 4 (2)
sold
Gross Profit 5,508 5,508 8 10 (3),
(6)
Selling,
general and 3,064 3,064 5 7 (4)
administrative
expenses
Other
operating 100 ($9 ) ($49 ) ($42 ) - -- --
charges
Operating 2,344 9 49 42 2,444 9 14 (5),
Income (6)
Interest 93 93 39 41
income
Interest 80 80 (10 ) (7 )
expense
Equity income 355 $10 365 26 17
(loss) - net
Other income (12 ) ($23 ) (35 ) -- --
(loss) - net
Income Before 2,700 9 49 10 42 (23 ) 2,787 11 13
Income Taxes
Income taxes 633 16 1 3 (10 ) ($13 ) 630 21 19
Consolidated 2,067 9 33 9 39 (13 ) 13 2,157 8 12
Net Income
Less: Net
income
attributable 12 12 (50 ) 50
to
noncontrolling
interests
Net Income
Attributable
to Shareowners $2,055 $9 $33 $9 $39 ($13 ) $13 $2,145 8 12
of The
Coca-Cola
Company
Diluted Net
Income Per $0.88 $0.00 $0.01 $0.00 $0.02 ($0.01 ) $0.01 $0.92 (7) 9 12
Share
Average Shares
Outstanding - 2,336 2,336 2,336 2,336 2,336 2,336 2,336 2,336
Diluted
Gross Margin 65.4 % 65.4 %
Operating 27.8 % 29.0 %
Margin
Effective Tax 23.4 % 22.6 %
Rate
Three Months Ended October 2, 2009
Items Impacting Comparability
After
Reported Asset Accounting Considering
Productivity Equity Transaction Certain Tax
(GAAP) Impairments/ Guidance Items
Initiatives Investees Gain Matters
Restructuring Changes (Non-GAAP)
Net Operating $8,044 ($223 ) $7,821
Revenues
Cost of goods 2,934 (123 ) 2,811
sold
Gross Profit 5,110 (100 ) 5,010
Selling,
general and 2,912 (48 ) 2,864
administrative
expenses
Other
operating 48 ($23 ) ($25 ) -
charges
Operating 2,150 23 25 (52 ) 2,146
Income
Interest 67 (1 ) 66
income
Interest 89 (3 ) 86
expense
Equity income 282 $6 23 311
(loss) - net
Other income 33 ($10 ) 23
(loss) - net
Income Before 2,443 23 25 6 (10 ) (27 ) 2,460
Income Taxes
Income taxes 523 2 8 $9 (11 ) 531
Consolidated 1,920 21 17 6 (10 ) (9 ) (16 ) 1,929
Net Income
Less: Net
income
attributable 24 (16 ) 8
to
noncontrolling
interests
Net Income
Attributable
to Shareowners $1,896 $21 $17 $6 ($10 ) ($9 ) $0 $1,921
of The
Coca-Cola
Company
Diluted Net
Income Per $0.81 $0.01 $0.01 $0.00 $0.00 $0.00 $0.00 $0.82 (7)
Share
Average Shares
Outstanding - 2,332 2,332 2,332 2,332 2,332 2,332 2,332 2,332
Diluted
Gross Margin 63.5 % 64.1 %
Operating 26.7 % 27.4 %
Margin
Effective Tax 21.4 % 21.6 %
Rate
Items to consider for comparability include primarily charges, gains,
and accounting changes. Charges and accounting changes negatively
Notes: impacting net income are reflected as increases to reported net income.
Gains and accounting changes positively impacting net income are
reflected as deductions to reported net income.
The currency impact is equal to the difference between current year U.S.
dollar amounts at current year exchange rates compared to current year
U.S. dollar amounts recalculated using prior year comparable period
exchange rates. In all cases, the exchange rates include the impact of
hedging in the applicable periods.
