The Coca-Cola Company Reports Fourth Quarter and Full Year 2007 Results
-- Fourth quarter EPS increased 79 percent to $0.52; increased 12 percent to $0.58 after considering items impacting comparability.
-- Full year EPS increased 19 percent to $2.57; increased 14 percent to $2.70 after considering items impacting comparability.
-- Worldwide unit case volume up 5 percent for the fourth quarter and 6 percent for the year, contributing over 1.2 billion additional unit cases.
-- Balanced growth in the year with sparkling beverage unit case volume up 4 percent, and still beverage unit case volume up 12 percent.
-- Strong cash generation with full year cash from operations increasing 20 percent.
ATLANTA--(BUSINESS WIRE)--
The Coca-Cola Company today reported fourth quarter earnings per share of $0.52, an increase of 79 percent versus the prior year on a reported basis, and $0.58 after considering items impacting comparability, an increase of 12 percent. Earnings per share for the quarter included a net charge of $0.06 per share primarily related to restructuring charges and asset write-downs. Earnings per share for the fourth quarter of 2006 were $0.29 and included a net charge of $0.23 per share primarily related to a non-cash impairment charge at Coca-Cola Enterprises Inc. ("CCE"), an equity investee.
Earnings per share for the year were $2.57, an increase of 19 percent versus the prior year on a reported basis, and $2.70 after considering items impacting comparability, an increase of 14 percent. Earnings per share for the year included a net charge of $0.13 per share primarily related to restructuring charges and asset write-downs. Full year 2006 earnings per share were $2.16 and included a net charge of $0.21 per share primarily related to a non-cash impairment charge at CCE.
"This has been a year of significant accomplishment," said Neville Isdell, chairman and chief executive officer, The Coca-Cola Company. "We have delivered strong business results and increased value to our shareowners by expanding our consumer appeal across our beverage brands and connecting in very meaningful ways with the communities we serve. By successfully executing our clearly defined strategies with our bottling partners, we delivered 6 percent unit case volume growth for the year and four consecutive quarters of double-digit earnings per share growth.
"Importantly, this growth was balanced across our geographies and portfolio of brands. On a worldwide basis, sparkling beverage volume increased a solid 4 percent, and still beverages increased 12 percent. We remain focused on driving sustainable long-term growth and value for our shareowners, while delivering against our stakeholder needs each day. With our strategies in place, our expanded brand portfolio and our geographic balance, we are well prepared to respond to opportunities and challenges ahead and anticipate another good year in 2008."
President and Chief Operating Officer Muhtar Kent said, "Clearly, our strategies are right and our execution is working as 2007 was a successful year for The Coca-Cola Company. As evident from our results, we consistently delivered on our promise of executing against our growth agenda. Our international business, led by the emerging markets, continues to drive our overall growth, while stabilizing key markets like Japan, the Philippines and North America underscores our ability to re-energize major markets. Our three-cola strategy has revitalized the sparkling category, and we successfully expanded our still portfolio through key acquisitions like glaceau, Fuze and Jugos del Valle, while continuing to build our innovation pipeline. Additionally, our focus on effectiveness and efficiency has allowed us to reinvest in top-line growth. We continue to build a much more efficient, dynamic business in which our associates share an unyielding commitment to winning around the world.
"I am pleased with the progress we made against our 2007 priorities. We are now better positioned to capture the significant growth opportunities. As we look to 2008, the foundation is in place to deliver another successful year of balanced geographic and brand growth for The Coca-Cola Company."
(All references to growth rate percentages and share compare the results of the period to those of the prior year comparable period.)
Financial Highlights
-- Fourth quarter net operating revenues increased 24 percent.
Revenue growth reflected a 6 percent increase in concentrate
sales, an 8 percent benefit from structural changes related to
bottler acquisitions, an 8 percent currency benefit and a 2
percent favorable impact from pricing and mix. For the year,
net operating revenues increased 20 percent, reflecting a 6
percent increase in concentrate sales, an 8 percent benefit
from structural changes related to bottler acquisitions, a 4
percent currency benefit and a 2 percent favorable impact from
pricing and mix.
-- Operating income in the quarter increased 26 percent on a
reported basis and increased 19 percent after considering
items impacting comparability. Items impacting comparability
negatively affected fourth quarter pre-tax operating income by
$126 million in 2007 and by $174 million in 2006. Currency
benefited ongoing operating income in the quarter by 9
percent. Full year operating income increased 15 percent on a
reported basis and increased 14 percent after considering
items impacting comparability. Currency benefited full year
operating income by 4 percent.
-- The Company repurchased $1.75 billion of its stock in 2007, in
line with previous guidance. For 2008, the Company plans to
repurchase $1.5 to $2.0 billion of its own stock. The Company
paid $3.1 billion in dividends to shareowners in 2007.
-- Cash from operations was $7.1 billion for the year, compared
with $6.0 billion in the prior year, an increase of 20
percent.
Operational Highlights
(All references to unit case volume percentage changes in this section are computed based on average daily sales. Group operational highlights are reported in line with the Company's operating structure as described in the Company's Form 8-K filing dated October 29, 2007.)
Total Company
-- Unit case volume increased 5 percent in the quarter and 6
percent for the year. Acquisitions contributed 1 point of unit
case volume growth for the quarter and year.
-- International operations delivered 7 percent unit case volume
growth in the quarter and 8 percent growth for the year,
reflecting broad-based growth across all groups. Double-digit
unit case volume growth in key emerging markets, including
China, India, Brazil, Turkey, Southern Eurasia, and the Middle
East continued to drive the results for the quarter. Latin
America and Africa continued to deliver solid performance in
the quarter. European Union achieved unit case volume growth
of 2 percent in the quarter, successfully cycling strong
growth in the prior year. The Philippines and Japan both
continued in the quarter to reflect a return to growth with
unit case volume increasing 9 percent and 1 percent,
respectively. North America achieved 1 percent unit case
volume growth in the quarter, reflecting improved performance
and the benefit of acquisitions.
