On Track to Deliver Full Year
Targets
- Net Revenues Declined 11%, Reflecting
Unfavorable Impacts from Structural Changes of 10% and Foreign
Currency of 1%
- Organic Revenues (Non-GAAP) Were Even,
Which Included the Impact of Two Fewer Days in the Reporting
Calendar and the Shift of the Easter Holiday
- Price/Mix Grew 3% with Balanced
Contribution Across the Operating Segments
- Operating Margin and Comparable
Currency Neutral Operating Margin (Non-GAAP) Expanded More than 90
Basis Points and More than 220 Basis Points, Respectively
- EPS of $0.27 and Comparable EPS
(Non-GAAP) of $0.43
- On Track to Deliver Full Year Organic
Revenue (Non-GAAP) and Comparable EPS (Non-GAAP) Targets
- Expanding Our Existing $3 Billion
Productivity and Reinvestment Program to Capture an Incremental
$800 Million in Annualized Savings by 2019
The Coca-Cola Company today reported first quarter 2017
operating results. Muhtar Kent, Chairman and Chief Executive
Officer of The Coca-Cola Company, said, "The first quarter
performance was in line with our plan, and we remain on track to
deliver our underlying revenue and profit targets for the full
year. As anticipated, revenues in the quarter were adversely
impacted by two fewer days and the shift of the Easter holiday.
Most importantly, we continue to execute against the long-term
strategic transformation plan for the Company – a plan that I am
confident will deliver even greater shareowner and stakeholder
value in the years to come."
"Next week I will proudly hand over the CEO reins to James
Quincey with full confidence that he will complete the Company's
transformation and lead our aggressive growth agenda. His vision of
accelerating The Coca-Cola Company's evolution into a total
beverage business with a focus on driving sustainable growth across
a broad portfolio is exciting for all stakeholders, and he has my
full support," Kent continued.
President and Chief Operating Officer James Quincey said, "We
are rapidly evolving our growth model to make changes that will
result in an even more consumer-centric portfolio that meets
people's changing tastes and preferences. Importantly, these
portfolio changes will help our consumers moderate the amount of
added sugar they consume. In addition, as we approach the end of
our refranchising and implement our new, more agile operating
model, we are expanding our productivity program. Our revamped
portfolio, a stronger global bottling system, and a leaner
enterprise structure will allow us to capture an increasing share
of the vibrant value growth available in the beverage industry and
to deliver value for our shareowners. It will be an honor and a
privilege to lead the organization as CEO, and I look forward to
working with our people around the world to accelerate our
growth."
Highlights
Quarterly
Performance
- Net revenues declined 11% to $9.1
billion, impacted by a headwind from acquisitions, divestitures,
and structural items of 10% related to the ongoing refranchising of
bottling territories and a foreign currency exchange headwind of
1%. Organic revenues (non-GAAP) were even – the result of 3%
price/mix growth and a 3% decline in concentrate sales. The two
fewer days in the quarter accounted for an approximate 2 point drag
on organic revenue (non-GAAP) growth. The timing of concentrate
shipments and the shift of the Easter holiday into the second
quarter also put negative pressure on the results. Core business
organic revenues (non-GAAP) were even, and core business price/mix
growth was 3%.
- Our value share growth outpaced our
volume share in total nonalcoholic ready-to-drink ("NARTD")
beverages, reflecting our shifted focus from driving volume growth
to driving revenue growth. We also gained value share in sparkling
soft drinks and juice, dairy, and plant-based beverages.
- Total unit case volume was even, which
included less than a half point of growth from acquired brands.
Unit case volume performance was significantly impacted by the
macroeconomic conditions in select Latin American markets along
with the shift of the Easter holiday into the second quarter.
Brazil and Venezuela accounted for over a 1 point drag on
consolidated unit case volume growth. From a market segmentation
perspective, our developed markets continued to outperform the
consolidated results with 1% unit case volume growth.
- Our operating margin expanded by more
than 90 basis points and our comparable currency neutral operating
margin (non-GAAP) expanded over 220 basis points. The reported
operating margin includes items impacting comparability and the
impact of changes in foreign currency exchange rates. Improvements
in operating margin were driven by structural impacts, our ongoing
pricing initiatives, savings generated through our productivity
program, and geographic mix.
- Cash from operations was $788 million,
up 30% from the prior year. This increase was driven by the cycling
of a pension plan contribution in the prior year, partially offset
by the impact of two fewer days in the quarter and our ongoing
refranchising of North American bottling territories.
Company Updates
We embarked upon 2017 with a full agenda of strategic priorities
to evolve our growth model and to further our transformation into a
total beverage company. Key initiatives include:
- Expanding our productivity and
reinvestment program: We are expanding our current productivity
and reinvestment program, with planned initiatives that are
expected to generate an incremental $800 million in
annualized savings by 2019. This brings the total annualized
savings target of our six-year program to $3.8 billion. We
expect to generate these additional savings through opportunities
across our entire spend base – supply chain, marketing
expenditures, and from the new operating model that was announced
at the CAGNY Conference earlier this year. The majority of these
additional savings are expected to be achieved in 2018 and 2019.
The expected productivity savings associated with 2017 were
included in our previously provided guidance.
- Accelerating growth of our
consumer-centric brand portfolio: As part of our ongoing
strategic priority to expand the beverages we sell across key
consumer-centric category clusters, we completed the acquisition of
the AdeS plant-based beverage business from Unilever. While
the transaction began as an acquisition by The Coca-Cola Company
and Coca-Cola FEMSA, other bottlers in Latin America later elected
to participate in the investment. By closing, the transaction
included all bottling partners within the AdeS geographic
footprint, demonstrating excitement across the system for the
fast-growing, plant-based beverage category. Building on the recent
success of Honest Tea in the U.S., our organic sports drink
Honest Sport was reintroduced with a new recipe and visual
identity. In addition, Honest Tea continued its expansion in
Europe, with additional markets planned for the remainder of the
year. In order to meet changing consumer needs in Japan, we
launched Coca-Cola Plus, the first-ever Trademark Coca-Cola
product approved by the Japanese government as Food for Specified
Health Use (FOSHU). This no-sugar product with added dietary fiber
is positioned to address Japan's large aging population. The
product is also helping us drive revenue growth in sparkling
soft drinks, with a premium retail price over similar size, pack,
and channel offerings of brand Coca-Cola.
