The Coca-Cola Company Reports Fourth Quarter and Full-Year 2010 Results
Q4 and Full-Year Results Meet or Exceed All Long-Term Growth Targets
Today, our Company reports strong worldwide volume growth, with fourth quarter comparable EPS at the high end of our long-term growth target and full-year comparable EPS well ahead of our long-term growth target. Our global momentum advances as we once again extend worldwide volume and value share gains in total nonalcoholic ready-to-drink beverages, driven by volume and value share gains in both sparkling and still beverages.
-- Strong worldwide volume growth of 6% in the quarter and 5% for the full
year. Excluding the benefit of new cross-licensed brands, primarily Dr
Pepper brands, worldwide volume growth was 5% in the quarter and for the
full year, with organic volume growth in the quarter across every one of
our five geographic operating groups.
-- North America volume growth of 8% in the quarter and 2% for the full
year. Excluding new cross-licensed brands, North America organic volume
was up 3% in the quarter and up 1% for the full year.
-- Fourth quarter reported EPS was $2.46, with comparable EPS at $0.72, up
9%, including a $0.02 dilutive impact to comparable EPS as a result of
the Coca-Cola Enterprises (CCE) transaction. Full-year reported EPS was
$5.06, with comparable EPS at $3.49, up 14%.
-- Fourth quarter reported net revenue was $10.5 billion, with comparable
currency neutral net revenue also at $10.5 billion, up 45%, including a
37% benefit from structural changes, principally related to the CCE
transaction. For the full year, reported net revenue was $35.1 billion,
with comparable currency neutral net revenue of $34.5 billion, up 14%,
including an 8% benefit from structural changes, principally related to
the CCE transaction.
-- Fourth quarter reported operating income was $1.2 billion, with
comparable currency neutral operating income of $2.0 billion, up 10%,
including a 3% benefit from structural changes, principally related to
the CCE transaction. For the full year, reported operating income was
$8.4 billion, with comparable currency neutral operating income of $9.3
billion, up 11%, including a 1% benefit from structural changes,
principally related to the CCE transaction.
-- Worldwide volume growth was led by brand Coca-Cola, up 4% in the quarter
and for the full year. Global volume and value share gains in total
nonalcoholic ready-to-drink (NARTD) beverages and across both sparkling
and still beverages in the quarter and for the full year.
-- Strong cash flow generated, with full-year cash from operations up 16%
to $9.5 billion.
-- Our transaction with CCE closed on plan and integration efforts are on
schedule, with expected 2011 cost synergies of $140 to $150 million.
-- Productivity initiatives are well on plan and on track to achieve our
targeted $500 million in annualized savings by year-end 2011.
ATLANTA--(BUSINESS WIRE)-- The Coca-Cola Company reports strong fourth quarter 2010 operating results, with reported worldwide volume growth of 6%, cycling 5% growth in the prior year quarter. For the full year, reported worldwide volume grew 5%, ahead of our long-term growth target. Excluding the benefit of new cross-licensed brands in North America, primarily Dr Pepper brands, worldwide volume grew 5% in the quarter and 5% for the full year. We achieved broad-based volume growth in the quarter across each of our five geographic operating groups, with growth of 14% in Eurasia and Africa, 5% in Latin America, 2% in Europe, 1% in Pacific and 8% in North America (3% excluding the benefit of new cross-licensed brands), its third consecutive quarter of organic growth.
In the quarter and for the full year, we gained global volume and value share in NARTD beverages, with share gains across most beverage categories. We continued to see strong growth in sparkling beverages, with worldwide brand Coca-Cola volume up 4% in the quarter driven by a wide array of global markets, including 37% in Russia, 20% in Turkey, 10% in India, 8% in Brazil, 7% in South Africa, 5% in Japan, 5% in Mexico and 2% in France. Worldwide sparkling beverage volume increased 5% in the quarter (3% excluding the benefit of new cross-licensed brands in North America), with international sparkling beverage volume increasing 4%.
Worldwide still beverage volume increased 9% in the quarter, led by growth across the portfolio, including juices and juice drinks, sports drinks, teas and water brands. Still beverage volume in the quarter increased 11% internationally and 7% in North America with the continued strong global performance of sports drinks, driven by Powerade (+12%). Sports drink growth in the quarter was balanced across key geographies, led by North America (+20%), South Korea (+43%), South Africa (+21%) and Mexico (+14%) as we continued to benefit from our powerful FIFA World Cup(TM) programs and successful innovation like Powerade Zero in the United States. Minute Maid Pulpy, which became our 14th billion dollar brand at the end of 2010, continues to expand globally and achieved 23% growth in the quarter and 31% growth for the full year. We also grew vitaminwater in the quarter, with double-digit growth internationally and 10% growth in North America.
Muhtar Kent, Chairman and Chief Executive Officer of The Coca-Cola Company said, "We once again delivered strong results this quarter, with volume growth realized across all five of our geographic operating groups. Importantly, we achieved solid growth in our developed markets with 3% growth in North America, 2% growth in Europe and 2% growth in Japan. Together with our global bottling partners, we are decisively executing our 2020 Vision, and I am pleased that we met or exceeded all of our long-term growth targets for both the quarter and the year, all while we completed our acquisition of CCE's North American business, began successfully integrating Coca-Cola Refreshments and operated in a still uncertain global economic environment. Further, as we strategically invest in inspirational marketing as well as sales and marketplace execution, we again gained broad-based worldwide volume and value share. 2010 was the first year in our journey to realize our 2020 Vision and our reported results today underscore the strength of our foundation.
"Now, as we enter 2011, we do so with solid momentum. This year marks the 125th anniversary of Coca-Cola, and the second year of our 2020 Vision, and we see opportunities as exciting as our predecessors must have seen back in 1886. Our commitment to shape a better future is perhaps the greatest responsibility given to each and every one of us at The Coca-Cola Company. This commitment is the foundation upon which our 2020 Vision is built, and we are confident that our system is well-positioned to build on the legacy of those who came before us. We intend to be the industry leader in every market we serve by continuing to invest in our brands and market execution capabilities, by advancing our sustainability efforts to drive our business, and by embedding ourselves even further into our customers' growth strategies.
"The fact that we are a thriving business after nearly 125 years is a testament to our youth, not our age. There is something special indeed about an enterprise that is in a state of constant renewal and dynamic growth. And while we recognize that challenges remain in our worldwide marketplace, we are confident that we are advancing our global momentum to deliver long-term sustainable growth and value for our shareowners."
FINANCIAL HIGHLIGHTS
All references to structural changes impacting comparable currency neutral results include the CCE transaction and elimination of CCE equity income, the sale of the Norway and Sweden bottling operations, other structural items and the benefit of new cross-licensed brands, primarily Dr Pepper brands.
-- Fourth quarter comparable currency neutral net revenue increased 45%,
reflecting a 6% increase in concentrate sales, 2% positive price/mix and
a 37% benefit from structural changes, principally related to the CCE
transaction. Concentrate sales growth is in line with unit case volume
growth for the full year at 5% after adjusting for the deconsolidation
of certain entities as of January 1, 2010 required by a change in
accounting guidance. The 2% positive price/mix in the quarter reflects
our continued focus on executing our revenue growth management
strategies to realize positive pricing that more than offsets the
ongoing impact of geographic mix. Full-year comparable currency neutral
net revenue increased 14%, reflecting a 5% increase in concentrate
sales, 1% positive price/mix and an 8% benefit from structural changes,
principally related to the CCE transaction.
-- Comparable currency neutral operating income was up 10% in the quarter
and 11% for the full year, reflecting a 3% increase in the quarter and a
1% increase for the year as a result of structural changes, principally
related to the CCE transaction. This was driven by strong top-line
performance as well as a continued focus on cost management and the
leveraging of productivity initiatives. Currency had a 1% positive
impact on comparable operating income in the quarter and a 3% positive
impact for the year.
-- Reported full-year cash from operations increased 16% to $9.5 billion.
-- Our Company returned $7.2 billion to shareowners in 2010, through $4.1
billion in dividends and $3.1 billion in share repurchases. In 2011, we
expect to repurchase $2.0 to $2.5 billion in stock over the course of
the year as part of our share repurchase program.
-- As required by accounting standards, the Company revalued its 33%
ownership of CCE to fair value at the closing date of the transaction to
acquire CCE's North American operations, resulting in a $5.0 billion
one-time non-cash gain in the fourth quarter of 2010.
-- Our transaction with CCE closed on plan and on schedule, with expected
2011 cost synergies of $140 to $150 million. This is in addition to the
$150 million in annual synergies previously identified in North America
as part of Coca-Cola Supply.
-- Productivity initiatives are well on track and on plan to achieve our
target of $500 million in annualized savings by year-end 2011.
