Coca-Cola Business Case
1
Coca-Cola Business Case
October, 2015
BUSI-690
Liberty University
Coca-Cola Business Case
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1 Executive Summary
Coca-Cola, founded in 1886, reported a net income of income of over 7 billion
dollars in 2014. It’s namesake and primary brand, Coca-Cola, was first patented for use
as a medication, later Asa Griggs Candler bought out the company and used marketing
techniques which led Coca-Cola to become a leader in the beverage industry
(GetNetWorth). Their closest competition is Nestle, PEPSICO, Inc. and Dr. Pepper
Snapple Group, Inc. Coca-Cola offers over 700 products and can be found all over the
world in many different languages. Despite this breadth and level of profit the firm is
constantly challenged by its competitors and must react to their efforts and to changes in
market forces. Profits have decline each of the last three years, and increased concerns
about the health effects of sugary drinks and large portion sizes are becoming
increasingly problematic.
This business case has been assembled to evaluate the position of Coca-Cola in
the beverage market and to evaluate what, if anything, can be done to return the business
to growth and increase profitability. This assessment begins with a review of the existing
mission and strategy of the Coca-Cola Company. It then contrasts that with alternatives
that could restore growth. SWOT analysis and similar tools are applied to the firm to help
identify alternative strategies. Do-nothing and alternative strategies are presented and
used to generate pro-forma statements that can then be analyzed using net present value
to determine whether changes and investments represent good uses of firm capital. Lastly,
this analysis is summarized and a recommended strategy and model suggested.
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2 Existing Mission, Strategy, and Objectives
Coca-Cola is a world leader in the beverage industry. As the beverage industry
changes, Coca-Cola looks ahead to understand the trends and forecasts industry behavior
to stay on top. Their vision is about individuals within the U.S. and around the world.
Inspiring people to be the best at who they are and what they can be. Coca-Cola feels
their responsibility is to the planet and to be a responsible business that helps to build and
sustain communities. As with all corporations, they want to maintain long term profits
while being a highly effective productive organization. Coca-Cola concentrates on the
needs or desires of their customers and shareholders. Coca-Cola believes diversity and
partnership is the key to encourage a positive change in the world and to inspire passion,
optimism and creativity.
Coca-Cola, founded in 1886, has a net income of income of over 7 billion dollars
in 2014. Their closest competition is Nestle, PEPSICO, Inc. and Dr. Pepper Snapple
Group, Inc. Coca-Cola offers over 700 products and can be found all over the world in
many different languages. One is able to connect with the organization through all social
media stream to provide feedback and encourage innovation. This corporation has diverse
group of products and in 2013 joined forces with FEMSA Comercio, a leader in Latin
America.
3 Alternative Mission Statement
The following assessment breaks down the different components of an alternative
mission statement for Coca-Cola following the development of this strategy.
Customers: The new mission statement should build a deeper relationship with
their customers who are loyal to the brand, which will not only include large international
Coca-Cola Business Case
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chins of retailers, restaurants and small independent business but also customer’s that
purchase the products.
Major Products: Coke’s major products are carbonated soft drinks. The new
mission statement will also include new products and focused more on energy drinks,
iced coffee and food.
Markets: Coke will continue to participate in the its current markets with further
expansion into coffee related beverages.
Technology: The new mission statement will include more about innovation and
use of technology and social media, such as on-line reviews, media sharing networks and
e-commerce.
Growth Potential: The new mission’s statement is committed to steady growth
with the new products that are introduced. The new mission statement will include
expanding into other technology such as using it (core companancy move large shipments
of sugar and water to make coffee) (not sure how you want to word this). The new
mission statement will allow coke to look and understand the trends and make a profit
from them.
Corporate Self Concept: The new business philosophy of Coca-Cola will include
collaboration with management and employees to get the job done. This collaboration
will stress accountability, which will make employees and management responsible to
each other and ultimately to society. It will also include component about the passion of
employees, as this influence performance on the job and the employees morale.