Reported net operating revenue growth includes a negative impact of $223
million, or approximately 3%, due to items impacting comparability,
which represents accounting guidance changes that are structural in
nature. Currency had minimal impact on net operating revenues after
considering items comparability for the three months ended October 1,
(1) 2010. Currency neutral net operating revenue growth after considering
items impacting comparability is 8%. Currency neutral net operating
revenue growth also includes a negative impact of $18 million due to
other structural changes. Currency neutral net operating revenue growth
after considering items impacting comparability and other structural
changes is 8%.
Cost of goods sold after considering items impacting comparability for
(2) the three months ended October 1, 2010 includes a currency impact of
approximately 1%. Currency neutral cost of goods sold after considering
items impacting comparability increased 3%.
Currency had minimal impact on gross profit after considering items
(3) impacting comparability for the three months ended October 1, 2010.
Currency neutral gross profit growth after considering items impacting
comparability is 10%.
Selling, general and administrative expenses after considering items
impacting comparability for the three months ended October 1, 2010
(4) include a currency impact of approximately 1%. Currency neutral selling,
general and administrative expenses after considering items impacting
comparability increased 8%.
Currency had minimal impact on operating income after considering items
(5) impacting comparability for the three months ended October 1, 2010.
Currency neutral operating income growth after considering items
impacting comparability is 14%.
Currency neutral operating expense leverage after considering items
impacting comparability for the three months ended October 1, 2010 is
(6) positive 4 percentage points, which is calculated by subtracting
currency neutral gross profit growth after considering items impacting
comparability of 10% from currency neutral operating income growth after
considering items impacting comparability of 14%.
(7) Per share amounts do not add due to rounding.
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures used in managing the business may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain items that impact the overall comparability. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. See the tables above for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three months ended October 1, 2010 and October 2, 2009. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP.
THE COCA-COLA COMPANY AND SUBSIDIARIES
Reconciliation of GAAP and Non-GAAP Financial Measures
(UNAUDITED)
(In millions except per share data)
Nine Months Ended October 1, 2010
% Change -
Items Impacting Comparability % Change
After - After
Reported Asset Certain Considering Reported Considering
Productivity Equity CCE Transaction Tax
(GAAP) Impairments/ Other Items Items (GAAP) Items
Initiatives Investees Transaction Gain Matters
Restructuring (Non-GAAP) (Non-GAAP)
Net Operating $24,625 $24,625 5 7 (1)
Revenues
Cost of goods 8,414 8,414 0 4 (2)
sold
Gross Profit 16,211 16,211 8 9 (3),
(6)
Selling,
general and 8,647 8,647 3 5 (4)
administrative
expenses
Other
operating 274 ($68 ) ($134 ) ($72 ) - -- --
charges
Operating 7,290 68 134 72 7,564 13 15 (5),
Income (6)
Interest 220 220 20 22
income
Interest 246 246 (9 ) (5 )
expense
Equity income 847 $55 902 39 24
(loss) - net
Other income (109 ) 26 ($23 ) $103 (3 ) -- --
(loss) - net
Income Before 8,002 94 134 55 72 (23 ) 103 8,437 15 17
Income Taxes
Income taxes 1,927 4 45 7 10 (10 ) ($42 ) 1,941 16 18
Consolidated 6,075 90 89 48 62 (13 ) 42 103 6,496 14 16
Net Income
Less: Net
income
attributable 37 37 (21 ) 61
to
noncontrolling
interests
Net Income
Attributable
to Shareowners $6,038 $90 $89 $48 $62 ($13 ) $42 $103 $6,459 14 16
of The
Coca-Cola
Company
Diluted Net
Income Per $2.59 $0.04 $0.04 $0.02 $0.03 ($0.01 ) $0.02 $0.04 $2.77 14 15
Share
Average Shares
Outstanding - 2,329 2,329 2,329 2,329 2,329 2,329 2,329 2,329 2,329
Diluted
Gross Margin 65.8 % 65.8 %
Operating 29.6 % 30.7 %
Margin