- Strengthening our system:
Bottler refranchising transactions completed in North
America since our last update on Feb. 9, 2017 represent the
largest block of territory transitions to date in this process. In
China, we closed the majority of previously announced
bottler refranchising transactions on April 1, 2017. Following
these transactions, all bottling territories in China are now
majority owned by local franchise partners. Meanwhile in Japan,
Coca-Cola West and Coca-Cola East Japan completed their previously
announced merger on April 1, 2017 to form Coca-Cola Bottlers
Japan Inc.
- Unlocking the power of our
people: We recently announced senior leadership appointments to
further advance our ongoing transformation into a growth-oriented,
consumer-centered, total beverage company. We announced the
creation of a Chief Growth Officer role with a clear mandate
for driving global growth and a Chief Innovation Officer
role to accelerate the expansion of our consumer-centric portfolio,
both reporting directly to the CEO. As part of our continued work
to digitize the enterprise, the Information Technology
function will now also report directly to the CEO. The entire
enterprise will be supported by a focused, more agile corporate
center as well as a broader Enabling Services
organization, combining key transactional and expertise
services.
Operating Review -
Three Months Ended March 31, 2017
Revenues and
Volume
Percent Change
ConcentrateSales 1
Price/Mix
CurrencyImpact
Acquisitions,Divestitures, andStructural
Items, Net
ReportedNetRevenues
OrganicRevenues 2
Unit CaseVolume
Consolidated (3) 3
(1) (10)
(11) 0 0 Europe,
Middle East & Africa (2) 2 (5) (3) (7) 1 2 Latin America (6) 6
(1) 0 (1) 0 (3) North America (3) 3 0 2 1 0 0 Asia Pacific 0 0 (3)
0 (2) 0 1 Bottling Investments (4) 2
0 (25) (27)
(2) (27)
Income Before
Income Taxes and EPS
Percent
Change
ReportedIncome BeforeIncome Taxes
ItemsImpactingComparability
CurrencyImpact
ComparableCurrency Neutral 2
StructuralImpact
ComparableCurrency
Neutral(StructurallyAdjusted) 2
Consolidated (20)
(16) (3) (1)
(3) 2
Europe, Middle East & Africa (7) 0 (5) (1) Latin
America (2) 0 (4) 2 North America (18) (20) (2) 4 Asia Pacific (1)
0 (5) 4 Bottling Investments (26) (24)
3 (5)
Percent Change
Reported EPS
ItemsImpactingComparability
CurrencyImpact
ComparableCurrency Neutral 2
Consolidated EPS (19)
(15) (3) (2)
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 income taxes, comparable currency neutral income before
income 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.
In addition to the data in the preceding tables, quarterly
operating results included the following:
Consolidated
- Price/mix growth of 3% was primarily
driven by positive operational pricing and mix in all operating
segments. Geographic or segment mix did not have a significant
impact on price/mix.
- Unit case volume was even and included
the following performance by category cluster:
- Sparkling soft drinks: -1%
- Juice, dairy, and plant-based
beverages: 0%
- Water, enhanced water, and sports
drinks: 3%
- Tea and coffee: 2%
- The decline in income before income
taxes included items impacting comparability, primarily due to
charges associated with the refranchising of bottling territories
in North America. The decline was also impacted by changes in
foreign currency exchange rates and structural items, which were
primarily related to the refranchising of bottling territories.
Comparable currency neutral income before income taxes
(structurally adjusted) (non-GAAP) benefited from the impact of our
productivity initiatives and an increase in equity income,
partially offset by a swing from net interest income to net
interest expense.
- Purchases of stock for treasury were
$1.3 billion in the quarter, and net share repurchases (non-GAAP)
totaled $836 million.
Europe, Middle East &
Africa
- Price/mix growth of 2% was driven by
positive operational pricing and mix in our Western Europe business
unit. Geographic mix did not have a significant impact on
price/mix. Acquisitions, divestitures, and structural items reflect
the impact of bottling transactions in Europe and Africa.
- The decline in income before income
taxes included items impacting comparability and the impact of
changes in foreign currency exchange rates. On a net basis,
comparable currency neutral income before income taxes (non-GAAP)
was not significantly impacted by structural items.
- We maintained value share in total
NARTD beverages. We gained value share in sparkling soft drinks;
juice, dairy, and plant-based beverages; and tea and coffee.
- Unit case volume growth of 2% included
1 point of growth from acquired brands, which were primarily water
brands in Africa. Unit case volume growth was driven by growth in
our West Africa and Western Europe business units and was partially
offset by a decline in our South & East Africa business unit,
primarily driven by South Africa. Low single-digit sparkling soft
drinks unit case volume growth was led by growth across the region
in Coca-Cola Zero Sugar, and a mid single-digit decline in juice,
dairy, and plant-based beverages was driven by market disruptions
in Iraq.
Latin America
- Price/mix growth of 6% included solid
performance in Mexico and inflation-led pricing in Argentina.
- We gained value share in total NARTD
beverages; water, enhanced water, and sports drinks; and tea and
coffee.
- The unit case volume decline of 3% was
driven by double-digit declines in both our Brazil and Latin Center
business units amidst persistent macroeconomic challenges in those
markets. These declines were partially offset by mid single-digit
unit case volume growth in Mexico. Unit case volume for sparkling
soft drinks declined mid single digits, primarily due to Brazil and
Venezuela, while water, enhanced water, and sports drinks grew low
single digits.
North America
- Price/mix growth of 3% reflects our
continued execution of disciplined occasion, brand, price, and
package strategy. Sparkling soft drinks price/mix growth of 1% was
unfavorably impacted by two points due to the timing of shipments
in the foodservice & on-premise channel. Acquisitions,
divestitures, and structural items reflect the impact of the
ongoing refranchising of bottling territories in North
America.
- Income before income taxes included
items impacting comparability and the impact of changes in foreign
currency exchange rates. Comparable currency neutral income before
income taxes (non-GAAP) was favorably impacted by the ongoing
refranchising in North America.
