By: Corey Leskanic, Mark Dowicz, Gabriella Grippa, DanielleTantillo
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Transcript of By: Corey Leskanic, Mark Dowicz, Gabriella Grippa, DanielleTantillo
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By: Corey Leskanic, Mark Dowicz, Gabriella Grippa, DanielleTantillo
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Letter to Shareholders
Corey Leskanic (CEO)
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Major Accomplishments 2012
• Introduced 500-plus new products in 2012, including more than 100 low- and no-calorie choices
• Coca-Cola volume grew 3%-nearly 300 million unit cases (comparable to adding another Germany and two Russias)
• In 2012, we announced our new organizational structure of 3 operating businesses: Coca-Cola America, Coca-Cola International, and Bottle Investments Groups
• #1 Beverage company for environment, social, and governance performance by Goldman Sachs
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2012 vs. 2011 Revenue 2012 vs. 2011
• decreased $222 million Net income Growth 2012 vs. 2011
• Decreased $72 MillionStock Performance 2012 vs. 2011
• $25.78 Dec. 30, 2011--- $31.73 Dec. 31, 2012o increase 23%
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2013 Growth Opportunities
• Emphasize core brands (Coca-Cola, Coca-Cola Light, Diet Coke, Coca-Cola Zero)o Coca-Cola Light 6.5% volume growth (growth in
physical volume of sales)o Most popular, big potential growth
• Natural Sweeteners (new consumer preference)- stevia w/ Sprite & Vitamin Water
• Environment- Bottling
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Business Review
Mark Dowicz (COO)
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Business ReviewNew Products:
Ayataka (Green Tea)
I Lohas (Water)
Partnership with JBF INdustries Ltd.
Zico Coconut Water
Dasani Drops
Odwalla Smoothie Refreshers
New Markets:
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Business Review (continued)
Competition• Pepsico, Inc.• Nestle S.A.• Dr. Pepper Snapple Group Inc.
Regulatory or Legal Issues• Workers sue based on discrimination• Discontinue Membership at American
Legislative Exchange Council
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Business Review (continued)
Risks:• Lack of popularity of many products• Changing health consciousness
attitude• Health issues• Commodity costs are rising
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Income Statement
Gabriella Grippa (CFO)
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Something to keep in mind...
• sales of products are seasonal
• 2nd and 3rd quarters account for higher unit sales
• Earn more than 60% of operating income during 2nd and 3rd quarters
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Revenue (in millions)
2011 2012 Percent Decrease
$8,284 $8,062 2.68%
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Why did the company's revenue go down?• Customer marketing programs
o allowanceso coupon programs
Result: reduction in net sales ($1.0 billion in 2011 and 2012)
• Unfavorable currency exchange rate changes, impact of volume decline, bottle and can net pricing per case growth, challenging operating conditions, ongoing macroeconomic weakness
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Cost of Revenue (in millions)
• Payments to licensors for marketing programs = reduction in cost of sales
• 2012 packaging costs per case grew due to increase cost of key raw materials like sugar.
2011 2012 Percent Decrease
$5,254 $5,162 1.75%
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Gross Margin Percentage & Expenses
2011 2012 Percent Decrease
36.6% 35.9% 0.68%
GDP
2011 2012
4.1% 4.1%
Operating Expenses
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Operating Income (in millions)
2011 2012 Percent Decrease
$1,033 $928 10.2%
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Operating Income (continued)
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Taxes (in millions)
• Increase French excise tax on beverages w/ added sweetener
• Tax rate reductions in UK and Sweden
• Tax law change in Belgium
2011 2012 Decrease$196 $160 $3621% 19% 2%
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Net Income (in millions)
• Charges totaling $85 million related to restructuring activities
• Net mark-to-market losses totaling $4 million • Tax benefit of $62 million from tax rate
reductions in UK and Sweden, and tax law change in Belgium.
2011 2012 Percent Decrease
$749 $677 9.6%
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Earnings per Share (in millions)
• 2012 paid dividends of $187 million
• February 2012, increase dividend from $0.13 to $0.16 per share
2011 2012 Percent Decrease
$2.35 $2.30 2.12%
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Return on Investment (in millions)
• Became less efficient
2011 2012 Decrease10.4% 8.8% 1.6%
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Balance Statement
Danielle Tantillo (CFO)
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Balance Sheet (continued)
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Balance Sheet2012 2011 Up/ Down
Current Assets 2,762 2,686 Up
Long Term Assets 6,748 6,408 Up
Current Liabilities 2,579 1,848 Up
Long Term Liabilities
4,238 4,347 Down
Shareholders Equity 2,693 2,899 Down
Retained Earnings 1,126 638 Up
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Current Asset
• Cash increased (net income higher in 2011)• Accounts Receivables (increased)• Inventory- decreased
2012 2011
2,762 2,686
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Long Term Assets
• Property, Plant, and Equipment
2012 2011
6,748 6,408
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Long Term Assets(continued)
• Franchise License Intangible Assets and Goodwill
2012 2011
6,748 6,408
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Current Liabilities
• Accounts Payable and Accrued Expenses
2012 2011
2,579 1,848
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Current Liabilities
• Debt
2012 2011
2,579 1,848
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Long Term Liabilities
• Long Term Debt
2012 2011
4,238 4,347
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Shareholders Equity
• 339,064,025 shares of common stock• Share Repurchases
o 65 million shares (no more than $1.5 billion)o 2011: $1,014 milliono 2012: $1,831 million
2012 2011
2,693 2,899
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Retained Earnings
• Dividends $187 million• Increased net income• Bought back more common stock
o 2012: 1,831 o 2011: 1,014
2012 2011
1,126 638
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Key Ratios
2012 2011 better/ worse
Current Ratio 1.07 1.45 Worse
Quick Ratio .92 1.24 Worse
Debt to Asset Ratio
36.5% 33.12% Worse
Time Covered Ratio
30.85 35.65 Worse
Inventory Turnover 13.37 13.04 Worse
Days Sales Outstanding
53.29 50.23 Worse
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Current Ratio• 2012- current assets were barely larger than
current liabilities o assets should be higher than liabilitieso should be greater than one= IS NOTo the ratios show that at 1.07 in 2012o Current debt increased $616 million dollars
Ratio Interpretations
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Ratio Interpretations Quick Ratio• Ability of current assets (without inventory) to
cover the current liabilities. o Shows if coca-cola has the resources necessary to
cover its current liabilities o Worse from 2011--> 1.24 to 0.92
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Ratio Interpretations Debt to Asset Ratio• Coca-cola's financial risk increased from
33.12% to 36.5% Io Increased debt over their assetso Debt increased by $616 million dollars.
Times-Covered Ratio• Decreased from 35.65 to 30.85
o Profits can still keep declining and they will still be able to meet interest charges
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Ratio Interpretations Inventory Turnover• Increased from 13.04 to 13.37 from 2011 to
2012 o cost of sales decrease from 2011 to 2012o Inventory increased from 2011 to 2012. o Took longer to get rid of all the inventory
Days Sales Outstanding • Increased from 50.23 in 2011 to 53.29 in
2012 o Take longer to receive what customers owe