Diversity is an important component when hiring the most talented and diverse
employees. All of these components will come together to help deliver a quality product.
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Desired Public Perception: The advantage the Coca-Cola has is brand recognition
in the US; however, brand recognition in China and Turkey is not as known (Coca-Cola).
The new mission statement will introduce the new quality products that make coke the
consumer all around brand. The public image of coke is pleaded by the high calorie high
fructose beverage that causes obesity. The new mission statement will changed that
perception that the public have of Coca-Cola by replacing high fructose corn syrup in its
products with a more natural sugar, such as stevia..
4 Existing Business Model Analysis
Coca- Cola’s current business model of focusing on producing and distributing
carbonated beverages through its large network is not cost effective because prices for
carbonated beverages are culturally bound to be within a specific price range, making
profits subject to shifts in the price of commodities (ingredients).
Coca- Cola has always been committed to growth; however the firm has
experience decreases in revenue and profits for the last three years. This reflects and
overall volatility related to the cost of doing business. For example, in 2007 there was a
17.73% increase and in 2008 there was a 2.99% decrease in profits. In 2010, the firm had
a huge increase of 73.05% profit followed by a 37.76% decrease in 2011; (Williams,
2012). This is mainly because of increases in raw material cost.
Diversification of its products across more than carbonated and sugary beverages
is a move that could stabilize profits; shifting the reliance among different commodities
could help alleviate some of the volatility to which Coca-Cola’s profits are subject.
Currently, Coca-Cola’s customer relationships lag behind its competitors and have
little interaction with their customers. While this is being addressed through attempts to
Coca-Cola Business Case
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expand their presence in social media outlets, changes have not yet borne significant
fruit.
5 Strengths, Weakness, Opportunities, and Threats Analysis
A Strength, Weakness, Opportunities and Threats (SWOT) analysis is an
evaluation of a corporation. It gives the investor a current state of health in regards to the
financial status of a company. A SWOT analysis will assist management in making a
strategic change or plan. Coca-Cola’s revenue is over $50B a year with an earned profit
of around $9.5B. Looking at the strengths and weakness of the company one can see that
beverages sales of soda are falling due to health concerns. A weakness of Coca-Cola is
diversification. Consumer preferences are changing and people are developing a healthier
lifestyle therefore, Coca-Cola should be trying to increase their market by getting into the
health beverage and coffee market shares. This would create an ideal opportunity for
Coca-Cola. It is estimated that 2B servings of coke are consumed each day which tells
the investor that Coca-Cola has capitalized on their brand recognition. An increase of
marketing promotions into the international market would reach more customers and
diversify their earnings. Coca-Cola needs to invest into water efforts by using purified
reclaimed water. Water is becoming a scarcity and the regulations in some countries may
change to limit the allowable water to make soda. If this change happens continued
decreases in revenue will be followed by greater decreases in profit.
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Coca-Cola’s popularity is a huge strength but advertising cost increase when
trying to sale in developing countries. The brand is easily recognized and has a lot of
partnerships with other companies to allow for financial backing to compete
internationally. Legal issues are a concern in the international trade market as well as the
lack of water resources. However, many successful businesses have overcome these
obstacles and with Coca-Cola’s loyal customers they can do the same. Coca-Cola’s
commitment to remain the best-selling beverage in the world is backed by their social
values and commitment to developing communities not just a company
6 BCG Matrix
The carbonated beverage sector represents the greatest component of Coca-Cola’s
revenues. A specific break-down of the different components of this business were not
readily identified through analysis of the balance statements, however apparently in an
effort to diversify and minimize risk Coca-Coal does have some non-controlling interests
in other firms or corporations. A BCG analysis was performed on Coca-Cola’s controlled
and uncontrolled component, however as the figure in Exhibit 5 shows the non-controlled
components represent a minor component of the overall firm profits.