- We gained value share in total NARTD
beverages for the 28th consecutive quarter. We also gained value
share in sparkling soft drinks; juice, dairy, and plant-based
beverages; and tea and coffee.
- In sparkling soft drinks, mid
single-digit unit case volume growth in both Fanta and Sprite as
well as low single-digit growth in Coca-Cola Zero was offset
primarily by a mid single-digit decline in Diet Coke. In juice,
dairy, and plant-based beverages, fairlife ultra-filtered milk grew
unit case volume over 50%.
Asia Pacific
- Price/mix was even, driven by positive
operational pricing and mix in our Greater China & Korea
business unit offset by negative performance in our India &
South West Asia business unit. Geographic mix did not have a
significant impact on price/mix.
- We gained value share in sparkling soft
drinks.
- Unit case volume growth of 1% included
low single-digit growth in our Greater China & Korea and ASEAN
business units, partially offset by a low single-digit decline in
our India & South West Asia business unit. Brand Coca-Cola led
low single-digit unit case volume growth in sparkling soft drinks.
Mid single-digit unit case volume growth in juice, dairy, and
plant-based beverages was driven by solid growth in Minute
Maid.
Bottling Investments
- Price/mix growth of 2% included solid
performance in the North American bottling operations partially
offset by negative operational pricing and mix in the Indian
bottling operations.
- The decline in income before income
taxes was driven by items impacting comparability partially offset
by the impact of changes in foreign currency exchange rates.
Comparable currency neutral income before income taxes (non-GAAP)
was unfavorably impacted by the ongoing refranchising of North
American bottling territories and the deconsolidation of our German
and South African bottling operations in 2016.
Outlook
Our 2017 outlook for organic revenues, comparable currency
neutral income before income 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 2017
projected organic revenues to our full year 2017 projected reported
net revenues, our full year 2017 projected comparable currency
neutral income before income taxes (structurally adjusted) to our
full year 2017 projected reported income before income taxes, or
our full year 2017 projected comparable EPS to our full year 2017
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 2017. The unavailable information could have a
significant impact on our full year 2017 GAAP financial
results.
Full Year 2017 Underlying Performance:
- Approximately 3% growth in organic
revenues (non-GAAP) – No Change
- 7% to 8% growth in comparable currency
neutral income before income taxes (structurally adjusted)
(non-GAAP), driven by strong operating performance partially offset
by the impact of an increasing interest rate environment – No
Change
Full Year 2017 Currency Impact:
- Net revenues: 1% to 2% headwind based
on the current rates and including the impact of hedged positions –
No Change
- Income before income taxes: 3% headwind
based on the current rates and including the impact of hedged
positions – Updated
Full Year 2017 Acquisitions, Divestitures, and Structural
Items Impact:
- Net revenues: 18% to 19% headwind from
acquisitions, divestitures, and structural items – No Change
- Income before income taxes: 5% to 6%
structural headwind – No Change
Full Year 2017 Other Items:
- Underlying effective tax rate
(non-GAAP): 24.0%* – No Change
- Net share repurchases (non-GAAP):
Approximately $2.0 billion – No Change
- Net capital expenditures: $2.0 billion
to $2.5 billion – No Change
Full Year 2017 EPS:
- Comparable EPS (non-GAAP): 1% to 3%
decline versus $1.91 in 2016 – Updated
Second Quarter 2017 Considerations – New:
- Net revenues: 17% to 18% headwind from
acquisitions, divestitures, and structural items; 1% to 2% currency
headwind based on the current rates and including the impact of
hedged positions
- Income before income taxes: 3% to 4%
structural headwind; 3% currency headwind based on the current
rates and including the impact of hedged positions
Full Year 2018 Considerations:
- Net revenues: 16% to 17% headwind from
acquisitions, divestitures, and structural items – No Change
- Income before income taxes: 1% to 2%
structural headwind; low single-digit currency headwind based on
the current rates and including the impact of hedged positions – No
Change
- Underlying effective tax rate
(non-GAAP): 26.0%* – No Change
*Does not include any impact from potential tax reform
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.
- "Price/mix" represents the change in
revenues caused by factors such as price changes, the mix of
products and packages sold, and the mix of channels and geographic
territories where the sales occurred.
- First quarter 2017 financial results
were impacted by two fewer days and fourth quarter 2017 financial
results will be impacted by one additional day as compared to the
same periods in 2016. Unit case volume results are not impacted by
variances 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 first quarter 2017 financial results today, April 25, 2017
at 9 a.m. EDT. We invite participants to listen to a live webcast
of the conference call on the Company’s website,
http://www.coca-colacompany.com, in the "Investors" section. An
audio replay in downloadable digital format and a transcript of the
call will be available on the website within 24 hours following the
call. Further, the "Investors" section of the website includes a
reconciliation of non-GAAP financial measures to the Company’s
results as reported under GAAP, which may be used during the call
when discussing financial results.
