Letter to
Shareholders
Corey Leskanic (CEO)
Major Accomplishments 2012
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Introduced 500-plus new products in 2012,
including more than 100 low- and no-calorie choices
Coca-Cola volume grew 3%-nearly 300 million unit
cases (comparable to adding another Germany and
two Russias)
In 2012, we announced our new organizational
structure of 3 operating businesses: Coca-Cola
America, Coca-Cola International, and Bottle
Investments Groups
#1 Beverage company for environment, social, and
governance performance by Goldman Sachs
2012 vs. 2011
Revenue 2012 vs. 2011
decreased $222 million
Net income Growth 2012 vs. 2011
Decreased $72 Million
Stock Performance 2012 vs. 2011
$25.78 Dec. 30, 2011--- $31.73 Dec. 31, 2012
o increase 23%
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2013 Growth Opportunities
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Emphasize core brands (Coca-Cola, CocaCola Light, Diet Coke, Coca-Cola Zero)
o Coca-Cola Light 6.5% volume growth (growth in
physical volume of sales)
o Most popular, big potential growth
Natural Sweeteners (new consumer
preference)- stevia w/ Sprite & Vitamin
Water
Environment- Bottling
Business Review
Mark Dowicz (COO)
Business Review
New Products:
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Ayataka (Green Tea)
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I Lohas (Water)
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Partnership with JBF INdustries Ltd.
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Zico Coconut Water
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Dasani Drops
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Odwalla Smoothie Refreshers
New Markets:
Business Review (continued)
Competition
Pepsico, Inc.
Nestle S.A.
Dr. Pepper Snapple Group Inc.
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Regulatory or Legal Issues
Workers sue based on discrimination
Discontinue Membership at American
Legislative Exchange Council
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Business Review (continued)
Risks:
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Lack of popularity of many products
Changing health consciousness
attitude
Health issues
Commodity costs are rising
Income
Statement
Gabriella Grippa (CFO)
Something to keep in mind...
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sales of products are seasonal
2nd and 3rd quarters account for higher unit
sales
Earn more than 60% of operating income
during 2nd and 3rd quarters
Revenue (in millions)
2011
2012
Percent
Decrease
$8,284
$8,062
2.68%
Why did the company's revenue
go down?
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Customer marketing programs
o allowances
o coupon programs
Result: reduction in net sales ($1.0 billion in 2011
and 2012)
Unfavorable currency exchange rate changes,
impact of volume decline, bottle and can net
pricing per case growth, challenging operating
conditions, ongoing macroeconomic weakness
Cost of Revenue (in millions)
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2011
2012
Percent
Decrease
$5,254
$5,162
1.75%
Payments to licensors for marketing
programs = reduction in cost of sales
2012 packaging costs per case grew due to
increase cost of key raw materials like sugar.
Gross Margin Percentage
& Expenses
GDP
2011
36.6%
2012
Percent
Decrease
35.9%
0.68%
Operating Expenses
2011
2012
4.1%
4.1%
Operating Income (in millions)
2011
2012
Percent
Decrease
$1,033
$928
10.2%
Operating Income (continued)
Taxes (in millions)
2011
2012
Decrease
$196
$160
$36
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21%
19%
2%
Increase French excise tax on beverages w/
added sweetener
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Tax rate reductions in UK and Sweden
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Tax law change in Belgium
Net Income (in millions)
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2011
2012
Percent
Decrease
$749
$677
9.6%
Charges totaling $85 million related to
restructuring activities
Net mark-to-market losses totaling $4 million
Tax benefit of $62 million from tax rate
reductions in UK and Sweden, and tax law
change in Belgium.
Earnings per Share (in millions)
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2011
2012
Percent
Decrease
$2.35
$2.30
2.12%
2012 paid dividends of $187 million
February 2012, increase dividend from $0.13
to $0.16 per share
Return on Investment (in millions)
2011
2012
Decrease
10.4%
8.8%
1.6%
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Became less efficient
Balance Statement
Danielle Tantillo (CFO)
Balance Sheet (continued)
Balance Sheet
2012
2011
Up/ Down
Current Assets
2,762
2,686
Up
Long Term Assets
6,748
6,408
Up
Current Liabilities
2,579
1,848
Up
Long Term
Liabilities
4,238
4,347
Down
Shareholders Equity 2,693
2,899
Down
Retained Earnings
638
Up
1,126
2012
Current Asset
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2,762
2011
2,686
Cash increased (net income higher in 2011)
Accounts Receivables (increased)
Inventory- decreased
2012
Long Term Assets
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6,748
Property, Plant, and Equipment
2011
6,408
2012
Long Term Assets
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6,748
(continued)
2011
6,408
Franchise License Intangible Assets and
Goodwill
2012
Current Liabilities
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2,579
2011
1,848
Accounts Payable and Accrued Expenses
2012
Current Liabilities
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Debt
2,579
2011
1,848
2012
Long Term Liabilities4,238
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Long Term Debt
2011
4,347
2012
Shareholders Equity2,693
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2011
2,899
339,064,025 shares of common stock
Share Repurchases
65 million shares (no more than $1.5 billion)
o 2011: $1,014 million
o 2012: $1,831 million
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2012
Retained Earnings 1,126
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Dividends $187 million
Increased net income
Bought back more common stock
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2012: 1,831
2011: 1,014
2011
638
Key Ratios
2012
2011
better/ worse
Current Ratio
1.07
1.45
Worse
Quick Ratio
.92
1.24
Worse
Debt to Asset
Ratio
36.5%
33.12%
Worse
Time Covered
Ratio
30.85
35.65
Worse
Inventory Turnover
13.37
13.04
Worse
Days Sales
Outstanding
53.29
50.23
Worse
Ratio Interpretations
Current Ratio
2012- current assets were barely larger than
current liabilities
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assets should be higher than liabilities
o should be greater than one= IS NOT
o the ratios show that at 1.07 in 2012
o Current debt increased $616 million dollars
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Ratio Interpretations
Quick Ratio
Ability of current assets (without inventory) to
cover the current liabilities.
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o
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Shows if coca-cola has the resources necessary to
cover its current liabilities
Worse from 2011--> 1.24 to 0.92
Ratio Interpretations
Debt to Asset Ratio
Coca-cola's financial risk increased from
33.12% to 36.5% I
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Increased debt over their assets
o Debt increased by $616 million dollars.
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Times-Covered Ratio
Decreased from 35.65 to 30.85
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Profits can still keep declining and they will still be
able to meet interest charges
Ratio Interpretations
Inventory Turnover
Increased from 13.04 to 13.37 from 2011 to
2012
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cost of sales decrease from 2011 to 2012
o Inventory increased from 2011 to 2012.
o Took longer to get rid of all the inventory
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Days Sales Outstanding
Increased from 50.23 in 2011 to 53.29 in
2012
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o
Take longer to receive what customers owe