Effective Tax 24.1 % 23.0 %
Rate
Nine Months Ended October 2, 2009
Items Impacting Comparability
After
Reported Asset Accounting Considering
Productivity Equity Transaction Certain Tax
(GAAP) Impairments/ Guidance Items
Initiatives Investees Gain Matters
Restructuring Changes (Non-GAAP)
Net Operating $23,480 ($561 ) $22,919
Revenues
Cost of goods 8,437 (330 ) 8,107
sold
Gross Profit 15,043 (231 ) 14,812
Selling,
general and 8,380 (126 ) 8,254
administrative
expenses
Other
operating 212 ($154 ) ($58 ) -
charges
Operating 6,451 154 58 (105 ) 6,558
Income
Interest 184 (4 ) 180
income
Interest 271 (11 ) 260
expense
Equity income 609 $68 52 729
(loss) - net
Other income 13 27 ($10 ) (3 ) 27
(loss) - net
Income Before 6,986 181 58 68 (10 ) (49 ) 7,234
Income Taxes
Income taxes 1,658 9 20 15 ($38 ) (25 ) 1,639
Consolidated 5,328 172 38 53 (10 ) 38 (24 ) 5,595
Net Income
Less: Net
income
attributable 47 (24 ) 23
to
noncontrolling
interests
Net Income
Attributable
to Shareowners $5,281 $172 $38 $53 ($10 ) $38 $0 $5,572
of The
Coca-Cola
Company
Diluted Net
Income Per $2.27 $0.07 $0.02 $0.02 $0.00 $0.02 $0.00 $2.40
Share
Average Shares
Outstanding - 2,324 2,324 2,324 2,324 2,324 2,324 2,324 2,324
Diluted
Gross Margin 64.1 % 64.6 %
Operating 27.5 % 28.6 %
Margin
Effective Tax 23.7 % 22.7 %
Rate
Items to consider for comparability include primarily charges, gains,
and accounting changes. Charges and accounting changes negatively
Notes: impacting net income are reflected as increases to reported net income.
Gains and accounting changes positively impacting net income are
reflected as deductions to reported net income.
The currency impact is equal to the difference between current year U.S.
dollar amounts at current year exchange rates compared to current year
U.S. dollar amounts recalculated using prior year comparable period
exchange rates. In all cases, the exchange rates include the impact of
hedging in the applicable periods.
Reported net operating revenue growth includes a negative impact of $561
million, or approximately 3%, due to items impacting comparability,
which represents accounting guidance changes that are structural in
nature. Net operating revenue growth after considering items impacting
comparability for the nine months ended October 1, 2010 includes a
(1) positive currency impact of approximately 3%. Currency neutral net
operating revenue growth after considering items impacting comparability
is 5%. Items do not add due to rounding. Currency neutral net operating
revenue growth also includes a negative impact of $21 million due to
other structural changes. Currency neutral net operating revenue growth
after considering items impacting comparability and other structural
changes is 5%.
Cost of goods sold after considering items impacting comparability for
(2) the nine months ended October 1, 2010 includes a currency impact of
approximately 3%. Currency neutral cost of goods sold after considering
items impacting comparability increased 1%.
Gross profit after considering items impacting comparability for the
(3) nine months ended October 1, 2010 includes a positive currency impact of
approximately 2%. Currency neutral gross profit growth after considering
items impacting comparability is 7%.
Selling, general and administrative expenses after considering items
impacting comparability for the nine months ended October 1, 2010
(4) include a currency impact of approximately 2%. Currency neutral selling,
general and administrative expenses after considering items impacting
comparability increased 3%.
Operating income after considering items impacting comparability for the
(5) nine months ended October 1, 2010 includes a positive currency impact of
approximately 4%. Currency neutral operating income growth after
considering items impacting comparability is 11%.
Currency neutral operating expense leverage after considering items
impacting comparability for the nine months ended October 1, 2010 is
(6) positive 4 percentage points, which is calculated by subtracting
currency neutral gross profit growth after considering items impacting
comparability of 7% from currency neutral operating income growth after
considering items impacting comparability of 11%.
