Flagship North America Market Maintains
Positive Momentum
- Net Revenues Declined 7%, Impacted by
Foreign Currency and Structural Changes
- Organic Revenues (Non-GAAP) Grew
3%
- Operating Margin Expanded More than 50
Basis Points
- EPS of $0.24 and Comparable EPS
(Non-GAAP) of $0.49
- Full Year Organic Revenue and
Comparable EPS Outlook (Both Non-GAAP) Remain Unchanged
The Coca-Cola Company today reported third quarter 2016
operating results. “I am pleased to report that we delivered
results in line with our expectations,” said Muhtar Kent, Chairman
and Chief Executive Officer of The Coca-Cola Company. “We continued
to see solid revenue results in our developed markets with 2% unit
case volume growth and a continued focus on price realization. The
United States, Japan and Western Europe delivered standout
performance underpinned by innovation and world-class marketing.
Globally, we gained nonalcoholic ready-to-drink value share for the
37th consecutive quarter and are on track to deliver our financial
commitments for the full year.”
“While our year-to-date reported net revenues declined 5%, our
core business organic revenues* have grown 4% despite continued
global economic and political volatility. We believe this core
business reflects the ultimate destination of our transformed
company – an enterprise positioned to capture sustainable growth
through a laser focus on innovating across our portfolio, building
strong brands, and leveraging unparalleled customer service through
aligned bottlers. As we continue on our path to transform the
global system, we remain committed to our strategic actions for
growth that will create long-term shareowner and stakeholder
value.”
Highlights
Quarterly Performance
- Net revenues were $10.6 billion, a 7%
decline from prior year, impacted by a foreign currency exchange
headwind of 2% and a headwind from acquisitions, divestitures and
structural items of 8%. Organic revenues (non-GAAP) grew 3%, evenly
split between volume and price/mix growth.
- We gained global volume and value share
in total nonalcoholic ready-to-drink ("NARTD") beverages. Value
share grew ahead of volume share, as a result of our focus on
accelerating our revenue growth management strategies, including
segmented market roles.
- Sparkling beverage unit case volume was
even as growth in three of the four geographic operating segments
was offset by a 2% decline in Latin America.
- Still beverage unit case volume grew
3%, primarily driven by water and sports drinks.
- Our operating margin expanded more than
50 basis points, which included items impacting comparability, the
impact of changes in foreign currency exchange rates and structural
impacts. Our comparable currency neutral operating margin
(non-GAAP) also expanded more than 50 basis points, driven by solid
pricing initiatives, a slightly favorable cost environment,
continued productivity and segment mix.
Company Updates
The Company continued to make substantial progress in
transforming its business to one that is strategically focused on
building great brands and leading a strong global franchise system.
Key developments this quarter include:
- Disciplined brand and growth
investments: Year to date, we have introduced more than 500 new
products across our system. For example, we successfully launched
Coca-Cola Zero Sugar in Great Britain, a new and improved
sugar-free product replacing Coca-Cola Zero in that market. With
significant media investment behind this launch, we saw strong
double-digit unit case volume growth in the quarter compared to the
prior year Great Britain Coca-Cola Zero base. We continued the
rollout of our new "Taste the Feeling" marketing campaign,
which has now been activated in more than 200 markets. The recently
announced "One Brand" strategy, which unites all four
Trademark Coca-Cola brands under a common visual identity, has now
been strategically rolled out in 12 of our top markets. We
announced the expansion of our coffee portfolio in the United
States with the anticipated launch in early 2017 of Gold
Peak ready-to-drink ("RTD") cold brew coffees and a partnership
with Dunkin' Brands Group to launch Dunkin' Donuts branded
RTD coffee beverages.
- Revenue growth through segmented
market roles: In North America, both reported net
revenues and organic revenues (non-GAAP) grew 3%, reflecting
ongoing pricing initiatives in our sparkling business as well as
continued growth in our stills portfolio. In Japan, recent
innovations such as extensions of the Ayataka tea trademark and
Olympic activations behind brand Coca-Cola contributed to 4% unit
case volume growth.
- Core business model focus: We
continued to make progress against our refranchising plans and
remain on track to meet our goal by the end of 2017. In North
America, we announced today six definitive agreements and four
transaction closings. In Africa, Coca-Cola Beverages Africa
began operations during the quarter, and we recently laid the
groundwork to acquire Anheuser-Busch InBev's majority stake in that
entity in order to implement our long-term strategic plans in these
territories with other partners. And in Latin America, we reached a
comprehensive agreement with Arca Continental regarding
concentrate prices on sparkling soft drinks in Mexico and other
initiatives to keep jointly capturing value in Arca Continental's
Mexican territories. This agreement follows our new understanding
with Coca-Cola FEMSA regarding joint value creation in
Mexico and territorial expansion opportunities through the
refranchising of Company-owned bottling operations.
- Drive efficiency through
productivity: We remain on track to deliver more than $600
million of productivity in 2016 by scaling initiatives and
embedding zero-based work into daily routines. We continue to use
productivity to prudently fund marketing while delivering operating
margin expansion.
- Sustainable business practices:
We reached an important milestone recently with respect to water
stewardship initiatives. The Company and its global bottling
partners announced during the quarter that we met our goal to
replenish the equivalent amount of water used in global sales
volume back to nature and communities. The Company is the first
Fortune 500 company to publicly claim achieving such a water
replenishment target.
Operating Review – Three Months
Ended September 30, 2016
Revenue and
Volume
Percent Change
Concentrate
Sales 1
Price/Mix Currency Impact
Acquisitions,
Divestitures and
Structural Items, Net
Reported Net Revenues
Organic
Revenues 2
Unit Case Volume
Consolidated
1 1 (2)
(8) (7) 3
1 Europe, Middle East & Africa 3
(1) 3 (2) (3)
(4) 2 2 Latin America 0
11 (16) 0 (4) 11 (2) North America 1 2 0 0 3 3 1 Asia Pacific 9 (8)
4 (1) 4 0 2 Bottling Investments (2) 3
(1) (19) (19)
2 (22)
Income Before
Taxes and EPS
Percent Change
Reported
Income Before Taxes
Items
Impacting
Comparability
Currency Impact
Comparable Currency Neutral 2 Structural
Impact
Comparable
Currency Neutral
(Structurally
Adjusted) 2
Consolidated (17)
(13) (3)
(1) (2)
2
Europe, Middle East & Africa 3 (2) 0 (2) 1 Latin America
(16) (13) (24) 21 North America 12 5 0 8 Asia Pacific 2 0 3 (1)
Bottling Investments (34)
(35) 0 1
Percent Change
Reported EPS
Items
Impacting
Comparability
Currency Impact
Comparable Currency Neutral 2
Consolidated EPS
(27) (24)
(3) 0
Note: Certain rows may not add due to rounding.
1 For Bottling Investments, this represents the percent change
in net revenues attributable to the increase (decrease) in unit
case volume after considering the impact of structural changes.
2 Organic revenues, comparable currency neutral income before
taxes, comparable currency neutral income before taxes
(structurally adjusted) and comparable currency neutral EPS are
non-GAAP financial measures. Refer to the Reconciliation of GAAP
and Non-GAAP Financial Measures section.
3 Effective August 1, 2016, the Company formed a new Europe,
Middle East & Africa operating group consisting of business
units that were previously included in the Europe and the Eurasia
& Africa operating groups.
In addition to the preceding data, quarterly (unless otherwise
noted) results were impacted by the following:
Consolidated
- Positive price/mix included 1 point of
negative segment mix. Bottling Investments was the primary driver
of the negative segment mix.
- The decline in income before taxes
included items impacting comparability, the impact of changes in
foreign currency exchange rates and structural impacts. Comparable
currency neutral income before taxes (structurally adjusted)
(non-GAAP) benefited from the impact of our productivity
initiatives and an increase in equity income, partially offset by
net interest expense.
- The effective tax rate was 26.5%. The
underlying effective tax rate (non-GAAP) was 22.5%.
- EPS was $0.24. Items impacting
comparability decreased reported EPS by a net $0.25 and were
primarily related to non-cash charges associated with the
refranchising of bottling territories in North America.
- Year-to-date cash from operations was
$6.7 billion, down $1.7 billion due to the deconsolidation of our
German bottling operations, the impact of contributions to our
pension plans and fluctuations in foreign currency exchange
rates.
- Year-to-date purchases of stock for
treasury were $2.5 billion. Net share repurchases (non-GAAP)
totaled $1.2 billion.
Europe, Middle East &
Africa
- Positive price/mix was primarily driven
by favorable geographic and product mix. Acquisitions, divestitures
and structural items reflect the impact of bottling transactions in
South Africa.
- The decline in income before taxes
included the impact of changes in foreign currency exchange rates
and structural impacts. Comparable currency neutral income before
taxes (non-GAAP) included the unfavorable impact of bottling
transactions in South Africa.
- We gained volume and value share in
total NARTD beverages. Unit case volume growth of 2% included 1
point of growth from acquired brands, which were primarily brands
in Africa. Sparkling beverage volume grew 1% and still beverage
volume grew 4%. Unit case volume growth in our Western Europe and
Middle East & North Africa business units was partially offset
by a decline in our Central & Eastern Europe business unit,
which was driven by poor weather and the cycling of strong third
quarter 2015 performance.
Latin America
- Positive price/mix benefited from solid
performance in Mexico and inflationary markets within our Latin
Center and South Latin business units.
- We gained volume and value share in
still beverages. Sparkling beverage volume declined 2% and still
beverage volume declined 1%. Unit case volume performance was
driven by a high single-digit decline in our Latin Center business
unit amidst continued macroeconomic challenges in Venezuela and a
mid single-digit decline in Brazil. These declines were partially
offset by mid single-digit growth in Mexico.
North America
- Positive price/mix reflects the
continued execution of disciplined occasion, brand, price and
package strategy. Sparkling beverage price/mix grew 3%.
- Income before taxes included items
impacting comparability and structural impacts. Comparable currency
neutral income before taxes (non-GAAP) was favorably impacted by
our productivity initiatives and the ongoing refranchising in North
America.
- We gained value share in total NARTD
beverages for the 26th consecutive quarter. Sparkling beverage
volume growth was slightly positive, rounding to even. Growth in
Sprite, Fanta and energy drinks was offset primarily by a decline
in Diet Coke. Coca-Cola Zero grew low single digits. Still beverage
volume grew 2%, primarily driven by water and sports drinks. Volume
in the dairy category grew double digits and vitaminwater grew high
single digits.
Asia Pacific
- Negative price/mix was driven by
unfavorable product and channel mix as well as the cycling of items
from the prior year.
- We gained volume and value share in
total NARTD beverages. Sparkling beverage volume growth was
slightly positive, rounding to even. Still beverage volume grew 5%.
