Strong Price/Mix and Solid Performance in
Developed Markets
Flagship North America Market Continues to
Outperform the Industry
- Net Revenues Declined 6% for the
Quarter and 5% for the Full Year, which Included a Combined
Unfavorable Impact from Foreign Currency and Structural Changes of
12% and 9%, Respectively
- Organic Revenues (Non-GAAP) Grew 6% for
the Quarter and 3% for the Full Year
- Price/Mix Grew 6% for the Quarter and
3% for the Full Year
- Operating Margin Expanded More than 90
Basis Points for the Full Year and Comparable Currency Neutral
Operating Margin (Non-GAAP) Expanded Nearly 140 Basis Points
- Fourth Quarter EPS of $0.13 and
Comparable EPS (Non-GAAP) of $0.37
- Company Provides 2017 Financial
Outlook
The Coca-Cola Company today reported fourth quarter and full
year 2016 operating results. Muhtar Kent, Chairman and Chief
Executive Officer of The Coca-Cola Company, said, "We are pleased
to report that we ended 2016 with fourth quarter top- and
bottom-line growth within our expectations. Strong price/mix
stemming from our continued focus on driving revenue and solid
performance in our developed markets helped offset persistent
macroeconomic pressures in our emerging and developing markets. Our
flagship market of North America grew net revenues 8% for the
quarter and 4% for the year, outperforming total retail value
growth for both the North America nonalcoholic ready-to-drink
beverage industry and U.S. consumer packaged goods companies."
"In addition to delivering our profit target for the full year,
I am encouraged by the strategic actions taken during 2016 to
strengthen our global bottling system. In the fourth quarter, we
reached a definitive agreement to refranchise all Company-owned
bottling operations in China, and we took important steps to
further the evolution of Coca-Cola Beverages Africa. During the
year, we successfully completed the creation of Coca-Cola European
Partners, and we supported the ongoing transformation of the
franchise bottling system in Japan. And last, we remain on track to
complete the refranchising of Company-owned bottling operations in
the United States by the end of 2017. In total, half of our global
system revenue has been in motion through our recent actions to
strengthen the system. The progress demonstrated by these actions
is foundational in positioning our system for prosperity long into
the future."
"We also recently made an important decision about the future
leadership of The Coca-Cola Company with the announcement that
James Quincey will become our next CEO, effective May 1. Having
worked closely with James for many years, I know that his knowledge
and experience make him the ideal candidate to lead our Company and
bottling system into the future. I am partnering with James to
ensure a smooth CEO transition and look forward to providing
continued support as Chairman of the Board of Directors."
Highlights
Quarterly / Full Year
Performance
- Net revenues were $9.4 billion for the
quarter, a 6% decline from prior year, impacted by a foreign
currency exchange headwind of 2% and a headwind from acquisitions,
divestitures, and structural items of 10%. Organic revenues
(non-GAAP) grew 6% in the quarter, driven by price/mix growth of
6%. Core business organic revenues (non-GAAP) grew 7% in the
quarter.
- Net revenues were $41.9 billion for the
full year, a 5% decline from the prior year, impacted by a foreign
currency exchange headwind of 3% and a headwind from acquisitions,
divestitures, and structural items of 6%. Organic revenues
(non-GAAP) for the full year grew 3%, driven by price/mix growth of
3%. Core business organic revenues (non-GAAP) grew 4% for the full
year.
- We gained global value share in total
nonalcoholic ready-to-drink ("NARTD") beverages and sparkling
beverages in both the quarter and the full year.
- Total unit case volume declined 1% for
the quarter and grew 1% for the full year. For the quarter, low
single-digit unit case volume growth in our developed markets was
offset by continued macroeconomic challenges in several Latin
American markets. North America grew unit case volume 1% in the
quarter, including 1% growth in sparkling beverages. For the full
year, our developed markets grew low single digits while our
emerging and developing markets were even.
- Our operating margin for the quarter
contracted nearly 80 basis points and our operating margin for the
full year expanded more than 90 basis points. These measures
included items impacting comparability, the impact of changes in
foreign currency exchange rates, and structural impacts. Our
comparable currency neutral operating margin (non-GAAP) in the
quarter expanded nearly 230 basis points and expanded nearly 140
basis points for the full year. These improvements were driven by
continued extensions of our pricing initiatives, a slightly
favorable cost environment, and our productivity program.
Company Updates
Strong momentum in transforming our business continued through
the last quarter of the year, with key actions driving positive
results in many markets around the world. Notable developments
included:
- Disciplined brand and growth
investments: We advanced our strategy to grow revenues and
profits from our sparkling beverage portfolio while at the same
time helping consumers reduce consumption of added sugars. In
Western Europe, Coca-Cola Zero Sugar once again grew unit
case volume double digits in the quarter, boosted by expansion into
France, Belgium, Netherlands, and Ireland. These recent moves
extend the product beyond its initial launch market of Great
Britain. Further expansion is planned in early 2017 for other
European markets, Australia, and South Africa, among others. In
addition to these moves in our sparkling portfolio, we continued
the global expansion of smartwater, one of our premium water
brands. While smartwater achieved double-digit unit case volume
growth during the year in its home market of North America, it also
helped drive full year high single-digit unit case volume growth in
the still water category for our Western Europe business unit.
- Innovating in different ways:
Portfolio innovations in the quarter extended beyond ongoing
product and reformulation initiatives. Sparkling beverage
performance in Japan kept its momentum in the quarter, boosted by
the Coca-Cola ribbon package innovation that was made
available in the market during November and December. This festive
bottle for Trademark Coca-Cola brands in Japan provided consumers
with a label that could be transformed into a holiday bow. Coffee
in Japan also continued to grow, driven by the bottle-can
package innovation for GEORGIA The Premium launched in early
2016. In our Central & Eastern Europe business unit, the launch
of a new Fanta spiral bottle led to full year mid
single-digit unit case volume growth for the brand and helped drive
a value share gain in sparkling beverages for the full year.
- Strengthening the global bottling
system: We remain on track to complete the refranchising of our
Company-owned bottling operations in the United States by the end
of 2017. In China, we signed a definitive agreement with COFCO
Coca-Cola Beverages Limited and Swire Beverages Holdings Limited to
refranchise all existing Company-owned bottling operations.
We also reached an important agreement in the evolution of
Coca-Cola Beverages Africa ("CCBA") regarding the transition
of Anheuser-Busch InBev's 54.5% stake in CCBA as well as its
interests in other African and Latin American bottling
operations.
- Planning a seamless leadership
transition: In December, the Board of Directors unanimously
approved Chairman and Chief Executive Officer Muhtar Kent's
recommendation for Company veteran James Quincey to become the next
CEO, effective May 1, 2017. Kent will continue as Chairman of the
Board of Directors following the CEO succession. The Board intends
to nominate Quincey to stand for election as a director at the 2017
Annual Meeting of Shareowners in April.
- Advancing sustainable business
practices: We continued to advance sustainability investments
around the world. During the quarter, we announced a combined
pledge with the U.S. Agency for International Development (USAID)
of up to $22 million to support the next five-year phase of
USAID's Water and Development Alliance (WADA). This
initiative aims to provide safe water access and sanitation to
communities in developing nations in Africa, the Middle East, Asia,
and Latin America. During the first phase of this partnership from
2005 to 2017, 35 projects were implemented in 30 different
countries. By the end of 2015, these projects had yielded improved
water access to over 600,000 people and improved sanitation for
over 250,000 people.