-- The Company continued to deliver strong growth in sparkling
beverages, which increased unit case volume 4 percent in the
quarter and for the year. Key brands drove the results with
Trademark Coca-Cola growing unit case volume 3 percent in the
quarter and 4 percent for the year. Trademark Fanta increased
unit case volume 4 percent for the quarter and 5 percent for
the year, and Trademark Sprite increased unit case volume 4
percent in the quarter and 8 percent for the year.
-- Still beverage unit case volume increased 11 percent in the
quarter and 12 percent for the year. Trademarks Dasani and
Powerade continued their strong performance, each increasing
unit case volume 9 percent in the quarter and 10 percent for
the year. Additionally, solid growth in Trademark Minute Maid
contributed to still beverage growth.
-- For the quarter and year, the Company gained global volume and
value share in nonalcoholic ready-to-drink beverages, as well
as in both sparkling and still categories.
Africa
----------
Percent Change
From Prior Year
------------------------------
Fourth Full
Quarter Year
--------------- --------------
Unit Case Volume 7% 10%
Net Revenues 25% 16%
Operating Income 17% 6%
-- The Africa Group's unit case volume increased 7 percent in the
quarter and 10 percent for the year. Net revenues for the year
increased 16 percent, primarily reflecting an 11 percent
increase in concentrate sales and positive price and mix,
partially offset by a low single-digit negative currency
impact. Full year operating income growth of 6 percent
primarily reflected the net revenue increase, the continued
investments in key marketing initiatives, particularly The
Coke Side of Life campaign, and restructuring charges.
-- For the year, solid unit case volume growth in South Africa,
East and Central Africa, North and West Africa and Nigeria
drove the results. Strong growth in Trademark Coca-Cola led to
double-digit unit case volume growth in sparkling beverages
and category share gains for the year.
Eurasia
--------
Percent Change
From Prior Year
--------------------------
Fourth Full
Quarter Year
------------ -------------
Unit Case Volume 13% 16%
Net Revenues 34% 24%
Operating Income 39% 38%
-- The Eurasia Group's unit case volume increased 13 percent in
the quarter and 16 percent for the year, cycling double-digit
growth in the prior year quarter and year. Double-digit unit
case volume growth in Russia, India, Turkey, Middle East,
Eastern Europe and Southern Eurasia drove the strong
performance in the year. Net revenues for the year increased
24 percent, reflecting a 15 percent increase in concentrate
sales with positive pricing and currency benefits. Full year
operating income increased 38 percent primarily reflecting the
higher net revenues, while continuing to support key marketing
and business initiatives.
-- In India, unit case volume increased 18 percent in the
quarter, cycling 12 percent growth in the prior year quarter,
and increased 14 percent for the year. Double-digit unit case
volume growth in Trademark Coca-Cola and still beverages in
the quarter led to continued share gains in both sparkling and
still beverage categories.
European Union
--------------
Percent Change
From Prior Year
------------------------
Fourth Full
Quarter Year
------------ -----------
Unit Case Volume 2% 3%
Net Revenues 15% 14%
Operating Income 10% 16%
-- Unit case volume in the European Union Group increased 2
percent in the quarter and 3 percent for the year,
successfully cycling tough comparisons in the second half of
2006, including World Cup activation, acquisitions made early
in the third quarter of 2006 and favorable weather in the
second half of 2006. Net revenues for the year increased 14
percent, reflecting a 3 percent increase in concentrate sales,
positive pricing and mix and a high single-digit currency
benefit. Full year operating income increased 16 percent
primarily reflecting the higher net revenues while continuing
to invest behind key initiatives across the Group, including
the Coca-Cola Zero launches and the three-cola strategy, The
Coke Side of Life campaign, Christmas programs and activation
of the Rugby World Cup.
-- The results for the quarter and year reflected balanced growth
across the portfolio - a 2 percent unit case volume increase
in sparkling beverages and strong growth in still beverages.
Broad-based unit case volume growth was achieved, with most
key countries delivering growth for the quarter and year. In
the quarter, Great Britain returned to growth. Germany unit
case volume declined 2 percent in the quarter, cycling strong
7 percent growth in the prior year quarter. For the year, unit
case volume increased 1 percent in Germany.
Latin America
---------------
Percent Change
From Prior Year
--------------------------------
Fourth Full
Quarter Year
------------------ -------------
Unit Case Volume 10% 9%
Net Revenues 24% 24%
Operating Income 26% 22%
-- The Latin America Group continued to deliver strong unit case
volume growth of 10 percent in the quarter and 9 percent for
the year, cycling 7 percent growth in the prior year quarter
and year. Solid unit case volume growth across all key markets
and a 7 percent increase in Trademark Coca-Cola drove the
results for the quarter and year. The joint acquisition of
Jugos del Valle with Coca-Cola FEMSA, S.A.B. de C.V. was
completed in the quarter. Full year 2006 unit case volume of
Jugos del Valle was 117 million. Net revenues for the year
increased 24 percent, reflecting a 9 percent increase in
concentrate sales, positive pricing and mix and a mid
single-digit currency benefit. Operating income for the year
increased 22 percent reflecting the net revenue increase while
continuing to invest in key marketing initiatives.
-- In Mexico, unit case volume increased 9 percent in the quarter
and 6 percent for the year. The growth was led by Trademark
Coca-Cola, which increased unit case volume 5 percent and 4
percent for the quarter and year, respectively. The continued
success of Coca-Cola Zero contributed to volume and value
share gains in sparkling beverages for the year. Double-digit
unit case volume growth in still beverages for the quarter and
year also led to share gains.
-- In Brazil, unit case volume growth for the quarter and year
was 16 percent. Double-digit unit case volume growth in
Trademark Coca-Cola drove the results and led to sparkling
beverage share gains for the quarter and year.