Unit case volume growth included 4% growth in Japan and 2% growth
in China, partially offset by a 4% decline in India.
Bottling Investments
- Price/mix results reflect strong
performance across several of our key bottling operations,
particularly North America, and positive geographic mix.
Acquisitions, divestitures and structural items reflect the impact
of the refranchised North America bottling territories and the
deconsolidation of our German and South African bottling
operations.
- The decline in income before taxes
included items impacting comparability and structural impacts.
Comparable currency neutral income before taxes (non-GAAP) was
unfavorably impacted by the ongoing refranchising of North America
bottling territories and the deconsolidation of our German and
South African bottling operations.
Operating Results – Nine Months Ended
September 30, 2016
Revenue and
Volume
Percent
Change Concentrate Sales 1
Price/Mix Currency Impact
Acquisitions,
Divestitures and
Structural Items, Net
Reported Net Revenues
Organic Revenues 2 Unit Case Volume
Consolidated 1
2 (3)
(5) (5)
2 1
Europe, Middle East & Africa 3 (1) 3 (3) (3) (4) 2 0
Latin America 0 12 (20) 0 (7) 13 0 North America 0 3 0 0 3 3 1 Asia
Pacific 4 (4) 1 (2) (1) 0 2 Bottling Investments (1)
1 (2)
(10) (12) 0
(13)
Income Before
Taxes and EPS
Percent Change
Reported
Income Before
Taxes
Items Impacting Comparability
Currency Impact Comparable Currency
Neutral 2 Structural Impact
Comparable
Currency
Neutral (Structurally Adjusted) 2
Consolidated (6)
(1) (9)
4 (3)
7
Europe, Middle
East & Africa 3 (4) 0 (3) (1) Latin America (10) (2) (27) 20
North America 6 2 0 4 Asia Pacific 1 0 (1) 1 Bottling Investments
(274) (284)
(3) 13
Percent
Change Reported EPS
Items Impacting Comparability
Currency Impact
Comparable Currency Neutral 2
Consolidated EPS
(1) 3
(9) 5
Note: Certain rows may not add due to rounding.
1 For Bottling Investments, this represents the percent change
in net revenues attributable to the increase (decrease) in unit
case volume after considering the impact of structural changes.
2 Organic revenues, comparable currency neutral income before
taxes, comparable currency neutral income before taxes
(structurally adjusted) and comparable currency neutral EPS are
non-GAAP financial measures. Refer to the Reconciliation of GAAP
and Non-GAAP Financial Measures section.
3 Effective August 1, 2016, the Company formed a new Europe,
Middle East & Africa operating group consisting of business
units that were previously included in the Europe and the Eurasia
& Africa operating groups.
Outlook
Our 2016 outlook for organic revenues, comparable currency
neutral income before taxes (structurally adjusted) and comparable
EPS are non-GAAP financial measures that exclude or have otherwise
been adjusted for items impacting comparability, the impact of
changes in foreign currency exchange rates, acquisitions and
divestitures, and the impact of structural items, as applicable. We
are not able to reconcile these forward-looking non-GAAP financial
measures to their most directly comparable forward-looking GAAP
financial measures without unreasonable efforts because we are
unable to predict with a reasonable degree of certainty the actual
impact of changes in foreign currency exchange rates and the exact
timing of acquisitions, divestitures and/or structural changes
throughout 2016. The unavailable information could have a
significant impact on our full year 2016 GAAP financial
results.
Full Year Net Revenues:
- 3% growth in organic revenues
(non-GAAP) – No Change
- 6% to 7% net headwind from
acquisitions, divestitures and structural items – No Change
- 2% to 3% currency headwind based on the
current spot rates and including the impact of hedged positions –
No Change
Full Year Income Before Taxes:
- 6% to 8% growth in comparable currency
neutral income before taxes (structurally adjusted) (non-GAAP) – No
Change
- 4% structural headwind – No Change
- 8% to 9% currency headwind based on the
current spot rates and including the impact of hedged positions –
No Change
Full Year EPS: Comparable EPS (non-GAAP) 4% to 7% decline
versus $2.00 in 2015 – No Change
The Company also expects the following:
- Underlying effective tax rate
(non-GAAP): 22.5% – No Change
- Net capital expenditures: Slightly less
than $2.5 billion – Updated
- Net share repurchases (non-GAAP): $2.0
billion to $2.5 billion – No Change
Fourth Quarter Considerations - New:
- Net revenues: 11% headwind from
acquisitions, divestitures and structural items; 1% to 2% currency
headwind based on the current spot rates and including the impact
of hedged positions
- Income before taxes: 6% to 7%
structural headwind; 8% to 9% currency headwind based on the
current spot rates and including the impact of hedged
positions
Notes
- All references to growth rate
percentages and share compare the results of the period to those of
the prior year comparable period.
- 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, unless otherwise noted. "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.
- "Core business" represents the combined
performance from the Europe, Middle East & Africa; Latin
America; North America; Asia Pacific; and Corporate operating
segments offset by intersegment eliminations.
- "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. In the reconciliation of reported net
revenues, "concentrate sales" represents the percent change in net
revenues attributable to the increase (decrease) in concentrate
sales volume for our geographic operating segments (expressed in
equivalent unit cases) after considering the impact of structural
changes. For our Bottling Investments operating segment, this
represents the percent change in net revenues attributable to the
increase (decrease) in unit case volume after considering the
impact of structural changes. Our Bottling Investments operating
segment reflects unit case volume growth for consolidated bottlers
only.
- "Sparkling beverages" means NARTD
beverages with carbonation, including carbonated energy drinks and
waters.
- "Still beverages" means nonalcoholic
beverages without carbonation, including noncarbonated waters,
flavored waters and enhanced waters, juices and juice drinks, teas,
coffees, sports drinks, dairy and noncarbonated energy drinks.
- First quarter 2016 financial results
were impacted by one less day, while fourth quarter financial
results will be impacted by two additional days. Unit case volume
results for the quarters are not impacted by the variance in days
due to the average daily sales computation referenced above.
Conference
Call
We are hosting a conference call with investors and analysts to
discuss third quarter 2016 results today, Oct. 26, 2016 at 9 a.m.
EDT. We invite investors to listen to a live audiocast of the
conference call on the Company’s 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 the
Company’s website. Further, the "Investors" section of the website
includes a reconciliation of non-GAAP financial measures, which may
be used periodically by management when discussing financial
results with investors and analysts, to the Company’s 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
September 30, 2016 October 2, 2015 % Change1
Net
Operating Revenues $ 10,633 $ 11,427 (7 ) Cost of
goods sold
4,131 4,577
(10 )
Gross Profit 6,502 6,850
(5 ) Selling, general and administrative expenses
4,009
4,207 (5 ) Other operating charges
222
264 (16 )
Operating
Income 2,271 2,379 (5 ) Interest income
164 155 6
Interest expense
182 138 32 Equity income (loss) — net
281 200 40 Other income (loss) — net
(1,106 ) (871 ) (27 )
Income Before Income Taxes 1,428 1,725 (17 ) Income
taxes
378 272
39
Consolidated Net Income 1,050
1,453 (28 ) Less: Net income (loss) attributable to noncontrolling
interests
4 4
(9 )
Net Income Attributable to Shareowners of The
Coca-Cola Company $ 1,046
$ 1,449 (28 )
Diluted Net
Income Per Share2 $ 0.24
$ 0.33 (27 )
Average
Shares Outstanding — Diluted2 4,364
4,399
1 Certain growth rates may not recalculate
using the rounded dollar amounts provided.
2 For the three months ended September 30,
2016 and October 2, 2015, basic net income per share was $0.24 for
2016 and $0.33 for 2015 based on average shares outstanding — basic
of 4,315 million for 2016 and 4,349 million for 2015. 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)
Nine Months Ended
September 30, 2016 October 2, 2015 % Change1
Net
Operating Revenues $ 32,454 $ 34,294 (5 ) Cost of
goods sold
12,671 13,428
(6 )
Gross Profit 19,783 20,866
(5 ) Selling, general and administrative expenses
11,682
12,490 (6 ) Other operating charges
830
1,166 (29 )
Operating
Income 7,271 7,210 1 Interest income
472 459 3
Interest expense
485 713 (32 ) Equity income (loss) — net
678 402 68 Other income (loss) — net
(315 ) 709 —
Income Before Income Taxes 7,621 8,067 (6 )
Income taxes
1,618 1,937
(16 )
Consolidated Net Income
6,003 6,130 (2 ) Less: Net income (loss) attributable to
noncontrolling interests
26
16 57
Net Income Attributable
to Shareowners of The Coca-Cola Company $
5,977 $ 6,114 (2 )
Diluted Net Income Per Share2 $
1.37 $ 1.39 (1 )
Average Shares Outstanding — Diluted2
4,374 4,410
1 Certain growth rates may not recalculate
using the rounded dollar amounts provided.