Operating Review – Three Months Ended December 31, 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 0 6
(2) (10)
(6) 6 (1) Europe,
Middle East & Africa 3 5 0 (2)
(6) (4) 5 1
Latin America (5) 15 (14) 0 (4) 10 (4) North America 4 5 0 0 8 8 1
Asia Pacific (2) 9 4 (3) 8 7 0 Bottling Investments 3
0 0 (23)
(20) 3 (25)
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 (67)
(61) (11) 6
(7) 14
Europe, Middle East &
Africa 3 (5) (4) (2) 2
Latin America (7) 0 (24) 17 North America 18 3 (1) 16 Asia Pacific
6 1 1 3 Bottling Investments (447)
(449) 1 0
Percent
Change Reported EPS
Items
Impacting
Comparability
Currency
Impact
Comparable
Currency
Neutral 2
Consolidated EPS (55)
(51) (11) 7
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.
Operating Results – Year Ended
December 31, 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
3 (3) (6)
(5) 3 1
Europe, Middle East & Africa 3 0 2
(3) (4) (4) 3
1 Latin America (1) 13 (18) 0 (6) 12 (1) North America 1 3 0
0 4 4 1 Asia Pacific 3 (2) 1 (2) 1 1 2 Bottling Investments
0 1 (1)
(13) (14) 1 (16)
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 (15)
(10) (9) 4
(3) 8
Europe, Middle East &
Africa 3 (4) (1) (3) (1)
Latin America (9) (2) (26) 19 North America 9 2 0 7 Asia Pacific 1
0 0 2 Bottling Investments (350)
(358) (2) 11
Percent
Change
Reported EPS
Items
Impacting
Comparability
Currency
Impact
Comparable
Currency
Neutral 2
Consolidated EPS (10)
(6) (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.
In addition to the data in the preceding tables, operating
results were impacted by the following:
Consolidated
- Positive price/mix in the quarter
included 2 points of positive segment mix, primarily driven by
Latin America. Segment mix did not have a significant impact on the
full year positive price/mix.
- Sparkling beverage unit case volume
declined 2% for the quarter and was even for the full year. Still
beverage unit case volume grew 2% for the quarter and 3% for the
full year.
- The decline in income before taxes for
both the quarter and the full year included items impacting
comparability, primarily due to the derecognition of intangible
assets 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. Comparable currency
neutral income before taxes (structurally adjusted) (non-GAAP) for
both the quarter and the full year 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.
- Cash from operations for the full year
was $8.8 billion, down $1.7 billion. This decrease was driven by
fluctuations in foreign currency exchange rates and our ongoing
refranchising of North America bottling territories as well as
bottling transactions in Europe and Africa.
- Purchases of stock for treasury for the
full year were $3.7 billion. Net share repurchases (non-GAAP)
totaled $2.3 billion for the full year.
Europe, Middle East & Africa
- Even price/mix for the quarter included
1 point of unfavorable geographic mix. Positive price/mix for the
full year included 1 point of favorable geographic mix.
Acquisitions, divestitures, and structural items for the quarter
and the full year reflect the impact of bottling transactions in
Europe and Africa.
- The decline in income before taxes for
both the quarter and the full year included the impact of changes
in foreign currency exchange rates and structural items. Comparable
currency neutral income before taxes (non-GAAP) for both the
quarter and the full year included the unfavorable impact of
bottling transactions in Europe and Africa.
- We gained value share in still
beverages during the quarter. Unit case volume growth of 1% for
both the quarter and the full year included 1 point of growth from
acquired brands, which were primarily water brands in Africa. For
the full year, sparkling beverage volume was even and still
beverage volume grew 3%. Unit case volume growth for the year in
our West Africa and Middle East & North Africa business units
was partially offset by a decline in our Central & Eastern
Europe business unit, which was primarily driven by a unit case
volume decline in Russia.
Latin America
- Positive price/mix for the quarter and
for the full year benefited from solid performance in Mexico and
several inflationary markets across Latin America.
- We gained value share in total NARTD
beverages, sparkling beverages and still beverages during the
quarter. For the full year, sparkling beverage volume declined 2%
and still beverage volume grew 2%. The total unit case volume
decline of 1% for the year was driven by high single-digit declines
in both our Brazil and Latin Center business units amidst continued
macroeconomic challenges in those regions. These declines were
partially offset by mid single-digit unit case volume growth in
Mexico.
North America
- Positive price/mix for the quarter and
for the full year reflects the continued execution of disciplined
occasion, brand, price, and package strategy. Sparkling beverage
price/mix grew 4% for the quarter and 3% for the full year.
- Income before taxes for both the
quarter and the full year included items impacting comparability
and structural impacts. Comparable currency neutral income before
taxes (non-GAAP) for the quarter was favorably impacted by the
ongoing refranchising in North America.
- We gained value share in total NARTD
beverages for the 27th consecutive quarter. For the full year,
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. Full year still beverage
volume grew 3%, primarily driven by growth in water which included
double-digit growth in smartwater. Volume in the dairy category
grew double digits and vitaminwater grew mid single digits.
Asia Pacific
- Positive price/mix for the quarter
included 1 point of favorable geographic mix. Geographic mix did
not have a significant impact on the negative price/mix for the
full year.
- We gained value share in sparkling
beverages during the quarter. For the full year, sparkling beverage
volume growth was slightly positive, rounding to even. Full year
still beverage volume grew 5%. Unit case volume growth for the full
year included mid single-digit growth in our ASEAN business unit
and low single-digit growth in our Japan business unit, partially
offset by a low single-digit decline in our Greater China &
Korea business unit.
Bottling Investments
- Full year positive price/mix reflects
solid performance across several of our key bottling operations,
particularly North America and India.
- The decline in income before taxes for
both the quarter and the full year included items impacting
comparability and structural impacts. For both the quarter and the
full year, 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. For the full year,
comparable currency neutral income before taxes (non-GAAP) also
included a favorable impact from the expanded distribution of
Monster Beverage Corporation products.
Outlook
Our 2017 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 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)
- 7% to 8% growth in comparable currency
neutral income before taxes (structurally adjusted) (non-GAAP),
driven by strong operating performance partially offset by an
increasing interest rate environment
Full Year 2017 Currency Impact:
- Net revenues: 1% to 2% headwind based
on the current spot rates and including the impact of hedged
positions
- Income before taxes: 3% to 4% headwind
based on the current spot rates and including the impact of hedged
positions
Full Year 2017 Acquisitions, Divestitures, and Structural
Items Impact:
- Net revenues: 18% to 19% headwind from
acquisitions, divestitures, and structural items
- Income before taxes: 5% to 6%
structural headwind
Full Year 2017 Other Items:
- Underlying effective tax rate
(non-GAAP): 24%*
- Net share repurchases (non-GAAP):
Approximately $2.0 billion
- Net capital expenditures: $2.0 billion
to $2.5 billion
Full Year 2017 EPS: Comparable EPS (non-GAAP) 1% to 4%
decline versus $1.91 in 2016
First Quarter 2017 Considerations:
- Net revenues: 12% to 13% 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: 1% to 2%
structural headwind; 3% to 4% currency headwind based on the
current spot rates and including the impact of hedged
positions
- Two fewer days when compared to first
quarter 2016
Full Year 2018 Considerations:
- Net revenues: 16% to 17% headwind from
acquisitions, divestitures, and structural items
- Income before taxes: 1% to 2%
structural headwind; low single-digit currency headwind based on
the current spot rates and including the impact of hedged
positions
- Underlying effective tax rate
(non-GAAP): 26%*
*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 for the fourth quarter, unless otherwise noted, and are
computed on a reported basis for the full year. "Unit case" means a
unit of measurement equal to 24 eight-ounce servings of finished
beverage. "Unit case volume" means the number of unit cases (or
unit case equivalents) of Company beverages directly or indirectly
sold by the Company and its bottling partners to customers.