-- In Argentina, strong sparkling beverage growth across core
brands contributed to unit case volume growth of 9 percent in
the quarter and for the year, driving share gains.
North America
-------------
Percent Change
From Prior Year
----------------------------
Fourth Full
Quarter Year
-------------- -------------
Unit Case Volume 1% (1%)
Net Revenues 13% 11%
Operating Income (4%) 1%
-- Unit case volume in the North America Group increased 1
percent in the quarter reflecting a 2 percent increase in
Retail and a decline of 3 percent in Foodservice and
Hospitality, reflecting a challenging restaurant industry
environment. For the year, unit case volume declined 1
percent. Net revenues for the year increased 11 percent,
reflecting even concentrate sales, positive pricing, growth of
finished goods businesses and an increase from acquisitions.
Operating income increased 1 percent for the year, reflecting
the higher net revenues, including the benefit from
acquisitions partially offset by higher input costs in the
finished goods businesses and restructuring costs.
-- Sparkling beverage unit case volume declined 2 percent in the
quarter and for the year, and reflected the expected
sequential improvement in the second half of the year. Diet
sparkling beverages delivered even unit case volume growth in
the quarter. The successful execution of the three-cola
strategy resulted in Coca-Cola Classic, Coca-Cola Zero and
Diet Coke all gaining share for the year. Coca-Cola Zero
continued to deliver strong growth, increasing unit case
volume double digits for the quarter and year. The Company's
portfolio of energy drinks delivered strong double-digit
growth in the quarter and year.
-- Still beverage unit case volume increased 8 percent in the
quarter and 5 percent for the year, reflecting continued
strong performance of glaceau and high single-digit growth in
Powerade and Dasani in the quarter. Total juice unit case
volume increased low single-digits in the quarter reflecting
continued growth in Trademark Simply juices and Odwalla.
Warehouse-delivered juices gained category share in the
quarter, even though unit case volume growth was negatively
impacted by price increases to cover higher ingredient costs.
Fuze and glaceau continued to perform ahead of expectations.
The transition of glaceau to the Coca-Cola bottler-centered
hybrid distribution model in the quarter was successfully
completed with the brands continuing to gain availability.
Pacific
-------
Percent Change
From Prior Year
-------------------------
Fourth Full
Quarter Year
------------ ------------
Unit Case Volume 3% 7%
Net Revenues 7% 7%
Operating Income 5% 3%
-- The Pacific Group increased unit case volume 3 percent for the
quarter and 7 percent for the year. Net revenues for the year
increased 7 percent, reflecting a 7 percent increase in
concentrate sales and a slight positive currency benefit
partially offset by unfavorable country mix. Operating income
for the year increased 3 percent reflecting the increase in
net revenues while investing in key business initiatives,
including driving the rapid growth in China and the turnaround
in the Philippines.
-- In Japan, unit case volume increased 1 percent in the quarter,
the fifth consecutive quarter of growth, cycling 2 percent
growth in the prior year quarter. For the year, unit case
volume increased 3 percent. Unit case volume growth across the
core brands of Trademark Coca-Cola, Sokenbicha, Aquarius and
Georgia Coffee drove the results in the quarter. Trademark
Coca-Cola continued to grow unit case volume double-digits
driven by the success of Coca-Cola Zero and the execution of
the three-cola strategy. Georgia Coffee returned to growth for
the first time in eight quarters increasing unit case volume 1
percent.
-- In China, unit case volume increased 13 percent for the
quarter led by double-digit growth in Trademark Coca-Cola,
Trademark Sprite and Minute Maid, partially offset by a slight
decline in low margin water. Full year unit case volume
increased 18 percent. The strong performance across the brands
resulted in share gains in both sparkling and still beverages.
-- In the Philippines, unit case volume increased by 9 percent
for the quarter and 5 percent for the year. Strong sparkling
unit case volume growth of 14 percent in the quarter reflects
the investment in key marketing initiatives and the focus on
improving the route-to-market, reshaping and streamlining the
supply chain and building sales capabilities.
Bottling Investments
--------------------
Percent Change
From Prior Year
--------------------------------
Fourth Full
Quarter Year
--------------- ----------------
Unit Case Volume 62% 64%
Net Revenues 61% 53%
Operating Income n/a 750%
-- The Bottling Investments Group's unit case volume increased 64
percent for the year reflecting acquisitions of certain
bottlers and unit case volume growth across the group. Net
revenues increased 53 percent for the year due to the unit
case volume increase, acquisitions, favorable pricing and mix,
and positive currency benefits. The strong operating income
increase for the year reflects the focus on investing to drive
revenue growth while delivering efficiency through the supply
chain.
Financial Review
Operating Results
Net operating revenues for the fourth quarter increased 24 percent, driven by a 6 percent increase in concentrate sales, an 8 percent benefit from structural change related to bottler acquisitions, an 8 percent currency benefit and a 2 percent favorable impact from pricing and mix. For the year, net operating revenues increased 20 percent, reflecting a 6 percent increase in concentrate sales, an 8 percent benefit from structural changes related to bottler acquisitions, a 4 percent benefit from currency and a 2 percent favorable impact from pricing and mix.
Cost of goods sold increased 28 percent for the quarter. This reflects a 6 percent increase in concentrate sales, an 8 percent increase from currency and a 14 percent increase from structural changes related to bottler acquisitions. For the year, cost of goods sold increased 27 percent. This reflects a 6 percent increase in concentrate sales, a 4 percent increase from currency, a 14 percent increase from structural changes related to bottler acquisitions and increases in commodity-based input and freight costs.
Selling, general and administrative expenses increased 17 percent for the quarter and 16 percent for the year, reflecting continued investments in marketing, increased costs to drive growth in the consolidated bottling operations, including acquisitions, increased sales and service costs for certain brand acquisitions, while effectively managing general and administrative expenses through productivity initiatives. Currency increased selling, general and administrative expenses 7 percent in the quarter and 4 percent for the year.