OPERATING REVIEW
Three Months Ended December 31, 2010
% Favorable / (Unfavorable)
Comparable
Currency
Unit Case Operating
Net Revenues Neutral
Volume Income
Operating
Income
Total Company 6 40 (35) 10
Eurasia & Africa 14 14 13 9
Europe 2 (2) (5) 2
Latin America 5 (3) 9 10
North America 8 156 (78) 27
Pacific 1 6 (1) (5)
Bottling Investments (8) (9) (86) 27
Year Ended December 31, 2010
% Favorable / (Unfavorable)
Comparable
Currency
Unit Case Operating
Net Revenues Neutral
Volume Income
Operating
Income
Total Company 5 13 3 11
Eurasia & Africa 12 16 21 14
Europe 0 1 1 3
Latin America 5 6 18 18
North America 2 35 (11) 12
Pacific 6 8 9 2
Bottling Investments (1) 0 27 43
Eurasia & Africa
-- Our Eurasia and Africa Group's volume increased 14% in the quarter,
cycling 5% growth in the prior year quarter. Full-year volume increased
12%, cycling 4% growth in the prior year. Reported net revenue for the
quarter increased 14%, reflecting an 8% increase in concentrate sales, a
3% positive currency impact and 3% positive price/mix. Reported
operating income increased 13% in the quarter. Comparable currency
neutral operating income increased 9% in the quarter due to the increase
in revenue and partially offset by increased investments in the
business, timing of SG&A expenses and increases to long-term incentive
compensation tied to performance. Full-year reported net revenue
increased 16%, reflecting a 12% increase in concentrate sales and a 6%
positive currency impact, partially offset by 2% price/mix. Full-year
reported operating income increased 21%, while comparable currency
neutral operating income increased 14% driven by increased revenue and
partially offset by continued investments in the business, including
FIFA World Cup(TM) investments.
-- In Eurasia and Africa, sparkling beverages increased 12%, with brand
Coca-Cola growing 12%, and still beverages increased 23% in the quarter.
Volume growth in the quarter was broad-based, with double-digit growth
in nearly all business units. Volume in Russia was up 31% and we once
again outperformed the industry. Volume growth for brand Coca-Cola, the
single largest NARTD brand in Russia, continued to accelerate through
the year to 37% growth in the fourth quarter led by an integrated
marketing campaign fully supported by appropriate packaging
segmentation. Russia gained volume and value share in total NARTD
beverages, as well as in sparkling beverages and juices and juice
drinks. Africa also reported strong volume growth in the quarter with
double-digit growth in the East and Central Region, 8% growth in South
Africa and 7% growth in the North and West Region. Volume in Turkey was
up 19% driven by 20% growth in brand Coca-Cola. India grew 12% in the
quarter with strong festival activation, cycling 20% growth in the prior
year quarter. Our brands now represent 4 of the top 5 sparkling brands
in India.
Europe
-- Our Europe Group's volume in the quarter was up 2%, cycling 1% growth in
the prior year quarter. Full-year volume was slightly positive, rounding
to even, cycling a decline of 1% in the prior year and reflecting
full-year growth in Germany and Northwest Europe. Reported net revenue
for the quarter decreased 2%, with 4% concentrate sales growth offset by
the impact of currency. Price/mix in the quarter was even. Reported
operating income decreased 5% in the quarter driven by the impact of
currency. Comparable currency neutral operating income increased 2% in
the quarter, driven by higher concentrate sales and favorable cost of
goods partially offset by timing of marketing and other operating
expenses as well as increases to long-term incentive compensation tied
to performance. Reported net revenue for the full year increased 1%,
with 1% positive price/mix and the impact of structural changes
partially offset by a 2% currency impact. Full-year concentrate sales
were even. Full-year reported operating income increased 1% and
comparable currency neutral operating income increased 3% due to
positive revenue growth and continued tight management of operating
expenses.
-- Volume growth in the quarter was driven by 2% growth in the Northwest
Europe and Nordics Region, with France growing mid single digits, and
growth in the Central and Southern Europe Region, driven by recovery in
countries like Poland, Romania, Hungary and Czech Republic. Brand
Coca-Cola grew 2% and Coca-Cola Zero grew 15% in the quarter as we
leveraged a strong pan-European integrated holiday campaign and
continued our focus on packaging segmentation to remain relevant and
affordable with consumers in a continued challenging economic and
competitive environment. Still beverage volume was up 5%. In a quarter
of continued price competition, we were pleased to see NARTD volume and
value share gains across Europe including France, Germany, Great Britain
and Italy. Europe also gained volume and value share in sparkling
beverages, still beverages, sports drinks and ready-to-drink teas.
Latin America
-- Our Latin America Group delivered volume growth of 5% in the quarter,
cycling 7% growth in the prior year quarter. Full-year volume also grew
5%, cycling 6% growth in the prior year. Reported net revenue for the
quarter decreased 3%, reflecting concentrate sales growth of 7%,
positive price/mix of 4% and a currency benefit of 1%, offset by the
impact of the deconsolidation of certain entities required by a change
in accounting guidance as well as the impact of structural changes.
Reported operating income was up 9% in the quarter, with comparable
currency neutral operating income up 10%, primarily reflecting favorable
volume and pricing, partially offset by timing of marketing expenses and
increases to long-term incentive compensation tied to performance.
Reported net revenue for the full year increased 6%, reflecting
concentrate sales growth of 7%, positive price/mix of 9% and a currency
benefit of 3%, partially offset by the impact of the deconsolidation of
certain entities required by a change in accounting guidance as well as
the impact of structural changes. Full-year reported operating income
was up 18% and comparable currency neutral operating income also
increased 18%.
-- Solid volume growth in the quarter was led by an 8% increase in Mexico,
7% growth in Brazil and 6% growth in our South Latin Region. Sparkling
beverages grew 4% in the quarter, driven by continued growth of brand
Coca-Cola, up 4% in Latin America as a whole, 8% in Brazil and 5% in
Mexico. Brand Coca-Cola was up 5% for the full year in Latin America.
This growth was driven by the ongoing benefit of our powerful FIFA World
Cup(TM) program activation and a fully integrated holiday campaign as
well as continued focus on mealtime occasions. Sprite and Fanta were
also both up mid single digits in the quarter. Brazil's focus on
single-serve and returnable packaging has resulted in steady volume
growth as well as continued strong volume and value share gains in total
NARTD, sparkling and still beverages, including juices and juice drinks,
sports drinks, energy drinks and ready-to-drink teas. During the
quarter, Mexico also posted strong volume and value share growth in
total NARTD, sparkling and still beverages, including juices and juice
drinks, sports drinks and ready-to-drink teas.
-- In the quarter the Latin America Group gained volume and value share in
total NARTD beverages including volume and value share gains in
sparkling and still beverages.
North America
-- Our North America Group's organic volume grew 3% in the quarter and 1%
for the full year. Including the benefit of new cross-licensed brands,
primarily Dr Pepper brands, North America volume grew 8% in the quarter
and 2% for the full year. Reported net revenue for the quarter increased
156%, primarily reflecting 5% growth in concentrate sales and the
benefit of structural changes, principally related to the CCE
transaction. Price/mix in the quarter was even. Fourth quarter reported
operating income decreased 78%. Comparable currency neutral operating
income increased 27% in the quarter, including an 18% benefit from
structural changes, principally related to the CCE transaction. This
increase also reflects higher concentrate sales and the continued focus
on executing a well-defined brand, price, package and channel strategy,
partially offset by timing of general and administrative expenses and
increases to long-term incentive compensation tied to performance.
Reported net revenue for the full year increased 35%, primarily
reflecting 1% growth in concentrate sales and the benefit of structural
changes, principally related to the CCE transaction. Price/mix for the
full year was even. Full-year reported operating income declined 11%.
Comparable currency neutral operating income increased 12% for the full
year, including a 4% benefit from structural changes, principally
related to the CCE transaction.
-- Organic volume for sparkling beverages increased 1% in the quarter (up
8% including the benefit of new cross-licensed brands, principally Dr
Pepper), as we continue to focus on strong marketing execution and
product and package innovation. For the full year, organic sparkling
volume was even (up 1% including the benefit of new cross-licensed
brands, principally Dr Pepper). We grew sparkling beverage volume and
value share in the quarter and for the full year, driven by a continued
focus on a well-defined brand, price, package and channel strategy.
Trademark Coca-Cola in North America was up 1% in the quarter, led by
Coca-Cola Zero, which delivered double-digit volume growth for the 19th
consecutive quarter. For the full year, Trademark Coca-Cola volume was
even. Sprite growth continued, up 4% in the quarter and 2% for the full
year, while Fanta was up 3% in the quarter and 1% for the full year.
-- North America still beverage volume was once again strong, up 7% in the
quarter, led by strong double-digit growth of Powerade (+20%) and
Trademark Simply (+17%). During the quarter, we gained volume and value
share across nearly all still beverage categories, including sports
drinks, energy drinks, ready-to-drink teas and coffees and enhanced
water. We maintained our volume share in juices and juice drinks while
increasing value share. In addition, the glaceau business grew 19% in
North America with vitaminwater and smartwater both continuing to
perform well.
