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The Coca-Cola Company Reports Full-Year And Fourth Quarter 2012 Results

Second quarter 2011 results included a net gain of $0.02 per share due to a noncash gain on the adjustment to fair value of our investment in Mexican bottler Grupo Continental S.A.B., partially offset by restructuring charges, costs related to global productivity initiatives and the CCE integration, and charges related to the natural disasters in Japan.

Third quarter 2011 results included a net charge of $0.04 per share due to restructuring charges and costs related to global productivity initiatives and the CCE integration.

Fourth quarter 2011 results included a net charge of $0.03 per share due to restructuring charges and costs related to global productivity initiatives and the CCE integration, partially offset by transaction gains.

NOTES

  • All references to growth rate percentages, share and cycling of growth rates compare the results of the period to those of the prior year comparable period.
  • “Concentrate sales” represents the amount of concentrates, syrups, beverage bases and powders sold by, or used in finished beverages sold by, the Company to its bottling partners or other customers.
  • “Sparkling beverages” means NARTD beverages with carbonation, including energy drinks and carbonated waters and flavored waters.
  • “Still beverages” means nonalcoholic beverages without carbonation, including noncarbonated waters, flavored waters and enhanced waters, juices and juice drinks, teas, coffees, sports drinks and noncarbonated energy drinks.
  • All references to volume and volume percentage changes indicate unit case volume, except for the reference to volume included in the explanation of net revenue growth for North America. All volume percentage changes are computed based on average daily sales for the fourth quarter, unless otherwise noted, and are computed on a reported basis for the full year. “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.
  • For both North America and Bottling Investments Group, net revenue growth attributable to volume reflects the increase in “as reported” volume, which is based on as reported sales rather than average daily sales and may include the impact of structural changes. For North America, this volume represents Coca-Cola Refreshments’ unit case sales (which are equivalent to concentrate sales) plus concentrate sales to non-Company-owned bottling operations.
  • Fourth quarter 2012 financial results were impacted by two additional selling days, which offset the impact of one less selling day in first quarter 2012 results. Unit case volume results for the quarters are not impacted by the variance in selling days due to the average daily sales computation referenced above.
  • Due to the refocusing in 2012 of the Beverage Partners Worldwide (BPW) ready-to-drink tea joint venture with Nestlé S.A. (Nestlé), we have eliminated the BPW joint venture volume and associated concentrate sales from our reported results for both 2011 and 2012 in those countries in which the joint venture was phased out during 2012. In addition, we have eliminated the Nestea licensed volume and associated concentrate sales in the U.S. due to our U.S. license agreement with Nestlé terminating at the end of 2012. These changes did not materially impact the Company’s reported volume results for fourth quarter or full-year 2012 on a consolidated basis or for any individual operating group. However, these changes increased the Company’s reported fourth quarter and full-year 2012 volume for still beverages by 2 points in both periods, and ready-to-drink tea by 18 points and 11 points, respectively.
  • The Company reports its financial results in accordance with accounting principles generally accepted in the United States (GAAP). However, management believes that certain non-GAAP financial measures provide users with additional meaningful financial information that should be considered when assessing our ongoing performance. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company’s performance. 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. Our non-GAAP financial information does not represent a comprehensive basis of accounting.

CONFERENCE CALL

We are hosting a conference call with investors and analysts to discuss full-year and fourth quarter 2012 results today, Feb. 12, 2013 at 9:30 a.m. EST. We invite investors to listen to a live audiocast of the conference call at our website, http://www.coca-colacompany.com in the “Investors” section. A replay in downloadable MP3 format and transcript of the call 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,