The Company had other operating charges in the fourth quarter and full year amounting to $125 million and $254 million pre-tax, respectively, primarily related to restructuring charges and asset write-downs.
Operating income increased 26 percent for the quarter and 15 percent for the year, reflecting the revenue growth, partially offset by increases in cost of goods sold, the investments in marketing and increased sales and service expenses in the bottling operations. After considering items impacting comparability, operating income increased 19 percent for the quarter and 14 percent for the year. Currency benefited ongoing operating income by 9 percent in the quarter and 4 percent for the year. Based on the anticipated benefits of hedging coverage in place, the Company currently expects currencies to have a minimal impact on operating income in 2008.
The increase in interest expense for the quarter and year is due to higher debt balances related to the financing of acquisitions, including the acquisition of glaceau, earlier in the year.
Effective Tax Rate
The reported effective tax rates for the quarter and the year were 25.2 percent and 24.0 percent, respectively. The underlying effective tax rate on operations for the quarter and year was 22.0 percent. For the quarter and year, the variance between the reported rate and the underlying rate was primarily due to changes in income tax reserves and the tax impact of various separately disclosed items impacting comparability.
The Company anticipates that its underlying effective tax rate on operations for the full year 2008 will be approximately 22.0 to 22.5 percent. The Company's estimated underlying effective tax rate does not reflect the impact of discrete events, which, if and when they occur, are separately recognized in the appropriate period.
Operating Structure
As previously announced, effective January 1, 2007, the Company made certain changes to its operating structure to align geographic responsibility. This new structure resulted in the reconfiguration of two operating segments which were renamed Eurasia Group and Pacific Group. The reconfiguration did not impact the other existing geographic operating segments, Bottling Investments or Corporate. Reclassified operating segment information can be found in the Company's Form 8-K filing dated October 29, 2007.
Items Impacting Prior Year Results
In 2006, the fourth quarter results included a net charge of $0.23 per share primarily related to the non-cash impairment charge at CCE, an equity investee. In 2006, the third quarter results included a charge primarily related to asset impairment and restructuring charges, offset by a benefit primarily related to the reversal of a tax valuation allowance. In 2006, the second quarter results included a net benefit of $0.04 per share primarily due to a gain from the sale of shares in the initial public offering of the Turkish bottler, Coca-Cola Icecek A.S. In 2006, the first quarter results included a net reduction of $0.02 per share primarily related to non-cash impairment charges of certain assets and investments in the bottling operations in Asia.
Conference Call
The Company will host a conference call with investors and analysts to discuss the fourth quarter and full year 2007 results today at 8:30 a.m. (EST). The Company invites investors to listen to the live audiocast of the conference call at the Company's Web site, 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 the Company's Web site. Further, the "Investors" section of the Company's Web site includes a reconciliation of GAAP to non-GAAP financial measures that may be used periodically by management when discussing the Company's financial results with investors and analysts.
THE COCA-COLA COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(UNAUDITED)
(In millions except per share data)
----------------------------------------------------------------------
Three Months Ended
-------------------------------------
December 31, December 31,
2007 2006 % Change
------------- ------------- --------
Net Operating Revenues $7,331 $5,932 24
Cost of goods sold 2,641 2,063 28
------------- -------------
Gross Profit 4,690 3,869 21
Selling, general and
administrative expenses 3,039 2,587 17
Other operating charges 125 70 --
------------- -------------
Operating Income 1,526 1,212 26
Interest income 86 41 110
Interest expense 156 47 232
Equity income (loss) - net 171 (467) --
Other income (loss) - net (4) 147 --
------------- -------------
Income Before Income Taxes 1,623 886 83
Income taxes 409 208 97
------------- -------------
Net Income $1,214 $ 678 79
============= =============
Diluted Net Income Per Share(a) $ 0.52 $ 0.29 79
============= =============
Average Shares Outstanding -
Diluted(a) 2,347 2,341
============= =============
(a) For the three months ended December 31, "Basic Net Income Per
Share" was $0.52 for 2007 and $0.29 for 2006 based on "Average Shares
Outstanding - Basic" of 2,314 and 2,336 for 2007 and 2006,
respectively.
THE COCA-COLA COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(UNAUDITED)
(In millions except per share data)
----------------------------------------------------------------------
Year Ended
-------------------------------------
December 31, December 31,
2007 2006 % Change
------------- ------------- --------
Net Operating Revenues $28,857 $24,088 20
Cost of goods sold 10,406 8,164 27
------------- -------------
Gross Profit 18,451 15,924 16
Selling, general and
administrative expenses 10,945 9,431 16
Other operating charges 254 185 --
------------- -------------
Operating Income 7,252 6,308 15
Interest income 236 193 22
Interest expense 456 220 107
Equity income - net 668 102 555
Other income (loss) - net 173 195 --
------------- -------------
Income Before Income Taxes 7,873 6,578 20
Income taxes 1,892 1,498 26
------------- -------------
Net Income $ 5,981 $ 5,080 18
============= =============
Diluted Net Income Per Share(a) $ 2.57 $ 2.16 19
============= =============
Average Shares Outstanding -
Diluted(a) 2,331 2,350
============= =============
(a) For the year ended December 31, "Basic Net Income Per Share" was
$2.59 for 2007 and $2.16 for 2006 based on "Average Shares
Outstanding - Basic" of 2,313 and 2,348 for 2007 and 2006,
respectively.