Pacific
-- Our Pacific Group delivered volume growth of 1% in the quarter, cycling
11% growth in the prior year quarter and bringing full-year volume
growth to 6%, cycling 7% growth in the prior year. Results in the
quarter were driven by the second consecutive quarter of growth in
Japan, up 2% in the quarter and 3% for the full year, as well as growth
of 8% in the Philippines and 16% in South Korea, partially offset by a
3% decline in China. Reported net revenue for the quarter increased 6%,
primarily reflecting a 5% increase in concentrate sales and a 6%
positive currency impact, partially offset by the impact of product mix
and geographic mix. Reported operating income decreased 1% in the
quarter. Comparable currency neutral operating income decreased 5% in
the quarter, reflecting unfavorable mix and timing of operating expenses
as well as increases to long-term incentive compensation tied to
performance. Reported net revenue for the full year increased 8%,
primarily reflecting a 6% increase in concentrate sales and a 6%
positive currency impact, partially offset by the impact of product mix
and geographic mix. Full-year reported operating income increased 9%,
and comparable currency neutral operating income grew 2% reflecting the
impact of lower cost of goods due to product mix and partially offset by
continued investments in the business.
-- Japan delivered 2% volume growth in the quarter, representing continued
improvement across our beverage portfolio. Brand Coca-Cola was up 5% in
the quarter and 3% for the year, while Coca-Cola Zero grew 16% in the
quarter and 20% for the full year. In the quarter, Japan gained volume
share in total NARTD and sparkling beverages while gaining volume and
value share in sports drinks, energy drinks and packaged water.
Importantly, our business in Japan saw positive results across major
channels, including a second consecutive quarter of positive growth in
the key vending and supermarket channels. While we remain cautious about
the economic challenges that remain in Japan, we are encouraged to see
continued momentum in this highly profitable developed market.
-- China full-year volume grew 6% with a 3% decline in the quarter, cycling
29% growth in the fourth quarter of 2009. It is not uncommon to see
noticeable volume swings in China from quarter to quarter. This is
especially true between the fourth and first quarter of every year,
given the fluctuating end-of-year trading activity driven by the varied
timing of the Chinese New Year. Importantly, China gained volume and
value share in sparkling beverages and also in juices and juice drinks,
with Minute Maid Pulpy, a brand born and launched in China, achieving
billion dollar brand status after only five years. For the full year, we
grew our business in China by over 100 million incremental unit cases,
our seventh consecutive year of achieving this level of incremental unit
case growth. As our business and the industry in China continue to
evolve, we are adapting our in-market strategies to make sure we keep
building on our strong foundation and remain well positioned to win in
China between now and 2020.
Bottling Investments
-- Our Bottling Investments Group's volume increased 9% in the quarter on a
comparable basis after adjusting for structural items and the
deconsolidation of certain bottlers required by a change in accounting
guidance. Reported volume decreased 8% in the quarter. The increase in
comparable volume was driven by strong growth across many markets,
including the Philippines, India and Brazil. Reported net revenue for
the quarter decreased 9%. This reflects the 9% increase in volume and
positive price/mix of 2%, offset by 1% currency and the 11% impact of
structural changes, principally related to the sale of the Norway and
Sweden bottling operations. Reported net revenue in the quarter also
reflects the impact of the deconsolidation required by a change in
accounting guidance. Reported operating income in the quarter decreased
86%. Comparable currency neutral operating income grew 27% in the
quarter, reflecting the increase in revenue and the benefits of
disciplined capital investments and expense management, partially offset
by continued investment in our in-market capabilities and the impact of
structural changes. Reported net revenue for the full year was even.
This reflects 10% unit case volume growth and 2% positive currency,
partially offset by 1% price/mix, due to geographic mix, and the impact
of structural changes. Full-year reported net revenue also reflects the
impact of the deconsolidation required by a change in accounting
guidance. For the full year, reported operating income increased 27% and
comparable currency neutral operating income grew 43%, reflecting the
increase in revenue and the benefits of disciplined capital investments
and expense management, partially offset by the impact of structural
changes.
FINANCIAL REVIEW
Fourth quarter reported net revenue increased 40% to $10.5 billion, with comparable currency neutral net revenue also at $10.5 billion, up 45%. Comparable currency neutral net revenue also excludes the deconsolidation of certain entities required by a change in accounting guidance. This 45% increase reflects a 6% increase in concentrate sales during the quarter, 2% positive price/mix and a 37% benefit from structural changes, principally related to the CCE transaction. After adjusting for the deconsolidation of certain entities as of January 1, 2010 required by a change in accounting guidance, concentrate sales are in line with unit case volume for the full year at 5%. The positive 2% price/mix in the quarter reflects our continued focus on executing our revenue growth management strategies to realize positive pricing that more than offsets the ongoing expected impact of geographic mix. This enabled us to grow global value share for the 14th consecutive quarter. Full-year reported net revenue was up 13% to $35.1 billion, with comparable currency neutral net revenue of $34.5 billion, up 14%. This reflects 5% growth in concentrate sales, 1% positive price/mix and an 8% benefit from structural changes, principally related to the CCE transaction.
Reported cost of goods sold increased 61% in the quarter. Comparable currency neutral cost of goods sold increased 60% in the quarter, primarily driven by a 6% increase in concentrate sales and an increase of 52% related to structural changes. Reported cost of goods sold for the full year increased 14%. Comparable currency neutral cost of goods sold increased 15% for the full year, driven by increased concentrate sales and a 12% increase related to structural changes partially offset by favorable product mix related to the strong performance of sparkling beverages in 2010.
Reported selling, general and administrative (SG&A) expenses increased 51% in the quarter. Comparable currency neutral SG&A expenses increased 52% in the quarter. This increase was primarily driven by continued investments behind our bottling operations and the timing of marketing expenses versus the prior year as well as increases to long-term incentive compensation tied to performance. Structural changes also increased comparable currency neutral SG&A expenses by 45%. For the full year, reported SG&A expenses increased 16%. Comparable currency neutral SG&A expenses increased 16% for the full year, driven by a 12% increase related to structural changes. Comparable currency neutral operating expense leverage declined 3 points for the full year as a result of an adverse 6 point impact from structural changes, principally related to the CCE transaction.
Fourth quarter reported operating income decreased 35% to $1.2 billion, with comparable currency neutral operating income of $2.0 billion, up 10%, including a 3% increase from structural changes, principally related to the CCE transaction. Full-year reported operating income was $8.4 billion, up 3%. Items impacting comparability reduced fourth quarter operating income by $856 million in 2010 and by $40 million in 2009. These items were primarily related to restructuring charges and costs related to global productivity initiatives as well as costs in 2010 related to the CCE transaction and a donation to The Coca-Cola Foundation. Comparable currency neutral operating income was $9.3 billion, up 11% for the full year, reflecting a 1% increase from structural changes, principally related to the CCE transaction. Currency had a 1% positive impact on comparable operating income in the quarter and a 3% positive impact for the year. Including the impact from our hedge positions and the cycling of our prior year rates, we expect currencies to have an even to slightly positive impact on operating income for the full year 2011 and also in the first quarter of 2011.
In the fourth quarter, The Coca-Cola Company was actively engaged in hedging activities for commodity exposure associated with the North American business acquired from CCE. This hedging activity resulted in an unrealized gain of $29 million, which has been excluded from fourth quarter comparable earnings and is reflected in the Reconciliation of GAAP and Non-GAAP Financial Measures schedule. In the future, these gains will be reflected in comparable earnings in the period that the related underlying transactions occur.
As required by accounting standards, The Coca-Cola Company revalued its approximately 33% ownership of CCE to fair value at the closing date of the transaction to purchase CCE's North American operations, resulting in a $5.0 billion one-time non-cash gain in the fourth quarter of 2010.
Fourth quarter reported EPS was $2.46, an increase of 273%, with comparable EPS at $0.72, up 9%. Items impacting comparability increased fourth quarter 2010 reported EPS by $1.74 per share and had no net impact on fourth quarter 2009 reported EPS. The net gain in 2010 included the non-cash gain related to the purchase of CCE's North American operations, partially offset by restructuring charges, costs related to global productivity initiatives, costs related to the CCE transaction, the retiring of debt, a donation to The Coca-Cola Foundation as well as certain tax matters. Fourth quarter 2009 reported EPS included restructuring charges and costs related to global productivity initiatives, offset by transaction gains and gains from certain tax matters. As anticipated, the impact of the CCE transaction was dilutive to fourth quarter 2010 comparable EPS by $0.02.
Total assets on our December 31, 2010 balance sheet increased by $24.3 billion when compared to our December 31, 2009 balance sheet, primarily due to the acquisition of CCE's North American operations partially offset by the deconsolidation of our Norway and Sweden bottling operations as well as the deconsolidation of certain entities, primarily bottlers, due to a change in accounting guidance effective January 1, 2010.
Cash from operations was $9.5 billion for the full year as compared with $8.2 billion in the prior year, an increase of 16%. This increase was primarily driven by our improved performance, including the effect of currency.