2012

December 31,

2011

% Change
As Adjusted 1
Net Operating Revenues $ 11,455 $ 11,040 4
Cost of goods sold   4,628     4,403     5  
Gross Profit 6,827 6,637 3
Selling, general and administrative expenses 4,430 4,406 1
Other operating charges   214     275      
Operating Income 2,183 1,956 12
Interest income 126 127 (1 )
Interest expense 95 104 (9 )
Equity income (loss) — net 182 155 17
Other income (loss) — net   (19 )   82      
Income Before Income Taxes 2,377 2,216 7
Income taxes   487     539     (10 )
Consolidated Net Income 1,890 1,677 13
Less: Net income attributable to noncontrolling interests   24     20     20  
Net Income Attributable to Shareowners of The Coca-Cola Company   $ 1,866     $ 1,657     13  
Diluted Net Income Per Share 2,3   $ 0.41     $ 0.36     14  
Average Shares Outstanding — Diluted 2,3   4,557     4,611      

1 Effective January 1, 2012, the Company elected to change our accounting methodology for determining the market-related value of assets for our U.S. qualified defined benefit pension plans. The Company's change in accounting methodology has been applied retrospectively, and we have adjusted all prior period financial information presented herein as required.

2 For the three months ended December 31, 2012 and 2011, basic net income per share was $0.42 for 2012 and $0.37 for 2011 based on average shares outstanding — basic of 4,479 for 2012 and 4,536 for 2011. 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.

3 Following shareowner approval, the Company amended its certificate of incorporation on July 27, 2012, to increase the number of authorized shares of common stock from 5.6 billion to 11.2 billion and effect a two-for-one stock split of the common stock. Accordingly, all share and per share data presented herein reflects the impact of the increase in authorized shares and the stock split.

 
 
 
 
 
 

THE COCA-COLA COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(UNAUDITED)
(In millions except per share data)
     
Year Ended
December 31, 2012 December 31,2011 % Change
As Adjusted 1
Net Operating Revenues $ 48,017 $ 46,542 3
Cost of goods sold   19,053     18,215     5  
Gross Profit 28,964 28,327 2
Selling, general and administrative expenses 17,738 17,422 2
Other operating charges   447     732      
Operating Income 10,779 10,173 6
Interest income 471 483 (2 )
Interest expense 397 417 (5 )
Equity income (loss) — net 819 690 19
Other income (loss) — net   137     529      
Income Before Income Taxes 11,809 11,458 3
Income taxes   2,723     2,812     (3 )
Consolidated Net Income 9,086 8,646 5
Less: Net income attributable to noncontrolling interests   67     62     8  
Net Income Attributable to Shareowners of The Coca-Cola Company   $ 9,019     $ 8,584     5  
Diluted Net Income Per Share 2,3   $ 1.97     $ 1.85     6  
Average Shares Outstanding — Diluted 2,3   4,584     4,646      

1 Effective January 1, 2012, the Company elected to change our accounting methodology for determining the market-related value of assets for our U.S. qualified defined benefit pension plans. The Company's change in accounting methodology has been applied retrospectively, and we have adjusted all prior period financial information presented herein as required.

2 For the years ended December 31, 2012 and 2011, basic net income per share was $2.00 for 2012 and $1.88 for 2011 based on average shares outstanding — basic of 4,504 for 2012 and 4,568 for 2011. 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.

Following shareowner approval, the Company amended its certificate of incorporation on July 27, 2012, to increase the number of authorized shares of common stock from 5.6 billion to 11.2 billion and effect a two-for-one stock split of the common stock. Accordingly, all share and per share data presented herein reflects the impact of the increase in authorized shares and the stock split.

 
 
 
 
 
 

THE COCA-COLA COMPANY AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(UNAUDITED)
(In millions except par value)
   
December 31, 2012 December 31,2011
As Adjusted 1
ASSETS
Current Assets
Cash and cash equivalents $ 8,442 $ 12,803
Short-term investments   5,017     1,088  
Total Cash, Cash Equivalents and Short-Term Investments   13,459     13,891  
Marketable securities 3,092 144
Trade accounts receivable, less allowances of $53 and $83, respectively 4,759 4,920
Inventories 3,264 3,092
Prepaid expenses and other assets 2,781 3,450
Assets held for sale   2,973      
Total Current Assets   30,328     25,497  
Equity Method Investments 9,216 7,233
Other Investments, Principally Bottling Companies 1,232 1,141
Other Assets 3,585 3,495
Property, Plant and Equipment — net 14,476 14,939
Trademarks With Indefinite Lives 6,527 6,430
Bottlers' Franchise Rights With Indefinite Lives 7,405 7,770
Goodwill 12,255 12,219
Other Intangible Assets   1,150     1,250  
Total Assets   $ 86,174     $ 79,974  
 
