The Coca-Cola Company Reports First Quarter 2008 Results
-- First quarter EPS increased 19 percent to $0.64; increased 20 percent to $0.67 after considering items impacting comparability.
-- Worldwide unit case volume up 6 percent for the first quarter and International unit case volume up 7 percent.
-- Solid growth with sparkling beverage unit case volume up 3 percent, led by 5 percent growth in International, and still beverage unit case volume up 17 percent.
-- Strong cash generation with cash from operations increasing 18 percent.
ATLANTA--(BUSINESS WIRE)--
The Coca-Cola Company today reported first quarter earnings per share of $0.64, an increase of 19 percent versus the prior year on a reported basis, and $0.67 after considering items impacting comparability, an increase of 20 percent. Earnings per share for the quarter included a net charge of $0.03 per share primarily related to restructuring charges and asset write-downs. Earnings per share for the first quarter of 2007 were $0.54, which included a net charge of $0.02 per share primarily related to an asset write-off in the Philippines bottler, partially offset by gains on the sales of the equity interest in a Brazilian bottler and real estate in Spain.
"We have begun 2008 successfully, with another solid quarter consistent with our overriding objective of creating long-term sustainable growth," said Chairman and Chief Executive Officer Neville Isdell. "Our system's success in executing our strategies - from marketing and beverage innovation to effective execution at the point of sale - continues to drive our growth. Importantly, our growth was again balanced, proving our ability to manage our portfolio of brands and geographies over time to deliver results. As Muhtar assumes executive leadership of our Company, I am confident that the strategies and programs that we together have put in place will continue to deliver long-term sustainable growth and value to our shareowners."
President and Chief Operating Officer Muhtar Kent said, "Our performance in the first quarter further builds on our success in 2007 in every respect. Our International business once again led the way, with both sparkling and still beverages contributing to our results. We do recognize there is still much more work to be done, especially in our flagship North America market with its challenging economic environment.
"I remain optimistic about the progress we are making and committed to continued improvement in the execution of our strategies. Even in the face of a difficult macroeconomic climate, I believe that by continuing to collaborate with our bottling partners and maintaining an unrelenting focus on integrated consumer marketing and commercial and franchise leadership, we will achieve another successful year 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
-- First quarter net operating revenues increased 21 percent.
Revenue growth reflected a 5 percent increase in concentrate
sales, a 5 percent increase from structural changes primarily
related to bottler acquisitions, a 9 percent currency benefit
and a 2 percent favorable impact from pricing and mix.
-- Operating income in the quarter increased 15 percent on a
reported basis and increased 19 percent after considering
items impacting comparability. Items impacting comparability
negatively affected first quarter operating income by $78
million in 2008 and by $10 million in 2007. Currency benefited
ongoing operating income in the quarter by 11 percent.
-- Cash from operations was $1.1 billion for the quarter, an 18
percent increase versus the prior year.
-- The Company repurchased $309 million of its stock in the
quarter and expects to repurchase $1.5 to $2.0 billion of its
stock for the full year.
-- In February, the Company approved its 46th consecutive annual
dividend increase, raising the quarterly dividend 12 percent
over 2007.
Operational Highlights
(All references to unit case volume percentage changes in this section are computed based on average daily sales.)
Total Company
-- Unit case volume increased 6 percent in the quarter, cycling 6
percent growth in the prior year quarter. Acquisitions
contributed 2 points of unit case volume growth.
-- International operations delivered 7 percent unit case volume
growth in the quarter, successfully cycling 9 percent growth
in the prior year. Double-digit unit case volume growth in key
emerging markets, including China, India, Brazil, Turkey,
Russia, Eastern Europe and the Philippines continued to drive
the results. Latin America continued to deliver strong unit
case volume growth of 9 percent in the quarter. European Union
achieved unit case volume growth of 3 percent in the quarter,
successfully cycling double-digit growth in the prior year
quarter. Japan continued to show signs of stabilization
delivering its sixth consecutive quarter of growth. North
America unit case volume was even reflecting the challenges in
the U.S. economy.