Effective Tax Rate
The reported effective tax rates for the quarter and the full year were 7.3% and 16.7%, respectively. The underlying effective tax rate on operations for the quarter was 21.5%, reflecting an underlying effective annual tax rate of 22.7%. The variance between the reported tax rate and the underlying tax rate was due to the tax impact of various items impacting comparability, separately presented in this document in the Reconciliation of GAAP and Non-GAAP Financial Measures schedule. The most significant item creating this variance for the quarter and the full year was the $5.0 billion one-time non-cash gain related to the acquisition of CCE's North American operations.
Our underlying effective tax rate does not reflect the impact of significant or unusual items and discrete events, which, if and when they occur, are separately recognized in the appropriate period.
For 2011, we expect our underlying effective tax rate on operations to be in the range of 23.5% to 24.5%.
Items Impacting Prior Year Results
First quarter 2009 results included a net charge of $0.07 per share primarily related to restructuring charges and asset write-downs.
Second quarter 2009 results included a net charge of $0.04 per share primarily related to restructuring charges and asset write-downs.
Third quarter 2009 results included a net charge of $0.01 per share primarily related to restructuring charges and costs related to global productivity initiatives.
Items impacting comparability had no net impact on fourth quarter 2009 reported EPS. Restructuring charges and costs related to global productivity initiatives were offset by transaction gains and gains from certain tax matters.
NOTES
-- All references to structural changes impacting comparable currency
neutral results include the CCE transaction and elimination of CCE
equity income, the sale of the Norway and Sweden bottling operations,
other structural items and the benefit of new cross-licensed brands,
primarily Dr Pepper brands.
-- All references to growth rate percentages, share and cycling of growth
rates compare the results of the period to those of the prior year
comparable period.
-- "Concentrate sales" represents the amount of concentrates, syrups,
beverage bases and powders sold by, or used in finished beverages sold
by, the Company to its bottling partners or other customers.
-- "Sparkling beverages" means NARTD beverages with carbonation, including
energy drinks and carbonated waters and flavored waters.
-- "Still beverages" means nonalcoholic beverages without carbonation,
including noncarbonated waters, flavored waters and enhanced waters,
juices and juice drinks, teas, coffees and sports drinks.
-- All references to volume and volume percentage changes indicate unit
case volume. All volume percentage changes are computed based on average
daily sales. "Unit case" means a unit of measurement equal to 24
eight-ounce servings of finished beverage. "Unit case volume" means the
number of unit cases (or unit case equivalents) of Company beverages
directly or indirectly sold by the Company and its bottling partners to
customers.
-- Fourth quarter 2010 results were impacted by one additional selling day,
which offset the impact of one fewer selling day in first quarter 2010
results.
-- Comparable results for the fourth quarter and full-year 2010 reflect the
impact of the deconsolidation of certain entities required by a change
in accounting guidance.
-- Our long-term revenue and operating income growth targets as referenced
in this release are on a comparable currency neutral basis and exclude
structural changes. Our long-term volume growth target is on a
comparable basis, excluding structural changes. Our long-term EPS growth
target is on a comparable basis.
-- All references to operating expense leverage indicate currency neutral
operating expense leverage. This is calculated by subtracting comparable
currency neutral gross profit growth from comparable currency neutral
operating income growth.
CONFERENCE CALL
We are hosting a conference call with investors and analysts to discuss our fourth quarter and full-year 2010 results today at 9:30 a.m. (EST). We invite investors to listen to the live audiocast of the conference call at our website, http://www.thecoca-colacompany.com in the "Investors" section. A replay in downloadable MP3 format will also be available within 24 hours after the audiocast on our website. Further, the "Investors" section of our website includes a reconciliation of non-GAAP financial measures that may be used periodically by management when discussing our financial results with investors and analysts to our results as reported under GAAP.
THE COCA-COLA COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(UNAUDITED)
(In millions except per share data)
Three Months Ended
December 31, 2010 December 31, 2009 % Change
Net Operating Revenues $ 10,494 $ 7,510 40
Cost of goods sold 4,279 2,651 61
Gross Profit 6,215 4,859 28
Selling, general and 4,511 2,978 51
administrative expenses
Other operating charges 545 101 --
Operating Income 1,159 1,780 (35 )
Interest income 97 65 49
Interest expense 487 84 480
Equity income (loss) - net 178 172 3
Other income (loss) - net 5,294 27 --
Income Before Income Taxes 6,241 1,960 218
Income taxes 457 382 20
Consolidated Net Income 5,784 1,578 267
Less: Net income
attributable to 13 35 (63 )
noncontrolling interests
Net Income Attributable to
Shareowners of The Coca-Cola $ 5,771 $ 1,543 274
Company
Diluted Net Income Per $ 2.46 $ 0.66 273
Share*
Average Shares Outstanding - 2,349 2,342
Diluted*
* For the three months ended December 31, 2010 and December 31, 2009, "Basic
Net Income Per Share" was $2.50 for 2010 and $0.67 for 2009 based on "Average
Shares Outstanding - Basic" of 2,311 for 2010 and 2,312 for 2009. Basic net
income per share and diluted net income per share are calculated based on net
income attributable to shareowners of The Coca-Cola Company.
THE COCA-COLA COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(UNAUDITED)
(In millions except per share data)
Year Ended
December 31, 2010 December 31, 2009 % Change
Net Operating Revenues $ 35,119 $ 30,990 13
Cost of goods sold 12,693 11,088 14
Gross Profit 22,426 19,902 13
Selling, general and 13,158 11,358 16
administrative expenses
Other operating charges 819 313 --
Operating Income 8,449 8,231 3
Interest income 317 249 27
Interest expense 733 355 106
Equity income (loss) - 1,025 781 31
net
Other income (loss) - 5,185 40 --
net
Income Before Income 14,243 8,946 59
Taxes
Income taxes 2,384 2,040 17
Consolidated Net Income 11,859 6,906 72
Less: Net income
attributable to 50 82 (39 )
noncontrolling interests
Net Income Attributable
to Shareowners of The $ 11,809 $ 6,824 73
Coca-Cola Company
Diluted Net Income Per $ 5.06 $ 2.93 73
Share*
Average Shares 2,333 2,329
Outstanding - Diluted*
* For the years ended December 31, 2010 and December 31, 2009, "Basic Net Income
Per Share" was $5.12 for 2010 and $2.95 for 2009 based on "Average Shares
Outstanding - Basic" of 2,308 for 2010 and 2,314 for 2009. Basic net income per
share and diluted net income per share are calculated based on net income
attributable to shareowners of The Coca-Cola Company.
THE COCA-COLA COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(UNAUDITED)
(In millions except par value)
December 31, 2010 December 31, 2009
Assets
Current Assets
Cash and cash equivalents $ 8,517 $ 7,021
Short-term investments 2,682 2,130
Total Cash, Cash Equivalents and 11,199 9,151
Short-Term Investments
Marketable securities 138 62
Trade accounts receivable, less 4,430 3,758
allowances of $48 and $55, respectively
Inventories 2,650 2,354
Prepaid expenses and other assets 3,162 2,226
Total Current Assets 21,579 17,551
Equity Method Investments 6,954 6,217
Other Investments, Principally Bottling 631 538
Companies
Other Assets 2,121 1,976
Property, Plant and Equipment - net 14,727 9,561
Trademarks With Indefinite Lives 6,356 6,183
Bottlers' Franchise Rights With 7,511 1,953
Indefinite Lives
Goodwill 11,665 4,224
Other Intangible Assets 1,377 468
Total Assets $ 72,921 $ 48,671
Liabilities and Equity
Current Liabilities
Accounts payable and accrued expenses $ 8,859 $ 6,657
Loans and notes payable 8,100 6,749
Current maturities of long-term debt 1,276 51
Accrued income taxes 273 264
Total Current Liabilities 18,508 13,721
Long-Term Debt 14,041 5,059
Other Liabilities 4,794 2,965
Deferred Income Taxes 4,261 1,580
The Coca-Cola Company Shareowners' Equity
Common stock, $0.25 par value; Authorized
- 5,600 shares; Issued - 3,520 and 3,520 880 880
shares, respectively
Capital surplus 10,057 8,537
Reinvested earnings 49,278 41,537
Accumulated other comprehensive income (1,450 ) (757 )
(loss)
Treasury stock, at cost - 1,228 and 1,217 (27,762 ) (25,398 )
shares, respectively
Equity Attributable to Shareowners of The 31,003 24,799
Coca-Cola Company
Equity Attributable to Noncontrolling 314 547
Interests
Total Equity 31,317 25,346
Total Liabilities and Equity $ 72,921 $ 48,671
THE COCA-COLA COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(UNAUDITED)
(In millions)
Year Ended
December 31, 2010 December 31, 2009
Operating Activities
Consolidated net income $ 11,859 $ 6,906
Depreciation and amortization 1,443 1,236
Stock-based compensation expense 380 241
Deferred income taxes 617 353
Equity (income) loss - net of dividends (671 ) (359 )
Foreign currency adjustments 151 61
Significant (gains) losses on sales of (645 ) (43 )
assets - net
Other significant (gains) losses - net (4,713 ) -
Other operating charges 264 134
Other items 477 221
Net change in operating assets and 370 (564 )
liabilities
Net cash provided by operating 9,532 8,186
activities
Investing Activities
Purchases of short-term investments (4,579 ) (2,130 )
Proceeds from disposals of short-term 4,032 -
investments
Acquisitions and investments,
principally beverage and bottling (2,511 ) (300 )
companies and trademarks
Purchases of other investments (132 ) (22 )
Proceeds from disposals of bottling 972 240
companies and other investments
Purchases of property, plant and (2,215 ) (1,993 )
equipment
Proceeds from disposals of property, 134 104
plant and equipment
Other investing activities (106 ) (48 )
Net cash provided by (used in) investing (4,405 ) (4,149 )
activities
Financing Activities
Issuances of debt 15,251 14,689
Payments of debt (13,403 ) (12,326 )
Issuances of stock 1,666 664
Purchases of stock for treasury (2,961 ) (1,518 )
Dividends (4,068 ) (3,800 )
Other financing activities 50 (2 )
Net cash provided by (used in) financing (3,465 ) (2,293 )
activities
Effect of Exchange Rate Changes on
Cash and Cash Equivalents (166 ) 576
Cash and Cash Equivalents
Net increase (decrease) during the year 1,496 2,320
Balance at beginning of year 7,021 4,701
Balance at end of year $ 8,517 $ 7,021
THE COCA-COLA COMPANY AND SUBSIDIARIES
Operating Segments
(UNAUDITED)
(In millions)
Three Months Ended
Net Operating Revenues Operating Income (Loss) Income (Loss) Before Income
Taxes
December
31,
2010
December
31, (2), December
December December December (3), 31,
31, 31, % Fav. / 2010 31, % Fav. / (4), % Fav. /
(5), 2009
2010 2009 (Unfav.) (2), (3), 2009 (Unfav.) (Unfav.)