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures used in managing the business may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain items that impact the overall comparability. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. See the tables above for supplemental financial data and corresponding reconciliations to GAAP financial measures for the nine months ended October 1, 2010 and October 2, 2009. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP.
THE COCA-COLA COMPANY AND SUBSIDIARIES
Reconciliation of GAAP and Non-GAAP Financial Measures
Operating Income (Loss) by Segment
(UNAUDITED)
(In millions)
Three Months Ended October 1, 2010 Three Months Ended October 2, 2009
% Favorable
Items Impacting Comparability Items Impacting Comparability
(Unfavorable)
% Favorable -
After After
(Unfavorable) After
Reported Asset Considering Reported Asset Accounting Considering -
Productivity CCE Productivity Considering
(GAAP) Impairments/ Items (GAAP) Impairments/ Guidance Items Reported
Initiatives Transaction Initiatives Items
Restructuring (Non-GAAP) Restructuring Changes (Non-GAAP) (GAAP)
(Non-GAAP)
(1)
Eurasia & $221 $1 $222 $184 ($1 ) $1 $184 20 21
Africa
Europe 742 13 755 774 1 1 ($1 ) 775 (4 ) (3 )
Latin 616 616 557 (13 ) 544 11 13
America
North 503 ($2 ) 501 433 2 5 440 16 14
America
Pacific 586 8 594 442 1 (8 ) 435 33 37
Bottling 78 12 90 83 18 (37 ) 64 (6 ) 41
Investments
Corporate (402 ) (1 ) 27 $42 (334 ) (323 ) 3 22 2 (296 ) (24 ) (13 )
Consolidated $2,344 $9 $49 $42 $2,444 $2,150 $23 $25 ($52 ) $2,146 9 14
Note: The currency impact is equal to the difference between current year U.S. dollar amounts at current year exchange rates compared to current year U.S. dollar amounts recalculated using
prior year comparable period exchange rates. In all cases, the exchange rates include the impact of hedging in the applicable periods.
(1) Currency neutral operating income growth after considering items impacting comparability for each operating segment is calculated as follows:
% Favorable
% Favorable
% Currency (Unfavorable)
(Unfavorable) -
- Impact After
Currency
After Considering
Neutral After
Considering Items
Impacting Considering
Items
Comparability Items
(Non-GAAP)
(Non-GAAP)
Eurasia & 21 2 19
Africa
Europe (3) (4) 1
Latin 13 (3) 16
America
North 14 0 14
America
Pacific 37 11 26
Bottling 41 (3) 44
Investments
Corporate (13) (2) (11)
Consolidated 14 0 14
THE COCA-COLA COMPANY AND SUBSIDIARIES
Reconciliation of GAAP and Non-GAAP Financial Measures
Operating Income (Loss) by Segment
(UNAUDITED)
(In millions)
Nine Months Ended October 1, 2010 Nine Months Ended October 2, 2009
% Favorable
Items Impacting Comparability Items Impacting Comparability
(Unfavorable)
% Favorable -
After After
(Unfavorable) After
Reported Asset Considering Reported Asset Accounting Considering -
Productivity CCE Productivity Considering
(GAAP) Impairments/ Items (GAAP) Impairments/ Guidance Items Reported
Initiatives Transaction Initiatives Items
Restructuring (Non-GAAP) Restructuring Changes (Non-GAAP) (GAAP)
(Non-GAAP)
(1)
Eurasia & $781 $1 $3 $785 $634 $2 $1 $637 23 23
Africa
Europe 2,391 43 2,434 2,327 1 2 ($2 ) 2,328 3 5
Latin 1,795 1,795 1,483 (34 ) 1,449 21 24
America
North 1,435 7 1 1,443 1,316 15 10 1,341 9 8
America
Pacific 1,658 13 1,671 1,492 1 (18 ) 1,475 11 13
Bottling 221 56 277 136 109 (67 ) 178 63 56
Investments
Corporate (991 ) 4 74 $72 (841 ) (937 ) 27 54 6 (850 ) (6 ) 1
Consolidated $7,290 $68 $134 $72 $7,564 $6,451 $154 $58 ($105 ) $6,558 13 15
Note: The currency impact is equal to the difference between current year U.S. dollar amounts at current year exchange rates compared to current year U.S. dollar amounts recalculated using
prior year comparable period exchange rates. In all cases, the exchange rates include the impact of hedging in the applicable periods.