- "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, product, and geographic 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 in which sales occurred.
- "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 and fourth quarter 2016 financial
results were 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 fourth quarter and full year 2016 results today, Feb. 9,
2017 at 9 a.m. EST. Also today, the Company's Investor Relations
team will hold a separate investor and analyst conference call to
address financial modeling-related questions at 11:30 a.m. EST. We
invite investors to listen to a live audiocast of both conference
calls 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 calls will also be available within 24 hours
after the audiocasts on the Company’s website. Further, the
"Investors" section of the website includes a reconciliation of
non-GAAP financial measures, which may be used 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
December 31,
2016
December 31,
2015
% Change1
Net Operating Revenues $ 9,409 $
10,000 (6 ) Cost of goods sold
3,794
4,054 (6 )
Gross
Profit 5,615 5,946 (6 ) Selling, general and
administrative expenses
3,580 3,937 (9 ) Other operating
charges
680 491
39
Operating Income 1,355
1,518 (11 ) Interest income
170 154 10 Interest expense
248 143 73 Equity income (loss) — net
157 87 82 Other
income (loss) — net
(919 )
(78 ) —
Income Before Income
Taxes 515 1,538 (67 ) Income taxes
(32 ) 302 —
Consolidated Net Income 547 1,236 (56 ) Less: Net
income (loss) attributable to noncontrolling interests
(3 ) (1 )
(358 )
Net Income Attributable to Shareowners of The Coca-Cola
Company $ 550
$ 1,237 (56 )
Diluted Net Income Per
Share2 $ 0.13
$ 0.28 (55 )
Average Shares
Outstanding — Diluted2 4,345
4,390
1 Certain growth rates may not recalculate using the rounded
dollar amounts provided.2 For the three months ended December 31,
2016 and December 31, 2015, basic net income per share was $0.13
for 2016 and $0.29 for 2015 based on average shares outstanding —
basic of 4,303 million for 2016 and 4,336 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)
Year Ended
December 31,
2016
December 31,
2015
% Change1
Net Operating Revenues $ 41,863 $
44,294 (5 ) Cost of goods sold
16,465
17,482 (6 )
Gross
Profit 25,398 26,812 (5 ) Selling, general and
administrative expenses
15,262 16,427 (7 ) Other operating
charges
1,510
1,657 (9 )
Operating Income
8,626 8,728 (1 ) Interest income
642 613 5 Interest
expense
733 856 (14 ) Equity income (loss) — net
835
489 71 Other income (loss) — net
(1,234
) 631 —
Income
Before Income Taxes 8,136 9,605 (15 ) Income taxes
1,586 2,239
(29 )
Consolidated Net Income 6,550
7,366 (11 ) Less: Net income (loss) attributable to noncontrolling
interests
23 15
45
Net Income Attributable to
Shareowners of The Coca-Cola Company
$ 6,527 $ 7,351
(11 )
Diluted Net Income Per Share2
$ 1.49 $ 1.67
(10 )
Average Shares Outstanding —
Diluted2 4,367
4,405
1 Certain growth rates may not recalculate using the rounded
dollar amounts provided.2 For the years ended December 31, 2016 and
December 31, 2015, basic net income per share was $1.51 for 2016
and $1.69 for 2015 based on average shares outstanding — basic of
4,317 million for 2016 and 4,352 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)
December 31, 2016
December 31,2015
ASSETS
Current Assets Cash and cash equivalents
$
8,555 $ 7,309 Short-term investments
9,595 8,322
Total Cash, Cash
Equivalents and Short-Term Investments
18,150 15,631 Marketable
securities
4,051 4,269 Trade accounts receivable, less
allowances of $466 and $352, respectively
3,856 3,941
Inventories
2,675 2,902 Prepaid expenses and other assets
2,481 2,752 Assets held for sale
2,797 3,900
Total Current
Assets 34,010
33,395
Equity Method Investments 16,260 12,318
Other Investments 989 3,470
Other Assets
4,248 4,110
Property, Plant and Equipment — net
10,635 12,571
Trademarks With Indefinite Lives
6,097 5,989
Bottlers' Franchise Rights With Indefinite
Lives 3,676 6,000
Goodwill 10,629 11,289
Other Intangible Assets 726
854
Total Assets
$ 87,270 $ 89,996
LIABILITIES AND
EQUITY
Current Liabilities Accounts payable and accrued expenses
$ 9,490 $ 9,660 Loans and notes payable
12,498
13,129 Current maturities of long-term debt
3,527 2,676
Accrued income taxes
307 331 Liabilities held for sale
710 1,133
Total Current Liabilities 26,532
26,929
Long-Term Debt
29,684 28,311
Other Liabilities 4,081 4,301
Deferred Income Taxes 3,753 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
14,993 14,016 Reinvested
earnings
65,502 65,018 Accumulated other comprehensive
income (loss)
(11,205 ) (10,174 ) Treasury stock, at
cost — 2,752 and 2,716 shares, respectively
(47,988 ) (45,066 )
Equity
Attributable to Shareowners of The Coca-Cola Company
23,062 25,554
Equity Attributable to Noncontrolling
Interests 158
210
Total Equity 23,220
25,764
Total Liabilities and
Equity $ 87,270
$ 89,996
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Condensed
Consolidated Statements of Cash Flows
(UNAUDITED) (In millions)
Year Ended December 31, 2016 December
31,2015
Operating Activities Consolidated net income
$ 6,550 $ 7,366 Depreciation and amortization
1,787 1,970 Stock-based compensation expense
258 236
Deferred income taxes
(856 ) 73 Equity (income) loss
— net of dividends
(449 ) (122 ) Foreign currency
adjustments
158 (137 ) Significant (gains) losses on sales
of assets — net
1,146 (374 ) Other operating charges
647 929 Other items
(224 ) 744 Net change in
operating assets and liabilities
(221
) (157 ) Net cash provided by operating
activities
8,796
10,528
Investing Activities Purchases of investments
(15,499 ) (15,831 ) Proceeds from disposals of
investments
16,624 14,079 Acquisitions of businesses, equity
method investments and nonmarketable securities
(838
) (2,491 )
Proceeds from disposals of businesses,
equity method investments and nonmarketable securities
1,035 565 Purchases of property, plant and equipment
(2,262 ) (2,553 ) Proceeds from disposals of
property, plant and equipment
150 85 Other investing
activities
(209 )
(40 ) Net cash provided by (used in) investing activities
(999 ) (6,186 )
Financing Activities Issuances of debt
27,281 40,434
Payments of debt
(25,615 ) (37,738 ) Issuances of
stock
1,434 1,245 Purchases of stock for treasury
(3,681 ) (3,564 ) Dividends
(6,043 )
(5,741 ) Other financing activities
79
251 Net cash provided by (used in)
financing activities
(6,545 )
(5,113 )
Effect of Exchange Rate Changes on Cash
and Cash Equivalents (6 )
(878 )
Cash and Cash Equivalents Net increase
(decrease) during the year
1,246 (1,649 ) Balance at
beginning of year
7,309
8,958 Balance at end of year
$ 8,555 $ 7,309
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
December 31,
2016
December 31,
2015
% Fav. /
(Unfav.)
December 31,
2016
December 31,
2015
% Fav. /
(Unfav.)
December 31,
2016
December 31,
2015
% Fav. /
(Unfav.)