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 8,680 $ 9,009
Loans and notes payable 16,297 12,871
Current maturities of long-term debt 1,577 2,041
Accrued income taxes 471 362
Liabilities held for sale   796      
Total Current Liabilities   27,821     24,283  
Long-Term Debt 14,736 13,656
Other Liabilities 5,468 5,420
Deferred Income Taxes 4,981 4,694
The Coca-Cola Company Shareowners' Equity

Common stock, $0.25 par value; Authorized — 11,200 shares; Issued — 7,040 and 7,040 shares, respectively 2

1,760 1,760
Capital surplus 11,379 10,332
Reinvested earnings 58,045 53,621
Accumulated other comprehensive income (loss) (3,385 ) (2,774 )
Treasury stock, at cost — 2,571 and 2,514 shares, respectively 2   (35,009 )   (31,304 )
Equity Attributable to Shareowners of The Coca-Cola Company 32,790 31,635
Equity Attributable to Noncontrolling Interests   378     286  
Total Equity   33,168     31,921  
Total Liabilities and Equity   $ 86,174     $ 79,974  

1 Effective January 1, 2012, the Company elected to change our accounting methodology for determining the market-related value of assets for our U.S. qualified defined benefit pension plans. The Company's change in accounting methodology has been applied retrospectively, and we have adjusted all prior period financial information presented herein as required.

2 Following shareowner approval, the Company amended its certificate of incorporation on July 27, 2012, to increase the number of authorized shares of common stock from 5.6 billion to 11.2 billion and effect a two-for-one stock split of the common stock. Accordingly, all share and per share data presented herein reflects the impact of the increase in authorized shares and the stock split.

 
 
 
 
 
 

THE COCA-COLA COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(UNAUDITED)
(In millions)
   
Year Ended
December 31, 2012 December 31,2011
As Adjusted 1
Operating Activities
Consolidated net income $ 9,086 $ 8,646
Depreciation and amortization 1,982 1,954
Stock-based compensation expense 259 354
Deferred income taxes 632 1,035
Equity (income) loss — net of dividends (426 ) (269 )
Foreign currency adjustments (130 ) 7
Significant (gains) losses on sales of assets — net (98 ) (220 )
Other operating charges 166 214
Other items 254 (354 )
Net change in operating assets and liabilities   (1,080 )   (1,893 )
Net cash provided by operating activities   10,645     9,474  
Investing Activities
Purchases of short-term investments (9,590 ) (4,057 )
Proceeds from disposals of short-term investments 5,622 5,647
Acquisitions and investments (1,535 ) (977 )
Purchases of other investments (5,266 ) (787 )
Proceeds from disposals of bottling companies and other investments 2,189 562
Purchases of property, plant and equipment (2,780 ) (2,920 )
Proceeds from disposals of property, plant and equipment 143 101
Other investing activities   (187 )   (93 )
Net cash provided by (used in) investing activities   (11,404 )   (2,524 )
Financing Activities
Issuances of debt 42,791 27,495
Payments of debt (38,573 ) (22,530 )
Issuances of stock 1,489 1,569
Purchases of stock for treasury (4,559 ) (4,513 )
Dividends (4,595 ) (4,300 )
Other financing activities   100     45  
Net cash provided by (used in) financing activities   (3,347 )   (2,234 )
Effect of Exchange Rate Changes on Cash and Cash Equivalents   (255 )   (430 )
Cash and Cash Equivalents
Net increase (decrease) during the period (4,361 ) 4,286
Balance at beginning of period   12,803     8,517  
Balance at end of period   $ 8,442     $ 12,803  

1 Effective January 1, 2012, the Company elected to change our accounting methodology for determining the market-related value of assets for our U.S. qualified defined benefit pension plans. The Company's change in accounting methodology has been applied retrospectively, and we have adjusted all prior period financial information presented herein as required.