THE COCA-COLA COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(UNAUDITED)
(In millions except par value)
----------------------------------------------------------------------
December 31, December 31,
2007 2006
------------- -------------
Assets
----------------------------------------------------------------------
Current Assets
Cash and cash equivalents $ 4,093 $ 2,440
Marketable securities 215 150
Trade accounts receivable, less allowances
of $56 and $63, respectively 3,317 2,587
Inventories 2,220 1,641
Prepaid expenses and other assets 2,260 1,623
--------- ---------
Total Current Assets 12,105 8,441
--------- ---------
Investments
Equity method investments 7,289 6,310
Cost method investments, principally
bottling companies 488 473
--------- ---------
Total Investments 7,777 6,783
--------- ---------
Other Assets 2,675 2,701
Property, Plant and Equipment - net 8,493 6,903
Trademarks With Indefinite Lives 5,153 2,045
Goodwill 4,256 1,403
Other Intangible Assets 2,810 1,687
--------- ---------
Total Assets $ 43,269 $ 29,963
========= =========
Liabilities and Shareowners' Equity
----------------------------------------------------------------------
Current Liabilities
Accounts payable and accrued expenses $ 6,915 $ 5,055
Loans and notes payable 5,919 3,235
Current maturities of long-term debt 133 33
Accrued income taxes 258 567
--------- ---------
Total Current Liabilities 13,225 8,890
--------- ---------
Long-Term Debt 3,277 1,314
Other Liabilities 3,133 2,231
Deferred Income Taxes 1,890 608
Shareowners' Equity
Common stock, $0.25 par value; Authorized
- 5,600 shares; Issued - 3,519 shares and
3,511 shares, respectively 880 878
Capital surplus 7,378 5,983
Reinvested earnings 36,235 33,468
Accumulated other comprehensive income
(loss) 626 (1,291)
Treasury stock, at cost - 1,201 shares and
1,193 shares, respectively (23,375) (22,118)
--------- ---------
Total Shareowners' Equity 21,744 16,920
--------- ---------
Total Liabilities and Shareowners' Equity $ 43,269 $ 29,963
========= =========
THE COCA-COLA COMPANY AND SUBSIDIARIES
----------------------------------------------------------------------
Condensed Consolidated Statements of Cash Flow
----------------------------------------------------------------------
(UNAUDITED)
(In millions)
Year Ended
------------------------------------
December 31, 2007 December 31, 2006
----------------- -----------------
Operating Activities
Net income $ 5,981 $ 5,080
Depreciation and amortization 1,163 938
Stock-based compensation expense 313 324
Deferred income taxes 109 (35)
Equity income or loss, net of
dividends (452) 124
Foreign currency adjustments 9 52
Gains on sales of assets,
including bottling interests (244) (303)
Other operating charges 166 159
Other items 99 233
Net change in operating assets
and liabilities 6 (615)
---------------- -----------------
Net cash provided by operating
activities 7,150 5,957
---------------- -----------------
Investing Activities
Acquisitions and investments,
principally trademarks and
bottling companies (5,653) (901)
Purchases of other investments (99) (82)
Proceeds from disposals of other
investments 448 640
Purchases of property, plant and
equipment (1,648) (1,407)
Proceeds from disposals of
property, plant and equipment 239 112
Other investing activities (6) (62)
---------------- -----------------
Net cash used in investing
activities (6,719) (1,700)
---------------- -----------------
Financing Activities
Issuances of debt 9,979 617
Payments of debt (5,638) (2,021)
Issuances of stock 1,619 148
Purchases of stock for treasury (1,838) (2,416)
Dividends (3,149) (2,911)
---------------- -----------------
Net cash provided by (used in)
financing activities 973 (6,583)
---------------- -----------------
Effect of Exchange Rate Changes
on Cash and Cash Equivalents 249 65
---------------- -----------------
Cash and Cash Equivalents
Net increase (decrease) during
the year 1,653 (2,261)
Balance at beginning of year 2,440 4,701
---------------- -----------------
Balance at end of year $ 4,093 $ 2,440
================ =================
THE COCA-COLA COMPANY AND SUBSIDIARIES
Operating Segments
(UNAUDITED)
(In millions except percentages)
Three Months Ended
----------------------------------------------------------------------
Net Operating Revenues Operating Income (Loss)
----------------------------------------------------------------------
DecemberDecember DecemberDecember
31, 31, 31, 31,
2007 2006 % Fav. / 2007 2006 % Fav. /
(1) (4) (Unfav.) (2) (5) (Unfav.)
----------------------------------------------------------------------
Africa $ 405 $ 325 25 $ 160 $ 137 17
Eurasia 235 176 34 50 36 39
European Union 1,153 1,002 15 527 480 10
Latin America 911 737 24 491 390 26
North America 1,886 1,666 13 402 419 (4)
Pacific 1,091 1,019 7 393 374 5
Bottling Investments 2,104 1,308 61 22 (59) -
Corporate 23 27 (15) (519) (565) 8
Eliminations (477) (328) - - - -
--------------------------------------------------
Consolidated $7,331 $5,932 24 $1,526 $1,212 26
----------------------------------------------------------------------
Income (Loss) Before Income Taxes
----------------------------------------------------------------------
December 31, December 31,
2007 2006 % Fav. /
(2), (3) (5), (6) (Unfav.)
----------------------------------------------------------------------
Africa $ 158 $ 134 18
Eurasia 52 45 16
European Union 529 480 10
Latin America 494 389 27
North America 401 418 (4)
Pacific 385 370 4
Bottling Investments 199 (534) -
Corporate (595) (416) (43)
Eliminations - - -
------------------------------------
Consolidated $ 1,623 $ 886 83
----------------------------------------------------------------------
Note: Refer to the Company's Form 8-K filing dated October 29, 2007
for more information on the changes to the Company's operating
structure.
(1) Intersegment revenues for the three months ended December 31, 2007
were $13 million for Africa, $21 million for Eurasia, $230 million
for European Union, $71 million for Latin America, $12 million for
North America, $112 million for Pacific and $18 million for Bottling
Investments.