-- The Company continued to deliver solid growth in sparkling
beverages, which increased unit case volume 3 percent in the
quarter, led by 5 percent growth in International. Key brands
drove the results with Trademark Coca-Cola growing unit case
volume 2 percent in the quarter. Trademarks Fanta and Sprite
increased unit case volume by 2 percent and 6 percent in the
quarter, respectively.
-- Still beverage unit case volume increased 17 percent in the
quarter, led by strong growth across the Company's still brand
portfolio including juice and juice drink brands, tea brands
and water brands.
-- For the quarter, 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
-----------------------------------
First Quarter
-----------------------------------
Unit Case Volume (1%)
Net Revenues 1%
Operating Income 13%
-- The Africa Group's unit case volume decreased 1 percent in the
quarter, cycling 17 percent growth in the prior year quarter,
reflecting volume declines in South Africa and Nigeria, offset
by solid growth in East and Central Africa and North and West
Africa. Net revenues for the quarter increased 1 percent,
reflecting a 3 percent increase in concentrate sales with
positive pricing and a low single-digit currency benefit,
partially offset by unfavorable country mix. Operating income
growth of 13 percent reflected the increase in net revenues
and favorable business mix while continuing to invest in key
marketing initiatives.
-- In the quarter, South Africa's unit case volume declined 9
percent, cycling 29 percent growth in the prior year quarter,
driven by supply chain issues resulting from carbon dioxide
shortages in the current quarter and the cycling of strong
growth in the prior year quarter, primarily related to the
replenishment of trade inventory levels due to carbon dioxide
shortages in late 2006. Nigeria's unit case volume declined 1
percent in the quarter, cycling 18 percent growth in the prior
year quarter, with Trademark Coca-Cola up low single digits.
Eurasia
--------
Percent Change
From Prior Year
----------------------------------
First
Quarter
----------------------------------
Unit Case Volume 13%
Net Revenues 49%
Operating Income 67%
-- The Eurasia Group's unit case volume increased 13 percent in
the quarter, cycling 16 percent growth in the prior year
quarter. Double-digit unit case volume growth in key markets
including India, Turkey, Russia and Eastern Europe drove the
strong performance. Net revenues for the quarter increased 49
percent, reflecting a 14 percent increase in concentrate sales
with positive pricing and mix, including growth in finished
products businesses, and a mid teens currency benefit.
Operating income increased 67 percent reflecting the net
revenue increase while continuing to invest in key marketing
initiatives.
-- In India, unit case volume increased 13 percent in the
quarter. 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
---------------------------------
First
Quarter
---------------------------------
Unit Case Volume 3%
Net Revenues 17%
Operating Income 14%
-- Unit case volume in the European Union Group increased 3
percent in the quarter, successfully cycling 11 percent growth
in the prior year quarter. Net revenues for the quarter
increased 17 percent, reflecting a 2 percent increase in
concentrate sales, positive pricing and mix and a low teens
currency benefit. Operating income increased 14 percent
primarily reflecting the higher net revenues while continuing
to invest behind key marketing initiatives across the group.
-- The results for the quarter reflected continued balanced
growth across the portfolio, achieving 2 percent unit case
volume growth in sparkling beverages and double-digit growth
in still beverages. Unit case volume growth was also
broad-based across the countries, with all key countries
reflecting growth. Great Britain's unit case volume increased
mid single digits, achieving its second consecutive quarter of
growth. Germany's unit case volume increased 2 percent in the
quarter, successfully cycling 11 percent growth in the prior
year quarter.
Latin America
-------------
Percent Change
From Prior Year
--------------------------------------
First
Quarter
--------------------------------------
Unit Case Volume 9%
Net Revenues 25%
Operating Income 22%
-- The Latin America Group continued to deliver strong unit case
volume growth of 9 percent in the quarter, successfully
cycling 7 percent growth in the prior year quarter. Solid unit
case volume growth across all key markets, a 5 percent
increase in Trademark Coca-Cola and the benefit of
acquisitions drove the results for the quarter. Net revenues
increased 25 percent, reflecting a 5 percent increase in
concentrate sales, positive pricing and mix and a low
double-digit currency benefit. Operating income increased 22
percent reflecting the net revenue increase while continuing
to invest in key marketing initiatives.