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Condensed
Consolidated Statements of Income
(UNAUDITED) (In millions except per share data)
Three Months Ended
March 31, 2017
April 1, 2016
% Change1
Net Operating Revenues $ 9,118 $
10,282 (11 ) Cost of goods sold
3,513
4,069 (14 )
Gross Profit
5,605 6,213 (10 ) Selling, general and administrative
expenses
3,315 3,761 (12 ) Other operating charges
308 311 (1
)
Operating Income 1,982 2,141 (7 ) Interest income
155 144 8 Interest expense
192 141 36 Equity income
(loss) — net
116 92 25 Other income (loss) — net
(554 ) (342 ) (62
)
Income Before Income Taxes 1,507 1,894 (20 ) Income
taxes
323 401
(19 )
Consolidated Net Income 1,184
1,493 (21 ) Less: Net income (loss) attributable to noncontrolling
interests
2 10
(79 )
Net Income Attributable to Shareowners of
The Coca-Cola Company $ 1,182
$ 1,483 (20 )
Diluted
Net Income Per Share2 $ 0.27
$ 0.34 (19 )
Average
Shares Outstanding — Diluted2 4,334
4,382 1
Certain growth rates may not recalculate using the rounded dollar
amounts provided. 2 For the three months ended March 31, 2017 and
April 1, 2016, basic net income per share was $0.28 for 2017 and
$0.34 for 2016 based on average shares outstanding — basic of 4,287
million for 2017 and 4,328 million for 2016. 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)
March 31,2017
December 31,2016
ASSETS Current Assets Cash and cash
equivalents
$ 12,120 $ 8,555 Short-term investments
9,791 9,595
Total Cash, Cash Equivalents and Short-Term Investments
21,911 18,150
Marketable securities
3,294 4,051 Trade accounts receivable,
less allowances of $446 and $466, respectively
3,702 3,856
Inventories
2,885 2,675 Prepaid expenses and other assets
2,670 2,481 Assets held for sale
5,789
2,797
Total Current Assets
40,251 34,010
Equity Method Investments 16,753 16,260
Other
Investments 1,230 989
Other Assets 4,454
4,248
Property, Plant and Equipment — net 9,746
10,635
Trademarks With Indefinite Lives 6,478 6,097
Bottlers' Franchise Rights With Indefinite Lives
1,769 3,676
Goodwill 10,008 10,629
Other
Intangible Assets 512
726
Total Assets $ 91,201
$ 87,270
LIABILITIES
AND EQUITY Current Liabilities Accounts payable
and accrued expenses
$ 10,251 $ 9,490 Loans and notes
payable
13,726 12,498 Current maturities of long-term debt
2,185 3,527 Accrued income taxes
268 307 Liabilities
held for sale
2,226 710
Total Current Liabilities 28,656
26,532
Long-Term Debt
31,538 29,684
Other Liabilities 4,041 4,081
Deferred Income Taxes 3,899 3,753
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
15,197 14,993 Reinvested
earnings
65,099 65,502 Accumulated other comprehensive
income (loss)
(10,206 ) (11,205 ) Treasury stock, at
cost — 2,767 and 2,752 shares, respectively
(48,974 ) (47,988 )
Equity
Attributable to Shareowners of The Coca-Cola Company
22,876 23,062
Equity Attributable to Noncontrolling
Interests 191 158
Total Equity 23,067
23,220
Total Liabilities and Equity
$ 91,201 $ 87,270
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Condensed
Consolidated Statements of Cash Flows
(UNAUDITED) (In millions)
Three Months Ended
March 31, 2017
April 1,2016
Operating Activities Consolidated net income
$
1,184 $ 1,493 Depreciation and amortization
328 458
Stock-based compensation expense
55 69 Deferred income taxes
(34 ) (81 ) Equity (income) loss — net of dividends
(89 ) (79 ) Foreign currency adjustments
72 93
Significant (gains) losses on sales of assets — net
497 362
Other operating charges
269 142 Other items
16 (173 )
Net change in operating assets and liabilities
(1,510 ) (1,680 ) Net cash provided by
operating activities
788
604
Investing Activities Purchases of investments
(3,551 ) (4,763 ) Proceeds from disposals of
investments
4,176 6,010 Acquisitions of businesses, equity
method investments and nonmarketable securities
(337
) (688 )
Proceeds from disposals of businesses,
equity method investments and nonmarketable securities
1,430 291 Purchases of property, plant and equipment
(442 ) (536 ) Proceeds from disposals of property,
plant and equipment
18 29 Other investing activities
(255 ) 5 Net cash
provided by (used in) investing activities
1,039 348
Financing
Activities Issuances of debt
11,704 8,530 Payments of
debt
(9,223 ) (6,783 ) Issuances of stock
394
763 Purchases of stock for treasury
(1,304 ) (739 )
Dividends
— (1,505 ) Other financing activities
(36 ) 133 Net cash
provided by (used in) financing activities
1,535 399
Effect of Exchange
Rate Changes on Cash and Cash Equivalents
203 88
Cash and Cash
Equivalents Net increase (decrease) during the period
3,565 1,439 Balance at beginning of period
8,555 7,309 Balance at end of
period
$ 12,120 $
8,748
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
March 31,2017
April 1,2016
% Fav. /(Unfav.)
March 31,2017
April 1,2016
% Fav. /(Unfav.)
March 31,2017
April 1,2016
% Fav. /(Unfav.)
Europe, Middle East & Africa
$ 1,632 $ 1,750
(7 )
$ 867 $ 927
(7 )
$ 885 $ 950 (7 )
Latin America
926 935 (1 )
505 523 (3 )
507
518 (2 ) North America
2,394 2,364 1
569 581 (2 )
473 580 (18 ) Asia Pacific
1,208 1,235 (2 )
545 551 (1 )
549 554 (1 ) Bottling Investments
3,867 5,292 (27 )
(110 ) (118 ) 6
(542
) (432 ) (26 ) Corporate
29 (15 ) —
(394
) (323 ) (22 )
(365 ) (276 ) (32 )
Eliminations
(938 ) (1,279 ) 27
— — —
— —
— Consolidated
$ 9,118 $
10,282 (11 )
$ 1,982
$ 2,141 (7 )
$ 1,507 $ 1,894 (20 )
Note: Certain growth rates may not recalculate using the
rounded dollar amounts provided. 1 During the three months
ended March 31, 2017, intersegment revenues were $13 million for
Latin America, $772 million for North America, $130 million for
Asia Pacific and $23 million for Bottling Investments. During the
three months ended April 1, 2016, intersegment revenues were $141
million for Europe, Middle East & Africa, $18 million for Latin
America, $943 million for North America, $133 million for Asia
Pacific, $41 million for Bottling Investments and $3 million for
Corporate.
THE COCA-COLA COMPANY
AND SUBSIDIARIESReconciliation
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 income taxes", "comparable currency neutral income before
income 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. In 2017 and 2016,
the Company refranchised bottling territories in North America to
certain of its unconsolidated bottling partners. 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 2017 versus 2016 volume
growth rates on a consolidated basis as well as for the North
America and Bottling Investments operating segments. 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 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, they are also considered
acquired brands. Also in 2016, the Company deconsolidated our
German bottling operations as a result of their being combined to
create Coca-Cola European Partners plc ("CCEP"). As a result of the
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 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 COCA-COLA COMPANY
AND SUBSIDIARIESReconciliation of GAAP and Non-GAAP Financial
Measures(UNAUDITED)
DEFINITIONS (continued)
- "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 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 months ended March 31, 2017 and
April 1, 2016 consisted of the structural changes discussed
above. Additionally, during the three months ended March 31,
2017, 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 plant-based protein beverages in China
that were acquired in 2016.