(2) Operating income (loss) and income (loss) before income taxes for
the three months ended December 31, 2007 were reduced by $1 million
for Africa, $1 million for Eurasia, $21 million for European Union,
$1 million for Latin America, $10 million for North America, $2
million for Pacific, $4 million for Bottling Investments and $86
million for Corporate primarily due to asset write-downs and
restructuring costs.
(3) Income (loss) before income taxes for the three months ended
December 31, 2007 was decreased by $9 million for Bottling
Investments primarily due to our proportionate share of tax benefits
recorded at an equity investee, offset by asset write-downs and
restructuring costs recorded by equity investees, and was increased
by $18 million for Corporate due to a gain on the sale of real
estate.
(4) Intersegment revenues for the three months ended December 31, 2006
were $8 million for Africa, $16 million for Eurasia, $160 million for
European Union, $42 million for Latin America, $16 million for North
America, $71 million for Pacific and $15 million for Bottling
Investments.
(5) Operating income (loss) and income (loss) before income taxes for
the three months ended December 31, 2006 were reduced by $2 million
for Africa, $2 million for European Union, $42 million for Pacific
and $27 million for Bottling Investments primarily due to asset
impairments and other restructuring costs and $101 million for
Corporate primarily due to a donation made to The Coca-Cola
Foundation.
(6) Income (loss) before income taxes for the three months ended
December 31, 2006 was reduced by $615 million for Bottling
Investments primarily due to our proportionate share of CCE's
impairment charge and restructuring charges recorded by other equity
investees, and was increased by $175 million for Corporate due to a
gain on the sale of Coca-Cola FEMSA shares.
THE COCA-COLA COMPANY AND SUBSIDIARIES
Operating Segments
(UNAUDITED)
(In millions except percentages)
Year Ended
----------------------------------------------------------------------
Net Operating Revenues Operating Income (Loss)
----------------------------------------------------------------------
DecemberDecember DecemberDecember
31, 31, 31, 31,
2007 2006 % Fav. / 2007 2006 % Fav. /
(1) (4) (Unfav.) (2) (5) (Unfav.)
----------------------------------------------------------------------
Africa $ 1,327 $ 1,140 16 $ 450 $ 424 6
Eurasia 1,084 877 24 380 275 38
European Union 4,990 4,364 14 2,612 2,254 16
Latin America 3,244 2,616 24 1,749 1,438 22
North America 7,836 7,029 11 1,696 1,683 1
Pacific 4,406 4,118 7 1,699 1,650 3
Bottling Investments 7,695 5,043 53 153 18 750
Corporate 72 93 (23) (1,487) (1,434) (4)
Eliminations (1,797) (1,192) - - - -
--------------------------------------------------
Consolidated $28,857 $24,088 20 $ 7,252 $ 6,308 15
----------------------------------------------------------------------
Income (Loss) Before Income
Taxes
----------------------------------------------------------------------
December 31,December
2007 31, 2006 % Fav. /
(2), (3) (5), (6) (Unfav.)
----------------------------------------------------------------------
Africa $ 441 $ 413 7
Eurasia 399 302 32
European Union 2,615 2,258 16
Latin America 1,753 1,434 22
North America 1,695 1,681 1
Pacific 1,680 1,644 2
Bottling Investments 761 67 1,036
Corporate (1,471) (1,221) (20)
Eliminations - - -
-------------------------------
Consolidated $ 7,873 $ 6,578 20
----------------------------------------------------------------------
Note: Refer to the Company's Form 8-K filing dated October 29, 2007
for more information on the changes to the Company's operating
structure.
(1) Intersegment revenues for the year ended December 31, 2007 were
$54 million for Africa, $114 million for Eurasia, $845 million for
European Union, $175 million for Latin America, $75 million for North
America, $409 million for Pacific and $125 million for Bottling
Investments.
(2) Operating income (loss) and income (loss) before income taxes for
the year ended December 31, 2007 were reduced by $34 million for
Africa, $3 million for Eurasia, $33 million for European Union, $4
million for Latin America, $23 million for North America, $3 million
for Pacific, $47 million for Bottling Investments and $121 million
for Corporate primarily due to asset write-downs and restructuring
costs.
(3) Income (loss) before income taxes for the year ended December 31,
2007 was decreased by $150 million for Bottling Investments primarily
due to our proportionate share of asset write-downs and restructuring
costs recorded by equity investees, and was increased by $227 million
for Corporate primarily due to gains on the sale of real estate, the
sale of our ownership in Vonpar, a bottler in Brazil, and the sale of
Coca-Cola Amatil shares.
(4) Intersegment revenues for the year ended December 31, 2006 were
$37 million for Africa, $86 million for Eurasia, $704 million for
European Union, $132 million for Latin America, $16 million for North
America, $128 million for Pacific and $89 million for Bottling
Investments.
(5) Operating income (loss) and income (loss) before income taxes for
the year ended December 31, 2006 were reduced by $3 million for
Africa, $36 million for European Union, $62 million for Pacific and
$87 million for Bottling Investments primarily due to contract
termination costs related to production capacity efficiencies, asset
impairments and other restructuring costs and $101 million for
Corporate primarily due to a donation made to The Coca-Cola
Foundation.
(6) Income (loss) before income taxes for the year ended December 31,
2006 was decreased by $606 million for Bottling Investments primarily
due to our proportionate share of CCE's impairment charge and
restructuring charges recorded by other equity investees, and was
increased by $298 million for Corporate due to a gain on the sale of
Coca-Cola FEMSA shares and the sale of a portion of our investment in
Coca-Cola Icecek in an initial public offering.