-- In Mexico, unit case volume increased 11 percent in the
quarter. The growth was led by brand Coca-Cola, which
increased unit case volume 6 percent and the successful
integration of Jugos del Valle, contributing 4 points of
growth. Strong performance in sparkling and still beverages
led to category share gains.
-- In Brazil, unit case volume growth for the quarter was 11
percent. Solid growth in Trademark Coca-Cola drove the results
and led to sparkling beverage share gains for the quarter.
-- In Argentina, strong sparkling beverage growth, led by
Trademark Coca-Cola, contributed to unit case volume growth of
5 percent in the quarter, successfully cycling 13 percent
growth in the prior year quarter and driving sparkling share
gains.
North America
--------------
Percent Change
From Prior Year
-----------------------------------
First
Quarter
-----------------------------------
Unit Case Volume Even
Net Revenues 13%
Operating Income (7%)
-- Unit case volume in the North America Group was even in the
quarter, reflecting a difficult U.S. economic environment.
Retail unit case volume increased 2 percent, including a
benefit from acquisitions, and Foodservice and Hospitality
declined 4 percent, reflecting the challenging foodservice
industry environment. Net revenues for the quarter increased
13 percent, reflecting a 2 percent increase in concentrate
sales, positive pricing, mix of finished goods businesses and
an increase from acquisitions. Operating income decreased 7
percent reflecting the growth in net revenues, including the
benefit of acquisitions, offset by higher input costs in the
finished goods businesses, unfavorable mix and continued
investment in key business initiatives.
-- Sparkling beverage unit case volume declined 3 percent in the
quarter, primarily reflecting the decline in Foodservice and
other on-premise businesses. The continued successful
execution of the three-cola strategy resulted in Coca-Cola
Classic, Diet Coke and Coca-Cola Zero each gaining share and
contributed to core sparkling category share gains in the U.S.
Coca-Cola Zero continued to deliver strong performance,
increasing unit case volume more than 40 percent for the
quarter, cycling strong double-digit growth in the prior year
quarter. The Company's portfolio of energy drinks also
delivered double-digit growth in the quarter.
-- Still beverage unit case volume increased 10 percent in the
quarter, reflecting the continued strong performance of
glaceau and Fuze as well as mid single-digit growth in
warehouse-delivered chilled juices. Warehouse-delivered
chilled juices gained category volume and value share in the
quarter, reflecting double-digit growth in Trademark Simply
and the expansion of Minute Maid Enhanced Juices. Fuze and
glaceau unit case volume continued to increase ahead of
expectations, reflecting increased availability and velocity
through the hybrid distribution model.
Pacific
-------
Percent Change
From Prior Year
---------------------------------
First
Quarter
---------------------------------
Unit Case Volume 10%
Net Revenues 7%
Operating Income 4%
-- The Pacific Group increased unit case volume 10 percent in the
quarter. Net revenues increased 7 percent, reflecting an 8
percent increase in concentrate sales positive pricing and a
low double-digit favorable currency impact, partially offset
by unfavorable country mix. Operating income increased 4
percent reflecting the increase in net revenues while
investing in key business initiatives, including the Olympics
activation.
-- In Japan, unit case volume reflected slight positive growth in
the quarter, the sixth consecutive quarter of growth,
successfully cycling 3 percent growth in the prior year
quarter. Trademark Coca-Cola continued to deliver double-digit
unit case volume growth driven by the success of Coca-Cola
Zero and the execution of the three-cola strategy. Georgia
Coffee unit case volume increased 1 percent in the quarter,
achieving its second consecutive quarter of growth. Mid
single-digit unit case volume declines in Sokenbicha and
Aquarius reflected unfavorable weather early in the quarter.
-- In China, even with the disruption from the heavy snows during
Chinese New Year, unit case volume increased 20 percent in the
quarter led by double-digit growth in Trademark Coca-Cola,
Trademark Sprite and Minute Maid. The strong performance
across the brands resulted in share gains in both sparkling
and still beverages.
-- In the Philippines, unit case volume increased 21 percent in
the quarter, cycling a 12 percent decline in the prior year
quarter, with both sparkling and still beverages increasing
unit case volume double digits. Double-digit growth in
Trademark Coca-Cola led to sparkling share gains.