2 For the nine months ended September 30,
2016 and October 2, 2015, basic net income per share was $1.38 for
2016 and $1.40 for 2015 based on average shares outstanding — basic
of 4,322 million for 2016 and 4,357 million for 2015. 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)
September 30, 2016 December
31,2015
ASSETS
Current Assets Cash and cash equivalents
$
11,147 $ 7,309 Short-term investments
11,265 8,322
Total Cash, Cash
Equivalents and Short-Term Investments
22,412 15,631 Marketable
securities
3,157 4,269 Trade accounts receivable, less
allowances of $472 and $352, respectively
4,082 3,941
Inventories
2,751 2,902 Prepaid expenses and other assets
3,091 2,752 Assets held for sale
2,463
3,900
Total Current Assets
37,956 33,395
Equity Method Investments 16,917 12,318
Other
Investments 1,110 3,470
Other Assets 4,526
4,110
Property, Plant and Equipment — net 11,172
12,571
Trademarks With Indefinite Lives 6,183 5,989
Bottlers' Franchise Rights With Indefinite Lives
4,438 6,000
Goodwill 10,865 11,289
Other
Intangible Assets 760
854
Total Assets $ 93,927
$ 89,996
LIABILITIES AND
EQUITY
Current Liabilities Accounts payable and accrued expenses
$ 11,153 $ 9,660 Loans and notes payable
12,088 13,129 Current maturities of long-term debt
3,473 2,676 Accrued income taxes
396 331 Liabilities
held for sale
682 1,133
Total Current Liabilities 27,792
26,929
Long-Term Debt
31,663 28,311
Other Liabilities 3,984 4,301
Deferred Income Taxes 4,243 4,691
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
14,882 14,016 Reinvested
earnings
66,457 65,018 Accumulated other comprehensive
income (loss)
(10,209 ) (10,174 ) Treasury stock, at
cost — 2,727 and 2,716 shares, respectively
(46,814 ) (45,066 )
Equity
Attributable to Shareowners of The Coca-Cola Company
26,076 25,554
Equity Attributable to Noncontrolling
Interests 169 210
Total Equity 26,245
25,764
Total Liabilities and Equity
$ 93,927 $ 89,996
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Condensed
Consolidated Statements of Cash Flows
(UNAUDITED) (In millions)
Nine Months Ended September 30, 2016 October
2,2015
Operating Activities Consolidated net income
$
6,003 $ 6,130 Depreciation and amortization
1,323
1,443 Stock-based compensation expense
191 171 Deferred
income taxes
(98 ) 212 Equity (income) loss — net of
dividends
(417 ) (150 ) Foreign currency adjustments
193 (76 ) Significant (gains) losses on sales of assets —
net
364 (550 ) Other operating charges
277 697 Other
items
(205 ) 859 Net change in operating assets and
liabilities
(908 ) (346 )
Net cash provided by operating activities
6,723 8,390
Investing
Activities Purchases of investments
(12,733 )
(12,006 ) Proceeds from disposals of investments
13,210
10,403 Acquisitions of businesses, equity method investments and
nonmarketable securities
(767 ) (2,489 )
Proceeds from disposals of businesses,
equity method investments and nonmarketable securities
745 416 Purchases of property, plant and equipment
(1,561 ) (1,670 ) Proceeds from disposals of
property, plant and equipment
92 50 Other investing
activities
(319 ) (117 )
Net cash provided by (used in) investing activities
(1,333 ) (5,413 )
Financing
Activities Issuances of debt
22,667 34,298 Payments of
debt
(20,406 ) (30,159 ) Issuances of stock
1,295 732 Purchases of stock for treasury
(2,509
) (1,966 ) Dividends
(3,028 ) (4,313 ) Other
financing activities
198
230 Net cash provided by (used in) financing activities
(1,783 ) (1,178 )
Effect of Exchange Rate Changes on Cash and Cash Equivalents
231 (774 )
Cash and
Cash Equivalents Net increase (decrease) during the period
3,838 1,025 Balance at beginning of period
7,309 8,958 Balance at end of
period
$ 11,147 $
9,983
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Operating
Segments
(UNAUDITED) (In millions)
Three Months
Ended
Net Operating Revenues 1
Operating Income (Loss) Income
(Loss) Before Income Taxes September 30,
2016 October 2, 2015
% Fav. /
(Unfav.)
September 30, 2016 October 2,
2015
% Fav. /
(Unfav.)
September 30, 2016 October 2,
2015
% Fav. /
(Unfav.)
Europe, Middle East & Africa
$ 1,852
$ 1,933 (4 )
$ 914
$ 930 (2 )
$
922 $ 945 (2 ) Latin America
965 1,012 (4 )
435 538 (19 )
447 535 (16 )
North America
2,664 2,580 3
666 585 14
653 581
12 Asia Pacific
1,460 1,406 4
583 571 2
589
576 2 Bottling Investments
4,840 5,948 (19 )
124 85
46
(734 ) (547 ) (34 ) Corporate
47 55 (16 )
(451 ) (330 ) (37 )
(449 ) (365 ) (23 )
Eliminations
(1,195 )
(1,507 ) 21
— —
—
—
— — Consolidated
$ 10,633 $ 11,427
(7 )
$
2,271 $ 2,379
(5 )
$ 1,428
$ 1,725 (17
)
Note: Certain growth rates may not
recalculate using the rounded dollar amounts provided.
1 During the three months ended September
30, 2016, intersegment revenues were $16 million for Latin America,
$1,003 million for North America, $145 million for Asia Pacific and
$31 million for Bottling Investments. During the three months ended
October 2, 2015, intersegment revenues were $169 million for
Europe, Middle East & Africa, $19 million for Latin America,
$1,112 million for North America, $159 million for Asia Pacific and
$48 million for Bottling Investments.
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Operating
Segments
(UNAUDITED) (In millions)
Nine Months
Ended
Net Operating Revenues 1
Operating Income (Loss) Income
(Loss) Before Income Taxes September 30,
2016 October 2, 2015
% Fav. /
(Unfav.)
September 30, 2016 October 2,
2015
% Fav. /
(Unfav.)
September 30, 2016 October 2,
2015
% Fav. /
(Unfav.)
Europe, Middle East & Africa
$ 5,633
$ 5,876 (4 )
$
2,897 $ 3,036 (5 )
$ 2,950 $ 3,085 (4 )
Latin America
2,837 3,051 (7 )
1,470 1,641 (10 )
1,485 1,649 (10 ) North America
7,737 7,548 3
1,982 1,874 6
1,978 1,865 6 Asia Pacific
4,255
4,292 (1 )
1,892 1,876 1
1,903 1,890 1 Bottling
Investments
15,747 17,864 (12 )
222 239 (7 )
(897 ) (240 ) (274 ) Corporate
95 120 (21 )
(1,192 ) (1,456 ) 18
202 (182 ) — Eliminations
(3,850 ) (4,457 )
14
—
— —
— —
— Consolidated
$
32,454 $ 34,294
(5 )
$ 7,271
$ 7,210 1
$ 7,621
$ 8,067 (6 )
Note: Certain growth rates may not
recalculate using the rounded dollar amounts provided.
1 During the nine months ended September
30, 2016, intersegment revenues were $264 million for Europe,
Middle East & Africa, $50 million for Latin America, $2,978
million for North America, $437 million for Asia Pacific, $116
million for Bottling Investments and $5 million for Corporate.
During the nine months ended October 2, 2015, intersegment revenues
were $471 million for Europe, Middle East & Africa, $56 million
for Latin America, $3,311 million for North America, $476 million
for Asia Pacific and $143 million for Bottling Investments.
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"). To supplement our
consolidated financial statements reported on a GAAP basis, we
provide the following non-GAAP financial measures: "Organic
revenues", "core business organic revenues", "comparable currency
neutral operating margin", "comparable currency neutral income
before taxes", "comparable currency neutral income before taxes
(structurally adjusted)", "comparable EPS", "comparable currency
neutral EPS", "underlying effective tax rate" and "net share
repurchases", each of which are defined below. Management believes
these non-GAAP financial measures provide investors with additional
meaningful financial information that should be considered when
assessing our underlying business performance and trends. We
believe these non-GAAP financial measures also enhance investors'
ability to compare period-to-period financial results. 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 measures do not
represent a comprehensive basis of accounting. Therefore, our
non-GAAP financial measures may not be comparable to similarly
titled measures reported by other companies. Reconciliations of
each of these non-GAAP financial measures to GAAP information are
also included. Management uses these non-GAAP financial measures in
making financial, operating, compensation and planning decisions
and in evaluating the Company's performance. Disclosing these
non-GAAP financial measures allows investors and Company management
to view our operating results excluding the impact of items that
are not reflective of the underlying operating performance.
DEFINITIONS
- "Currency neutral operating results"
are determined by dividing or multiplying, as appropriate, our
current period actual U.S. dollar operating results, normalizing
for certain structural items in hyperinflationary economies, by the
current period actual exchange rates (that include the impact of
current period currency hedging activities), to derive our current
period local currency operating results. We then multiply or
divide, as appropriate, the derived current period local currency
operating results by the foreign currency exchange rates (that also
include the impact of the comparable prior period currency hedging
activities) used to translate the Company's financial statements in
the comparable prior year period to determine what the current
period U.S. dollar operating results would have been if the foreign
currency exchange rates had not changed from the comparable prior
year period.
- "Structural changes" generally refer to
acquisitions or dispositions of bottling, distribution or canning
operations and the consolidation or deconsolidation of bottling and
distribution entities for accounting purposes. During 2016, the
Company deconsolidated our South African bottling operations and
disposed of its related equity method investment in exchange for
equity method investments in Coca-Cola Beverages Africa Limited
("CCBA") and CCBA's South African subsidiary. As part of the
transaction, the Company also acquired and licensed several brands.
The impacts of the deconsolidation and new equity method
investments have been included as a structural change (a component
of acquisitions and divestitures) in our analysis of net operating
revenues on a consolidated basis as well as for our Europe, Middle
East and Africa and Bottling Investments operating segments and
equity income on a consolidated basis as well as for our Bottling
Investments operating segment. The brands and licenses that the
Company acquired impacted the Company’s unit case volume and
concentrate sales volume and therefore, in addition to being
included as a structural change (a component of acquisitions and
divestitures), they are also considered acquired brands. Also in
2016, the Company deconsolidated our German bottling operations as
a result of their being merged to create Coca-Cola European
Partners ("CCEP"). As a result of the merger transaction, the
Company now owns an equity method investment in CCEP. Accordingly,
the impact of the deconsolidation and new equity method investment
has been included as a structural change (a component of
acquisitions and divestitures) in our analysis of net operating
revenues on a consolidated basis as well as for our Europe, Middle
East and Africa and Bottling Investments operating segments and
equity income on a consolidated basis as well as for our Bottling
Investments operating segment. During 2016, the Company also
changed our funding arrangement with our bottling partners in
China, which resulted in a reduction in net operating revenues with
an offsetting reduction in direct marketing expense (a component of
selling, general and administration expenses). In 2016 and 2015,
the Company refranchised bottling territories in North America to
certain of its unconsolidated bottling partners. Additionally, in
2015, the Company sold its global energy drink business to Monster
Beverage Corporation ("Monster"); acquired Monster's non-energy
drink business; acquired an equity interest in Monster; amended its
current distribution coordination agreements with Monster to expand
into additional territories; and acquired a South African
bottler.
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED)
DEFINITIONS (continued)
Accordingly, these activities have been included as structural
items in our analysis of the impact of these changes on certain
line items in our condensed consolidated statements of income. In
addition, for non-Company-owned and licensed beverage products sold
in the refranchised territories in North America for which the
Company no longer reports unit case volume, we have eliminated the
unit case volume from the base year when calculating 2016 versus
2015 volume growth rates on a consolidated basis as well as for the
North America and Bottling Investments operating segments.
- "Organic revenues" is a non-GAAP
financial measure that excludes or has otherwise been adjusted for
the impact of acquisitions, divestitures and structural items, as
applicable, as well as the impact of changes in foreign currency
exchange rates. Management believes the organic revenue (non-GAAP)
growth measure provides users with useful supplemental information
regarding the Company's ongoing revenue performance and trends by
presenting revenue growth excluding the impact of foreign exchange,
as well as the impact of acquisitions, divestitures and structural
changes. "Core business organic revenues" (non-GAAP) represents the
combined organic revenue performance from the Europe, Middle East
and Africa; Latin America; North America; Asia Pacific; and
Corporate operating segments offset by intersegment eliminations.
