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The Coca-Cola Company Reports Full-Year And Fourth Quarter 2013 Results

Productivity is a core pillar of our 2020 Vision and a priority of our Company as we design and implement the most effective and efficient business system. The primary components of the incremental productivity goal will consist of (i) expanded savings through global supply chain optimization as well as data and information technology system standardization, which will be reinvested in global brand-building initiatives with an emphasis on increased media spending, and (ii) improved effectiveness of our marketing investments by transforming our marketing and commercial model to redeploy into more consumer-facing marketing investments to generate the highest possible return and accelerate growth.

Items Impacting Comparability

For details on items impacting comparability in the quarter and for the full year, see the Reconciliation of GAAP and Non-GAAP Financial Measures schedule.

NOTES

  • All references to growth rate percentages and share 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, unless otherwise noted. 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.
  • Fourth quarter 2013 financial results were impacted by one additional selling day, which partially offset the impact of two fewer selling days in first quarter 2013 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.
  • In January 2012, the Company announced that Beverage Partners Worldwide (BPW), our joint venture with Nestlé in the ready-to-drink tea category, will focus its geographic scope primarily in Europe and Canada. The joint venture was phased out in all other territories by the end of 2012, and the Company's agreement to distribute products in the United States terminated at the end of 2012. We have eliminated the BPW and Nestlé licensed volume and associated concentrate sales for the year ended Dec. 31, 2012 in those countries impacted by these structural changes.
  • As previously announced, effective Jan. 1, 2013, the Company transferred our India and South West Asia business unit from the Eurasia and Africa operating segment to the Pacific operating segment. The countries included in our India and South West Asia business unit are Bangladesh, Bhutan, India, the Maldives, Nepal and Sri Lanka. This change in organizational structure did not impact the other geographic operating segments, Bottling Investments or Corporate. The reclassified historical operating segment data reflecting the change in organizational structure was disclosed in a Form 8-K filed with the U.S. Securities and Exchange Commission on March 21, 2013.
  • 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 2013 results today, Feb. 18, 2014 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 a 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, 2013

December 31,2012

%Change 1

Net Operating Revenues $ 11,040 $ 11,455 (4)
Cost of goods sold   4,315     4,628     (7)
Gross Profit 6,725 6,827 (2)
Selling, general and administrative expenses 4,319 4,430 (3)
Other operating charges   301     214     40
Operating Income 2,105 2,183 (4)
Interest income 153 126 22
Interest expense 149 95 56
Equity income (loss) — net 65 182 (64)
Other income (loss) — net   54     (19 )  
Income Before Income Taxes 2,228 2,377 (6)
Income taxes   520     487     7
Consolidated Net Income 1,708 1,890 (10)
Less: Net income (loss) attributable to noncontrolling interests   (2 )   24    
Net Income Attributable to Shareowners of The Coca-Cola Company   $ 1,710     $ 1,866     (8)
Diluted Net Income Per Share 2   $ 0.38     $ 0.41     (7)
Average Shares Outstanding — Diluted 2   4,482     4,557      

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

2 For the three months ended December 31, 2013 and 2012, basic net income per share was $0.39 for 2013 and $0.42 for 2012 based on average shares outstanding — basic of 4,410 for 2013 and 4,479 for 2012. 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, 2013

December 31,2012

%Change 1

Net Operating Revenues $ 46,854 $ 48,017 (2)
Cost of goods sold   18,421     19,053     (3)
Gross Profit 28,433 28,964 (2)
Selling, general and administrative expenses 17,310 17,738 (2)
Other operating charges   895     447     100
Operating Income 10,228 10,779 (5)
Interest income 534 471 13
Interest expense 463 397 17
Equity income (loss) — net 602 819 (27)
Other income (loss) — net   576     137     321
Income Before Income Taxes 11,477 11,809 (3)
Income taxes   2,851     2,723     5
Consolidated Net Income 8,626 9,086 (5)
Less: Net income attributable to noncontrolling interests   42     67     (38)
Net Income Attributable to Shareowners of The Coca-Cola Company   $ 8,584     $ 9,019     (5)
Diluted Net Income Per Share 2   $ 1.90     $ 1.97     (3)
Average Shares Outstanding — Diluted 2   4,509     4,584      

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

2 For the years ended December 31, 2013 and 2012, basic net income per share was $1.94 for 2013 and $2.00 for 2012 based on average shares outstanding — basic of 4,434 for 2013 and 4,504 for 2012. 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, 2013