(1) Currency neutral operating income growth after considering items impacting comparability for each operating segment is calculated as follows:
% Favorable
% Favorable
% Currency (Unfavorable)
(Unfavorable) -
- Impact After
Currency
After Considering
Neutral After
Considering Items
Impacting Considering
Items
Comparability Items
(Non-GAAP)
(Non-GAAP)
Eurasia & 23 8 15
Africa
Europe 5 2 3
Latin 24 3 21
America
North 8 1 7
America
Pacific 13 8 5
Bottling 56 9 47
Investments
Corporate 1 0 1
Consolidated 15 4 11
The Coca-Cola Company
The Coca-Cola Company (NYSE: KO) is the world's largest beverage company, refreshing consumers with more than 500 sparkling and still brands. Along with Coca-Cola, recognized as the world's most valuable brand, the Company's portfolio includes 12 other billion dollar brands, including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply and Georgia. Globally, we are the No. 1 provider of sparkling beverages, juices and juice drinks and ready-to-drink teas and coffees. Through the world's largest beverage distribution system, consumers in more than 200 countries enjoy the Company's beverages at a rate of 1.6 billion servings a day. With an enduring commitment to building sustainable communities, our Company is focused on initiatives that protect the environment, conserve resources and enhance the economic development of the communities where we operate. For more information about our Company, please visit our website at www.thecoca-colacompany.com.
Forward-Looking Statements
This press release may contain statements, estimates or projections that constitute "forward-looking statements" as defined under U.S. federal securities laws. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will" and similar expressions identify forward-looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from The Coca-Cola Company's historical experience and our present expectations or projections. These risks include, but are not limited to, obesity and other health concerns; scarcity and quality of water; changes in the nonalcoholic beverages business environment, including changes in consumer preferences based on health and nutrition considerations and obesity concerns; shifting consumer tastes and needs, changes in lifestyles and competitive product and pricing pressures; impact of the global credit crisis on our liquidity and financial performance; increased competition; our ability to expand our operations in developing and emerging markets; foreign currency exchange rate fluctuations; increases in interest rates; our ability to maintain good relationships with our bottling partners; the financial condition of our bottling partners; increases in income tax rates or changes in income tax laws; increases in indirect taxes or new indirect taxes; our ability and the ability of our bottling partners to maintain good labor relations, including the ability to renew collective bargaining agreements on satisfactory terms and avoid strikes, work stoppages or labor unrest; increase in the cost, disruption of supply or shortage of energy; increase in cost, disruption of supply or shortage of ingredients or packaging materials; changes in laws and regulations relating to beverage containers and packaging, including container deposit, recycling, eco-tax and/or product stewardship laws or regulations; adoption of significant additional labeling or warning requirements; unfavorable general economic conditions in the United States or other major markets; unfavorable economic and political conditions in international markets, including civil unrest and product boycotts; changes in commercial or market practices and business model within the European Union; litigation uncertainties; adverse weather conditions; our ability to maintain brand image and corporate reputation as well as other product issues such as product recalls; changes in legal and regulatory environments; changes in accounting standards and taxation requirements; our ability to achieve overall long-term goals; our ability to protect our information systems; additional impairment charges; our ability to successfully manage Company-owned bottling operations; the impact of climate change on our business; global or regional catastrophic events; risks related to our acquisition of Coca-Cola Enterprises Inc.'s North American operations; and other risks discussed in our Company's filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K, which filings are available from the SEC. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. The Coca-Cola Company undertakes no obligation to publicly update or revise any forward-looking statements.
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Source: The Coca-Cola Company
Released October 19, 2010