Management believes the core business organic revenues (non-GAAP)
measure enhances the understanding of the current quarter and
year-to-date change in the net operating revenues of the segments
of our business that are not significantly impacted by the
acquisition and divestiture activity taking place in our Bottling
Investments operating segment. The adjustments related to
acquisitions, divestitures and structural items for the three and
nine months ended September 30, 2016 and October 2, 2015
consisted of the structural changes discussed above. Additionally,
during the three and nine months ended September 30, 2016,
organic revenues (non-GAAP) were adjusted, both on a consolidated
basis and for our Asia Pacific operating segment, for the sales of
the Company's newly acquired plant-based protein beverages in
China.
- "Comparable currency neutral operating
margin", "comparable currency neutral income before taxes" and
"comparable currency neutral income before taxes (structurally
adjusted)" are non-GAAP financial measures that exclude or have
otherwise been adjusted for items impacting comparability
(discussed further below) and the impact of changes in foreign
currency exchange rates. Comparable currency neutral income before
taxes (structurally adjusted) (non-GAAP) has also been adjusted for
structural changes. Management uses these non-GAAP financial
measures to evaluate the Company's performance and make resource
allocation decisions. Further, management believes that comparable
currency neutral operating margin (non-GAAP) expansion, comparable
currency neutral income before taxes (non-GAAP) growth and
comparable currency neutral income before taxes (structurally
adjusted) (non-GAAP) growth measures enhance its ability to
communicate the underlying operating results and provide investors
with useful supplemental information to enhance their understanding
of the Company's underlying business performance and trends by
improving their ability to compare our period-to-period financial
results.
- "Comparable EPS" and "comparable
currency neutral EPS" are non-GAAP financial measures that exclude
or have otherwise been adjusted for items impacting comparability
(discussed further below). Comparable currency neutral EPS
(non-GAAP) has also been adjusted for the impact of changes in
foreign currency exchange rates. Management uses these non-GAAP
financial measures to evaluate the Company's performance and make
resource allocation decisions. Further, management believes the
comparable EPS (non-GAAP) and comparable currency neutral EPS
(non-GAAP) growth measures enhance its ability to communicate its
underlying operating results and provide investors with useful
supplemental information to enhance their understanding of the
Company's underlying business performance and trends by improving
their ability to compare our period-to-period financial
results.
- "Underlying effective tax rate" is a
non-GAAP financial measure that represents the estimated annual
effective income tax rate on income before taxes that excludes or
has otherwise been adjusted for items impacting comparability
(discussed further below).
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED)
DEFINITIONS (continued)
- "Net share repurchases" is a non-GAAP
financial measure that reflects the net amount of purchases of
stock for treasury after considering proceeds from the issuances of
stock, the net change in stock issuance receivables (related to
employee stock options exercised but not settled prior to the end
of the period) and the net change in treasury stock payables (for
treasury shares repurchased but not settled prior to the end of the
period).
ITEMS IMPACTING COMPARABILITY
The following information is provided to give qualitative and
quantitative information related to items impacting comparability.
Items impacting comparability are not defined terms within GAAP.
Therefore, our non-GAAP financial information may not be comparable
to similarly titled measures reported by other companies. We
determine which items to consider as "items impacting
comparability" based on how management views our business; makes
financial, operating, compensation and planning decisions; and
evaluates the Company's ongoing performance. Items such as charges,
gains and accounting changes which are viewed by management as
impacting only the current period or the comparable period, but not
both, or as pertaining to different and unrelated underlying
activities or events across comparable periods, are generally
considered "items impacting comparability". Items impacting
comparability include asset impairments and restructuring charges,
charges related to our productivity and reinvestment initiatives,
and transaction gains/losses, in each case when exceeding a U.S.
dollar threshold. Also included are timing differences related to
our economic (nondesignated) hedging activities and our
proportionate share of similar items incurred by our equity method
investees, regardless of size. In addition, we provide the impact
that changes in foreign currency exchange rates had on our
financial results ("currency neutral") defined above.
Asset Impairments and Restructuring
Restructuring
During the nine months ended September 30, 2016, the
Company recorded charges of $240 million. The Company also
recorded charges of $75 million and $204 million during the
three and nine months ended October 2, 2015, respectively.
These charges were related to the integration of our German
bottling operations, which were deconsolidated in May 2016.
Productivity and Reinvestment
During the three and nine months ended September 30, 2016,
the Company recorded charges of $59 million and $187 million,
respectively, related to our productivity and reinvestment
initiatives. The Company also recorded charges of $141 million and
$323 million during the three and nine months ended
October 2, 2015, respectively. These productivity and
reinvestment initiatives are focused on four key areas:
restructuring the Company's global supply chain; implementing
zero-based work, an evolution of zero-based budget principles
across the organization; streamlining and simplifying the Company's
operating model; and further driving increased discipline and
efficiency in direct marketing investments. The savings realized
from the program will enable the Company to fund marketing
initiatives and innovation required to deliver sustainable net
revenue growth. The savings will also support margin expansion and
increased returns on invested capital over time.
Equity Investees
During the three and nine months ended September 30, 2016,
the Company recorded net charges of $14 million and
$35 million, respectively. During the three and nine months
ended October 2, 2015, the Company recorded a net gain of $3
million and a net charge of $79 million, respectively. These
amounts represent the Company’s proportionate share of significant
operating and nonoperating items recorded by our equity method
investees.
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED)
Transaction Gains/Losses
During the three and nine months ended September 30, 2016,
the Company recorded charges of $73 million and $170 million,
respectively, related to costs incurred to refranchise certain of
our North America bottling territories. These costs include, among
other items, internal and external costs for individuals directly
working on the refranchising efforts, severance, and costs
associated with the implementation of information technology
systems to facilitate consistent data standards and availability
throughout the North America bottling system.
During the three and nine months ended September 30, 2016,
the Company recorded charges of $4 million and $37 million,
respectively, for noncapitalizable transaction costs associated
with pending and closed transactions, primarily related to the
deconsolidation of our German bottling operations discussed
below.
During the three and nine months ended September 30, 2016,
the Company incurred losses of $1,089 million and
$1,657 million, respectively. The Company also incurred losses
of $815 million and $848 million during the three and nine months
ended October 2, 2015, respectively. These losses were
primarily due to the derecognition of intangible assets relating to
the refranchising of bottling territories in North America to
certain of our unconsolidated bottling partners.
During the three and nine months ended September 30, 2016,
the Company incurred charges of $17 million related to
payments made to certain of our unconsolidated North America
bottling partners in order to convert their bottling agreements to
a comprehensive beverage agreement with additional
requirements.
During the three and nine months ended September 30, 2016,
the Company recognized an $80 million tax impact resulting from the
accrual of tax on temporary differences related to the investment
in foreign subsidiaries that are now expected to reverse in the
foreseeable future.
During the three and nine months ended September 30, 2016,
the Company recorded a net loss of $21 million primarily due
to the deconsolidation of our South African bottling operations in
exchange for investments in CCBA and CCBA's South African
subsidiary.
During the nine months ended September 30, 2016, the
Company recognized a gain of $1,288 million, net of transaction
costs described above, as a result of the deconsolidation of our
German bottling operations. On May 29, 2016, the Company merged its
German bottling operations with Coca-Cola Enterprises, Inc.
and Coca-Cola Iberian Partners, S.A.U., to create CCEP in exchange
for an equity investment in CCEP.
During the nine months ended September 30, 2016, the
Company recorded a net gain of $18 million as a result of the
disposal of our shares in Keurig Green Mountain, Inc.
During the three and nine months ended October 2, 2015, the
Company recorded an impairment charge of $38 million on a trademark
in the glacéau portfolio. This charge was primarily a result of
foreign currency exchange rate fluctuations that impacted the fair
value of the asset.
During the nine months ended October 2, 2015, the Company
recorded a net gain of $1,402 million as a result of our
transaction with Monster, primarily due to the difference in the
recorded carrying value of the assets transferred, including an
allocated portion of goodwill, compared to the value of the total
assets and business acquired. This net gain was recorded in the
line item other income (loss) — net in our condensed consolidated
statement of income. Additionally, under the terms of this
transaction, the Company was required to discontinue selling energy
products under certain trademarks, including one trademark in the
glacéau portfolio. As a result, the Company recognized an
impairment charge of $380 million upon the closing of the
transaction with Monster, primarily related to the discontinuation
of the energy products in the glacéau portfolio.
In the fourth quarter of 2014, the owners of the majority
interest of a Brazilian bottler exercised their option to acquire
from us a 10 percent interest in the entity's outstanding shares
resulting in our recognizing an estimated loss of $32 million due
to the exercise price being lower than our carrying value. The
transaction closed in January 2015, and the Company recorded an
additional loss of $6 million during the nine months ended October
2, 2015, calculated based on the final option price. Also during
the nine months ended October 2, 2015, the Company recorded a loss
of $19 million on our previously held investment in a South African
bottler, which had been accounted for under the equity method of
accounting prior to our acquisition of the bottler in February
2015.
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED)
Other Items
Economic (Nondesignated) Hedges
The Company uses derivatives as economic hedges primarily to
mitigate the price risk associated with the purchase of materials
used in the manufacturing process as well as the purchase of
vehicle fuel. Although these derivatives were not designated and/or
did not qualify for hedge accounting, they are effective economic
hedges. The changes in fair values of these economic hedges are
immediately recognized into earnings.
The Company excludes the net impact of mark-to-market
adjustments for outstanding hedges and realized gains/losses for
settled hedges from our non-GAAP financial information until the
period in which the underlying exposure being hedged impacts our
condensed consolidated statement of income. We believe this
adjustment provides meaningful information related to the impact of
our economic hedging activities. During the three months ended
September 30, 2016 and October 2, 2015, the impact of the
Company's adjustment related to our economic hedging activities
resulted in a decrease of $11 million and an increase of $87
million, respectively, to our non-GAAP income before income taxes.
During the nine months ended September 30, 2016 and
October 2, 2015, the net impact of the Company's adjustment
related to our economic hedging activities described above resulted
in a decrease of $82 million and an increase of $76 million,
respectively, to our non-GAAP income before income taxes.
Donation to The Coca-Cola Foundation
During both the nine months ended September 30, 2016 and
October 2, 2015, the Company recorded charges of
$100 million due to contributions the Company made to The
Coca-Cola Foundation.
Early Extinguishment of Long-Term Debt
During the nine months ended October 2, 2015, the Company
recorded charges of $320 million due to the early extinguishment of
certain long-term debt.