- "Comparable currency neutral operating
margin", "comparable currency neutral income before income taxes"
and "comparable currency neutral income before income 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 income 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 the comparable currency neutral operating margin
(non-GAAP) expansion, comparable currency neutral income before
income taxes (non-GAAP) growth and comparable currency neutral
income before income 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 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.
- "Underlying effective tax rate" is a
non-GAAP financial measure that represents the estimated annual
effective income tax rate on income before income taxes that
excludes or has otherwise been adjusted for items impacting
comparability (discussed further below).
- "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).
THE COCA-COLA COMPANY
AND SUBSIDIARIESReconciliation of GAAP and Non-GAAP Financial
Measures(UNAUDITED)
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 operating results" defined
above).
Asset Impairments and Restructuring
Asset Impairments
During the three months ended March 31, 2017, the Company
recorded a charge of $84 million related to the impairment of
Coca-Cola Refreshments ("CCR") goodwill that is recorded in our
Bottling Investments operating segment, primarily as a result of
current quarter refranchising activities in North America and
management's view of the proceeds that are expected to be received
for the remaining bottling territories upon their refranchising.
This charge was determined by comparing the fair value of the
reporting unit to its carrying value.
Restructuring
During the three months ended April 1, 2016, the Company
recorded charges of $199 million. These charges were related
to the integration of our German bottling operations, which were
deconsolidated in May 2016.
Productivity and Reinvestment
During the three months ended March 31, 2017 and April 1, 2016,
the Company recorded charges of $139 million and $63 million,
respectively, related to our productivity and reinvestment
initiatives. 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 months ended March 31, 2017 and April 1, 2016,
the Company recorded net charges of $58 million and
$3 million, respectively. These amounts represent the
Company’s proportionate share of significant operating and
nonoperating items recorded by certain of our equity method
investees.
THE COCA-COLA COMPANY
AND SUBSIDIARIESReconciliation
of GAAP and Non-GAAP Financial
Measures(UNAUDITED)
Transaction Gains/Losses
During the three months ended March 31, 2017 and April 1, 2016,
the Company recorded charges of $60 million and $45 million,
respectively, primarily related to costs incurred to refranchise
certain of our bottling operations. 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 our North America bottling system.
During the three months ended March 31, 2017 and April 1, 2016,
the Company recorded charges of $2 million and $1 million,
respectively. These charges were for noncapitalizable transaction
costs associated with pending and closed transactions.
During the three months ended March 31, 2017 and April 1, 2016,
the Company incurred losses of $497 million and
$369 million, respectively, due to the refranchising of
certain bottling territories in North America. These losses
primarily related to the derecognition of the intangible assets
transferred or reclassified as held for sale.
During the three months ended March 31, 2017, the Company
incurred charges of $106 million primarily related to payments made
to certain of our unconsolidated bottling partners in North America
in order to convert their bottling agreements to a comprehensive
beverage agreement with additional requirements.
During the three months ended March 31, 2017, the Company
recognized a tax expense of $60 million resulting from the accrual
of tax on temporary differences related to the investment in
foreign subsidiaries that are expected to reverse in the
foreseeable future.
During the three months ended April 1, 2016, the Company
recorded a net gain of $18 million as a result of the disposal of
our shares in Keurig Green Mountain, Inc.
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
March 31, 2017 and April 1, 2016, the net impact of the Company's
adjustment related to our economic hedging activities resulted in a
decrease of $4 million and an increase of $24 million,
respectively, to our non-GAAP income before income taxes.
Other
During the three months ended March 31, 2017, the Company
recorded impairment charges of $20 million related to Venezuelan
intangible assets as a result of weaker sales resulting from
continued political instability. These charges were determined by
comparing the fair value of the assets, derived using discounted
cash flow analyses, to the respective carrying values.
During the three months ended March 31, 2017 and April 1, 2016,
the Company recorded other charges of $6 million and
$3 million, respectively. These charges were primarily related
to tax litigation expense.
Certain Tax Matters
During the three months ended March 31, 2017, the Company
recorded $53 million of excess tax benefits associated with the
Company's share-based compensation arrangements, partially offset
by a net tax charge of $23 million for changes to our uncertain tax
positions, including interest and penalties. During the three
months ended April 1, 2016, 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 SUBSIDIARIESReconciliation of GAAP and Non-GAAP Financial
Measures(UNAUDITED)
2017 OUTLOOK