 
 
 
 
 
 

THE COCA-COLA COMPANY AND SUBSIDIARIES

Operating Segments

(UNAUDITED)
(In millions)

 

Three Months Ended

 
    Net Operating Revenues   Operating Income (Loss) 1   Income (Loss) Before Income Taxes 1
 

December 31,

2012

 

December 31,

2011

 

% Fav. /

(Unfav.)

 

December 31,

2012

 

December 31,

2011

 

% Fav. /

(Unfav.)

 

December 31,

2012

 

December 31,

2011

 

% Fav. /

(Unfav.)

Eurasia & Africa $ 697   $ 663   5   $ 273   $ 231   18   $ 281   $ 233   21
Europe 1,143 1,212 (6 ) 670 593 13 675 598 13
Latin America 1,274 1,177 8 715 652 10 718 658 9
North America 5,292 4,993 6 558 498 12 558 500 12
Pacific 1,346 1,357 (1 ) 426 382 11 434 383 13
Bottling Investments 2,087 1,977 6 (29 ) 35 154 197 (22 )
Corporate 19 34 (46 ) (430 ) (435 ) 1 (443 ) (353 ) (25 )
Eliminations   (403 )   (373 )                            
Consolidated   $ 11,455     $ 11,040     4     $ 2,183     $ 1,956     12     $ 2,377     $ 2,216     7  

1 Effective January 1, 2012, the Company elected to change our accounting methodology for determining the market-related value of assets for our U.S. qualified defined benefit pension plans. The Company's change in accounting methodology has been applied retrospectively, and we have adjusted all prior period financial information presented herein as required.

 

Note: Certain growth rates may not recalculate using the rounded dollar amounts provided.

 
 

During the three months ended December 31, 2012, the results of our operating segments were impacted by the following items:

  • Intersegment revenues were $26 million for Eurasia and Africa, $154 million for Europe, $95 million for Latin America, $2 million for North America, $104 million for Pacific and $22 million for Bottling Investments.
  • Operating income (loss) and income (loss) before income taxes were reduced by $1 million for Europe, $70 million for North America, $2 million for Pacific, $119 million for Bottling Investments and $20 million for Corporate due to charges related to the Company’s productivity and reinvestment program as well as other restructuring initiatives. Operating income (loss) and income (loss) before income taxes were increased by $1 million for Europe due to the refinement of previously established accruals related to the Company’s 2008-2011 productivity initiatives. Operating income (loss) and income (loss) before income taxes were increased by $1 million for North America due to the refinement of previously established accruals related to the Company’s integration of Coca-Cola Enterprises Inc.’s (“CCE”) former North America business.
  • Operating income (loss) and income (loss) before income taxes were reduced by $6 million for North America due to the loss or damage of certain fixed assets as a result of Hurricane Sandy.
  • Operating income (loss) and income (loss) before income taxes were reduced by $6 million for Corporate due to the elimination of the Company’s proportionate share of gross profit in inventory on sales to Embotelladora Andina S.A. (“Andina”) following its merger with Embotelladoras Coca-Cola Polar S.A. (“Polar”). Subsequent to this transaction, the Company has an ownership interest in Andina that we account for under the equity method of accounting.
  • Operating income (loss) and income (loss) before income taxes were increased by $3 million for Corporate due to a net gain on the sale of land held by one of the Company’s consolidated bottling operations, partially offset by transaction costs associated with the Company’s acquisition of an equity ownership interest in Mikuni Coca-Cola Bottling Co., Ltd. (“Mikuni”), a bottling partner with operations in Japan.
  • Income (loss) before income taxes was increased by $185 million for Corporate due to the gain the Company recognized as a result of the merger of Andina and Polar.
  • Income (loss) before income taxes was reduced by $108 million for Corporate due to the loss the Company recognized on the pending sale of a majority ownership interest in our Philippine bottling operations to Coca-Cola FEMSA S.A.B. de C.V. (“Coca-Cola FEMSA”). This transaction was completed in January 2013. As of December 31, 2012, the assets and liabilities associated with our Philippine bottling operations were classified as held for sale in our consolidated balance sheets.
  • Income (loss) before income taxes was reduced by $82 million for Corporate due to the Company acquiring an ownership interest in Mikuni for which we paid a premium over the publicly traded market price. This premium was expensed on the acquisition date. Subsequent to this transaction, the Company accounts for our investment in Mikuni under the equity method of accounting
  • Income (loss) before income taxes was reduced by $25 million for Bottling Investments due to the Company’s proportionate share of unusual or infrequent items recorded by certain of our equity method investees.
  • Income (loss) before income taxes was reduced by $16 million for Corporate due to other-than-temporary declines in the fair values of certain cost method investments.
  • Income (loss) before income taxes was reduced by $1 million for Europe and was increased by $1 million for Eurasia and Africa, $1 million for Latin America, $1 million for North America and $1 million for Pacific due to changes in the structure of Beverage Partners Worldwide (“BPW”), our 50/50 joint venture with Nestlé S.A. (“Nestlé”) in the ready-to-drink tea category.
  • Income (loss) before income taxes was reduced by $5 million for Corporate due to charges associated with the Company’s indemnification of a previously consolidated entity.