Hyperinflationary Economies
During the three and nine months ended September 30, 2016,
the Company recorded a charge of $76 million due to the
write-down we recorded related to our receivables from our bottling
partner in Venezuela as a result of the continued lack of liquidity
and our revised assessment of the U.S. dollar value we expect to
realize upon the conversion of the Venezuelan bolivar into U.S.
dollars by our bottling partner to pay our receivables.
During the three and nine months ended October 2, 2015, the
Company recorded net charges of $3 million and $138 million,
respectively, related to our Venezuelan operations. These charges
were primarily a result of the remeasurement of the net monetary
assets of our Venezuelan subsidiary using the SIMADI exchange rate,
an impairment of a Venezuelan trademark due to higher exchange
rates, and a write-down of receivables from our bottling partner in
Venezuela. The write-down was recorded primarily as a result of the
continued lack of liquidity and our revised assessment of the U.S.
dollar value we expect to realize upon the conversion of the
Venezuelan bolivar into U.S. dollars by our bottling partner to pay
our receivables.
Other
During the three and nine months ended September 30, 2016,
the Company recorded other charges of $10 million and
$20 million, respectively. During both the three and nine
months ended October 2, 2015, the Company recorded other
charges of $1 million and $2 million, respectively. These
charges were primarily related to tax litigation expense as well as
charges associated with certain fixed assets and costs associated
with restructuring and transitioning the Company's Russian juice
operations to an existing joint venture with an unconsolidated
bottling partner.
Certain Tax Matters
During the three and nine months ended September 30, 2016,
the Company recorded net tax charges of $7 million and
$84 million, respectively, related to amounts required to be
recorded for changes to our uncertain tax positions, including
interest and penalties. During the three and nine months ended
October 2, 2015, the Company recorded a net tax benefit of $6
million related to amounts required to be recorded for changes to
our uncertain tax positions, including interest and penalties.
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED)
2016 OUTLOOK
Our 2016 outlook for organic revenues, comparable currency
neutral income before taxes (structurally adjusted) and comparable
EPS are non-GAAP financial measures that exclude or have otherwise
been adjusted for items impacting comparability, the impact of
changes in foreign currency exchange rates, acquisitions and
divestitures, and the impact of structural items, as applicable. We
are not able to reconcile our full year 2016 projected organic
revenues to our full year 2016 projected reported net revenues, our
full year 2016 projected comparable currency neutral income before
taxes (structurally adjusted) to our full year 2016 projected
reported income before taxes, or our full year 2016 projected
comparable EPS to our full year 2016 projected reported EPS without
unreasonable efforts because we are unable to predict with a
reasonable degree of certainty the actual impact of changes in
foreign currency exchange rates and the exact timing of
acquisitions, divestitures and/or structural changes throughout
2016. The unavailable information could have a significant impact
on our full year 2016 GAAP financial results.
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED) (In millions except per share data)
Three Months
Ended September 30, 2016
Net
operating
revenues
Cost of
goods
sold
Gross
profit
Gross
margin
Selling,
general and
administrative
expenses
Other
operating
charges
Operating
income
Operating
margin
Reported (GAAP) $ 10,633
$ 4,131 $ 6,502
61.1 % $ 4,009
$ 222 $
2,271 21.4 % Items Impacting
Comparability: Asset Impairments/Restructuring — — — — — —
Productivity & Reinvestment — — — — (59 ) 59 Equity Investees —
— — — — — Transaction Gains/Losses — — — — (77 ) 77 Other Items (7
) 2 (9 ) 2 (86 ) 75 Certain Tax Matters — — —
— — — Comparable (Non-GAAP) $ 10,626
$ 4,133 $ 6,493
61.1 % $ 4,011
$ — $ 2,482 23.4 %
Three Months Ended
October 2, 2015
Net
operating
revenues
Cost of
goods
sold
Gross
profit
Gross
margin
Selling,
general and
administrative
expenses
Other
operating
charges
Operating
income
Operating
margin
Reported (GAAP) $ 11,427 $ 4,577
$ 6,850 59.9 % $ 4,207
$ 264 $ 2,379 20.8 %
Items Impacting Comparability: Asset Impairments/Restructuring — —
— — (75 ) 75 Productivity & Reinvestment — — — — (141 ) 141
Equity Investees — — — — — — Transaction Gains/Losses — — — — (44 )
44 Other Items (27 ) (93 ) 66 4 (4 ) 66 Certain Tax Matters —
— — — — — Comparable
(Non-GAAP) $ 11,400 $ 4,484
$ 6,916 60.7 %
$ 4,211 $ — $
2,705 23.7 %
Net operating revenues
Cost of
goods
sold
Gross profit
Selling,
general and
administrative
expenses
Other operating charges Operating
income
% Change — Reported (GAAP) (7)
(10) (5) (5) (16) (5) % Currency
Impact (2) 0 (3) (1) — (7) % Change — Currency Neutral (Non-GAAP)
(5) (10) (2)
(3) — 2
% Change —
Comparable (Non-GAAP) (7) (8) (6) (5) — (8) % Comparable Currency
Impact (Non-GAAP) (2) 0 (3) (1) — (5) % Change — Comparable
Currency Neutral (Non-GAAP) (5) (8)
(3) (3) —
(3)
Note: Certain columns may not add due to
rounding. Certain growth rates may not recalculate using the
rounded dollar amounts provided.
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED) (In millions except per share data)
Three Months Ended September 30, 2016
Interest
expense
Equity income
(loss) — net
Other
income
(loss) — net
Income
before
income
taxes
Income
taxes1
Effective
tax rate
Net income
(loss) attributable to
noncontrolling
interests
Net income
attributable to
shareowners of
The Coca-Cola
Company
Diluted
net
income
per
share2
Reported (GAAP) $ 182
$ 281 $ (1,106 )
$ 1,428 $
378 26.5 %
$ 4 $ 1,046
$ 0.24 Items Impacting Comparability: Asset
Impairments/Restructuring — — — — — — — — Productivity &
Reinvestment — — — 59 20 — 39 0.01 Equity Investees — 14 — 14 4 —
10 — Transaction Gains/Losses — — 1,127 1,204 246 — 958 0.22 Other
Items — — — 75 (15 ) — 90 0.02 Certain Tax Matters — —
— — (7 ) — 7 — Comparable
(Non-GAAP) $ 182 $ 295
$ 21 $ 2,780 $ 626
22.5 % $ 4
$ 2,150 $ 0.49
Three Months Ended
October 2, 2015
Interest
expense
Equity
income
(loss) — net
Other
income
(loss) — net
Income
before
income
taxes
Income
taxes1
Effective
tax rate
Net income
(loss) attributable to
noncontrolling
interests
Net income
attributable to
shareowners of
The Coca-Cola
Company
Diluted
net
income
per
share3
Reported (GAAP) $ 138 $ 200
$ (871 ) $ 1,725 $
272 15.8 % $ 4 $
1,449 $ 0.33 Items Impacting Comparability:
Asset Impairments/Restructuring — — — 75 — — 75 0.02 Productivity
& Reinvestment — — — 141 49 — 92 0.02 Equity Investees — (3 ) —
(3 ) (1 ) — (2 ) — Transaction Gains/Losses — — 815 859 291 — 568
0.13 Other Items — — 25 91 33 — 58 0.01 Certain Tax Matters —
— — — 6 — (6 ) —
Comparable (Non-GAAP) $ 138 $ 197
$ (31 ) $ 2,888
$ 650 22.5 % $ 4
$ 2,234 $ 0.51
Interest
expense
Equity
income
(loss) — net
Other
income
(loss) — net
Income
before
income taxes
Income
taxes
Net income
(loss) attributable to
noncontrolling
interests
Net income
attributable to
shareowners of
The Coca-Cola
Company
Diluted
net
income
per share
% Change — Reported (GAAP) 32 40 (27)
(17) 39 (9) (28) (27) % Change —
Comparable (Non-GAAP) 32 49 —
(4) (4) (7)
(4) (3)
Note: Certain columns may not add due to
rounding. Certain growth rates may not recalculate using the
rounded dollar amounts provided.
1 The income tax adjustments are the
calculated income tax benefits (charges) at the applicable tax rate
for each of the items impacting comparability with the exception of
certain tax matters previously discussed as well as the tax impact
resulting from the accrual of tax on temporary differences related
to the investment in foreign subsidiaries that are now expected to
reverse in the foreseeable future.
2 4,364 million average shares outstanding
— diluted
3 4,399 million average shares outstanding
— diluted
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED) (In millions except per share data)
Nine Months
Ended September 30, 2016
Net
operating revenues
Cost of
goods
sold
Gross
profit
Gross
margin
Selling,
general and
administrative
expenses
Other
operating
charges
Operating
income
Operating
margin
Reported (GAAP) $ 32,454
$ 12,671 $ 19,783
61.0 % $ 11,682
$ 830 $
7,271 22.4 % Items Impacting
Comparability: Asset Impairments/Restructuring — — — — (240 ) 240
Productivity & Reinvestment — — — — (187 ) 187 Equity Investees
— — — — — — Transaction Gains/Losses — — — — (207 ) 207 Other Items
25 132 (107 ) 15 (196 ) 74 Certain Tax Matters — — —
— — — Comparable (Non-GAAP) $
32,479 $ 12,803 $ 19,676
60.6 % $ 11,697
$ — $ 7,979
24.6 %
Nine Months
Ended October 2, 2015
Net
operating
revenues
Cost of
goods
sold
Gross
profit
Gross
margin
Selling,
general and
administrative
expenses
Other
operating
charges
Operating
income
Operating
margin
Reported (GAAP) $ 34,294 $
13,428 $ 20,866 60.8 % $
12,490 $ 1,166 $ 7,210
21.0 % Items Impacting Comparability: Asset
Impairments/Restructuring — — — — (204 ) 204 Productivity &
Reinvestment — — — — (323 ) 323 Equity Investees — — — — — —
Transaction Gains/Losses — — — — (427 ) 427 Other Items (42 ) (66 )
24 33 (212 ) 203 Certain Tax Matters — — — —
— — Comparable (Non-GAAP) $ 34,252
$ 13,362 $ 20,890
61.0 % $ 12,523
$ — $ 8,367 24.4 %
Net
operating revenues
Cost of
goods
sold
Gross
profit
Selling,
general and
administrative
expenses
Other
operating
charges
Operating
income
% Change — Reported (GAAP) (5) (6)
(5) (6) (29) 1 % Currency Impact (3)
(1) (4) (2) — (9) % Change — Currency Neutral (Non-GAAP) (2)
(5) (1) (4)
— 9
% Change — Comparable (Non-GAAP)
(5) (4) (6) (7) — (5) % Comparable Currency Impact (Non-GAAP) (3)
(1) (4) (2) — (7) % Change — Comparable Currency Neutral (Non-GAAP)
(2) (3) (2)
(4) — 2
Note: Certain columns may not add due to
rounding. Certain growth rates may not recalculate using the
rounded dollar amounts provided.