Bottling Investments
--------------------
Percent Change
From Prior Year
------------------------------
First
Quarter
------------------------------
Unit Case Volume 40%
Net Revenues 43%
Operating Income n/a
-- The Bottling Investments Group's unit case volume increased 40
percent in the quarter, reflecting acquisitions of certain
bottlers in the prior year and unit case volume growth across
the group. Net revenues increased 43 percent due to the unit
case volume increase, acquisitions, favorable product pricing
and mix offsetting unfavorable country mix, and mid teens
positive currency benefits. The operating income increase
reflects the continued focus on investing to drive revenue
growth while delivering efficiency and commodity procurement
benefits through the supply chain.
Financial Review
Operating Results
Net operating revenues in the quarter increased 21 percent, driven by a 5 percent increase in concentrate sales, a 5 percent increase from structural changes primarily related to bottler acquisitions, a 9 percent currency benefit and a 2 percent favorable impact from pricing and mix.
Cost of goods sold increased 22 percent in the quarter, reflecting a 5 percent increase in concentrate sales, a 9 percent increase from currency and an 8 percent increase from structural changes primarily related to bottler acquisitions.
Selling, general and administrative expenses increased 21 percent in the quarter, with structural changes primarily related to bottler acquisitions, increased costs from brand acquisitions and currency increasing selling, general and administrative expenses by 17 percent. The Company continued to increase marketing expenses to support brand growth while effectively managing general and administrative expenses through productivity initiatives.
Operating income increased 15 percent for the quarter, reflecting the revenue growth, partially offset by the investments in marketing and increased sales and service expenses in the bottling operations while effectively managing general and administrative expenses. After considering items impacting comparability, operating income increased 19 percent in the quarter. Currency benefited ongoing operating income by 11 percent in the quarter. Based on current expectations of market rates for the remainder of the year and benefits of hedging coverage in place, the Company currently expects a favorable currency impact on 2008 operating income in the mid single-digit range. Given the greater than expected currency benefit, the Company is evaluating whether there might be opportunities to reinvest a portion of the currency benefit in marketing programs and productivity initiatives to drive long-term sustainable growth.
The Company had other operating charges in the quarter of $78 million related to restructuring charges and asset write-downs.
Effective Tax Rate
The reported effective tax rate for the quarter was 23.0 percent and the underlying effective tax rate on operations for the quarter was 22.0 percent. The variance between the reported rate and the underlying rate was primarily due to 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 22.0 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.
Items Impacting Prior Year Results
In 2007, the first quarter results included a net charge of $0.02 per share primarily related to an asset write-off in the Philippines bottler, partially offset by gains on the sales of the equity interest in a Brazilian bottler and real estate in Spain.
Conference Call
The Company will host a conference call with investors and analysts to discuss the first quarter results today at 8:30 a.m. (EDT). 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 non-GAAP financial measures that may be used periodically by management when discussing the Company's 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
--------------------------------------
March 28, March 30,
2008 2007 % Change
------------- ------------ ----------
Net Operating Revenues $ 7,379 $ 6,103 21
Cost of goods sold 2,624 2,145 22
------------- ------------
Gross Profit 4,755 3,958 20
Selling, general and
administrative expenses 2,803 2,325 21
Other operating charges 78 6 --
------------- ------------
Operating Income 1,874 1,627 15
Interest income 65 37 76
Interest expense 117 71 65
Equity income (loss) - net 137 20 585
Other income (loss) - net (11) 116 --
------------- ------------
Income Before Income Taxes 1,948 1,729 13
Income taxes 448 467 (4)
------------- ------------
Net Income $ 1,500 $ 1,262 19
============= ============
Diluted Net Income Per Share(a) $ 0.64 $ 0.54 19
============= ============
Average Shares Outstanding -
Diluted(a) 2,351 2,321
============= ============
(a) For the three months ended March 28, 2008 and March 30, 2007,
"Basic Net Income Per Share" was $0.65 and $0.55, respectively, based
on "Average Shares Outstanding - Basic" of 2,322 and 2,314,
respectively.