Europe, Middle East & Africa
$ 1,645
$ 1,711 (4 )
$ 779
$ 839 (7 )
$
799 $ 838 (5 ) Latin America
982 1,023 (4 )
481 528 (9 )
481 515 (7 ) North
America
2,473 2,292 8
600 492 22
582 491 18
Asia Pacific
1,039 960 8
332 313 6
335 317 6
Bottling Investments
4,138 5,199 (20 )
(359 )
(115 ) (212 )
(1,026 ) (187 ) (447 ) Corporate
37 46 (20 )
(478 ) (539 ) 11
(656
) (436 ) (50 ) Eliminations
(905
) (1,231 ) 27
— — —
— —
— Consolidated
$
9,409 $ 10,000 (6
)
$ 1,355 $ 1,518
(11 )
$ 515
$ 1,538 (67 )
Note: Certain growth rates may not
recalculate using the rounded dollar amounts provided.
1 During the three months ended
December 31, 2016, intersegment revenues were $23 million
for Latin America, $795 million for North America, $69 million
for Asia Pacific and $18 million for Bottling Investments. During
the three months ended December 31, 2015, intersegment
revenues were $150 million for Europe, Middle East & Africa,
$19 million for Latin America, $948 million for North America,
$69 million for Asia Pacific, $35 million for Bottling
Investments and $10 million for Corporate.
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Operating
Segments
(UNAUDITED) (In millions)
Year
Ended
Net Operating Revenues
1 Operating Income (Loss)
Income (Loss) Before Income Taxes
December 31,
2016
December 31,
2015
% Fav. /
(Unfav.)
December 31,
2016
December 31,
2015
% Fav. /
(Unfav.)
December 31,
2016
December 31,
2015
% Fav. /
(Unfav.)
Europe, Middle East & Africa
$ 7,278
$ 7,587 (4 )
$
3,676 $ 3,875 (5 )
$ 3,749 $ 3,923 (4 )
Latin America
3,819 4,074 (6 )
1,951 2,169 (10 )
1,966 2,164 (9 ) North America
10,210 9,840 4
2,582 2,366 9
2,560 2,356 9 Asia Pacific
5,294
5,252 1
2,224 2,189 2
2,238 2,207 1 Bottling
Investments
19,885 23,063 (14 )
(137 ) 124 —
(1,923 ) (427 ) (350 ) Corporate
132 166 (21 )
(1,670 ) (1,995 ) 16
(454 ) (618 ) 27
Eliminations
(4,755 )
(5,688 ) 16
—
— —
— — —
Consolidated
$ 41,863
$ 44,294 (5 )
$ 8,626 $ 8,728
(1 )
$ 8,136
$ 9,605 (15 )
Note: Certain growth rates may not
recalculate using the rounded dollar amounts provided.
1 During the year ended December 31,
2016, intersegment revenues were $264 million for Europe, Middle
East & Africa, $73 million for Latin America, $3,773
million for North America, $506 million for Asia Pacific, $134
million for Bottling Investments and $5 million for Corporate.
During the year ended December 31, 2015, intersegment revenues
were $621 million for Europe, Middle East & Africa, $75 million
for Latin America, $4,259 million for North America,
$545 million for Asia Pacific, $178 million for Bottling
Investments and $10 million for Corporate.
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 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 merged to
create Coca-Cola European Partners plc ("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 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 full
year 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 and years
ended December 31, 2016 and December 31, 2015 consisted
of the structural changes discussed above. Additionally, during the
three months and year ended December 31, 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 the 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 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 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 operating results" defined
above).
Asset Impairments and Restructuring
Asset Impairments
During the three months and year ended December 31, 2016,
the Company recorded charges of $153 million related to certain
intangible assets. These charges included $143 million related to
the impairment of certain U.S. bottlers' franchise rights recorded
in our Bottling Investments operating segment. This charge was
related to a number of factors, primarily as a result of lower
operating performance compared to previously modeled results as
well as a revision in management's view of the proceeds that may be
ultimately received upon refranchising the territory. The remaining
charge of $10 million was related to an impairment of goodwill
recorded in our Bottling Investments operating segment. This charge
was primarily the result of management's revised outlook on market
conditions. These charges of $153 million were recorded in our
Bottling Investments operating segment.
Restructuring
During the year ended December 31, 2016, the Company
recorded charges of $240 million. The Company also recorded
charges of $88 million and $292 million during the three
months and year ended December 31, 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 months and year ended December 31, 2016,
the Company recorded charges of $165 million and $352 million,
respectively, related to our productivity and reinvestment
initiatives. The Company also recorded charges of $368 million and
$691 million during the three months and year ended
December 31, 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.
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED)
Equity Investees
During the three months and year ended December 31, 2016,
the Company recorded net charges of $26 million and
$61 million, respectively. During the three months and year
ended December 31, 2015, the Company recorded net charges of
$8 million and $87 million, respectively. These amounts
represent the Company’s proportionate share of significant
operating and nonoperating items recorded by certain of our equity
method investees.
Transaction Gains/Losses
During the three months and year ended December 31, 2016,
the Company recorded charges of $127 million and $297 million,
respectively, 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 bottling
systems. Additionally, during the three months and year ended
December 31, 2016, the Company recorded $118 million of
pension settlement charges primarily as a result of our
refranchising activities.
During the three months and year ended December 31, 2016,
the Company recorded charges of $4 million and $41 million,
respectively. During the three months and year ended
December 31, 2015, the Company recorded charges of $21 million
and $30 million, respectively. These charges were for
noncapitalizable transaction costs associated with pending and
closed transactions, primarily related to the deconsolidation of
our German bottling operations and the Monster transaction both
discussed below.
During the three months and year ended December 31, 2016,
the Company incurred losses of $799 million and
$2,456 million, respectively. The Company also incurred losses
of $179 million and $1,027 million during the three months and year
ended December 31, 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 months and year ended December 31, 2016,
the Company incurred charges of $14 million and $31 million,
respectively, 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 months and year ended December 31, 2016,
the Company recognized a tax benefit of $23 million and a net tax
charge of $57 million, respectively, 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 year ended December 31, 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 year ended December 31, 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 year ended December 31, 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 year ended December 31, 2015, the Company
recorded a net gain of $1,403 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. 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. During the year ended December 31, 2015,
the Company recognized impairment charges of $418 million primarily
related to the discontinuation of the energy products in the
glacéau portfolio as a result of the transaction with Monster.
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED)
Transaction Gains/Losses (continued)
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 year ended
December 31, 2015, calculated based on the final option price.
Also during the year ended December 31, 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.
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 and year
ended December 31, 2016, the net impact of the Company's
adjustment related to our economic hedging activities resulted in
decreases of $56 million and $138 million, respectively, to our
non-GAAP income before income taxes. During the three months and
year ended December 31, 2015, the net impact of the Company's
adjustment related to our economic hedging activities described
above resulted in a decrease of $52 million and an increase of $24
million, respectively, to our non-GAAP income before income
taxes.
Donations to The Coca-Cola Foundation
During the three months and year ended December 31, 2016,
the Company recorded charges of $100 million and
$200 million, respectively. During the year ended
December 31, 2015, the Company recorded charges of
$100 million. These charges were due to contributions the
Company made to The Coca-Cola Foundation.
Devaluation of the Egyptian Pound
During the three months and year ended December 31, 2016,
the Company recorded a charge of $72 million as a result of
remeasuring its net monetary assets denominated in Egyptian pounds.
The Egyptian pound devalued as a result of the central bank
allowing its currency, which was previously pegged to the U.S.
dollar, to float freely.
Other
During the three months and year ended December 31, 2016,
the Company recorded other charges of $14 million and
$34 million, respectively. During the three months and year
ended December 31, 2015, the Company recorded other charges of
$14 million and $15 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.