Our 2017 outlook for organic revenues, comparable currency
neutral income before income 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 2017
projected organic revenues to our full year 2017 projected reported
net revenues, our full year 2017 projected comparable currency
neutral income before income taxes (structurally adjusted) to our
full year 2017 projected reported income before income taxes, or
our full year 2017 projected comparable EPS to our full year 2017
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 2017. The unavailable information could have a
significant impact on our full year 2017 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 March 31, 2017
Netoperatingrevenues
Cost ofgoodssold
Grossprofit
Grossmargin
Selling,general
andadministrativeexpenses
Otheroperatingcharges
Operatingincome
Operatingmargin
Reported (GAAP) $ 9,118 $
3,513 $ 5,605 61.5
% $ 3,315 $ 308
$ 1,982 21.7 % Items
Impacting Comparability: Asset Impairments/Restructuring — — — —
(84 ) 84 Productivity & Reinvestment — — — — (139 ) 139 Equity
Investees — — — — — — Transaction Gains/Losses — (3 ) 3 — (59 ) 62
Other Items 14 21 (7 ) (3 ) (26 ) 22 Certain Tax Matters — —
— — — — Comparable (Non-GAAP)
$ 9,132 $ 3,531 $ 5,601
61.3 % $ 3,312 $ —
$ 2,289 25.1 %
Three Months Ended April 1, 2016
Netoperatingrevenues
Cost ofgoodssold
Grossprofit
Grossmargin
Selling,general
andadministrativeexpenses
Otheroperatingcharges
Operatingincome
Operatingmargin
Reported (GAAP) $ 10,282 $ 4,069
$ 6,213 60.4 % $ 3,761
$ 311 $ 2,141 20.8 %
Items Impacting Comparability: Asset Impairments/Restructuring — —
— — (199 ) 199 Productivity & Reinvestment — — — — (63 ) 63
Equity Investees — — — — — — Transaction Gains/Losses — — — — (46 )
46 Other Items 47 48 (1 ) 4 (3 ) (2 ) Certain Tax Matters —
— — — — — Comparable (Non-GAAP)
$ 10,329 $ 4,117 $ 6,212
60.1 % $ 3,765 $ —
$ 2,447 23.7 %
Netoperatingrevenues
Cost ofgoodssold
Grossprofit
Selling,general
andadministrativeexpenses
Otheroperatingcharges
Operatingincome
% Change — Reported (GAAP) (11) (14)
(10) (12) (1) (7) % Currency Impact (1)
0 (2) (1) — (4) % Change — Currency Neutral (Non-GAAP) (10)
(14) (8) (11) — (4)
% Change — Comparable
(Non-GAAP) (12) (14) (10) (12) — (6) % Comparable Currency Impact
(Non-GAAP) (1) 0 (2) (1) — (5) % Change — Comparable Currency
Neutral (Non-GAAP) (10) (14) (8)
(11) — (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)
Three Months Ended March 31, 2017
Interestexpense
Equityincome(loss) —net
Otherincome(loss) —net
Incomebeforeincometaxes
Incometaxes1
Effectivetax rate
Net income(loss)attributable
tononcontrollinginterests
Net incomeattributable toshareowners ofThe
Coca-ColaCompany
Dilutednetincomepershare2
Reported (GAAP) $ 192 $
116 $ (554 ) $
1,507 $ 323 21.4 %
$ 2 $ 1,182
$ 0.27 Items Impacting Comparability:
Asset Impairments/Restructuring
— — — 84 — — 84 0.02 Productivity & Reinvestment — — — 139 52 —
87 0.02 Equity Investees — 58 — 58 15 — 43 0.01 Transaction
Gains/Losses — — 603 665 174 — 491 0.11 Other Items — — — 22 — — 22
0.01 Certain Tax Matters — — — — 30
— (30 ) (0.01 ) Comparable (Non-GAAP) $ 192
$ 174 $ 49 $ 2,475
$ 594 24.0 % $ 2 $
1,879 $ 0.43
Three Months Ended
April 1, 2016
Interestexpense
Equityincome(loss) —net
Otherincome(loss) —net
Incomebeforeincometaxes
Incometaxes1
Effectivetax rate
Net income(loss)attributable
tononcontrollinginterests
Net incomeattributable toshareowners ofThe
Coca-ColaCompany
Dilutednetincomepershare3
Reported (GAAP) $ 141 $ 92
$ (342 ) $ 1,894 $
401 21.2 % $ 10 $
1,483 $ 0.34 Items Impacting Comparability:
Asset Impairments/Restructuring — — — 199 — — 199 0.05 Productivity
& Reinvestment — — — 63 21 — 42 0.01 Equity Investees — 3 — 3 —
— 3 — Transaction Gains/Losses — — 351 397 143 — 254 0.06 Other
Items — — 29 27 10 — 17 — Certain Tax Matters — — —
— 6 — (6 ) — Comparable
(Non-GAAP) $ 141 $ 95 $ 38
$ 2,583 $ 581 22.5 %
$ 10 $ 1,992 $ 0.45
Interestexpense
Equityincome(loss) —net
Otherincome(loss) —net
Incomebeforeincometaxes
Income
taxes
Net income(loss)attributable
tononcontrollinginterests
Net incomeattributable toshareowners ofThe
Coca-ColaCompany
Dilutednetincomepershare
% Change — Reported (GAAP) 36 25 (62)
(20) (19) (79) (20) (19) %
Change — Comparable (Non-GAAP) 36 81 31
(4) 2 (79) (6) (5) 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 4,334 million average shares outstanding —
diluted 3 4,382 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 March 31, 2017
Income beforeincome taxes
Diluted net incomeper share
% Change — Reported (GAAP) (20) (19) %
Currency Impact (1) (1) % Change — Currency Neutral (Non-GAAP) (19)
(18) % Structural Impact 4 — % Change — Currency Neutral
(Structurally Adjusted) (Non-GAAP) (23) —
% Impact of Items Impacting
Comparability (Non-GAAP) (16) (15) % Change — Comparable (Non-GAAP)
(4) (5) % Comparable Currency Impact (Non-GAAP) (3) (3) % Change —
Comparable Currency Neutral (Non-GAAP) (1) (2) % Comparable
Structural Impact (Non-GAAP) (3) — % Change — Comparable Currency
Neutral (Structurally Adjusted) (Non-GAAP) 2 —
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 March 31, 2017
Europe,Middle East &Africa
LatinAmerica
NorthAmerica
AsiaPacific
BottlingInvestments
Corporate Eliminations Consolidated
Reported (GAAP) $ 1,632 $
926 $ 2,394 $ 1,208 $
3,867 $ 29 $ (938) $
9,118 Items Impacting Comparability: Asset
Impairments/Restructuring — — — — — — — — Productivity &
Reinvestment — — — — — — — — Equity Investees — — — — — — — —
Transaction Gains/Losses — — — — — — — — Other Items —
— 5 — — 9 — 14
Comparable (Non-GAAP) $ 1,632 $ 926 $ 2,399
$ 1,208 $ 3,867 $ 38 $ (938) $
9,132
Three
Months Ended April 1, 2016