(4), (6), (14),
(1) (13) (14) (7), (15),
(5), (6) (8), (16)
(9),
(10),
(11),
(12)
Eurasia & $ 619 $ 542 14 $ 199 $ 176 13 $ 206 $ 173 19
Africa
Europe 1,163 1,190 (2 ) 585 619 (5 ) 597 615 (3 )
Latin 1,085 1,120 (3 ) 610 559 9 616 558 10
America
North 4,822 1,886 156 85 383 (78 ) 90 379 (76 )
America
Pacific 1,216 1,144 6 390 395 (1 ) 390 391 0
Bottling 1,860 2,044 (9 ) 6 43 (86 ) 187 234 (20 )
Investments
Corporate 29 24 21 (716 ) (395 ) (81 ) 4,155 (390 ) --
Eliminations (300 ) (440 ) -- -- -- -- -- -- --
Consolidated $ 10,494 $ 7,510 40 $ 1,159 $ 1,780 (35 ) $ 6,241 $ 1,960 218
Intersegment revenues were $20 million for Eurasia and Africa, $139
(1) million for Europe, $70 million for Latin America, $18 million for North
America, $33 million for Pacific and $20 million for Bottling Investments.
Operating income (loss) and income (loss) before income taxes were reduced
by $3 million for Eurasia and Africa, $7 million for Europe, $125 million
for North America, $9 million for Pacific, $66 million for Bottling
Investments and $335 million for Corporate, primarily due to the Company's
(2) productivity, integration and restructuring initiatives, charitable
donations, transaction costs incurred in connection with our acquisition
of CCE's North American business and the sale of our Norway and Sweden
bottling operations to CCE and other distribution charges related to
bottling activities in Eurasia.
Operating income (loss) and income (loss) before income taxes for North
America were negatively impacted by $235 million due to the elimination of
gross profit in inventory on intercompany sales and an inventory fair
value adjustment as a result of our acquisition of CCE's North American
business. Prior to the acquisition, we recognized the profit associated
(3) with concentrate sales when the concentrate was sold to CCE, excluding the
portion that was deemed to be intercompany due to our previous ownership
interest in CCE. However, subsequent to the acquisition, the Company will
not recognize the profit associated with concentrate sold to CCE's legacy
North American business until the finished beverage products made from
those concentrates are sold.
Operating income (loss) and income (loss) before income taxes were reduced
(4) by $74 million for North America due to the acceleration of expense
associated with certain share-based replacement awards issued in
connection with our acquisition of CCE's North American business.
Operating income (loss) and income (loss) before income taxes were reduced
(5) by $20 million for North America due to the amortization of favorable
supply contracts acquired in connection with our acquisition of CCE's
North American business.
Operating income (loss) and income (loss) before income taxes were
increased by $28 million for North America and $1 million for Corporate
(6) due to mark-to-market gains related to non-designated hedges that are
associated with underlying transactions expected to occur in a future
period.
Income (loss) before income taxes was reduced by $11 million for Bottling
(7) Investments, primarily attributable to the Company's proportionate share
of restructuring charges recorded by equity method investees.
Income (loss) before income taxes was increased by $4,978 million for
(8) Corporate due to the remeasurement of our equity investment in CCE to fair
value upon our acquisition of CCE's North American business.
Income (loss) before income taxes was reduced by $265 million for
(9) Corporate due to charges related to pre-existing relationships with CCE.
These charges primarily related to the write-off of our investment in
infrastructure programs with CCE.
Income (loss) before income taxes was increased by $597 million for
(10) Corporate due to the gain on the sale of our Norway and Sweden bottling
operations to CCE.
Income (loss) before income taxes was reduced by $342 million for
(11) Corporate due to debt extinguishment costs, including the impact of the
settlement of treasury rate locks in connection with our tender offer.
Income (loss) before income taxes was reduced by $22 million for Corporate
(12) due to an other-than-temporary impairment of an equity method investment
and a donation of preferred shares in one of our equity method investees.
Intersegment revenues were $34 million for Eurasia and Africa, $210
(13) million for Europe, $69 million for Latin America, $24 million for North
America, $74 million for Pacific and $29 million for Bottling Investments.
Operating income (loss) and income (loss) before income taxes were reduced
by $1 million for Eurasia and Africa, $4 million for Europe, $16 million
(14) for North America, $32 million for Bottling Investments and $48 million
for Corporate, primarily as a result of the Company's productivity,
integration and restructuring initiatives.
Income (loss) before income taxes was reduced by $18 million for Bottling
(15) Investments, primarily attributable to the Company's proportionate share
of restructuring charges by equity method investees.
Income (loss) before income taxes was increased by $34 million for
(16) Corporate due to realized gains on the sale of equity securities that were
classified as available-for-sale.
THE COCA-COLA COMPANY AND SUBSIDIARIES
Operating Segments
(UNAUDITED)
(In millions)
Year Ended
Net Operating Revenues Operating Income (Loss) Income (Loss) Before Income
Taxes
December
31,
2010
(2),
December (3), December
December December 31, December (4), 31,
31, 31, 31, (5),
% Fav. / 2010 % Fav. / 2009 % Fav. /
2010 2009 2009 (6),
(Unfav.) (2), (3), (Unfav.) (7), (16), (Unfav.)
(1) (15) (4) (16) (8), (17),
(9),
(5), (6) (18), (19)
(10),
(11),
(12),
(13),
(14)
Eurasia & $ 2,556 $ 2,197 16 $ 980 $ 810 21 $ 1,000 $ 810 23
Africa
Europe 5,249 5,203 1 2,976 2,946 1 3,020 2,976 1
Latin 4,121 3,882 6 2,405 2,042 18 2,426 2,039 19
America
North 11,205 8,271 35 1,520 1,699 (11 ) 1,523 1,701 (10 )
America
Pacific 5,271 4,875 8 2,048 1,887 9 2,049 1,866 10
Bottling 8,313 8,320 0 227 179 27 1,205 980 23
Investments
Corporate 92 88 5 (1,707 ) (1,332 ) (28 ) 3,020 (1,426 ) --
Eliminations (1,688 ) (1,846 ) -- -- -- -- -- -- --
Consolidated $ 35,119 $ 30,990 13 $ 8,449 $ 8,231 3 $ 14,243 $ 8,946 59
Intersegment revenues were $130 million for Eurasia and Africa, $825
(1) million for Europe, $241 million for Latin America, $65 million for North
America, $330 million for Pacific and $97 million for Bottling
Investments.
Operating income (loss) and income (loss) before income taxes were reduced
by $7 million for Eurasia and Africa, $50 million for Europe, $133 million
for North America, $22 million for Pacific, $122 million for Bottling
Investments and $485 million for Corporate, primarily due to the Company's
(2) productivity, integration and restructuring initiatives, charitable
donations, transaction costs incurred in connection with our acquisition
of CCE's North American business and the sale of our Norway and Sweden
bottling operations to CCE and other distribution charges related to
bottling activities in Eurasia.