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED)
Other Items (continued)
Hyperinflationary Economies
During the year ended December 31, 2016, the Company
recorded a charge of $76 million due to the write-down related
to 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 year ended December 31, 2015, the Company
recorded net charges of $138 million 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.
Early Extinguishment of Long-Term Debt
During the year ended December 31, 2015, the Company
recorded charges of $320 million due to the early extinguishment of
certain long-term debt.
Certain Tax Matters
During the three months and year ended December 31, 2016,
the Company recorded net tax charges of $5 million and
$89 million, respectively, related to amounts required to be
recorded for changes to our uncertain tax positions, including
interest and penalties. During the three months and year ended
December 31, 2015, the Company recorded a net tax charge of $1
million and a net tax benefit of $5 million, respectively, related
to amounts required to be recorded for changes to our uncertain tax
positions, including interest and penalties.
2017 OUTLOOK
Our 2017 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 2017 projected organic
revenues to our full year 2017 projected reported net revenues, our
full year 2017 projected comparable currency neutral income before
taxes (structurally adjusted) to our full year 2017 projected
reported income before taxes, or our full year 2017 projected
comparable EPS to our full year 2017 projected 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 December 31,
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) $ 9,409 $
3,794 $ 5,615 59.7
% $ 3,580 $ 680
$ 1,355 14.4% Items Impacting
Comparability: Asset Impairments/Restructuring — — — — (153 ) 153
Productivity & Reinvestment — — — — (165 ) 165 Equity Investees
— — — — — — Transaction Gains/Losses — — — — (249 ) 249 Other Items
(34 ) 16 (50 ) 6 (113 ) 57 Certain Tax Matters — — —
— — — Comparable (Non-GAAP) $
9,375 $ 3,810 $ 5,565
59.4 % $ 3,586 $ — $
1,979 21.1%
Three Months Ended December 31,
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) $ 10,000 $ 4,054
$ 5,946 59.5 % $ 3,937
$ 491 $ 1,518 15.2% Items
Impacting Comparability: Asset Impairments/Restructuring — — — —
(88 ) 88 Productivity & Reinvestment — — — — (368 ) 368 Equity
Investees — — — — — — Transaction Gains/Losses — — — — (21 ) 21
Other Items 5 — 5 8 (14 ) 11 Certain Tax Matters — —
— — — — Comparable (Non-GAAP) $
10,005 $ 4,054 $ 5,951
59.5 % $ 3,945 $ — $
2,006 20.0%
Net
operating
revenues
Cost of
goods
sold
Gross
profit
Selling,
general and
administrative
expenses
Other
operating
charges
Operating
income
% Change — Reported (GAAP) (6) (6)
(6) (9) 39 (11) % Currency Impact (2) 0
(3) (1) — (8) % Change — Currency Neutral (Non-GAAP) (4)
(7) (3) (8) — (3)
% Change — Comparable (Non-GAAP)
(6) (6) (7) (9) — (1) % Comparable Currency Impact (Non-GAAP) (2) 0
(3) (1) — (8) % Change — Comparable Currency Neutral (Non-GAAP)
(4) (6) (3) (8) —
7
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 December 31,
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) $ 248 $
157 $ (919 ) $
515 $ (32 ) (6.3
)% $ (3 ) $
550 $ 0.13 Items Impacting
Comparability: Asset Impairments/Restructuring — — — 153 56 — 97
0.02 Productivity & Reinvestment — — — 165 57 — 108 0.02 Equity
Investees — 26 — 26 3 — 23 0.01 Transaction Gains/Losses — — 813
1,062 361 — 701 0.16 Other Items — — 73 130 21 — 109 0.03 Certain
Tax Matters — — — — (5 ) — 5
— Comparable (Non-GAAP) $ 248 $
183 $ (33 ) $ 2,051 $ 461
22.5 % $ (3 ) $ 1,593 $
0.37
Three Months Ended December 31, 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) $ 143 $ 87
$ (78 ) $ 1,538 $
302 19.6 % $ (1 )
$ 1,237 $ 0.28 Items Impacting
Comparability: Asset Impairments/Restructuring — — — 88 — — 88 0.02
Productivity & Reinvestment — — — 368 135 — 233 0.05 Equity
Investees — 8 — 8 — — 8 — Transaction Gains/Losses — — 178 199 65 —
134 0.03 Other Items — — (49 ) (38 ) (15 ) — (23 ) (0.01 ) Certain
Tax Matters — — — — (1 ) — 1
— Comparable (Non-GAAP) $ 143 $
95 $ 51 $ 2,163 $ 486
22.5 % $ (1 ) $ 1,678
$ 0.38
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) 73 82 —
(67) — (358) (56) (55) % Change
— Comparable (Non-GAAP) 73 94 — (5)
(5) (336) (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 4,345 million average shares outstanding —
diluted3 4,390 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)
Year Ended December 31, 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) $ 41,863
$ 16,465 $ 25,398
60.7% $ 15,262 $
1,510 $ 8,626 20.6% Items
Impacting Comparability: Asset Impairments/Restructuring — — — —
(393 ) 393 Productivity & Reinvestment — — — — (352 ) 352
Equity Investees — — — — — — Transaction Gains/Losses — — — — (456
) 456 Other Items (9 ) 148 (157 ) 21 (309 ) 131 Certain Tax Matters
— — — — — — Comparable
(Non-GAAP) $ 41,854 $ 16,613 $
25,241 60.3% $ 15,283 $ —
$ 9,958 23.8%
Year Ended December 31,
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) $ 44,294 $
17,482 $ 26,812 60.5% $
16,427 $ 1,657 $ 8,728
19.7% Items Impacting Comparability: Asset
Impairments/Restructuring — — — — (292 ) 292 Productivity &
Reinvestment — — — — (691 ) 691 Equity Investees — — — — — —
Transaction Gains/Losses — — — — (448 ) 448 Other Items (37 ) (66 )
29 41 (226 ) 214 Certain Tax Matters — — — —
— — Comparable (Non-GAAP) $ 44,257
$ 17,416 $ 26,841 60.6%
$ 16,468 $ — $ 10,373
23.4%
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) (7) (9) (1) % Currency Impact (3)
(1) (4) (2) — (8) % Change — Currency Neutral (Non-GAAP) (3)
(5) (1) (5) — 7
% Change — Comparable (Non-GAAP)
(5) (5) (6) (7) — (4) % Comparable Currency Impact (Non-GAAP) (3)
(1) (4) (2) — (7) % Change — Comparable Currency Neutral (Non-GAAP)
(3) (4) (2) (5) —
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)
Year Ended December 31, 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) $ 733 $
835 $ (1,234 ) $
8,136 $ 1,586 19.5
% $ 23 $ 6,527
$ 1.49 Items Impacting Comparability: Asset
Impairments/Restructuring — — — 393 56 — 337 0.08 Productivity