During the three months ended December 31, 2011, the results of our operating segments were impacted by the following items:

  • Intersegment revenues were $28 million for Eurasia and Africa, $160 million for Europe, $82 million for Latin America, $1 million for North America, $78 million for Pacific and $24 million for Bottling Investments.
  • Operating income (loss) and income (loss) before income taxes were reduced by $3 million for Eurasia and Africa, $20 million for Europe, $1 million for Latin America, $145 million for North America, $1 million for Pacific, $31 million for Bottling Investments and $64 million for Corporate, primarily due to the Company’s productivity, integration and restructuring initiatives.
  • Operating income (loss) and income (loss) before income taxes were reduced by $10 million for Corporate due to charges associated with the floods in Thailand that impacted the Company’s supply chain operations in the region.
  • Income (loss) before income taxes was reduced by $13 million for Bottling Investments due to the Company’s proportionate share of unusual or infrequent items recorded by certain of our equity method investees.
  • Income (loss) before income taxes was increased by a net $122 million for Corporate, primarily due to gains the Company recognized as a result of an equity method investee issuing additional shares of its own stock during the period at a per share amount greater than the carrying value of the Company’s per share investment. These gains were partially offset by charges associated with certain of the Company’s equity method investments in Japan.
  • Income (loss) before income taxes was reduced by $17 million for Corporate due to other-than-temporary declines in the fair values of certain available-for-sale securities.
  • Income (loss) before income taxes was reduced by $1 million for Corporate due to costs associated with the early extinguishment of certain long-term debt. This debt existed prior to the Company’s acquisition of CCE’s former North America business.
 
 
 
 
 
 
 

THE COCA-COLA COMPANY AND SUBSIDIARIES

Operating Segments

(UNAUDITED)
(In millions)
 

Year Ended

 
    Net Operating Revenues   Operating Income (Loss) 1   Income (Loss) Before Income Taxes 1
 

December 31,

2012

 

December 31,

2011

 

% Fav. /

(Unfav.)

 

December 31,

2012

 

December 31,

2011

 

% Fav. /

(Unfav.)

 

December 31,

2012

 

December 31,

2011

 

% Fav. /

(Unfav.)