Operating income (loss) and income (loss) before income taxes for North
America were negatively impacted by $235 million, primarily due to the
elimination of gross profit in inventory on intercompany sales and an
inventory fair value adjustment as a result of our acquisition of CCE's
North American business. Prior to the acquisition, we recognized the
(3) profit associated with concentrate sales when the concentrate was sold to
CCE, excluding the portion that was deemed to be intercompany due to our
previous ownership interest in CCE. However, subsequent to the
acquisition, the Company will not recognize the profit associated with
concentrate sold to CCE's legacy North American business until the
finished beverage products made from those concentrates are sold.
Operating income (loss) and income (loss) before income taxes were reduced
(4) by $74 million for North America due to the acceleration of expense
associated with certain share-based replacement awards issued in
connection with our acquisition of CCE's North American business.
Operating income (loss) and income (loss) before income taxes were reduced
(5) by $20 million for North America due to the amortization of favorable
supply contracts acquired in connection with our acquisition of CCE's
North American business.
Operating income (loss) and income (loss) before income taxes were
increased by $28 million for North America and $1 million for Corporate
(6) due to mark-to-market gains related to non-designated hedges that are
associated with underlying transactions expected to occur in a future
period.
Income (loss) before income taxes was reduced by $66 million for Bottling
Investments. This net charge was primarily attributable to the Company's
proportionate share of unusual tax charges, asset impairments,
(7) restructuring charges and transaction costs recorded by equity method
investees, which were partially offset by our proportionate share of a
foreign currency remeasurement gain recorded by an equity method investee.
The components of the net charge were individually insignificant.
Income (loss) before income taxes was increased by $4,978 million for
(8) Corporate due to the remeasurement of our equity investment in CCE to fair
value upon our acquisition of CCE's North American business.
Income (loss) before income taxes was reduced by $265 million for
(9) Corporate due to charges related to pre-existing relationships with CCE.
These charges primarily related to the write-off of our investment in
infrastructure programs with CCE.
Income (loss) before income taxes was increased by $597 million for
(10) Corporate due to the gain on the sale of our Norway and Sweden bottling
operations to CCE.
Income (loss) before income taxes was reduced by $342 million for
(11) Corporate due to debt extinguishment costs, including the impact of the
settlement of treasury rate locks in connection with our tender offer.
Income (loss) before income taxes was reduced by $103 million for
(12) Corporate due to the remeasurement of our Venezuelan subsidiary's net
assets.
Income (loss) before income taxes was increased by $23 million for
(13) Corporate due to the gain on the sale of 50 percent of our investment in
Leao Junior, S.A., a Brazilian tea company.
Income (loss) before income taxes was reduced by $23 million for Bottling
Investments and $25 million for Corporate due to other-than-temporary
(14) impairments of available-for-sale securities and an equity method
investment and a donation of preferred shares in one of our equity method
investees.
Intersegment revenues were $220 million for Eurasia and Africa, $895
(15) million for Europe, $182 million for Latin America, $80 million for North
America, $342 million for Pacific and $127 million for Bottling
Investments.
Operating income (loss) and income (loss) before income taxes were reduced
by $4 million for Eurasia and Africa, $7 million for Europe, $31 million
(16) for North America, $1 million for Pacific, $141 million for Bottling
Investments and $129 million for Corporate, primarily as a result of the
Company's productivity, integration and restructuring initiatives and
asset impairments.
Income (loss) before income taxes was reduced by $84 million for Bottling
(17) Investments and $2 million for Corporate, primarily attributable to the
Company's proportionate share of asset impairment charges and
restructuring costs recorded by equity method investees.
(18) Income (loss) before income taxes was reduced by $27 million for Corporate
due to an other-than-temporary impairment of a cost method investment.
Income (loss) before income taxes was increased by $44 million for
(19) Corporate due to realized gains on the sale of equity securities that were
classified as available-for-sale.
THE COCA-COLA COMPANY AND SUBSIDIARIES
Reconciliation of GAAP and Non-GAAP Financial Measures
(UNAUDITED)
(In millions except per share data)
Three Months Ended December 31, 2010
Items Impacting Comparability
% Change -
% Change
Certain After - After
Asset Tax Other Considering
Reported Impairments/ Productivity Equity CCE Items Items Reported Considering
(GAAP) Initiatives Investees Matters
Restructuring Transaction (2) (Non-GAAP) (GAAP) Items
(1)
(Non-GAAP)
Net Operating $ 10,494 $ 4 $ 10,498 40 45 (3)
Revenues
Cost of goods 4,279 ($255 ) 22 4,046 61 62 (4)
sold
Gross Profit 6,215 255 (18 ) 6,452 28 36 (5),
(8)
Selling,
general and 4,511 (74 ) 4,437 51 52 (6)
administrative
expenses
Other
operating 545 ($85 ) ($56 ) (144 ) (260 ) - -- --
charges
Operating 1,159 85 56 473 242 2,015 (35 ) 11 (7),
Income (8)
Interest 97 97 49 54
income
Interest 487 (342 ) 145 480 84
expense
Equity income 178 $ 11 189 3 (13 )
(loss) - net
Other income 5,294 15 (5,310 ) 7 6 -- --
(loss) - net
Income Before 6,241 100 56 11 (4,837 ) 591 2,162 218 7
Income Taxes
Income taxes 457 8 8 2 39 ($254 ) 205 465 20 3
Consolidated 5,784 92 48 9 (4,876 ) 254 386 1,697 267 9
Net Income
Less: Net
income
attributable 13 13 (63 ) (13 )
to
noncontrolling
interests
Net Income
Attributable
to Shareowners $ 5,771 $ 92 $ 48 $ 9 ($4,876 ) $ 254 $ 386 $ 1,684 274 9
of The
Coca-Cola
Company
Diluted Net
Income Per $ 2.46 $ 0.04 $ 0.02 $ 0.00 ($2.08 ) $ 0.11 $ 0.16 $ 0.72 (9) 273 9
Share
Average Shares
Outstanding - 2,349 2,349 2,349 2,349 2,349 2,349 2,349 2,349
Diluted
Gross Margin 59.2 % 61.5 %
Operating 11.0 % 19.2 %
Margin
Effective Tax 7.3 % 21.5 %
Rate
Three Months Ended December 31, 2009
Items Impacting Comparability
After
Asset Certain Accounting
Reported Productivity Equity Transaction Tax Considering
Impairments/ Guidance
(GAAP) Initiatives Investees Gain Matters Items
Restructuring Changes
(Non-GAAP)
Net Operating $ 7,510 ($258 ) $ 7,252
Revenues
Cost of goods 2,651 (146 ) 2,505
sold
Gross Profit 4,859 (112 ) 4,747
Selling,
general and 2,978 (51 ) 2,927
administrative
expenses
Other
operating 101 ($52 ) ($49 ) -
charges
Operating 1,780 52 49 (61 ) 1,820
Income
Interest 65 (2 ) 63
income
Interest 84 (5 ) 79
expense
Equity income 172 $ 18 27 217
(loss) - net
Other income 27 ($34 ) 1 (6 )
(loss) - net
Income Before 1,960 52 49 18 (34 ) (30 ) 2,015
Income Taxes
Income taxes 382 7 18 3 $ 53 (10 ) 453
Consolidated 1,578 45 31 15 (34 ) (53 ) (20 ) 1,562
Net Income
Less: Net
income
attributable 35 (20 ) 15
to
noncontrolling
interests
Net Income
Attributable
to Shareowners $ 1,543 $ 45 $ 31 $ 15 ($34 ) ($53 ) $ 0 $ 1,547
of The
Coca-Cola
Company
Diluted Net
Income Per $ 0.66 $ 0.02 $ 0.01 $ 0.01 ($0.01 ) ($0.02 ) $ 0.00 $ 0.66 (9)
Share
Average Shares
Outstanding - 2,342 2,342 2,342 2,342 2,342 2,342 2,342 2,342
Diluted
Gross Margin 64.7 % 65.5 %
Operating 23.7 % 25.1 %
Margin
Effective Tax 19.5 % 22.5 %
Rate
Notes:
Items to consider for comparability include primarily charges, gains and
accounting changes. Charges and accounting changes negatively impacting
consolidated net income are reflected as increases to reported
consolidated net income. Gains and accounting changes positively
impacting consolidated net income are reflected as deductions to
reported consolidated net income.
The currency impact is equal to the difference between current year U.S.
dollar amounts at current year exchange rates compared to current year
U.S. dollar amounts recalculated using prior year comparable period
exchange rates. In all cases, the exchange rates include the impact of
hedging in the applicable periods.
Items impacting comparability reflected in Certain Tax Matters for the
(1) three months ended December 31, 2010 primarily include deferred tax
expense on certain undistributed foreign earnings.
(2)
Items impacting comparability reflected in Other Items for the three
months ended December 31, 2010 include charitable donations of $250
million, debt extinguishment costs of $342 million, unrealized
mark-to-market gains of $29 million related to non-designated hedges
that are associated with underlying transactions expected to occur in a
future period, and other immaterial items.