& Reinvestment — — — 352 122 — 230 0.05 Equity Investees — 61 —
61 11 — 50 0.01 Transaction Gains/Losses — — 1,167 1,623 724 — 899
0.21 Other Items — — 113 244 22 — 222 0.05 Certain Tax Matters —
— — — (89 ) — 89 0.02
Comparable (Non-GAAP) $ 733 $ 896
$ 46 $ 10,809 $ 2,432
22.5 % $ 23 $ 8,354
$ 1.91
Year Ended December 31, 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) $ 856 $ 489
$ 631 $ 9,605 $ 2,239
23.3 % $ 15 $ 7,351
$ 1.67 Items Impacting Comparability: Asset
Impairments/Restructuring — — — 292 — — 292 0.07 Productivity &
Reinvestment — — — 691 259 — 432 0.10 Equity Investees — 87 — 87 5
— 82 0.02 Transaction Gains/Losses — — (351 ) 97 (108 ) — 205 0.05
Other Items (320 ) — 64 598 158 — 440 0.10 Certain Tax Matters —
— — — 5 — (5 ) —
Comparable (Non-GAAP) $ 536 $ 576
$ 344 $ 11,370 $ 2,558
22.5 % $ 15 $ 8,797
$ 2.00
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) (14) 71 —
(15) (29) 45 (11) (10) % Change
— Comparable (Non-GAAP) 37 55 (87) (5)
(5) 45 (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 4,367 million average shares outstanding —
diluted3 4,405 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 December 31, 2016
Income before
income taxes
Diluted net income
per share
% Change — Reported (GAAP) (67) (55) %
Currency Impact (17) (23) % Change — Currency Neutral (Non-GAAP)
(49) (32) % Structural Impact 2 — % Change — Currency Neutral
(Structurally Adjusted) (Non-GAAP) (50) —
% Impact of Items Impacting
Comparability (Non-GAAP) (61) (51) % Change — Comparable (Non-GAAP)
(5) (4) % Comparable Currency Impact (Non-GAAP) (11) (11) % Change
— Comparable Currency Neutral (Non-GAAP) 6 7 % Comparable
Structural Impact (Non-GAAP) (7) — % Change — Comparable Currency
Neutral (Structurally Adjusted) (Non-GAAP) 14
—
Year Ended December
31, 2016
Income before
income taxes
Diluted net income
per share
% Change — Reported (GAAP) (15) (10) %
Currency Impact (12) (13) % Change — Currency Neutral (Non-GAAP)
(3) 2 % Structural Impact (2) — % Change — Currency Neutral
(Structurally Adjusted) (Non-GAAP) (1) —
% Impact of Items Impacting
Comparability (Non-GAAP) (10) (6) % 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) 8 —
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 December
31, 2016
Europe,
Middle East &
Africa
Latin
America
North
America
Asia
Pacific
Bottling
Investments
Corporate
Eliminations Consolidated
Reported
(GAAP) $ 1,645 $ 982
$ 2,473 $ 1,039 $ 4,138
$ 37 $ (905 ) $
9,409 Items Impacting Comparability: Asset
Impairments/Restructuring — — — — — — — — Productivity &
Reinvestment — — — — — — — — Equity Investees — — — — — — — —
Transaction Gains/Losses — — — — — — — — Other Items —
— (7 ) —
— (27 ) —
(34 ) Comparable (Non-GAAP) $ 1,645
$ 982 $ 2,466
$ 1,039 $ 4,138 $
10 $ (905 ) $ 9,375
Three Months Ended December
31, 2015
Europe,
Middle East & Africa
Latin
America
North
America
Asia
Pacific
Bottling
Investments
Corporate Eliminations
Consolidated
Reported (GAAP) $ 1,711 $
1,023 $ 2,292 $ 960 $
5,199 $ 46 $ (1,231 )
$ 10,000 Items Impacting Comparability: Asset
Impairments/Restructuring — — — — — — — — Productivity &
Reinvestment — — — — — — — — Equity Investees — — — — — — — —
Transaction Gains/Losses — — — — — — — — Other Items —
— (5 ) —
— 10 —
5 Comparable (Non-GAAP) $ 1,711
$ 1,023 $ 2,287
$ 960 $ 5,199
$ 56 $ (1,231 ) $ 10,005
Europe,
Middle East &
Africa
Latin
America
North
America
Asia
Pacific
Bottling
Investments
Corporate Eliminations
Consolidated
% Change — Reported (GAAP) (4)
(4) 8 8 (20) (20) 27
(6) % Currency Impact (2) (14) 0 4 0 26 — (2) % Change —
Currency Neutral (Non-GAAP) (2) 10 8 4 (20) (46) — (4) %
Acquisitions, Divestitures and Structural Items (6) 0 0 (3) (23)
(6) — (10) % Change — Organic Revenues (Non-GAAP) 5
10 8 7 3
(42) — 6
% Change — Comparable (Non-GAAP) (4) (4) 8 8 (20)
(82) — (6) % Comparable Currency Impact (Non-GAAP) (2) (14) 0 4 0
(43) — (2) % Change — Comparable Currency Neutral (Non-GAAP)
(2) 10 8 4
(20) (38) — (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) (In millions)
Net Operating
Revenues by Segment:
Year Ended December 31,
2016
Europe,
Middle East &
Africa
Latin
America
North
America
Asia
Pacific
Bottling
Investments
Corporate Eliminations
Consolidated
Reported (GAAP) $ 7,278
$ 3,819 $ 10,210 $ 5,294
$ 19,885 $ 132 $ (4,755
) $ 41,863 Items Impacting Comparability:
Asset Impairments/Restructuring — — — — — — — — Productivity &
Reinvestment — — — — — — — — Equity Investees — — — — — — — —
Transaction Gains/Losses — — — — — — — — Other Items —
— (18 ) —
— 9 —
(9 ) Comparable (Non-GAAP) $ 7,278
$ 3,819 $ 10,192
$ 5,294 $ 19,885
$ 141 $ (4,755 ) $ 41,854
Year Ended December
31, 2015
Europe,
Middle East &
Africa
Latin
America
North
America
Asia
Pacific
Bottling
Investments
Corporate Eliminations
Consolidated
Reported (GAAP) $ 7,587 $
4,074 $ 9,840 $ 5,252 $
23,063 $ 166 $ (5,688 )
$ 44,294 Items Impacting Comparability: Asset
Impairments/Restructuring — — — — — — — — Productivity &
Reinvestment — — — — — — — — Equity Investees — — — — — — — —
Transaction Gains/Losses — — — — — — — — Other Items —
— (24 ) —
— (13 ) —
(37 ) Comparable (Non-GAAP) $ 7,587
$ 4,074 $ 9,816
$ 5,252 $ 23,063 $
153 $ (5,688 ) $ 44,257
Europe,
Middle East &
Africa
Latin
America
North
America
Asia
Pacific
Bottling
Investments
Corporate Eliminations
Consolidated
% Change — Reported (GAAP) (4)
(6) 4 1 (14) (21) 16
(5) % Currency Impact (3) (18) 0 1 (1) (26) — (3) % Change —
Currency Neutral (Non-GAAP) (1) 12 4 (1) (13) 6 — (3) %
Acquisitions, Divestitures and Structural Items (4) 0 0 (2) (13) 9
— (6) % Change — Organic Revenues (Non-GAAP) 3
12 4 1 1
(4) — 3
% Change — Comparable (Non-GAAP) (4) (6) 4 1 (14) (8) — (5)
% Comparable Currency Impact (Non-GAAP) (3) (18) 0 1 (1) (14) — (3)
% Change — Comparable Currency Neutral (Non-GAAP) (1)
12 4 (1) (13)
6 — (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)
Core Business
Revenues (Non-GAAP): 1
Three Months Ended
December 31, 2016
Reported (GAAP) Net Operating Revenues $ 9,409
Bottling Investments Net Operating Revenues (4,138 ) Consolidated