Europe,Middle East& Africa
LatinAmerica
NorthAmerica
AsiaPacific
BottlingInvestments
Corporate Eliminations Consolidated
Reported (GAAP) $ 1,750 $ 935
$ 2,364 $ 1,235 $ 5,292
$ (15) $ (1,279) $ 10,282
Items Impacting Comparability: Asset Impairments/Restructuring — —
— — — — — — Productivity & Reinvestment — — — — — — — — Equity
Investees — — — — — — — — Transaction Gains/Losses — — — — — — — —
Other Items — — (2) — —
49 — 47 Comparable (Non-GAAP) $ 1,750 $
935 $ 2,362 $ 1,235 $ 5,292 $ 34
$ (1,279) $ 10,329
Europe,Middle East& Africa
LatinAmerica
NorthAmerica
AsiaPacific
BottlingInvestments
Corporate Eliminations Consolidated
%
Change — Reported (GAAP) (7) (1) 1
(2) (27) — 27 (11) % Currency
Impact (5) (1) 0 (3) 0 — — (1) % Change — Currency Neutral
(Non-GAAP) (2) 0 2 0 (27) — — (10) % Acquisitions, Divestitures and
Structural Items (3) 0 2 0 (25) — — (10) % Change — Organic
Revenues (Non-GAAP) 1 0 0 0 (2)
— — 0
% Change — Comparable (Non-GAAP) (7) (1) 2 (2) (27) 5
— (12) % Comparable Currency Impact (Non-GAAP) (5) (1) 0 (3) 0 (1)
— (1) % Change — Comparable Currency Neutral (Non-GAAP) (2)
0 2 0 (27) 7 —
(10) 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 (Non-GAAP): 1
Three Months EndedMarch 31,
2017
Reported (GAAP) Net Operating Revenues $ 9,118
Bottling Investments Net Operating Revenues (3,867 ) Consolidated
Eliminations 938 Intersegment Core Net Operating Revenue
Eliminations (4 ) Core Business Revenues (Non-GAAP) 6,185 Items
Impacting Comparability: Asset Impairments/Restructuring —
Productivity & Reinvestment — Equity Investees — Transaction
Gains/Losses — Other Items 14 Comparable Core Business
Revenues (Non-GAAP) $ 6,199
Three Months EndedApril 1,
2016
Reported (GAAP) Net Operating Revenues $
10,282 Bottling Investments Net Operating Revenues (5,292 )
Consolidated Eliminations 1,279 Intersegment Core Net Operating
Revenue Eliminations (6 ) Core Business Revenues (Non-GAAP) 6,263
Items Impacting Comparability: Asset Impairments/Restructuring —
Productivity & Reinvestment — Equity Investees — Transaction
Gains/Losses — Other Items 47 Comparable Core Business
Revenues (Non-GAAP) $ 6,310
%
Change — Reported (GAAP) Net Operating Revenues (11) %
Change — Core Business Revenues (Non-GAAP) (1) % Core Business
Currency Impact (Non-GAAP) (1) % Change — Currency Neutral Core
Business Revenues (Non-GAAP) 0 % Acquisitions, Divestitures and
Structural Items 0 % Change — Core Business Organic Revenues
(Non-GAAP)2 0 % Change — Comparable Core
Business Revenues (Non-GAAP) (2) % Comparable Core Business
Currency Impact (Non-GAAP) (2) % Change — Comparable Currency
Neutral Core Business Revenues (Non-GAAP) 0
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 (non-GAAP) 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 $4 million
and $6 million during the three months ended March 31, 2017 and
April 1, 2016, respectively. 2 Core business organic revenue
(non-GAAP) 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 March 31, 2017
Europe,Middle East& Africa
LatinAmerica
NorthAmerica
AsiaPacific
BottlingInvestments
Corporate Consolidated
Reported (GAAP)
$ 867 $ 505 $ 569
$ 545 $ (110 ) $
(394 ) $ 1,982 Items Impacting
Comparability: Asset Impairments/Restructuring — — — — 84 — 84
Productivity & Reinvestment 2 — 35 1 14 87 139 Equity Investees
— — — — — — — Transaction Gains/Losses — — — — 60 2 62 Other Items
— — (10 ) —
(3 ) 35 22 Comparable (Non-GAAP)
$ 869 $ 505 $ 594 $ 546
$ 45 $ (270 ) $ 2,289
Three Months Ended April 1,
2016
Europe,Middle East& Africa
LatinAmerica
NorthAmerica
AsiaPacific
BottlingInvestments
Corporate Consolidated
Reported (GAAP)
$ 927 $ 523 $ 581
$ 551 $ (118 ) $
(323 ) $ 2,141 Items Impacting
Comparability: Asset Impairments/Restructuring — — — — 199 — 199
Productivity & Reinvestment 3 — 31 1 21 7 63 Equity Investees —
— — — — — — Transaction Gains/Losses — — — — 45 1 46 Other Items
— — (16 ) —
(42 ) 56 (2 ) Comparable (Non-GAAP) $
930 $ 523 $ 596 $ 552
$ 105 $ (259 ) $ 2,447
Europe,Middle East& Africa
LatinAmerica
NorthAmerica
AsiaPacific
BottlingInvestments
Corporate Consolidated
% Change — Reported
(GAAP) (7) (3) (2) (1) 6
(22) (7) % Currency Impact (5) (4) (2) (5) (1) 13 (4)
% Change — Currency Neutral (Non-GAAP) (1) 1 0
4 8 (34) (4)
% Change — Comparable (Non-GAAP) (7) (3) 0 (1) (59)
(4) (6) % Comparable Currency Impact (Non-GAAP) (5) (4) (2) (5) (2)
0 (5) % Change — Comparable Currency Neutral (Non-GAAP) (1)
1 2 4 (57) (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)
Income (Loss)
Before Income Taxes by Segment:
Three Months Ended March 31, 2017
Europe,Middle East& Africa
LatinAmerica
NorthAmerica
AsiaPacific
BottlingInvestments
Corporate Consolidated
Reported (GAAP)
$ 885 $ 507 $ 473
$ 549 $ (542 ) $
(365 ) $ 1,507 Items Impacting
Comparability: Asset Impairments/Restructuring — — — — 84 — 84
Productivity & Reinvestment 2 — 35 1 14 87 139 Equity Investees
4 — — — 53 1 58 Transaction Gains/Losses — — 107 — 556 2 665 Other
Items — — (10 ) —
(3 ) 35 22 Comparable (Non-GAAP) $ 891
$ 507 $ 605 $ 550
$ 162 $ (240 ) $ 2,475
Three Months Ended April 1, 2016
Europe,Middle East& Africa
LatinAmerica
NorthAmerica
AsiaPacific
BottlingInvestments
Corporate Consolidated
Reported (GAAP)
$ 950 $ 518 $ 580
$ 554 $ (432 ) $
(276 ) $ 1,894 Items Impacting
Comparability: Asset Impairments/Restructuring — — — — 199 — 199
Productivity & Reinvestment 3 — 31 1 21 7 63 Equity Investees —
— — — 3 — 3 Transaction Gains/Losses — — — — 414 (17 ) 397 Other
Items — — (16 ) —
(42 ) 85 27 Comparable (Non-GAAP) $ 953
$ 518 $ 595 $ 555
$ 163 $ (201 ) $ 2,583
Europe,Middle East& Africa
LatinAmerica
NorthAmerica
AsiaPacific