(3)
Reported net operating revenue growth includes a negative impact of $0.3
billion, or 5%, due to items impacting comparability, which represents
accounting guidance changes that are structural in nature. Currency had
minimal impact on net operating revenues after considering items
impacting comparability for the three months ended December 31, 2010.
Currency neutral net operating revenues after considering items
impacting comparability are approximately $10.5 billion. Currency
neutral net operating revenue growth after considering items impacting
comparability is 45%.
(4)
Cost of goods sold after considering items impacting comparability for
the three months ended December 31, 2010 includes a currency impact of
approximately 2%. Currency neutral cost of goods sold after considering
items impacting comparability increased 60%.
(5)
Currency had minimal impact on gross profit after considering items
impacting comparability for the three months ended December 31, 2010.
Currency neutral gross profit growth after considering items impacting
comparability is 36%.
(6)
Currency had minimal impact on selling, general and administrative
expenses after considering items impacting comparability for the three
months ended December 31, 2010. Currency neutral selling, general and
administrative expenses after considering items impacting
comparabilityincreased 52%.
(7)
Operating income after considering items impacting comparability for the
three months ended December 31, 2010 includes a positive currency impact
of approximately 1%. Currency neutral operating income after considering
items impacting comparability is approximately $2.0 billion. Currency
neutral operating income growth after considering items impacting
comparability is 10%.
(8)
Currency neutral operating expense leverage after considering items
impacting comparability for the three months ended December 31, 2010 is
negative 26 percentage points, which is calculated by subtracting
currency neutral gross profit growth after considering items impacting
comparability of 36% from currency neutral operating income growth after
considering items impacting comparability of 10%.
(9) 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 December 31, 2010 and December 31, 2009. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP.
THE COCA-COLA COMPANY AND SUBSIDIARIES
Reconciliation of GAAP and Non-GAAP Financial Measures
(UNAUDITED)
(In millions except per share data)
Year Ended December 31, 2010
% Change -
Items Impacting Comparability % Change
After - After
Certain
Asset Tax Considering Reported Considering
Reported Productivity Equity CCE Transaction Other Items
Impairments/ Matters Items (GAAP) Items
(GAAP) Initiatives Investees Transaction Gain (2)
Restructuring (1) (Non-GAAP) (Non-GAAP)
Net Operating $35,119 $4 $35,123 13 16 (3)
Revenues
Cost of goods 12,693 ($255 ) 22 12,460 14 17 (4)
sold
Gross Profit 22,426 255 (18 ) 22,663 13 16 (5),
(8)
Selling,
general and 13,158 (74 ) 13,084 16 17 (6)
administrative
expenses
Other
operating 819 ($153 ) ($190 ) (216 ) (260 ) - -- --
charges
Operating 8,449 153 190 545 242 9,579 3 14 (7),
Income (8)
Interest 317 317 27 30
income
Interest 733 (342 ) 391 106 15
expense
Equity income 1,025 $66 1,091 31 15
(loss) - net
Other income 5,185 41 (5,310 ) ($23 ) 110 3 -- --
(loss) - net
Income Before 14,243 194 190 66 (4,765 ) (23 ) 694 10,599 59 15
Income Taxes
Income taxes 2,384 12 53 9 49 (10 ) ($296 ) 205 2,406 17 15
Consolidated 11,859 182 137 57 (4,814 ) (13 ) 296 489 8,193 72 14
Net Income
Less: Net
income
attributable 50 50 (39 ) 32
to
noncontrolling
interests
Net Income
Attributable
to Shareowners $11,809 $182 $137 $57 ($4,814 ) ($13 ) $296 $489 $8,143 73 14
of The
Coca-Cola
Company
Diluted Net
Income Per $5.06 $0.08 $0.06 $0.02 ($2.06 ) ($0.01 ) $0.13 $0.21 $3.49 73 14
Share
Average Shares
Outstanding - 2,333 2,333 2,333 2,333 2,333 2,333 2,333 2,333 2,333
Diluted
Gross Margin 63.9 % 64.5 %
Operating 24.1 % 27.3 %
Margin
Effective Tax 16.7 % 22.7 %
Rate
Year Ended December 31, 2009
Items Impacting Comparability
After
Reported Asset Accounting Considering
Productivity Equity Transaction Certain Tax
(GAAP) Impairments/ Guidance Items
Initiatives Investees Gain Matters
Restructuring Changes (Non-GAAP)
Net Operating $30,990 ($819 ) $30,171
Revenues
Cost of goods 11,088 (476 ) 10,612
sold
Gross Profit 19,902 (343 ) 19,559
Selling,
general and 11,358 (177 ) 11,181
administrative
expenses
Other
operating 313 ($206 ) ($107 ) -
charges
Operating 8,231 206 107 (166 ) 8,378
Income
Interest 249 (6 ) 243
income
Interest 355 (16 ) 339
expense
Equity income 781 $86 79 946
(loss) - net
Other income 40 27 ($44 ) (2 ) 21
(loss) - net
Income Before 8,946 233 107 86 (44 ) (79 ) 9,249
Income Taxes
Income taxes 2,040 16 38 18 $15 (35 ) 2,092
Consolidated 6,906 217 69 68 (44 ) (15 ) (44 ) 7,157
Net Income
Less: Net
income
attributable 82 (44 ) 38
to
noncontrolling
interests
Net Income
Attributable
to Shareowners $6,824 $217 $69 $68 ($44 ) ($15 ) $0 $7,119
of The
Coca-Cola
Company
Diluted Net
Income Per $2.93 $0.09 $0.03 $0.03 ($0.02 ) ($0.01 ) $0.00 $3.06 (9)
Share
Average Shares
Outstanding - 2,329 2,329 2,329 2,329 2,329 2,329 2,329 2,329
Diluted
Gross Margin 64.2 % 64.8 %
Operating 26.6 % 27.8 %
Margin
Effective Tax 22.8 % 22.6 %
Rate
Notes:
Items to consider for comparability include primarily charges, gains
and accounting changes. Charges and accounting changes negatively
impacting consolidated net income are reflected as increases to
reported consolidated net income. Gains and accounting changes
positively impacting consolidated net income are reflected as
deductions to reported consolidated net income.
The currency impact is equal to the difference between current year
U.S. dollar amounts at current year exchange rates compared to current
year U.S. dollar amounts recalculated using prior year comparable
period exchange rates. In all cases, the exchange rates include the
impact of hedging in the applicable periods.
Items impacting comparability reflected in Certain Tax Matters for the
(1) year ended December 31, 2010 primarily include deferred tax expense on
certain undistributed foreign earnings.
(2)
Items impacting comparability reflected in Other Items for the twelve
months ended December 31, 2010 include charitable donations of $250
million, debt extinguishment costs of $342 million, a charge of $103
million due to the remeasurement of our Venezuelan subsidiary's net
assets, unrealized mark-to-market gains of $29 million related to
non-designated hedges that are associated with underlying transactions
expected to occur in a future period, and other immaterial items.
(3)
Reported net operating revenue growth includes a negative impact of
$0.8 billion, or 3%, due to items impacting comparability, which
represents accounting guidance changes that are structural in nature.
Net operating revenue growth after considering items impacting
comparability for the year ended December 31, 2010 includes a positive
currency impact of approximately 2%. Currency neutral net operating
revenues after considering items impacting comparability are
approximately $34.5 billion. Currency neutral net operating revenue
growth after considering items impacting comparability is 14%.
(4)
Cost of goods sold after considering items impacting comparability for
the year ended December 31, 2010 includes a currency impact of
approximately 2%. Currency neutral cost of goods sold after considering
items impacting comparability increased 15%.
(5)
Gross profit after considering items impacting comparability for the
year ended December 31, 2010 includes a positive currency impact of
approximately 2%. Currency neutral gross profit growth after
considering items impacting comparability is 14%.
(6)
Selling, general and administrative expenses after considering items
impacting comparability for the year ended December 31, 2010 include a
currency impact of approximately 1%. Currency neutral selling, general
and administrative expenses after considering items impacting
comparability increased 16%.
(7)
Operating income after considering items impacting comparability for
the year ended December 31, 2010 includes a positive currency impact of
approximately 3%. Currency neutral operating income after considering
items impacting comparability is approximately $9.3 billion. Currency
neutral operating income growth after considering items impacting
comparability is 11%.
(8)
Currency neutral operating expense leverage after considering items
impacting comparability for the year ended December 31, 2010 is
negative 3 percentage points, which is calculated by subtracting
currency neutral gross profit growth after considering items impacting
comparability of 14% from currency neutral operating income growth
after considering items impacting comparability of 11%.
(9) 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 years ended December 31, 2010 and December 31, 2009. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP.