Eurasia & Africa $ 2,970   $ 2,841   5   $ 1,169   $ 1,091   7   $ 1,192   $ 1,089   9
Europe 5,123 5,474 (6 ) 2,960 3,090 (4 ) 3,015 3,134 (4 )
Latin America 4,831 4,690 3 2,879 2,815 2 2,882 2,832 2
North America 21,680 20,571 5 2,597 2,319 12 2,624 2,327 13
Pacific 6,035 5,838 3 2,425 2,151 13 2,432 2,154 13
Bottling Investments 8,895 8,591 4 140 224 (37 ) 904 897 1
Corporate 127 159 (20 ) (1,391 ) (1,517 ) 8 (1,240 ) (975 ) (27 )
Eliminations   (1,644 )   (1,622 )                            
Consolidated   $ 48,017     $ 46,542     3     $ 10,779     $ 10,173     6     $ 11,809     $ 11,458     3  

1 Effective January 1, 2012, the Company elected to change our accounting methodology for determining the market-related value of assets for our U.S. qualified defined benefit pension plans. The Company's change in accounting methodology has been applied retrospectively, and we have adjusted all prior period financial information presented herein as required.

 

Note: Certain growth rates may not recalculate using the rounded dollar amounts provided.

 
 

During the year ended December 31, 2012, the results of our operating segments were impacted by the following items:

  • Intersegment revenues were $152 million for Eurasia and Africa, $642 million for Europe, $271 million for Latin America, $15 million for North America, $476 million for Pacific and $88 million for Bottling Investments.
  • Operating income (loss) and income (loss) before income taxes were reduced by $1 million for Europe, $227 million for North America, $3 million for Pacific, $164 million for Bottling Investments and $38 million for Corporate due to charges related to the Company’s productivity and reinvestment program as well as other restructuring initiatives. Operating income (loss) and income (loss) before income taxes were increased by $4 million for Europe, $1 million for Pacific and $5 million for Corporate due to the refinement of previously established accruals related to the Company’s 2008-2011 productivity initiatives. Operating income (loss) and income (loss) before income taxes were increased by $6 million for North America due to the refinement of previously established accruals related to the Company’s integration of CCE’s former North America business.
  • Operating income (loss) and income (loss) before income taxes were reduced by $21 million for North America due to costs associated with the Company detecting residues of carbendazim, a fungicide that is not registered in the U.S. for use on citrus products, in orange juice imported from Brazil for distribution in the U.S. As a result, the Company began purchasing additional supplies of Florida orange juice at a higher cost than Brazilian orange juice.
  • Operating income (loss) and income (loss) before income taxes were reduced by $20 million for North America due to changes in the Company’s ready-to-drink tea strategy as a result of our current U.S. license agreement with Nestlé terminating at the end of 2012.
  • Operating income (loss) and income (loss) before income taxes were reduced by $6 million for North America due to the loss or damage of certain fixed assets as a result of Hurricane Sandy.
  • Operating income (loss) and income (loss) before income taxes were reduced by $6 million for Corporate due to the elimination of the Company’s proportionate share of gross profit in inventory on sales to Andina following its merger with Polar. Subsequent to this transaction, the Company has an ownership interest in Andina that we account for under the equity method of accounting.
  • Operating income (loss) and income (loss) before income taxes were increased by $3 million for Corporate due to a gain on the sale of land held by one of the Company’s consolidated bottling operations, partially offset by transaction costs associated with the Company’s acquisition of an equity ownership interest in Mikuni, a bottling partner with operations in Japan.
  • Income (loss) before income taxes was increased by $185 million for Corporate due to the gain the Company recognized as a result of the merger of Andina and Polar.
  • Income (loss) before income taxes was increased by $92 million for Corporate due to a gain the Company recognized as a result of Coca-Cola FEMSA issuing additional shares of its own stock during the period at a per share amount greater than the carrying amount of the Company’s per share investment.
  • Income (loss) before income taxes was reduced by $108 million for Corporate due to the loss the Company recognized on the pending sale of a majority ownership interest in our Philippine bottling operations to Coca-Cola FEMSA. This transaction was completed in January 2013. As of December 31, 2012, the assets and liabilities associated with our Philippine bottling operations were classified as held for sale in our consolidated balance sheets.
  • Income (loss) before income taxes was reduced by $82 million for Corporate due to the Company acquiring an ownership interest in Mikuni for which we paid a premium over the publicly traded market price. This premium was expensed on the acquisition date. Subsequent to this transaction, the Company accounts for our investment in Mikuni under the equity method of accounting.
  • Income (loss) before income taxes was increased by $8 million for Bottling Investments due to the Company’s proportionate share of unusual or infrequent items recorded by certain of our equity method investees.
  • Income (loss) before income taxes was reduced by $16 million for Corporate due to other-than-temporary declines in the fair values of certain cost method investments.
  • Income (loss) before income taxes was reduced by $1 million for Eurasia and Africa, $4 million for Europe, $2 million for Latin America and $4 million for Pacific due to changes in the structure of BPW, our 50/50 joint venture with Nestlé in the ready-to-drink tea category.
  • Income (loss) before income taxes was reduced by $5 million for Corporate due to charges associated with the Company’s indemnification of a previously consolidated entity.