December 31,2012

ASSETS

Current Assets
Cash and cash equivalents $ 10,414 $ 8,442
Short-term investments   6,707     5,017  
Total Cash, Cash Equivalents and Short-Term Investments   17,121     13,459  
Marketable securities 3,147 3,092
Trade accounts receivable, less allowances of $61 and $53, respectively 4,873 4,759
Inventories 3,277 3,264
Prepaid expenses and other assets 2,886 2,781
Assets held for sale       2,973  
Total Current Assets   31,304     30,328  
Equity Method Investments 10,393 9,216
Other Investments, Principally Bottling Companies 1,119 1,232
Other Assets 4,661 3,585
Property, Plant and Equipment — net 14,967 14,476
Trademarks With Indefinite Lives 6,744 6,527
Bottlers' Franchise Rights With Indefinite Lives 7,415 7,405
Goodwill 12,312 12,255
Other Intangible Assets   1,140     1,150  
Total Assets   $ 90,055     $ 86,174  
 

LIABILITIES AND EQUITY

Current Liabilities
Accounts payable and accrued expenses $ 9,577 $ 8,680
Loans and notes payable 16,901 16,297
Current maturities of long-term debt 1,024 1,577
Accrued income taxes 309 471
Liabilities held for sale       796  
Total Current Liabilities   27,811     27,821  
Long-Term Debt 19,154 14,736
Other Liabilities 3,498 5,468
Deferred Income Taxes 6,152 4,981
The Coca-Cola Company Shareowners' Equity

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

1,760 1,760
Capital surplus 12,276 11,379
Reinvested earnings 61,660 58,045
Accumulated other comprehensive income (loss) (3,432 ) (3,385 )
Treasury stock, at cost — 2,638 and 2,571 shares, respectively   (39,091 )   (35,009 )
Equity Attributable to Shareowners of The Coca-Cola Company 33,173 32,790
Equity Attributable to Noncontrolling Interests   267     378  
Total Equity   33,440     33,168  
Total Liabilities and Equity   $ 90,055     $ 86,174  
 

THE COCA-COLA COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(UNAUDITED)
(In millions)
   
Year Ended
December 31, 2013 December 31,2012
Operating Activities
Consolidated net income $ 8,626 $ 9,086
Depreciation and amortization 1,977 1,982
Stock-based compensation expense 227 259
Deferred income taxes 648 632
Equity (income) loss — net of dividends (201 ) (426 )
Foreign currency adjustments 168 (130 )
Significant (gains) losses on sales of assets — net (670 ) (98 )
Other operating charges 465 166
Other items 234 254
Net change in operating assets and liabilities   (932 )   (1,080 )
Net cash provided by operating activities   10,542     10,645  
Investing Activities
Purchases of investments (14,782 ) (14,824 )
Proceeds from disposals of investments 12,791 7,791
Acquisitions of businesses, equity method investments and nonmarketable securities (353 ) (1,486 )
Proceeds from disposals of businesses, equity method investments andnonmarketable securities 872 20
Purchases of property, plant and equipment (2,550 ) (2,780 )
Proceeds from disposals of property, plant and equipment 111 143
Other investing activities   (303 )   (268 )
Net cash provided by (used in) investing activities   (4,214 )   (11,404 )
Financing Activities
Issuances of debt 43,425 42,791
Payments of debt (38,714 ) (38,573 )
Issuances of stock 1,328 1,489
Purchases of stock for treasury (4,832 ) (4,559 )
Dividends (4,969 ) (4,595 )
Other financing activities   17     100  
Net cash provided by (used in) financing activities   (3,745 )   (3,347 )
Effect of Exchange Rate Changes on Cash and Cash Equivalents   (611 )   (255 )
Cash and Cash Equivalents
Net increase (decrease) during the year 1,972 (4,361 )
Balance at beginning of year   8,442     12,803  
Balance at end of year   $ 10,414     $ 8,442  
 

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, 2013

 

December 31,2012

 

% Fav. /(Unfav.)

 

December 31, 2013

 

December 31,2012

 

% Fav. /(Unfav.)

 

December 31, 2013

 

December 31,2012

 

% Fav. /(Unfav.)

Eurasia & Africa $ 660 $ 656 1 $ 242 $ 272 (11 ) $ 241 $ 280 (14 )
Europe 1,269 1,143 11 598 670 (11 ) 605 675 (10 )
Latin America 1,266 1,274 (1 ) 699 715 (2 ) 707 718 (2 )
North America 5,271 5,292 557 558 555 558
Pacific 1,253 1,387 (10 ) 454 427 7 452 435 4
Bottling Investments 1,568 2,087 (25 ) (71 ) (29 ) (153 ) 2 154 (98 )
Corporate 30 19 64 (374 ) (430 ) 13 (334 ) (443 ) 25
Eliminations   (277 )     (403 )     31                                      
Consolidated   $ 11,040       $ 11,455       (4 )     $ 2,105       $ 2,183       (4 )     $ 2,228       $ 2,377       (6 )

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

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