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TheStreet Open House

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

During the three months ended December 31, 2013, the results of our operating segments were impacted by the following items:

  • Intersegment revenues were $169 million for Europe, $22 million for Latin America, $3 million for North America, $66 million for Pacific and $17 million for Bottling Investments.
  • Operating income (loss) and income (loss) before taxes were reduced by $50 million for Europe, $92 million for North America, $10 million for Pacific, $108 million for Bottling Investments and $24 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 reduced by $5 million for Corporate due to impairment charges recorded on certain of the Company's intangible assets.
  • Operating income (loss) and income (loss) before income taxes were reduced by $11 million for Pacific due to a charge associated with certain of the Company's fixed assets.
  • Operating income (loss) and income (loss) before income taxes were reduced by $1 million for Corporate due to transaction costs associated with certain of the Company's bottling partners.
  • Income (loss) before income taxes was reduced by a net $134 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 $30 million for Corporate due to a charge the Company recognized on the early extinguishment of certain long-term debt.

THE COCA-COLA COMPANY AND SUBSIDIARIES

Operating Segments

(UNAUDITED)
(In millions)
 

Three Months Ended (continued)

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

  • Intersegment revenues were $154 million for Europe, $95 million for Latin America, $2 million for North America, $130 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' ("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 sale of a majority ownership interest in our Philippine bottling operations to Coca-Cola FEMSA S.A.B. de C.V. ("Coca-Cola FEMSA"), which 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.
  • 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.
 

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, 2013

 

December 31,2012

 

% Fav. /(Unfav.)

  December 31, 2013   December 31,2012  

% Fav. /(Unfav.)

  December 31, 2013   December 31,2012  

% Fav. /(Unfav.)

Eurasia & Africa $ 2,763 $ 2,697 2 $ 1,087 $ 1,078 1 $ 1,109 $ 1,101 1
Europe 5,334 5,123 4 2,859 2,960 (3 ) 2,923 3,015 (3 )
Latin America 4,939 4,831 2 2,908 2,879 1 2,920 2,882 1
North America 21,590 21,680 2,432 2,597 (6 ) 2,434 2,624 (7 )
Pacific 5,869 6,308 (7 ) 2,478 2,516 (2 ) 2,494 2,523 (1 )
Bottling Investments 7,676 8,895 (14 ) 115 140 (18 ) 679 904 (25 )
Corporate 154 127 22 (1,651 ) (1,391 ) (19 ) (1,082 ) (1,240 ) 13
Eliminations   (1,471 )     (1,644 )     10                                      
Consolidated   $ 46,854       $ 48,017       (2 )     $ 10,228       $ 10,779       (5 )     $ 11,477       $ 11,809       (3 )

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

During the year ended December 31, 2013, the results of our operating segments were impacted by the following items:

  • Intersegment revenues were $689 million for Europe, $191 million for Latin America, $16 million for North America, $497 million for Pacific and $78 million for Bottling Investments.
  • Operating income (loss) and income (loss) before income taxes were reduced by $2 million for Eurasia and Africa, $57 million for Europe, $282 million for North America, $26 million for Pacific, $194 million for Bottling Investments and $121 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 $2 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 increased by $1 million for Pacific and $1 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 reduced by $195 million for Corporate due to impairment charges recorded on certain of the Company's intangible assets.
  • Operating income (loss) and income (loss) before income taxes were reduced by $22 million for Pacific due to charges associated with certain of the Company's fixed assets.
  • Operating income (loss) and income (loss) before income taxes were reduced by $8 million for Corporate due to transaction costs associated with certain of the Company's bottling partners.
  • Operating income (loss) and income (loss) before income taxes were increased by $3 million for North America due to the refinement of previously established accruals related to the loss or damage of certain fixed assets as a result of Hurricane Sandy.
  • Income (loss) before income taxes was increased by $615 million for Corporate due to a gain the Company recognized on the deconsolidation of our Brazilian bottling operations as a result of their combination with an independent bottling partner.
  • Income (loss) before income taxes was reduced by $9 million for Bottling Investments and $140 million for Corporate due to the devaluation of the Venezuelan bolivar, including our proportionate share of the charge incurred by an equity method investee which has operations in Venezuela.
  • Income (loss) before income taxes was reduced by a net $114 million for Corporate due to the merger of four of the Company's Japanese bottling partners in which we held equity method investments prior to their merger.
  • Income (loss) before income taxes was increased by $139 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 value of the Company's per share investment.
  • Income (loss) before income taxes was reduced by a net $159 million for Bottling Investments due to the Company’s proportionate share of unusual or infrequent items recorded by certain of our equity method investees.

THE COCA-COLA COMPANY AND SUBSIDIARIES

Operating Segments

(UNAUDITED)
(In millions)
 

Year Ended (continued)

  • Income (loss) before income taxes was reduced by $53 million for Corporate due to charges the Company recognized on the early extinguishment of certain long-term debt. These charges include both the difference between the reacquisition price and the net carrying amount of the debt extinguished as well as hedge accounting adjustments reclassified from accumulated comprehensive income to earnings.
  • Income (loss) before income taxes was increased by $1 million for Corporate due to an adjustment to the Company's loss on the sale of a controlling ownership interest in our previously consolidated Philippine bottling operations to Coca-Cola FEMSA.

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

  • Intersegment revenues were $642 million for Europe, $271 million for Latin America, $15 million for North America, $628 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, which 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.
  • 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.

THE COCA-COLA COMPANY AND SUBSIDIARIES

Operating Segments

(UNAUDITED)
(In millions)
 

Year Ended (continued)

  • 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.

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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