BottlingInvestments
Corporate Consolidated
% Change — Reported
(GAAP) (7) (2) (18) (1) (26)
(32) (20) % Currency Impact (5) (4) (2) (5) 0 31 (1)
% Change — Currency Neutral (Non-GAAP) (2) 2
(16) 4 (26) (63) (19)
% Impact of Items Impacting Comparability
(Non-GAAP) 0 0 (20) 0 (24) (13) (16) % Change — Comparable
(Non-GAAP) (6) (2) 2 (1) (2) (19) (4) % Comparable Currency Impact
(Non-GAAP) (5) (4) (2) (5) 3 13 (3) % Change — Comparable Currency
Neutral (Non-GAAP) (1) 2 4 4 (5)
(32) (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)
Operating Expense
Leverage:
Three Months Ended
March 31, 2017
Operatingincome
Gross profit
Operatingexpenseleverage1
% Change — Reported (GAAP) (7) (10) 2 %
Change — Currency Neutral (Non-GAAP) (4) (8) 4 % Change — Currency
Neutral (Structurally Adjusted) (Non-GAAP) (8) 0
(8) % Change —
Comparable (Non-GAAP) (6) (10) 3 % Change — Comparable Currency
Neutral (Non-GAAP) (2) (8) 6 % Change — Comparable Currency Neutral
(Structurally Adjusted) (Non-GAAP) 3 1 2 Note:
Certain rows may not add due to rounding. 1 Operating
expense leverage is calculated by subtracting gross profit growth
from operating income growth.
Operating
Margin:
Three MonthsEnded March
31,2017
Three MonthsEnded April
1,2016
Basis
PointGrowth(Decline)
Reported (GAAP) 21.74 % 20.82 %
92 Items Impacting Comparability (Non-GAAP) (3.32 )% (2.87
)% Comparable Operating Margin (Non-GAAP) 25.06 % 23.69 % 137
Comparable Currency Impact (Non-GAAP) (0.89 )% 0.00 % Comparable
Currency Neutral Operating Margin (Non-GAAP) 25.95 % 23.69 %
226
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED) (In millions)
Purchases and
Issuances of Stock:
Three Months EndedMarch 31,
2017
Three Months EndedApril 1,
2016
Reported (GAAP) Issuances of Stock $ 394 $ 763 Purchases of
Stock for Treasury (1,304 ) (739 ) Net Change in Stock Issuance
Receivables1 (1 ) 40 Net Change in Treasury Stock Payables2 75
(219 ) Net Share Repurchases (Non-GAAP) $ (836 )
$ (155 ) 1 Represents the net change in receivables
related to employee stock options exercised but not settled prior
to the end of the period. 2 Represents the net change in payables
for treasury shares repurchased but not settled prior to the end of
the period.
Consolidated Cash
from Operations:
Three Months EndedMarch 31,
2017
Three Months EndedApril 1,
2016
Net Cash Provided byOperating
Activities
Net Cash Provided byOperating
Activities
Reported (GAAP) $ 788 $ 604
Items Impacting Comparability: Cash Payments for Pension Plan
Contributions 29 471 Comparable (Non-GAAP) $ 817
$ 1,075
Net Cash Provided byOperating
Activities
% Change — Reported (GAAP) 30 % Change —
Comparable (Non-GAAP) (24) 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, offering over 500 brands to people in more than 200
countries. Of our 21 billion-dollar brands, 19 are available in
lower- or no-sugar options to help people moderate their
consumption of added sugar. In addition to our namesake Coca-Cola
drinks, some of our leading brands around the world include: AdeS
soy-based beverages, Ayataka green tea, Dasani waters, Del Valle
juices and nectars, Fanta, Georgia coffee, Gold Peak teas and
coffees, Honest Tea, Minute Maid juices, Powerade sports drinks,
Simply juices, smartwater, Sprite, vitaminwater, and Zico coconut
water. At Coca-Cola, we’re serious about making positive
contributions to the world. That starts with reducing sugar in our
drinks and continuing to introduce new ones with added benefits. It
also means continuously working to reduce our environmental impact,
creating rewarding careers for our associates and bringing economic
opportunity wherever we operate. Together with our bottling
partners, we employ more than 700,000 people around the world. For
more information, visit our digital magazine Coca-Cola Journey at
www.coca-colacompany.com, and follow The Coca-Cola Company on
Twitter, Instagram, Facebook and LinkedIn.
Forward-Looking
Statements
This press release may contain statements, estimates or
projections that constitute “forward-looking statements” as defined
under U.S. federal securities laws. Generally, the words “believe,”
“expect,” “intend,” “estimate,” “anticipate,” “project,” “will” and
similar expressions identify forward-looking statements, which
generally are not historical in nature. Forward-looking statements
are subject to certain risks and uncertainties that could cause
actual results to differ materially from The Coca-Cola Company’s
historical experience and our present expectations or projections.
These risks include, but are not limited to, obesity and other
health-related 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 and throughout the world;
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 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 pension 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; failure to realize the economic benefits from or an
inability to successfully manage the possible negative consequences
of our productivity initiatives; failure to realize a significant
portion of the anticipated benefits of our strategic relationship
with Monster; inability to attract or retain a highly skilled
workforce; global or regional catastrophic events, including
terrorist acts, cyber-strikes and radiological attacks; 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, 2016, 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/20170425005807/en/
The Coca-Cola CompanyInvestors and
AnalystsTim Leveridge, +01-404-676-7563orMediaKent Landers, +01-404-676-2683
Coca Cola (NYSE:KO)
Historical Stock Chart
From Mar 2024 to Apr 2024
Coca Cola (NYSE:KO)
Historical Stock Chart
From Apr 2023 to Apr 2024