During the year ended December 31, 2011, the results of our operating segments were impacted by the following items:

  • Intersegment revenues were $152 million for Eurasia and Africa, $697 million for Europe, $287 million for Latin America, $12 million for North America, $384 million for Pacific and $90 million for Bottling Investments.
  • Operating income (loss) and income (loss) before income taxes were reduced by $12 million for Eurasia and Africa, $25 million for Europe, $4 million for Latin America, $374 million for North America, $4 million for Pacific, $89 million for Bottling Investments and $164 million for Corporate, primarily due to the Company’s productivity, integration and restructuring initiatives as well as costs associated with the merger of Embotelladoras Arca S.A.B. de C.V. (“Arca”) and Grupo Continental S.A.B. (“Contal”).
  • Operating income (loss) and income (loss) before income taxes were reduced by $2 million for North America and $82 million for Pacific due to charges associated with the earthquake and tsunami that devastated northern and eastern Japan on March 11, 2011.
  • Operating income (loss) and income (loss) before income taxes were reduced by $19 million for North America due to the amortization of favorable supply contracts acquired in connection with our acquisition of CCE’s former North America business.
  • Operating income (loss) and income (loss) before income taxes were reduced by $10 million for Corporate due to charges associated with the floods in Thailand that impacted the Company’s supply chain operations in the region.
  • Income (loss) before income taxes was increased by a net $417 million for Corporate, primarily due to the gain the Company recognized as a result of the merger of Arca and Contal.
  • Income (loss) before income taxes was increased by a net $122 million for Corporate, primarily due to gains the Company recognized as a result of an equity method investee issuing additional shares of its own stock during the period at a per share amount greater than the carrying value of the Company’s per share investment. These gains were partially offset by charges associated with certain of the Company’s equity method investments in Japan.
  • Income (loss) before income taxes was increased by $102 million for Corporate due to the gain on the sale of our investment in Coca-Cola Embonor S.A. (“Embonor”), a bottling partner with operations primarily in Chile. Prior to this transaction, the Company accounted for our investment in Embonor under the equity method of accounting.
  • Income (loss) before income taxes was reduced by $53 million for Bottling Investments due to the Company’s proportionate share of unusual or infrequent items recorded by certain of our equity method investees.
  • Income (loss) before income taxes was reduced by $41 million for Corporate due to the impairment of an investment in an entity accounted for under the equity method of accounting.
  • Income (loss) before income taxes was reduced by $17 million for Corporate due to other-than-temporary declines in the fair values of certain available-for-sale securities.
  • Income (loss) before income taxes was reduced by $9 million for Corporate due to the net charge we recognized on the repurchase and/or exchange of certain long-term debt assumed in connection with our acquisition of CCE’s former North America business as well as the early extinguishment of certain other long-term debt.
  • Income (loss) before income taxes was reduced by $5 million for Corporate due to the finalization of working capital adjustments related to the sale of our Norwegian and Swedish bottling operations to New CCE.
 
 
 
 
 
 
 

THE COCA-COLA COMPANY AND SUBSIDIARIES

Reconciliation of GAAP and Non-GAAP Financial Measures

(UNAUDITED)

The Company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP” or referred to herein as “reported”). However, management believes that certain non-GAAP financial measures provide users with additional meaningful financial information that should be considered when assessing our ongoing performance. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company’s performance. 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. Our non-GAAP financial information does not represent a comprehensive basis of accounting.

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