THE COCA-COLA COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(UNAUDITED)
(In millions except par value)
----------------------------------------------------------------------
March 28, December 31,
2008 2007
------------ -------------
Assets
----------------------------------------------------------------------
Current Assets
Cash and cash equivalents $ 6,199 $ 4,093
Marketable securities 221 215
Trade accounts receivable, less allowances
of $68 and $56, respectively 3,500 3,317
Inventories 2,447 2,220
Prepaid expenses and other assets 2,521 2,260
---------- ------------
Total Current Assets 14,888 12,105
---------- ------------
Investments
Equity method investments 7,573 7,289
Cost method investments, principally
bottling companies 549 488
---------- ------------
Total Investments 8,122 7,777
---------- ------------
Other Assets 2,702 2,675
Property, Plant and Equipment - net 8,675 8,493
Trademarks With Indefinite Lives 5,323 5,153
Goodwill 4,334 4,256
Other Intangible Assets 2,960 2,810
---------- ------------
Total Assets $ 47,004 $ 43,269
========== ============
Liabilities and Shareowners' Equity
----------------------------------------------------------------------
Current Liabilities
Accounts payable and accrued expenses $ 7,805 $ 6,915
Loans and notes payable 7,285 5,919
Current maturities of long-term debt 130 133
Accrued income taxes 368 258
---------- ------------
Total Current Liabilities 15,588 13,225
---------- ------------
Long-Term Debt 3,259 3,277
Other Liabilities 3,287 3,133
Deferred Income Taxes 1,838 1,890
Shareowners' Equity
Common stock, $0.25 par value; Authorized -
5,600 shares; Issued - 3,519 shares and
3,519 shares, respectively 880 880
Capital surplus 7,662 7,378
Reinvested earnings 36,843 36,235
Accumulated other comprehensive income
(loss) 1,199 626
Treasury stock, at cost - 1,199 shares and
1,201 shares, respectively (23,552) (23,375)
---------- ------------
Total Shareowners' Equity 23,032 21,744
---------- ------------
Total Liabilities and Shareowners' Equity $ 47,004 $ 43,269
========== ============
THE COCA-COLA COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(UNAUDITED)
(In millions)
----------------------------------------------------------------------
Three Months Ended
------------------------
March 28, March 30,
2008 2007
---------- -----------
Operating Activities
Net income $ 1,500 $ 1,262
Depreciation and amortization 307 241
Stock-based compensation expense 75 76
Deferred income taxes (8) (95)
Equity income or loss, net of dividends (122) (1)
Foreign currency adjustments (18) (2)
Gains on sales of assets, including bottling
interests (8) (138)
Other operating charges 78 6
Other items 11 44
Net change in operating assets and
liabilities (695) (444)
---------- -----------
Net cash provided by operating activities 1,120 949
---------- -----------
Investing Activities
Acquisitions and investments, principally
beverage and bottling companies and
trademarks (238) (767)
Purchases of other investments (42) (9)
Proceeds from disposals of other investments 97 246
Purchases of property, plant and equipment (386) (350)
Proceeds from disposals of property, plant
and equipment 14 89
Other investing activities (2) (4)
---------- -----------
Net cash used in investing activities (557) (795)
---------- -----------
Financing Activities
Issuances of debt 3,204 2,920
Payments of debt (1,825) (1,288)
Issuances of stock 316 93
Purchases of stock for treasury (254) (718)
---------- -----------
Net cash provided by financing activities 1,441 1,007
---------- -----------
Effect of Exchange Rate Changes on Cash and
Cash Equivalents 102 31
---------- -----------
Cash and Cash Equivalents
Net increase during the period 2,106 1,192
Balance at beginning of period 4,093 2,440
---------- -----------
Balance at end of period $ 6,199 $ 3,632
========== ===========
THE COCA-COLA COMPANY AND SUBSIDIARIES
Operating Segments
(UNAUDITED)
(In millions)
Three Months Ended
----------------------------------------------------------------------
Net Operating Revenues Operating Income (Loss)
----------------------------------------------------------------------
March March
March 28, March 30, % Fav. 28, 30,
2008 2007 / 2008 2007 % Fav. /
(1) (4) (Unfav.) (2) (5) (Unfav.)