THE COCA-COLA COMPANY AND SUBSIDIARIES
----------------------------------------------------------------------
Reconciliation of GAAP to Non-GAAP Financial Measures
----------------------------------------------------------------------
(UNAUDITED)
(In millions except per share data and percentages)
-----------------------------------------------
Three Months Ended December 31, 2007
-----------------------------------------------------
Items Impacting Comparability
---------------------------------------
Gains
on Certain
Asset Sales Tax
Reported Impairments/ Equity of Matters
(GAAP) Restructuring Investees Assets (1)
-----------------------------------------------
Net Operating
Revenues $7,331
Cost of goods
sold 2,641 ($1)
-----------------------------------------------
Gross Profit 4,690 1
Selling, general
and
administrative
expenses 3,039
Other operating
charges 125 (125)
-----------------------------------------------
Operating Income
(2) 1,526 126
Interest income 86
Interest expense 156
Equity income -
net 171 $ 9
Other income
(loss) - net (4) ($18)
-----------------------------------------------
Income Before
Income Taxes 1,623 126 9 (18)
Income taxes 409 19 2 (7) ($40)
-----------------------------------------------
Net Income $1,214 $ 107 $ 7 ($11) $ 40
===============================================
Diluted Net
Income Per Share $ 0.52 $ 0.05 $ 0.00$ 0.00 $ 0.02
===============================================
Average Shares
Outstanding -
Diluted 2,347 2,347 2,347 2,347 2,347
===============================================
Gross Margin 64.0%
Operating Margin 20.8%
Effective Tax
Rate 25.2%
-----------------------------------------------
------------- --------- ------------
Three Months
Ended
December 31,
2007
------------- % Change -
After % Change After
- Considering - Considering
Items Reported Items
(Non-GAAP) (GAAP) (Non-GAAP)
------------- --------- ------------
Net Operating Revenues $7,331 24 24
Cost of goods sold 2,640 28 28
-------------
Gross Profit 4,691 21 21
Selling, general and
administrative expenses 3,039 17 22
Other operating charges - -- --
-------------
Operating Income (2) 1,652 26 19(2)
Interest income 86 110 110
Interest expense 156 232 232
Equity income - net 180 -- 22
Other income (loss) - net (22) -- --
-------------
Income Before Income Taxes 1,740 83 16
Income taxes 383 97 40
-------------
Net Income $1,357 79 11
=============
Diluted Net Income Per
Share $ 0.58 (3) 79 12
=============
Average Shares Outstanding
- Diluted 2,347
=============
Gross Margin 64.0%
Operating Margin 22.5%
Effective Tax Rate 22.0%
------------- --------- ------------
-------------------------------------------
Three Months Ended December 31, 2006
-----------------------------------------------
Items Impacting Comparability
---------------------------------------
Asset
Reported Impairments/ Equity Transaction
(GAAP) Restructuring Investees Gains
-------------------------------------------
Net Operating Revenues $5,932
Cost of goods sold 2,063 ($4)
-------------------------------------------
Gross Profit 3,869 4
Selling, general and
administrative
expenses 2,587
Other operating charges 70 (70)
-------------------------------------------
Operating Income 1,212 74
Interest income 41
Interest expense 47
Equity income - net (467) $ 615
Other income (loss) -
net 147 ($175)
-------------------------------------------
Income Before Income
Taxes 886 74 615 (175)
Income taxes 208 10 57 (76)
-------------------------------------------
Net Income $ 678 $ 64 $ 558 ($99)
===========================================
Diluted Net Income Per
Share $ 0.29 $ 0.03 $ 0.24 ($0.04)
===========================================
Average Shares
Outstanding - Diluted 2,341 2,341 2,341 2,341
===========================================
Gross Margin 65.2%
Operating Margin 20.4%
Effective Tax Rate 23.5%
-------------------------------------------
-------------------------------
Three Months Ended December 31,
2006
-------------------------------
Items
Impacting
Comparability
-------------------
Certain After
Tax Considering
Foundation Matters Items
Donation (1) (Non-GAAP)
-------------------------------
Net Operating Revenues $5,932
Cost of goods sold 2,059
-------------------------------
Gross Profit 3,873
Selling, general and
administrative expenses ($100) 2,487
Other operating charges -
-------------------------------
Operating Income 100 1,386
Interest income 41
Interest expense 47
Equity income - net 148
Other income (loss) - net (28)
-------------------------------
Income Before Income Taxes 100 1,500
Income taxes 38 $ 37 274
-------------------------------
Net Income $ 62 ($37) $1,226
===============================
Diluted Net Income Per Share $ 0.03 ($0.02) $ 0.52 (3)
===============================
Average Shares Outstanding -
Diluted 2,341 2,341 2,341
===============================
Gross Margin 65.3%
Operating Margin 23.4%
Effective Tax Rate 18.2%(4)
-------------------------------
Note: Items to consider for comparability include primarily charges,
gains, and accounting changes. Charges and accounting changes
negatively 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.
(1) Primarily due to changes in reserves related to certain tax
matters.
(2) Ongoing operating income for the three months ended December 31,
2007 includes a positive currency impact of approximately 9%.
Ongoing, currency neutral operating income growth is 10%.
(3) Per share amounts do not add due to rounding.
(4) Effective tax rate calculated on full figures.