Eliminations 905 Intersegment Core Net Operating Revenue
Eliminations (1 ) Core Business Revenues (Non-GAAP) 6,175
Items Impacting Comparability: Asset Impairments/Restructuring —
Productivity & Reinvestment — Equity Investees — Transaction
Gains/Losses — Other Items (34 ) Comparable Core Business
Revenues (Non-GAAP) $ 6,141
Three Months Ended
December 31, 2015
Reported (GAAP) Net Operating Revenues $
10,000 Bottling Investments Net Operating Revenues (5,199 )
Consolidated Eliminations 1,231 Intersegment Core Net Operating
Revenue Eliminations (11 ) Core Business Revenues (Non-GAAP)
6,021 Items Impacting Comparability: Asset
Impairments/Restructuring — Productivity & Reinvestment —
Equity Investees — Transaction Gains/Losses — Other Items 5
Comparable Core Business Revenues (Non-GAAP) $ 6,026
% Change — Reported (GAAP) Net
Operating Revenues (6) % Change — Core Business Revenues
(Non-GAAP) 3 % Core Business Currency Impact (Non-GAAP) (2) %
Change — Currency Neutral Core Business Revenues (Non-GAAP) 5 %
Acquisitions, Divestitures and Structural Items (2) % Change — Core
Business Organic Revenues (Non-GAAP)2 7 %
Change — Comparable Core Business Revenues (Non-GAAP) 2 %
Comparable Core Business Currency Impact (Non-GAAP) (3) % Change —
Comparable Currency Neutral Core Business Revenues (Non-GAAP)
5
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 $1 million and $11 million
during the three months ended December 31, 2016 and
December 31, 2015, respectively.2 Core business organic
revenue (Non-GAAP) growth included 7 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 (Non-GAAP): 1
Year Ended
December 31, 2016
Reported (GAAP) Net Operating Revenues $
41,863 Bottling Investments Net Operating Revenues (19,885 )
Consolidated Eliminations 4,755 Intersegment Core Net Operating
Revenue Eliminations (15 ) Core Business Revenues (Non-GAAP)
26,718 Items Impacting Comparability: Asset
Impairments/Restructuring — Productivity & Reinvestment —
Equity Investees — Transaction Gains/Losses — Other Items (9
) Comparable Core Business Revenues (Non-GAAP) $ 26,709
Year Ended
December 31, 2015
Reported (GAAP) Net Operating Revenues $
44,294 Bottling Investments Net Operating Revenues (23,063 )
Consolidated Eliminations 5,688 Intersegment Core Net Operating
Revenue Eliminations (19 ) Core Business Revenues (Non-GAAP)
26,900 Items Impacting Comparability: Asset
Impairments/Restructuring — Productivity & Reinvestment —
Equity Investees — Transaction Gains/Losses — Other Items
(37 ) Comparable Core Business Revenues (Non-GAAP) $ 26,863
% Change — Reported (GAAP) Net
Operating Revenues (5) % Change — Core Business Revenues
(Non-GAAP) (1) % Core Business Currency Impact (Non-GAAP) (3) %
Change — Currency Neutral Core Business Revenues (Non-GAAP) 3 %
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) (3) % Change —
Comparable Currency Neutral Core Business Revenues (Non-GAAP)
3
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 $15 million and
$19 million during the years ended December 31, 2016 and
December 31, 2015, respectively.2 Core business organic revenue
(Non-GAAP) growth included 4 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 December
31, 2016
Europe,
Middle East &
Africa
Latin
America
North
America
Asia
Pacific
Bottling
Investments
Corporate Consolidated
Reported
(GAAP) $ 779 $ 481 $
600 $ 332 $ (359 )
$ (478 ) $ 1,355 Items Impacting
Comparability: Asset Impairments/Restructuring — — — — 153 — 153
Productivity & Reinvestment 26 — 54 — 22 63 165 Equity
Investees — — — — — — — Transaction Gains/Losses — — — — 246 3 249
Other Items — — (16 )
— (10 ) 83
57 Comparable (Non-GAAP) $ 805
$ 481 $ 638 $ 332
$ 52 $ (329 )
$ 1,979
Three Months Ended December 31,
2015
Europe,
Middle East &
Africa
Latin
America
North
America
Asia
Pacific
Bottling
Investments
Corporate Consolidated
Reported
(GAAP) $ 839 $ 528 $
492 $ 313 $ (115 )
$ (539 ) $ 1,518 Items Impacting
Comparability: Asset Impairments/Restructuring — — — — 88 — 88
Productivity & Reinvestment (12 ) — 37 3 147 193 368 Equity
Investees — — — — — — — Transaction Gains/Losses — — — — 3 18 21
Other Items — — 22
— (34 ) 23
11 Comparable (Non-GAAP) $ 827
$ 528 $ 551 $ 316
$ 89 $ (305 )
$ 2,006
Europe,
Middle East &
Africa
Latin
America
North
America
Asia
Pacific
Bottling
Investments
Corporate Consolidated
% Change —
Reported (GAAP) (7) (9) 22 6
(212) 11 (11) % Currency Impact (2) (23) (1) 1
3 3 (8) % Change — Currency Neutral (Non-GAAP) (5)
14 22 5 (215)
9 (3)
% Change —
Comparable (Non-GAAP) (3) (9) 16 5 (41) (8) (1) % Comparable
Currency Impact (Non-GAAP) (2) (23) (1) 1 1 (7) (8) % Change —
Comparable Currency Neutral (Non-GAAP) (1) 14
16 4 (42)
(1) 7
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:
Year Ended December 31,
2016
Europe,
Middle East &
Africa
Latin
America
North
America
Asia
Pacific
Bottling
Investments
Corporate Consolidated
Reported (GAAP) $
3,676 $ 1,951 $ 2,582 $
2,224 $ (137 ) $ (1,670
) $ 8,626 Items Impacting Comparability: Asset
Impairments/Restructuring — — — — 393 — 393 Productivity &
Reinvestment 32 (2 ) 134 1 82 105 352 Equity Investees — — — — — —
— Transaction Gains/Losses — — — — 424 32 456 Other Items —
76 (47 ) — (130 ) 232 131 Comparable
(Non-GAAP) $ 3,708 $ 2,025 $ 2,669 $
2,225 $ 632 $ (1,301 ) $ 9,958
Year
Ended December 31, 2015
Europe,
Middle East &
Africa
Latin
America
North
America
Asia
Pacific
Bottling
Investments
Corporate Consolidated
Reported
(GAAP) $ 3,875 $ 2,169 $
2,366 $ 2,189 $ 124 $
(1,995 ) $ 8,728 Items Impacting
Comparability: Asset Impairments/Restructuring — — — — 292 — 292
Productivity & Reinvestment (9 ) 7 141 2 304 246 691 Equity
Investees — — — — — — — Transaction Gains/Losses — — — — 3 445 448
Other Items — 33 12
2 (10 ) 177
214 Comparable (Non-GAAP) $ 3,866
$ 2,209 $ 2,519
$ 2,193 $ 713
$ (1,127 ) $ 10,373
Europe,
Middle East &
Africa
Latin
America
North
America
Asia
Pacific
Bottling
Investments
Corporate Consolidated
% Change —
Reported (GAAP) (5) (10) 9 2
— 16 (1) % Currency Impact (3) (27) 0 0 — (2)
(8) % Change — Currency Neutral (Non-GAAP) (2)
17 9 2 — 18
7
% Change — Comparable (Non-GAAP) (4)