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED) (In millions except per share data)
Nine Months Ended September 30, 2016
Interest
expense
Equity
income
(loss) —
net
Other
income
(loss) —
net
Income
before
income
taxes
Income
taxes1
Effective
tax rate
Net income
(loss)
attributable to
noncontrolling
interests
Net income
attributable to
shareowners of
The Coca-Cola
Company
Diluted
net
income
per
share2
Reported (GAAP) $ 485
$ 678 $ (315 )
$ 7,621 $
1,618 21.2 %
$ 26 $ 5,977
$ 1.37 Items Impacting Comparability: Asset
Impairments/Restructuring — — — 240 — — 240 0.05 Productivity &
Reinvestment — — — 187 65 — 122 0.03 Equity Investees — 35 — 35 8 —
27 0.01 Transaction Gains/Losses — — 354 561 363 — 198 0.05 Other
Items — — 40 114 1 — 113 0.03 Certain Tax Matters — —
— — (84 ) — 84 0.02 Comparable
(Non-GAAP) $ 485 $ 713
$ 79 $ 8,758 $
1,971 22.5 % $ 26
$ 6,761 $ 1.55
Nine Months
Ended October 2, 2015
Interest
expense
Equity
income
(loss) —
net
Other
income
(loss) —
net
Income
before
income
taxes
Income
taxes1
Effective
tax rate
Net income
(loss)
attributable to
noncontrolling
interests
Net income
attributable to
shareowners of
The Coca-Cola
Company
Diluted
net
income
per
share3
Reported (GAAP) $ 713 $ 402
$ 709 $ 8,067 $ 1,937
24.0 % $ 16 $ 6,114
$ 1.39 Items Impacting Comparability: Asset
Impairments/Restructuring — — — 204 — — 204 0.05 Productivity &
Reinvestment — — — 323 124 — 199 0.05 Equity Investees — 79 — 79 5
— 74 0.02 Transaction Gains/Losses — — (529 ) (102 ) (173 ) — 71
0.02 Other Items (320 ) — 113 636 173 — 463 0.10 Certain Tax
Matters — — — — 6 — (6 )
— Comparable (Non-GAAP) $ 393 $ 481
$ 293 $ 9,207
$ 2,072 22.5 %
$ 16 $ 7,119 $
1.61
Interest
expense
Equity
income
(loss) —
net
Other
income
(loss) —
net
Income
before
income
taxes
Income
taxes
Net income
(loss)
attributable to
noncontrolling
interests
Net income
attributable to
shareowners of
The Coca-Cola
Company
Diluted
net
income
per
share
% Change — Reported (GAAP) (32) 68 —
(6) (16) 57 (2) (1) % Change —
Comparable (Non-GAAP) 24 48 (73)
(5) (5) 57
(5) (4)
Note: Certain columns may not add due to
rounding. Certain growth rates may not recalculate using the
rounded dollar amounts provided.
1 The income tax adjustments are the
calculated income tax benefits (charges) at the applicable tax rate
for each of the items impacting comparability with the exception of
certain tax matters previously discussed as well as the tax impact
resulting from the accrual of tax on temporary differences related
to the investment in foreign subsidiaries that are now expected to
reverse in the foreseeable future.
2 4,374 million average shares outstanding
— diluted
3 4,410 million average shares outstanding
— diluted
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED)
Income Before
Income Taxes and Diluted Net Income Per Share:
Three Months Ended September 30, 2016
Income before
income taxes
Diluted net income
per share
% Change — Reported (GAAP) (17) (27) %
Currency Impact (7) (6) % Change — Currency Neutral (Non-GAAP) (11)
(21) % Structural Impact 0 — % Change — Currency Neutral
(Structurally Adjusted) (Non-GAAP) (10) —
% Impact of Items Impacting
Comparability (Non-GAAP) (13) (24) % Change — Comparable (Non-GAAP)
(4) (3) % Comparable Currency Impact (Non-GAAP) (3) (3) % Change —
Comparable Currency Neutral (Non-GAAP) (1) 0 % Comparable
Structural Impact (Non-GAAP) (2) — % Change — Comparable Currency
Neutral (Structurally Adjusted) (Non-GAAP) 2 —
Nine Months Ended
September 30, 2016
Income before
income taxes
Diluted net income
per share
% Change — Reported (GAAP) (6) (1) % Currency
Impact (11) (11) % Change — Currency Neutral (Non-GAAP) 5 10 %
Structural Impact (2) — % Change — Currency Neutral (Structurally
Adjusted) (Non-GAAP) 8 —
% Impact of Items Impacting Comparability (Non-GAAP)
(1) 3 % Change — Comparable (Non-GAAP) (5) (4) % Comparable
Currency Impact (Non-GAAP) (9) (9) % Change — Comparable Currency
Neutral (Non-GAAP) 4 5 % Comparable Structural Impact (Non-GAAP)
(3) — % Change — Comparable Currency Neutral (Structurally
Adjusted) (Non-GAAP) 7 —
Note: Certain columns may not add due to
rounding.
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED) (In millions)
Net Operating
Revenues by Segment:
Three Months
Ended September 30, 2016
Europe,
Middle East
& Africa
Latin America
North America Asia Pacific
Bottling
Investments
Corporate Eliminations
Consolidated
Reported (GAAP) $ 1,852 $
965 $ 2,664 $ 1,460 $
4,840 $ 47 $ (1,195 )
$ 10,633 Items Impacting Comparability: Asset
Impairments/Restructuring — — — — — — — — Productivity &
Reinvestment — — — — — — — — Equity Investees — — — — — — — —
Transaction Gains/Losses — — — — — — — — Other Items —
— (3 ) —
— (4 ) —
(7 ) Comparable (Non-GAAP) $ 1,852
$ 965 $ 2,661 $
1,460 $ 4,840 $ 43
$ (1,195 ) $ 10,626
Three Months Ended October 2, 2015
Europe,
Middle East
& Africa
Latin America North America
Asia Pacific
Bottling
Investments
Corporate Eliminations
Consolidated
Reported (GAAP) $ 1,933 $
1,012 $ 2,580 $ 1,406 $
5,948 $ 55 $ (1,507 )
$ 11,427 Items Impacting Comparability: Asset
Impairments/Restructuring — — — — — — — — Productivity &
Reinvestment — — — — — — — — Equity Investees — — — — — — — —
Transaction Gains/Losses — — — — — — — — Other Items —
— (2 ) —
— (25 ) —
(27 ) Comparable (Non-GAAP) $ 1,933
$ 1,012 $ 2,578 $
1,406 $ 5,948 $ 30
$ (1,507 ) $ 11,400
Europe,
Middle East
& Africa
Latin America North America
Asia Pacific
Bottling
Investments
Corporate Eliminations
Consolidated
% Change — Reported (GAAP) (4)
(4) 3 4 (19) (16) 21
(7) % Currency Impact (2) (16) 0 4 (1) (37) — (2) % Change —
Currency Neutral (Non-GAAP) (2) 11 3 (1) (18) 20 — (5) %
Acquisitions, Divestitures and Structural Items (3) 0 0 (1) (19) 5
— (8) % Change — Organic Revenues (Non-GAAP) 2 11
3 0 2 13
— 3
% Change —
Comparable (Non-GAAP) (4) (4) 3 4 (19) 36 — (7) % Comparable
Currency Impact (Non-GAAP) (2) (16) 0 4 (1) (1) — (2) % Change —
Comparable Currency Neutral (Non-GAAP) (2) 11
3 (1) (18) 37
— (5)
Note: Certain columns may not add due to
rounding. Certain growth rates may not recalculate using
the rounded dollar amounts provided.
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED) (In millions)
Net Operating
Revenues by Segment:
Nine Months Ended September 30, 2016
Europe,
Middle East
& Africa
Latin America North America
Asia Pacific
Bottling
Investments
Corporate Eliminations
Consolidated
Reported (GAAP) $ 5,633 $
2,837 $ 7,737 $ 4,255 $
15,747 $ 95 $ (3,850 )
$ 32,454 Items Impacting Comparability: Asset
Impairments/Restructuring — — — — — — — — Productivity &
Reinvestment — — — — — — — — Equity Investees — — — — — — — —
Transaction Gains/Losses — — — — — — — — Other Items —
— (11 ) —
— 36 —
25 Comparable (Non-GAAP) $ 5,633
$ 2,837 $ 7,726
$ 4,255 $ 15,747
$ 131 $ (3,850 ) $ 32,479
Nine Months Ended October 2,
2015
Europe,
Middle East
& Africa
Latin America North America
Asia Pacific
Bottling
Investments
Corporate Eliminations
Consolidated
Reported (GAAP) $ 5,876 $
3,051 $ 7,548 $ 4,292 $
17,864 $ 120 $ (4,457 )
$ 34,294 Items Impacting Comparability: Asset
Impairments/Restructuring — — — — — — — — Productivity &
Reinvestment — — — — — — — — Equity Investees — — — — — — — —
Transaction Gains/Losses — — — — — — — — Other Items —
— (19 ) —
— (23 ) —
(42 ) Comparable (Non-GAAP) $ 5,876
$ 3,051 $ 7,529
$ 4,292 $ 17,864 $
97 $ (4,457 ) $ 34,252
Europe,
Middle East
& Africa
Latin America North America
Asia Pacific
Bottling
Investments
Corporate Eliminations
Consolidated
% Change — Reported (GAAP) (4)
(7) 3 (1) (12) (21) 14
(5) % Currency Impact (3) (20) 0 1 (2) (46) — (3) % Change —
Currency Neutral (Non-GAAP) (1) 13 3 (2) (10) 25 — (2) %
Acquisitions, Divestitures and Structural Items (3) 0 0 (2) (10) 14
— (5) % Change — Organic Revenues (Non-GAAP) 2
13 3 0 0 10
— 2
%
Change — Comparable (Non-GAAP) (4) (7) 3 (1) (12) 34 — (5) %
Comparable Currency Impact (Non-GAAP) (3) (20) 0 1 (2) 3 — (3) %
Change — Comparable Currency Neutral (Non-GAAP) (1)
13 3 (2) (10)
31 — (2)
Note: Certain columns may not add due to
rounding. Certain growth rates may not recalculate using
the rounded dollar amounts provided.