----------------------------------------------------------------------
Africa $ 314 $ 310 1$ 126 $ 112 13
Eurasia 326 219 49 145 87 67
European Union 1,275 1,090 17 691 604 14
Latin America 901 719 25 506 415 22
North America 1,898 1,681 13 324 347 (7)
Pacific 1,004 939 7 388 372 4
Bottling
Investments 2,089 1,457 43 17 (2) -
Corporate 28 14 100 (323) (308) (5)
Eliminations (456) (326) - - - -
---------------------------------------------------
Consolidated $ 7,379 $6,103 21$1,874 $1,627 15
----------------------------------------------------------------------
Income (Loss) Before Income Taxes
----------------------------------------------------------------------
March 30,
March 28, 2008 2007 % Fav. /
(2), (3) (5), (6) (Unfav.)
----------------------------------------------------------------------
Africa $ 122 $ 108 13
Eurasia 143 90 59
European Union 700 614 14
Latin America 504 415 21
North America 325 348 (7)
Pacific 383 367 4
Bottling Investments 155 7 2,114
Corporate (384) (220) (75)
Eliminations - - -
------------------------------------
Consolidated $ 1,948 $ 1,729 13
----------------------------------------------------------------------
(1) Intersegment revenues for the three months ended March 28, 2008
were $12 million for Africa, $30 million for Eurasia, $230 million
for European Union, $57 million for Latin America, $14 million for
North America, $91 million for Pacific and $22 million for Bottling
Investments.
(2) Operating income (loss) and income (loss) before income taxes for
the three months ended March 28, 2008 decreased by $76 million for
Corporate and $2 million for North America primarily due to asset
write-downs and restructuring costs.
(3) Income (loss) before income taxes for the three months ended March
28, 2008 increased by $5 million for Bottling Investments primarily
due to our proportionate share of one-time adjustments recorded by
our equity method investees.
(4) Intersegment revenues for the three months ended March 30, 2007
were $10 million for Africa, $24 million for Eurasia, $168 million
for European Union, $38 million for Latin America, $16 million for
North America, $50 million for Pacific and $20 million for Bottling
Investments.
(5) Operating income (loss) and income (loss) before income taxes for
the three months ended March 30, 2007 decreased by $2 million for
Africa, $6 million for Bottling Investments and $2 million for
Corporate primarily due to asset write-offs and restructuring costs.
(6) Income (loss) before income taxes for the three months ended March
30, 2007 decreased by $73 million for Bottling Investments primarily
for our proportionate share of asset write-offs in the Philippines
and increased by $137 million for Corporate primarily due to gains on
the sale of real estate in Spain and the sale of the equity ownership
in Vonpar, a bottler in Brazil.
THE COCA-COLA COMPANY AND SUBSIDIARIES
----------------------------------------------------------------------
Reconciliation of GAAP to Non-GAAP Financial Measures
----------------------------------------------------------------------
(UNAUDITED)
(In millions except per share data)
----------------------------------------
Three Months Ended March 28, 2008
----------------------------------------
Items Impacting Comparability
--------------------------------
Certain
Asset Tax
Reported Impairments/ Equity Matters
(GAAP) Restructuring Investees (1)
----------------------------------------
Net Operating Revenues $7,379
Cost of goods sold 2,624
----------------------------------------
Gross Profit 4,755
Selling, general and
administrative expenses 2,803
Other operating charges 78 ($78)
----------------------------------------
Operating Income 1,874 78
Interest income 65
Interest expense 117
Equity income - net 137 ($5)
Other income (loss) - net (11)
----------------------------------------
Income Before Income Taxes 1,948 78 (5)
Income taxes 448 13 (14) ($2)
----------------------------------------
Net Income $1,500 $ 65 $ 9 $ 2
========================================
Diluted Net Income Per Share $ 0.64 $ 0.03 $ 0.00 $ 0.00
========================================
Average Shares Outstanding -
Diluted 2,351 2,351 2,351 2,351
========================================
Gross Margin 64.4%
Operating Margin 25.4%
Effective Tax Rate 23.0%
----------------------------------------
------------- --------- ------------
Three Months
Ended March
28, 2008
------------- % Change -
After % Change After
- Considering - Considering