THE COCA-COLA COMPANY AND SUBSIDIARIES
Reconciliation of GAAP and Non-GAAP Financial Measures
Operating Income (Loss) by Segment
(UNAUDITED)
(In millions)
Three Months Ended December 31, 2010 Three Months Ended December 31, 2009
%
Items Impacting Comparability Items Impacting Comparability
% Favorable
Favorable (Unfavorable)
After After -
(Unfavorable)
Reported Asset Other Considering Reported Asset Accounting Considering - After
Productivity CCE Productivity Considering
(GAAP) Impairments/ Items Items (GAAP) Impairments/ Guidance Items Reported
Initiatives Transaction Initiatives Items
Restructuring (1) (Non-GAAP) Restructuring Changes (Non-GAAP) (GAAP)
(Non-GAAP)
(2)
Eurasia & $199 $1 $2 $202 $176 $1 $177 13 14
Africa
Europe 585 7 592 619 $1 3 $2 625 (5 ) (5 )
Latin 610 610 559 (22 ) 537 9 14
America
North 85 14 1 $439 ($28 ) 511 383 15 1 4 403 (78 ) 27
America
Pacific 390 9 399 395 (6 ) 389 (1 ) 3
Bottling 6 66 72 43 32 (17 ) 58 (86 ) 24
Investments
Corporate (716 ) 4 37 34 270 (371 ) (395 ) 4 44 (22 ) (369 ) (81 ) (1 )
Consolidated $1,159 $85 $56 $473 $242 $2,015 $1,780 $52 $49 ($61 ) $1,820 (35 ) 11
Notes:
Items to consider for comparability include primarily charges, gains
and accounting changes. Charges and accounting changes negatively
impacting operating income are reflected as increases to reported
operating income. Gains and accounting changes positively impacting
operating income are reflected as deductions to reported operating
income.
The currency impact is equal to the difference between current year
U.S. dollar amounts at current year exchange rates compared to current
year U.S. dollar amounts recalculated using prior year comparable
period exchange rates. In all cases, the exchange rates include the
impact of hedging in the applicable periods.
(1)
Items impacting comparability reflected in Other Items for the three
months ended December 31, 2010 for North America and Corporate include
unrealized mark-to-market gains related to non-designated hedges that
are associated with underlying transactions expected to occur in a
future period. Items impacting comparability for Corporate also include
charitable donations of $250 million and other immaterial items.
Currency neutral operating income growth after considering items
(2) impacting comparability for each operating segment is calculated as
follows:
% Favorable % Favorable
% Currency
(Unfavorable) - (Unfavorable) -
Impact After
After Currency
Considering
Considering Neutral After
Items Impacting
Items Considering Items
Comparability
(Non-GAAP) (Non-GAAP)
Eurasia & Africa 14 5 9
Europe (5) (7) 2
Latin America 14 4 10
North America 27 0 27
Pacific 3 8 (5)
Bottling 24 (3) 27
Investments
Corporate (1) 1 (2)
Consolidated 11 1 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 three months ended December 31, 2010 and December 31, 2009. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP.
THE COCA-COLA COMPANY AND SUBSIDIARIES
Reconciliation of GAAP and Non-GAAP Financial Measures
Operating Income (Loss) by Segment
(UNAUDITED)
(In millions)
Year Ended December 31, 2010 Year Ended December 31, 2009
% Favorable
Items Impacting Comparability Items Impacting Comparability
(Unfavorable)
% Favorable -
After After
(Unfavorable) After
Reported Asset Considering Reported Asset Accounting Considering -
Productivity CCE Other Productivity Considering
(GAAP) Impairments/ Items Items (GAAP) Impairments/ Guidance Items Reported
Initiatives Transaction Initiatives Items
Restructuring (1) (Non-GAAP) Restructuring Changes (Non-GAAP) (GAAP)
(Non-GAAP)
(2)
Eurasia & $980 $2 $5 $987 $810 $2 $2 $814 21 21
Africa
Europe 2,976 50 3,026 2,946 2 5 2,953 1 2
Latin 2,405 2,405 2,042 ($56 ) 1,986 18 21
America
North 1,520 21 2 $439 ($28 ) 1,954 1,699 30 1 14 1,744 (11 ) 12
America
Pacific 2,048 22 2,070 1,887 1 (24 ) 1,864 9 11
Bottling 227 122 349 179 141 (84 ) 236 27 48
Investments
Corporate (1,707 ) 8 111 106 270 (1,212 ) (1,332 ) 31 98 (16 ) (1,219 ) (28 ) 1
Consolidated $8,449 $153 $190 $545 $242 $9,579 $8,231 $206 $107 ($166 ) $8,378 3 14
Notes:
Items to consider for comparability include primarily charges, gains
and accounting changes. Charges and accounting changes negatively
impacting operating income are reflected as increases to reported
operating income. Gains and accounting changes positively impacting
operating income are reflected as deductions to reported operating
income.
The currency impact is equal to the difference between current year
U.S. dollar amounts at current year exchange rates compared to current
year U.S. dollar amounts recalculated using prior year comparable
period exchange rates. In all cases, the exchange rates include the
impact of hedging in the applicable periods.
(1)
Items impacting comparability reflected in Other Items for the year
ended December 31, 2010 for North America and Corporate include
unrealized mark-to-market gains related to non-designated hedges that
are associated with underlying transactions expected to occur in a
future period. Items impacting comparability for Corporate also include
charitable donations of $250 million and other immaterial items.
Currency neutral operating income growth after considering items
(2) impacting comparability for each operating segment is calculated as
follows:
% Favorable
% Favorable
% Currency (Unfavorable) -
(Unfavorable) -
Impact After Currency
After
Considering Neutral After
Considering
Items Impacting Considering
Items
Comparability Items
(Non-GAAP)
(Non-GAAP)
Eurasia & Africa 21 7 14
Europe 2 (1) 3
Latin America 21 3 18
North America 12 0 12
Pacific 11 9 2
Bottling Investments 48 5 43
Corporate 1 1 0
Consolidated 14 3 11
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures used in managing the business may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain items that impact the overall comparability. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. See the tables above for supplemental financial data and corresponding reconciliations to GAAP financial measures for the years ended December 31, 2010 and December 31, 2009. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP.
About The Coca-Cola Company
The Coca-Cola Company is the world's largest beverage company, refreshing consumers with more than 500 sparkling and still brands. Led by Coca-Cola, the world's most valuable brand, the Company's portfolio features 14 billion dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply and Georgia. Globally, we are the No. 1 provider of sparkling beverages, juices and juice drinks and ready-to-drink teas and coffees. Through the world's largest beverage distribution system, consumers in more than 200 countries enjoy the Company's beverages at a rate of 1.7 billion servings a day. With an enduring commitment to building sustainable communities, our Company is focused on initiatives that reduce our environmental footprint, support active, healthy living, create a safe, inclusive work environment for our associates, and enhance the economic development of the communities where we operate. For more information about our Company, please visit our website at www.thecoca-colacompany.com.
Forward-Looking Statements
This press release may contain statements, estimates or projections that constitute "forward-looking statements" as defined under U.S. federal securities laws. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will" and similar expressions identify forward-looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from The Coca-Cola Company's historical experience and our present expectations or projections. These risks include, but are not limited to, obesity and other health concerns; scarcity and quality of water; changes in the nonalcoholic beverages business environment, including changes in consumer preferences based on health and nutrition considerations and obesity concerns; shifting consumer tastes and needs, changes in lifestyles and competitive product and pricing pressures; impact of the global credit crisis on our liquidity and financial performance; increased competition; our ability to expand our operations in developing and emerging markets; foreign currency exchange rate fluctuations; increases in interest rates; our ability to maintain good relationships with our bottling partners; the financial condition of our bottling partners; increases in income tax rates or changes in income tax laws; increases in indirect taxes or new indirect taxes; our ability and the ability of our bottling partners to maintain good labor relations, including the ability to renew collective bargaining agreements on satisfactory terms and avoid strikes, work stoppages or labor unrest; increase in the cost, disruption of supply or shortage of energy; increase in cost, disruption of supply or shortage of ingredients or packaging materials; changes in laws and regulations relating to beverage containers and packaging, including container deposit, recycling, eco-tax and/or product stewardship laws or regulations; adoption of significant additional labeling or warning requirements; unfavorable general economic conditions in the United States or other major markets; unfavorable economic and political conditions in international markets, including civil unrest and product boycotts; changes in commercial or market practices and business model within the European Union; litigation uncertainties; adverse weather conditions; our ability to maintain brand image and corporate reputation as well as other product issues such as product recalls; changes in legal and regulatory environments; changes in accounting standards and taxation requirements; our ability to achieve overall long-term goals; our ability to protect our information systems; additional impairment charges; our ability to successfully manage Company-owned bottling operations; the impact of climate change on our business; global or regional catastrophic events; risks related to our acquisition of Coca-Cola Enterprises Inc.'s North American operations; and other risks discussed in our Company's filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K, which filings are available from the SEC. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. The Coca-Cola Company undertakes no obligation to publicly update or revise any forward-looking statements.
Stay informed. Subscribe to receive the latest news from The Coca-Cola Company at http://feeds.feedburner.com/NewsFromTheCoca-ColaCompany.
Source: The Coca-Cola Company
Released February 9, 2011