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED) (In millions)
Core Business
Revenues: 1
Three Months Ended
September 30, 2016
Reported (GAAP) Net Operating Revenues $
10,633 Bottling Investments Net Operating Revenues (4,840 )
Consolidated Eliminations 1,195 Intersegment Core Net Operating
Revenue Eliminations — Core Business Revenues
(Non-GAAP) 6,988 Items Impacting Comparability: Asset
Impairments/Restructuring — Productivity & Reinvestment —
Equity Investees — Transaction Gains/Losses — Other Items (7
) Comparable Core Business Revenues (Non-GAAP) $ 6,981
Three Months Ended
October 2, 2015
Reported (GAAP) Net Operating Revenues $
11,427 Bottling Investments Net Operating Revenues (5,948 )
Consolidated Eliminations 1,507 Intersegment Core Net Operating
Revenue Eliminations (1 ) Core Business Revenues (Non-GAAP)
6,985 Items Impacting Comparability: Asset
Impairments/Restructuring — Productivity & Reinvestment —
Equity Investees — Transaction Gains/Losses — Other Items
(27 ) Comparable Core Business Revenues (Non-GAAP) $ 6,958
% Change — Reported (GAAP) Net
Operating Revenues (7) % Change — Core Business Revenues
(Non-GAAP) 0 % Core Business Currency Impact (Non-GAAP) (2) %
Change — Currency Neutral Core Business Revenues (Non-GAAP) 2 %
Acquisitions, Divestitures and Structural Items (1) % Change — Core
Business Organic Revenues (Non-GAAP)2 3 %
Change — Comparable Core Business Revenues (Non-GAAP) 0 %
Comparable Core Business Currency Impact (Non-GAAP) (2) % Change —
Comparable Currency Neutral Core Business Revenues (Non-GAAP)
2
Note: Certain columns may not add due to
rounding. Certain growth rates may not recalculate using the
rounded dollar amounts provided.
1 Core business revenues included the net
operating revenues from the Europe, Middle East & Africa, Latin
America, North America, Asia Pacific and Corporate operating
segments offset by intersegment revenue eliminations of $1 million
during the three months ended October 2, 2015.
2 Core business organic revenue growth
included 2 points of positive price/mix.
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED) (In millions)
Core Business
Revenues: 1
Nine Months Ended
September 30, 2016
Reported (GAAP) Net Operating Revenues $
32,454 Bottling Investments Net Operating Revenues (15,747 )
Consolidated Eliminations 3,850 Intersegment Core Net Operating
Revenue Eliminations (13 ) Core Business Revenues (Non-GAAP) 20,544
Items Impacting Comparability: Asset Impairments/Restructuring —
Productivity & Reinvestment — Equity Investees — Transaction
Gains/Losses — Other Items 25 Comparable Core Business
Revenues (Non-GAAP) $ 20,569
Nine Months Ended
October 2, 2015
Reported (GAAP) Net Operating Revenues $
34,294 Bottling Investments Net Operating Revenues (17,864 )
Consolidated Eliminations 4,457 Intersegment Core Net Operating
Revenue Eliminations (8 ) Core Business Revenues (Non-GAAP) 20,879
Items Impacting Comparability: Asset Impairments/Restructuring —
Productivity & Reinvestment — Equity Investees — Transaction
Gains/Losses — Other Items (42 ) Comparable Core Business Revenues
(Non-GAAP) $ 20,837
% Change — Reported
(GAAP) Net Operating Revenues (5) % Change — Core
Business Revenues (Non-GAAP) (2) % Core Business Currency Impact
(Non-GAAP) (4) % Change — Currency Neutral Core Business Revenues
(Non-GAAP) 2 % Acquisitions, Divestitures and Structural Items (1)
% Change — Core Business Organic Revenues (Non-GAAP)2 4 %
Change — Comparable Core Business Revenues (Non-GAAP) (1) %
Comparable Core Business Currency Impact (Non-GAAP) (4) % Change —
Comparable Currency Neutral Core Business Revenues (Non-GAAP) 2
Note: Certain columns may not add due to
rounding. Certain growth rates may not recalculate using the
rounded dollar amounts provided.
1 Core business revenues included the net
operating revenues from the Europe, Middle East & Africa, Latin
America, North America, Asia Pacific and Corporate operating
segments offset by intersegment revenue eliminations of $13 million
and $8 million during the nine months ended September 30, 2016 and
October 2, 2015, respectively.
2 Core business organic revenue growth
included 3 points of positive price/mix.
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED) (In millions)
Operating Income
(Loss) by Segment:
Three Months Ended September 30, 2016
Europe,
Middle East
& Africa
Latin America North America
Asia Pacific
Bottling
Investments
Corporate Consolidated
Reported
(GAAP) $ 914 $ 435 $
666 $ 583 $ 124 $
(451 ) $ 2,271 Items Impacting
Comparability: Asset Impairments/Restructuring — — — — — — —
Productivity & Reinvestment 2 (1 ) 22 — 22 14 59 Equity
Investees — — — — — — — Transaction Gains/Losses — — — — 73 4 77
Other Items — 76
11 — (15 )
3 75 Comparable (Non-GAAP) $ 916
$ 510 $ 699
$ 583 $ 204 $ (430 )
$ 2,482
Three Months Ended October 2,
2015
Europe,
Middle East
& Africa
Latin America North America
Asia Pacific
Bottling
Investments
Corporate Consolidated
Reported
(GAAP) $ 930 $ 538 $
585 $ 571 $ 85 $
(330 ) $ 2,379 Items Impacting
Comparability: Asset Impairments/Restructuring — — — — 75 — 75
Productivity & Reinvestment (1 ) 4 31 2 76 29 141 Equity
Investees — — — — — — — Transaction Gains/Losses — — — — — 44 44
Other Items — — 40
— 47 (21 )
66 Comparable (Non-GAAP) $ 929
$ 542 $ 656 $ 573
$ 283 $ (278 )
$ 2,705
Europe,
Middle East
& Africa
Latin America North America
Asia Pacific
Bottling
Investments
Corporate Consolidated
% Change —
Reported (GAAP) (2) (19) 14 2
46 (37) (5) % Currency Impact (3) (24) 0 4 (3)
(6) (7) % Change — Currency Neutral (Non-GAAP) 1
5 14 (1) 48
(31) 2
% Change — Comparable
(Non-GAAP) (1) (6) 7 2 (28) (55) (8) % Comparable Currency Impact
(Non-GAAP) (3) (24) 0 4 (1) 1 (5) % Change — Comparable Currency
Neutral (Non-GAAP) 1 18 7
(2) (27) (56) (3)
Note: Certain columns may not add due to
rounding. Certain growth rates may not recalculate using
the rounded dollar amounts provided.
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED) (In millions)
Operating Income
(Loss) by Segment:
Nine Months Ended September 30, 2016
Europe,
Middle East
& Africa
Latin America North America
Asia Pacific
Bottling
Investments
Corporate Consolidated
Reported
(GAAP) $ 2,897 $ 1,470
$ 1,982 $ 1,892 $ 222
$ (1,192 ) $ 7,271 Items
Impacting Comparability: Asset Impairments/Restructuring — — — —
240 — 240 Productivity & Reinvestment 6 (2 ) 80 1 60 42 187
Equity Investees — — — — — — — Transaction Gains/Losses — — — — 178
29 207 Other Items — 76
(31 ) — (120 ) 149
74 Comparable (Non-GAAP) $ 2,903
$ 1,544 $ 2,031
$ 1,893 $ 580 $
(972 ) $ 7,979
Nine Months Ended October 2,
2015
Europe,
Middle East
& Africa
Latin America North America
Asia Pacific
Bottling
Investments
Corporate Consolidated
Reported
(GAAP) $ 3,036 $ 1,641 $
1,874 $ 1,876 $ 239 $
(1,456 ) $ 7,210 Items Impacting
Comparability: Asset Impairments/Restructuring — — — — 204 — 204
Productivity & Reinvestment 3 7 104 (1 ) 157 53 323 Equity
Investees — — — — — — — Transaction Gains/Losses — — — — — 427 427
Other Items — 33
(10 ) 2 24
154 203 Comparable (Non-GAAP) $ 3,039
$ 1,681 $ 1,968
$ 1,877 $ 624
$ (822 ) $ 8,367
Europe,
Middle East
& Africa
Latin America North America
Asia Pacific
Bottling
Investments
Corporate Consolidated
% Change —
Reported (GAAP) (5) (10) 6 1
(7) 18 1 % Currency Impact (3) (28) 0 (1) (1)
(4) (9) % Change — Currency Neutral (Non-GAAP) (1)
18 5 1 (6)
22 9
% Change — Comparable (Non-GAAP)
(4) (8) 3 1 (7) (18) (5) % Comparable Currency Impact (Non-GAAP)
(3) (27) 0 (1) (2) 1 (7) % Change — Comparable Currency Neutral
(Non-GAAP) (1) 19 3
1 (6) (19) 2
Note: Certain columns may not add due to
rounding. Certain growth rates may not recalculate using
the rounded dollar amounts provided.
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED) (In millions)
Income (Loss)
Before Income Taxes by Segment:
Three Months Ended September 30, 2016
Europe,
Middle East
& Africa
Latin America North America
Asia Pacific
Bottling
Investments
Corporate Consolidated
Reported
(GAAP) $ 922 $ 447 $
653 $ 589 $ (734 )
$ (449 ) $ 1,428 Items Impacting
Comparability: Asset Impairments/Restructuring — — — — — — —
Productivity & Reinvestment 2 (1 ) 22 — 22 14 59 Equity
Investees — — — — 14 — 14 Transaction Gains/Losses — — 17 — 1,162
25 1,204 Other Items — 76
11 — (15 )
3 75 Comparable (Non-GAAP)
$ 924 $ 522 $ 703
$ 589 $ 449
$ (407 ) $ 2,780
Three
Months Ended October 2, 2015
Europe,
Middle East
& Africa
Latin America North America
Asia Pacific
Bottling
Investments
Corporate Consolidated
Reported
(GAAP) $ 945 $ 535 $
581 $ 576 $ (547 )
$ (365 ) $ 1,725 Items Impacting
Comparability: Asset Impairments/Restructuring — — — — 75 — 75
Productivity & Reinvestment (1 ) 4 31 2 76 29 141 Equity
Investees (3 ) — — — — — (3 ) Transaction Gains/Losses — — — — 794
65 859 Other Items — — 40
— 47
4 91 Comparable (Non-GAAP) $ 941
$ 539 $ 652
$ 578 $ 445 $ (267
) $ 2,888
Europe,
Middle East
& Africa
Latin America North America
Asia Pacific
Bottling
Investments
Corporate Consolidated
% Change —
Reported (GAAP) (2) (16) 12 2
(34) (23) (17) % Currency Impact (2) (24) 0 3
0 6 (7) % Change — Currency Neutral (Non-GAAP) 0
8 13 (1) (34)
(29) (11)
% Impact of Items
Impacting Comparability (Non-GAAP) 0 (13) 5 0 (35) 29 (13) % Change
— Comparable (Non-GAAP) (2) (3) 8 2 1 (52) (4) % Comparable
Currency Impact (Non-GAAP) (2) (24) 0 3 0 16 (3) % Change —
Comparable Currency Neutral (Non-GAAP) 1 21
8 (1) 1
(67) (1)
Note: Certain columns may not add due to
rounding. Certain growth rates may not recalculate using
the rounded dollar amounts provided.