Items Reported Items
(Non-GAAP) (GAAP) (Non-GAAP)
------------- --------- ------------
Net Operating Revenues $7,379 21 21(2)
Cost of goods sold 2,624 22 23
-------------
Gross Profit 4,755 20 20
Selling, general and
administrative expenses 2,803 21 21
Other operating charges - -- --
-------------
Operating Income 1,952 15 19(3)
Interest income 65 76 76
Interest expense 117 65 65
Equity income - net 132 585 42
Other income (loss) - net (11) -- --
-------------
Income Before Income Taxes 2,021 13 21
Income taxes 445 (4) 16
-------------
Net Income $1,576 19 22
=============
Diluted Net Income Per Share $ 0.67 19 20
=============
Average Shares Outstanding -
Diluted 2,351
=============
Gross Margin 64.4%
Operating Margin 26.5%
Effective Tax Rate 22.0%
------------- --------- ------------
--------------------------------
Three Months Ended March 30, 2007
------------------------------------
Items Impacting
Comparability
----------------------------
Asset
Reported Impairments/ Equity
(GAAP) Restructuring Investees
--------------------------------
Net Operating Revenues $6,103
Cost of goods sold 2,145 ($4)
--------------------------------
Gross Profit 3,958 4
Selling, general and
administrative expenses 2,325
Other operating charges 6 (6)
--------------------------------
Operating Income 1,627 10
Interest income 37
Interest expense 71
Equity income - net 20 $ 73
Other income (loss) - net 116
--------------------------------
Income Before Income Taxes 1,729 10 73
Income taxes 467 2 -
--------------------------------
Net Income $1,262 $ 8 $ 73
================================
Diluted Net Income Per Share $ 0.54 $ 0.00 $ 0.03
================================
Average Shares Outstanding -
Diluted 2,321 2,321 2,321
================================
Gross Margin 64.9%
Operating Margin 26.7%
Effective Tax Rate 27.0%
--------------------------------
-----------------------------
Three Months Ended March 30,
2007
-----------------------------
Items
Impacting
Comparability
-----------------
Gains onCertain After
Sales Tax Considering
of Matters Items
Assets (1) (Non-GAAP)
-----------------------------
Net Operating Revenues $6,103
Cost of goods sold 2,141
-----------------------------
Gross Profit 3,962
Selling, general and
administrative expenses 2,325
Other operating charges -
-----------------------------
Operating Income 1,637
Interest income 37
Interest expense 71
Equity income - net 93
Other income (loss) - net ($137) (21)
-----------------------------
Income Before Income Taxes (137) 1,675
Income taxes (73) ($11) 385
-----------------------------
Net Income ($64) $ 11 $1,290
=============================
Diluted Net Income Per Share ($0.03) $ 0.00 $ 0.56 (4)
=============================
Average Shares Outstanding -
Diluted 2,321 2,321 2,321
=============================
Gross Margin 64.9%
Operating Margin 26.8%
Effective Tax Rate 23.0%
-----------------------------
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 related to changes in reserves related to certain tax
matters.
(2) Net operating revenues excluding structural changes:
2008 2007 % Change
------------------------
Reported net operating revenues$7,379 $6,103 21%
Structural changes (421) (129) --
------------------------
Net operating revenues
excluding structural changes $6,958 $5,974 16%
========================
(3) Ongoing operating income for the three months ended March 28, 2008
includes a positive currency impact of approximately 11 percent.
Ongoing, currency neutral operating income growth is 8 percent.
(4) 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 March 28, 2008 and March 30, 2007. 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(R), recognized as the world's most valuable brand, the Company markets four of the world's top five nonalcoholic sparkling brands, including Diet Coke(R), Fanta(R) and Sprite(R), 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 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 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 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 or work stoppages; increase in the cost of energy; increase in cost, disruption of supply or shortage of raw and packaging 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 general economic conditions in the U.S.; unfavorable economic and political conditions in international markets, including civil unrest and product boycotts; changes in commercial and 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 April 16, 2008