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 December 31, 2007 and
December 31, 2006. 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 to Non-GAAP Financial Measures
(UNAUDITED)
(In millions except per share data and percentages)
----------------------------------------------------------------------
-----------------------------------------------
Year Ended December 31, 2007
-----------------------------------------------------
Items Impacting Comparability
---------------------------------------
Gains
on Certain
Asset Sales Tax
Reported Impairments/ Equity of Matters
(GAAP) Restructuring Investees Assets (1)
-----------------------------------------------
Net Operating
Revenues $28,857
Cost of goods
sold 10,406 ($14)
-----------------------------------------------
Gross Profit 18,451 14
Selling, general
and
administrative
expenses 10,945
Other operating
charges 254 (254)
-----------------------------------------------
Operating Income 7,252 268
Interest income 236
Interest expense 456
Equity income -
net 668 $ 150
Other income
(loss) - net 173 ($227)
-----------------------------------------------
Income Before
Income Taxes 7,873 268 150 (227)
Income taxes 1,892 49 21 (111) ($77)
-----------------------------------------------
Net Income $ 5,981 $ 219 $ 129 ($116) $ 77
===============================================
Diluted Net
Income Per Share$ 2.57 $ 0.09 $ 0.06 ($0.05) $ 0.03
===============================================
Average Shares
Outstanding -
Diluted 2,331 2,331 2,331 2,331 2,331
===============================================
Gross Margin 63.9%
Operating Margin 25.1%
Effective Tax
Rate 24.0%
-----------------------------------------------
------------- --------- ------------
Year Ended
December 31,
2007
------------- % Change -
After % Change After
- Considering - Considering
Items Reported Items
(Non-GAAP) (GAAP) (Non-GAAP)
------------- --------- ------------
Net Operating Revenues $28,857 20 20(2)
Cost of goods sold 10,392 27 27
-------------
Gross Profit 18,465 16 16
Selling, general and
administrative expenses 10,945 16 17
Other operating charges - -- --
-------------
Operating Income 7,520 15 14(3)
Interest income 236 22 22
Interest expense 456 107 107
Equity income - net 818 555 16
Other income (loss) - net (54) -- --
-------------
Income Before Income Taxes 8,064 20 12
Income taxes 1,774 26 10
-------------
Net Income $ 6,290 18 13
=============
Diluted Net Income Per Share $ 2.70 19 14
=============
Average Shares Outstanding -
Diluted 2,331
=============
Gross Margin 64.0%
Operating Margin 26.1%
Effective Tax Rate 22.0%
------------- --------- ------------
-------------------------------------------
Year Ended December 31, 2006
-----------------------------------------------
Items Impacting Comparability
---------------------------------------
Asset
Reported Impairments/ Equity Transaction
(GAAP) Restructuring Investees Gains
-------------------------------------------
Net Operating Revenues $24,088
Cost of goods sold 8,164 ($4)
-------------------------------------------
Gross Profit 15,924 4
Selling, general and
administrative
expenses 9,431
Other operating charges 185 (185)
-------------------------------------------
Operating Income 6,308 189
Interest income 193
Interest expense 220
Equity income - net 102 $ 606
Other income (loss) -
net 195 ($298)
-------------------------------------------
Income Before Income
Taxes 6,578 189 606 (298)
Income taxes 1,498 30 57 8
-------------------------------------------
Net Income $ 5,080 $ 159 $ 549 ($306)
===========================================
Diluted Net Income Per
Share $ 2.16 $ 0.07 $ 0.23 ($0.13)
===========================================
Average Shares
Outstanding - Diluted 2,350 2,350 2,350 2,350
===========================================
Gross Margin 66.1%
Operating Margin 26.2%
Effective Tax Rate 22.8%
-------------------------------------------
-------------------------------
Year Ended December 31, 2006
-------------------------------
Items Impacting
Comparability
-------------------
Certain After
Tax Considering
Foundation Matters Items
Donation (1) (Non-GAAP)
-------------------------------
Net Operating Revenues $24,088
Cost of goods sold 8,160
-------------------------------
Gross Profit 15,928
Selling, general and administrative
expenses ($100) 9,331
Other operating charges -
-------------------------------
Operating Income 100 6,597
Interest income 193
Interest expense 220
Equity income - net 708
Other income (loss) - net (103)
-------------------------------
Income Before Income Taxes 100 7,175
Income taxes 38 ($24) 1,607
-------------------------------
Net Income $ 62 $ 24 $ 5,568
===============================
Diluted Net Income Per Share $ 0.03 $ 0.01 $ 2.37
===============================
Average Shares Outstanding -
Diluted 2,350 2,350 2,350
===============================
Gross Margin 66.1%
Operating Margin 27.4%
Effective Tax Rate 22.4%
-------------------------------
Note: Items to consider for comparability include primarily charges,
gains, and accounting changes. Charges and accounting changes
negatively 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.
(1) Primarily due to changes in reserves related to certain tax
matters.
(2) Net operating revenues excluding structural changes:
2007 2006 % Change
--------------------------
Reported net operating
revenues $28,857 $24,088 20%
Structural changes (1,762) -- --
--------------------------
Net operating revenues
excluding structural changes$27,095 $24,088 12%
==========================
(3) Ongoing operating income for the year ended December 31, 2007
includes a positive currency impact of approximately 4%. Ongoing,
currency neutral operating income growth is 10%.
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 years ended December 31, 2007 and December
31, 2006. 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
The Coca-Cola Company is the world's largest beverage company. Along with Coca-Cola, recognized as the world's most valuable brand, the Company markets four of the world's top five nonalcoholic sparkling brands, including Diet Coke, Fanta and Sprite, and a wide range of other beverages, including diet and light beverages, waters, juices and juice drinks, teas, coffees, energy and sports drinks. Through the world's largest beverage distribution system, consumers in more than 200 countries enjoy the Company's beverages at a rate of 1.5 billion servings each day. For more information about The Coca-Cola Company, please visit our web site 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 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 increased consumer information; increased competition; our ability to expand our operations in emerging markets; foreign currency and interest rate fluctuations; our ability to maintain good relationships with our bottling partners; the financial condition of our bottlers; our ability to maintain good labor relations, including our ability to renew collective bargaining agreements on satisfactory terms and avoid strikes or work stoppages; increase in the cost of energy; increase in cost, disruption of supply or shortage of raw materials; changes in laws and regulations relating to beverage containers and packaging, including mandatory deposit, recycling, eco-tax and/or product stewardship laws or regulations; adoption of significant additional labeling or warning requirements; 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 product quality 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; global or regional catastrophic events; and other risks discussed in our Company's filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K, which filings are available from the SEC. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. The Coca-Cola Company undertakes no obligation to publicly update or revise any forward-looking statements.
Source: The Coca-Cola Company
Released February 13, 2008