(8) 6 2 (11) (15) (4) % Comparable Currency Impact (Non-GAAP) (3)
(26) 0 0 (1) (1) (7) % Change — Comparable Currency Neutral
(Non-GAAP) (1) 18 6
2 (10) (14) 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)
Income (Loss)
Before Income Taxes by Segment:
Three Months Ended December
31, 2016
Europe,
Middle East &
Africa
Latin
America
North
America
Asia
Pacific
Bottling
Investments
Corporate Consolidated
Reported
(GAAP) $ 799 $ 481 $
582 $ 335 $ (1,026 )
$ (656 ) $ 515 Items Impacting
Comparability: Asset Impairments/Restructuring — — — — 153 — 153
Productivity & Reinvestment 26 — 54 — 22 63 165 Equity
Investees — — — — 20 6 26 Transaction Gains/Losses — — 15 — 1,044 3
1,062 Other Items — — (16
) — (9 ) 155
130 Comparable (Non-GAAP) $ 825
$ 481 $ 635
$ 335 $ 204 $ (429
) $ 2,051
Three Months Ended
December 31, 2015
Europe,
Middle East &
Africa
Latin
America
North
America
Asia
Pacific
Bottling
Investments
Corporate Consolidated
Reported
(GAAP) $ 838 $ 515 $
491 $ 317 $ (187 )
$ (436 ) $ 1,538 Items Impacting
Comparability: Asset Impairments/Restructuring — — — — 88 — 88
Productivity & Reinvestment (12 ) — 37 3 147 193 368 Equity
Investees 1 — — — 7 — 8 Transaction Gains/Losses — — — — 183 16 199
Other Items — — 22
— (34 ) (26 )
(38 ) Comparable (Non-GAAP) $ 827
$ 515 $ 550
$ 320 $ 204 $ (253 )
$ 2,163
Europe,
Middle East &
Africa
Latin
America
North
America
Asia
Pacific
Bottling
Investments
Corporate Consolidated
% Change —
Reported (GAAP) (5) (7) 18 6
(447) (50) (67) % Currency Impact (2) (24) (1)
1 6 (32) (17) % Change — Currency Neutral (Non-GAAP) (3)
17 19 4
(453) (18) (49)
% Impact of
Items Impacting Comparability (Non-GAAP) (4) 0 3 1 (449) 19 (61) %
Change — Comparable (Non-GAAP) 0 (7) 15 5 1 (70) (5) % Comparable
Currency Impact (Non-GAAP) (2) (24) (1) 1 1 (41) (11) % Change —
Comparable Currency Neutral (Non-GAAP) 2 17
16 3 0 (29)
6
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:
Year Ended December 31,
2016
Europe,
Middle East &
Africa
Latin
America
North
America
Asia
Pacific
Bottling
Investments
Corporate Consolidated
Reported
(GAAP) $ 3,749 $ 1,966
$ 2,560 $ 2,238 $ (1,923
) $ (454 ) $ 8,136 Items
Impacting Comparability: Asset Impairments/Restructuring — — — —
393 — 393 Productivity & Reinvestment 32 (2 ) 134 1 82 105 352
Equity Investees — — — — 52 9 61 Transaction Gains/Losses — — 32 —
2,879 (1,288 ) 1,623 Other Items — 76
(47 ) — (129 )
344 244 Comparable (Non-GAAP)
$ 3,781 $ 2,040 $
2,679 $ 2,239 $ 1,354
$ (1,284 ) $ 10,809
Year Ended December 31, 2015
Europe,
Middle East &
Africa
Latin
America
North
America
Asia
Pacific
Bottling
Investments
Corporate Consolidated
Reported
(GAAP) $ 3,923 $ 2,164 $
2,356 $ 2,207 $ (427 )
$ (618 ) $ 9,605 Items Impacting
Comparability: Asset Impairments/Restructuring — — — — 292 — 292
Productivity & Reinvestment (9 ) 7 141 2 304 246 691 Equity
Investees 4 — — — 83 — 87 Transaction Gains/Losses — — — — 1,010
(913 ) 97 Other Items — 33
12 2 (10 )
561 598 Comparable (Non-GAAP) $
3,918 $ 2,204 $ 2,509
$ 2,211 $ 1,252
$ (724 ) $ 11,370
Europe,
Middle East &
Africa
Latin
America
North
America
Asia
Pacific
Bottling
Investments
Corporate Consolidated
% Change —
Reported (GAAP) (4) (9) 9 1
(350) 27 (15) % Currency Impact (3) (27) 0 0
(3) (70) (12) % Change — Currency Neutral (Non-GAAP) (2)
18 9 2
(346) 96 (3)
% Impact of
Items Impacting Comparability (Non-GAAP) (1) (2) 2 0 (358) 104 (10)
% Change — Comparable (Non-GAAP) (4) (7) 7 1 8 (77) (5) %
Comparable Currency Impact (Non-GAAP) (3) (26) 0 0 (2) (47) (9) %
Change — Comparable Currency Neutral (Non-GAAP) (1)
19 7 2 11
(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 December 31, 2016
Operating income
Gross profit
Operating expense
leverage1
% Change — Reported (GAAP) (11) (6) (5)
% Change — Currency Neutral (Non-GAAP) (3) (3)
0
% Change — Comparable (Non-GAAP) (1) (7) 5 % Change —
Comparable Currency Neutral (Non-GAAP) 7 (3)
10
Year Ended December 31,
2016 Operating income Gross profit
Operating expense
leverage1
% Change — Reported (GAAP) (1) (5) 4 %
Change — Currency Neutral (Non-GAAP) 7 (1)
9
% Change — Comparable (Non-GAAP) (4) (6) 2 % Change —
Comparable Currency Neutral (Non-GAAP) 3 (2)
5
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
December 31,
2016
Three Months
Ended
December 31,
2015
Basis Point
Growth
(Decline)
Reported (GAAP) 14.40 %
15.19 % (79 ) Items
Impacting Comparability (Non-GAAP) (6.71 )% (4.86 )% Comparable
Operating Margin (Non-GAAP) 21.11 % 20.05 % 106 Comparable Currency
Impact (Non-GAAP) (1.23 )% 0.00 % Comparable Currency Neutral
Operating Margin (Non-GAAP) 22.34 % 20.05 %
229
Year Ended
December 31,
2016
Year Ended
December 31,
2015
Basis Point
Growth
(Decline)
Reported (GAAP) 20.61 % 19.70 %
91 Items Impacting Comparability (Non-GAAP) (3.18 )% (3.74
)% Comparable Operating Margin (Non-GAAP) 23.79 % 23.44 % 35
Comparable Currency Impact (Non-GAAP) (1.04 )% 0.00 % Comparable
Currency Neutral Operating Margin (Non-GAAP) 24.83 %
23.44 % 139
THE COCA-COLA
COMPANY AND SUBSIDIARIES
Reconciliation of
GAAP and Non-GAAP Financial Measures
(UNAUDITED) (In millions)
Purchases and
Issuances of Stock:
Year Ended
December 31, 2016
Year Ended
December 31, 2015
Reported (GAAP) Issuances of Stock $ 1,434 $ 1,245 Purchases
of Stock for Treasury (3,681 ) (3,564 ) Net Change in Stock
Issuance Receivables1 1 1 Net Change in Treasury Stock Payables2
(63 ) 18 Net Share Repurchases (Non-GAAP) $ (2,309 )
$ (2,300 )
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:
Year Ended
December 31, 2016
Year Ended
December 31, 2015
Net Cash Provided by
Operating Activities
Net Cash Provided by
Operating Activities
Reported (GAAP) $ 8,796 $ 10,528
Items Impacting Comparability: Cash Payments for Pension Plan
Contributions 471 — Comparable (Non-GAAP) $ 9,267
$ 10,528 Net Cash
Provided by
Operating Activities
% Change — Reported (GAAP) (16) % Change —
Comparable (Non-GAAP) (12)
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/20170209005618/en/
The Coca-Cola CompanyInvestors and
Analysts:Tim Leveridge, 404-676-7563orMedia:Kent Landers, 404-676-2683
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