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED) (In millions)
Income (Loss)
Before Income Taxes by Segment:
Nine Months Ended September 30,
2016
Europe,
Middle East
& Africa
Latin America North America
Asia Pacific
Bottling
Investments
Corporate Consolidated
Reported
(GAAP) $ 2,950 $ 1,485
$ 1,978 $ 1,903 $ (897
) $ 202 $ 7,621 Items Impacting
Comparability: Asset Impairments/Restructuring — — — — 240 — 240
Productivity & Reinvestment 6 (2 ) 80 1 60 42 187 Equity
Investees — — — — 32 3 35 Transaction Gains/Losses — — 17 — 1,835
(1,291 ) 561 Other Items — 76
(31 ) — (120 )
189 114 Comparable (Non-GAAP)
$ 2,956 $ 1,559 $
2,044 $ 1,904 $ 1,150
$ (855 ) $ 8,758
Nine Months Ended October 2, 2015
Europe,
Middle East
& Africa
Latin America North America
Asia Pacific
Bottling
Investments
Corporate Consolidated
Reported
(GAAP) $ 3,085 $ 1,649 $
1,865 $ 1,890 $ (240 )
$ (182 ) $ 8,067 Items Impacting
Comparability: Asset Impairments/Restructuring — — — — 204 — 204
Productivity & Reinvestment 3 7 104 (1 ) 157 53 323 Equity
Investees 3 — — — 76 — 79 Transaction Gains/Losses — — — — 827 (929
) (102 ) Other Items — 33
(10 ) 2 24
587 636 Comparable (Non-GAAP) $
3,091 $ 1,689 $ 1,959
$ 1,891 $ 1,048
$ (471 ) $ 9,207
Europe,
Middle East
& Africa
Latin America North America
Asia Pacific
Bottling
Investments
Corporate Consolidated
% Change —
Reported (GAAP) (4) (10) 6 1
(274) — (6) % Currency Impact (3) (28) 0 (1)
(11) — (11) % Change — Currency Neutral (Non-GAAP) (1)
18 6 1
(263) — 5
% Impact of Items
Impacting Comparability (Non-GAAP) 0 (2) 2 0 (284) 292 (1) % Change
— Comparable (Non-GAAP) (4) (8) 4 1 10 (81) (5) % Comparable
Currency Impact (Non-GAAP) (3) (27) 0 (1) (3) (50) (9) % Change —
Comparable Currency Neutral (Non-GAAP) (1) 20
4 1 13 (31)
4
Note: Certain columns may not add due to
rounding. Certain growth rates may not recalculate using
the rounded dollar amounts provided.
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED)
Operating Expense
Leverage:
Three
Months Ended September 30, 2016
Operating
income
Gross profit
Operating expense
leverage1
% Change — Reported (GAAP) (5) (5) 1 %
Change — Currency Neutral (Non-GAAP) 2 (2)
4
% Change — Comparable (Non-GAAP) (8) (6) (2) % Change —
Comparable Currency Neutral (Non-GAAP) (3) (3)
0
Nine Months Ended September 30, 2016
Operating
income
Gross profit
Operating expense
leverage1
% Change — Reported (GAAP) 1 (5) 6 %
Change — Currency Neutral (Non-GAAP) 9 (1)
10
% Change — Comparable (Non-GAAP) (5) (6) 1 % Change —
Comparable Currency Neutral (Non-GAAP) 2 (2)
4
Note: Certain rows may not add due to
rounding.
1Operating expense leverage is calculated
by subtracting gross profit growth from operating income
growth.
Operating
Margin:
Three Months
Ended
September 30, 2016
Three Months
Ended
October 2, 2015
Basis Point
Growth (Decline)
Reported (GAAP) 21.36 % 20.81 %
55 Items Impacting Comparability (Non-GAAP) (2.00 )% (2.92
)% Comparable Operating Margin (Non-GAAP) 23.36 % 23.73 % (37 )
Comparable Currency Impact (Non-GAAP) (0.88 )% 0.00 % Comparable
Currency Neutral Operating Margin (Non-GAAP) 24.24 %
23.73 % 51
Nine Months
Ended
September 30, 2016
Nine Months
Ended
October 2, 2015
Basis Point
Growth (Decline)
Reported (GAAP) 22.40 % 21.02 %
138 Items Impacting Comparability (Non-GAAP) (2.17 )% (3.41
)% Comparable Operating Margin (Non-GAAP) 24.57 % 24.43 % 14
Comparable Currency Impact (Non-GAAP) (0.97 )% 0.00 % Comparable
Currency Neutral Operating Margin (Non-GAAP) 25.54 % 24.43 % 111
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED) (In millions)
Purchases and
Issuances of Stock:
Nine Months Ended
September 30, 2016
Nine Months Ended
October 2, 2015
Reported (GAAP) Issuances of Stock $ 1,295 $ 732 Purchases
of Stock for Treasury (2,509 ) (1,966 ) Net Change in Stock
Issuance Receivables1 (2 ) 16 Net Change in Treasury Stock
Payables2 12 (37 )
Net Share Repurchases (Non-GAAP)
$ (1,204 ) $ (1,255 )
1 Represents the net change in
receivables related to employee stock options exercised but not
settled prior to the end of the period.
2Represents the net change in payables for
treasury shares repurchased but not settled prior to the end of the
period.
Consolidated Cash
from Operations:
Nine Months Ended
September 30, 2016
Nine Months Ended
October 2, 2015
Net Cash Provided by
Operating Activities
Net Cash Provided by
Operating Activities
Reported (GAAP) $ 6,723 $ 8,390
Items Impacting Comparability: Cash Payments for Pension Plan
Contributions 471 — Comparable (Non-GAAP) $ 7,194
$ 8,390 Net Cash Provided
by
Operating Activities
% Change — Reported (GAAP) (20) % Change —
Comparable (Non-GAAP) (14)
Note: Certain growth rates may not
recalculate using the rounded dollar amounts provided.
About The Coca-Cola
Company
The Coca-Cola Company (NYSE: KO) is the world's
largest beverage company, refreshing consumers with more than 500
sparkling and still brands and more than 3,800 beverage choices.
Led by Coca-Cola, one of the world's most valuable and recognizable
brands, our Company's portfolio features 20 billion-dollar brands,
18 of which are available in reduced-, low- or no-calorie options.
These brands include Diet Coke, Coca-Cola Zero, Fanta, Sprite,
Dasani, vitaminwater, Powerade, Minute Maid, Simply,
Del Valle, Georgia and Gold Peak. Through the world's largest
beverage distribution system, we are the No. 1 provider of both
sparkling and still beverages. More than 1.9 billion servings
of our beverages are enjoyed by consumers in more than 200
countries each day. With an enduring commitment to building
sustainable communities, our Company is focused on initiatives that
reduce our environmental footprint, create a safe,
inclusive work environment for our associates, and enhance the
economic development of the communities where we operate. Together
with our bottling partners, we rank among the world's top
10 private employers with more than 700,000 system associates. For
more information, visit Coca-Cola Journey at www.coca-colacompany.com, follow us on Twitter at
twitter.com/CocaColaCo, visit our
blog, Coca-Cola Unbottled, at www.coca-colablog.com or find us on LinkedIn at
www.linkedin.com/company/the-coca-cola-company.
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 concerns;
water scarcity and poor quality; evolving consumer preferences;
increased competition and capabilities in the marketplace; product
safety and quality concerns; perceived negative health consequences
of certain ingredients, such as non-nutritive sweeteners and
biotechnology-derived substances, and of other substances present
in our beverage products or packaging materials; an inability to be
successful in our innovation activities; increased demand for food
products and decreased agricultural productivity; changes in the
retail landscape or the loss of key retail or foodservice
customers; an inability to expand operations in emerging and
developing markets; fluctuations in foreign currency exchange
rates; interest rate increases; an inability to maintain good
relationships with our bottling partners; a deterioration in our
bottling partners' financial condition; increases in income tax
rates, changes in income tax laws or unfavorable resolution of tax
matters; increased or new indirect taxes in the United States or in
one or more other major markets; increased cost, disruption of
supply or shortage of energy or fuels; increased cost, disruption
of supply or shortage of ingredients, other raw materials or
packaging materials; changes in laws and regulations relating to
beverage containers and packaging; significant additional labeling
or warning requirements or limitations on the marketing or sale of
our products; an inability to protect our information systems
against service interruption, misappropriation of data or breaches
of security; unfavorable general economic conditions in the United
States; unfavorable economic and political conditions in
international markets; litigation or legal proceedings; failure to
adequately protect, or disputes relating to, trademarks, formulae
and other intellectual property rights; adverse weather conditions;
climate change; damage to our brand image and corporate reputation
from negative publicity, even if unwarranted, related to product
safety or quality, human and workplace rights, obesity or other
issues; changes in, or failure to comply with, the laws and
regulations applicable to our products or our business operations;
changes in accounting standards; an inability to achieve our
overall long-term growth objectives; deterioration of global credit
market conditions; default by or failure of one or more of our
counterparty financial institutions; an inability to timely
implement our previously announced actions to reinvigorate growth,
or to realize the economic benefits we anticipate from these
actions; failure to realize a significant portion of the
anticipated benefits of our strategic relationship with Monster
Beverage Corporation; an inability to renew collective bargaining
agreements on satisfactory terms, or we or our bottling partners
experience strikes, work stoppages or labor unrest; future
impairment charges; multi-employer plan withdrawal liabilities in
the future; an inability to successfully integrate and manage our
Company-owned or -controlled bottling operations; an inability to
successfully manage our refranchising activities; an inability to
successfully manage the possible negative consequences of our
productivity initiatives; an inability to attract or retain a
highly skilled workforce; global or regional catastrophic events;
and other risks discussed in our Company’s filings with the
Securities and Exchange Commission (SEC), including our Annual
Report on Form 10-K for the year ended December 31, 2015 and our
subsequently filed Quarterly Reports on Form 10-Q, 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161026005768/en/
The Coca-Cola CompanyInvestors and
Analysts:Tim Leveridge, +01-404-676-7563orMedia:Petro Kacur, +01-404-676-2683
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