Coca-Cola Business Case
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While the main competitor for Coca-Cola in this case study if the Pepsi corporation,
other beverage markets and makers could potentially yield significant areas for growth.
The option to diversify into coffee and energy drink businesses will be discussed further
in Sections 13 and 14.
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7 Competition Index and Analysis
Direct competitor comparison:
Coca-Cola Business Case
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Coca-Cola’ closest competitor is PEPSICO. Completing a financial comparison
one can see that PEPSICO produces more trailing twelve month (TTM) revenue than
Coca-Cola, however their net income is lower. In comparison, the only company that
achieved revenue growth this past twelve months was Dr. Pepper Snapple Group, Inc.
Comparing their growth to the overall industry growth at .14% was still a poor
achievement. The overall net value of Coca-Cola according to Get Net Worth is $158.8
billion dollars.
To maintain a competitive edge over the competition, it is very important for
Coca-Cola to continue to achieve success by reviewing their strategic alternatives and the
industry demand. Over the past several years Coca-Cola’s image, and along with it,
revenues, has declined. Industry demands and key drivers in the United States and
overseas markets have made Coca-Cola take a different look at their mission statement
and strategies. Due to health concerns many consumers are drinking less soft drink
beverages and more water and ‘Ready-to-Drink” coffee or tea. This trend is causing a
decline in Europe and the United States by an overall 3.2% (Trefis, 2013). Consumers
and market trends are shifting towards a drink with less sugar content however, this trend
is quickly demanding a decline in artificial sweeteners because it is causing weight gain
and sugar cravings. (Trefis, 2013).
Coca-Cola Business Case
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8 Historical Financial Statements
Historical financial statements for the Coca-Cola Co. can be found in Exhibit 6 of
this document. Data has been copied from SEC filings from 2014 and 2013 to generate
these tables. Historical data was used to generate Pro-Forma projections using a linear
regression of the last three years and are included (green highlights) in this section.
9 Ratios and Financial Condition Analysis
To maintain a competitive edge over the competition, it is very important for
Coca-Cola to continue to achieve success by reviewing their strategic alternatives and the
industry demand. Over the past several years Coca-Cola’s image has declined. Industry
demands and key drivers in the United States and overseas markets have made Coca-Cola
take a different look at their mission statement and strategies. Due to health concerns
many consumers are drinking less soft drink beverages and more water and ‘Ready-to-
Drink” coffee or tea. This trend is causing a decline in Europe and the United States by
an overall 3.2% (Trefis, 2013). Consumers and market trends are shifting towards a drink
with less sugar content however, this trend is quickly demanding a decline in artificial
sweeteners because it is causing weight gain and sugar cravings. (Trefis, 2013).
Coca-Cola noticed this decline and trend in the market and quickly bought 16% of
Green Mountain Coffee Roasters in 2014. Green Mountain Coffee Roasters owns Keurig
which has caused a revolution in the coffee industry. Coca-Cola is also looking into at
home carbonation platforms to diversify their products. The estimated profits could grow
into the billions if their strategy works. Coca-Cola’s performance can be measured by
evaluating the net present value of new subscribers and total overall value of the
company. Net Present Value (NPV) shows how a company’s cash flow exceeds its
Coca-Cola Business Case
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outflow which results in profit. Coca-Cola’s overall is to create cash flow and diversity
their Business Model needs to change.
Coca-Cola’s value of common stock is $51.22 with an estimated return of investment at
8.13% (Stock Analysis, 2015). The past History shows us that potential growth rate is
poor in the soft drink industry so Coca-Cola is streamlining all efforts to water, tea and
coffee to create revenue and maintain their leading status in the marketplace. Revenue is
equal to the number of beverages multiplied by the number of consumers therefore; if we
multiply the number of potential consumers and add them to the current value of the
company using a 2% new consumer growth the present value would be estimated at $
161.97B. Cost of the product can be calculated by compounding the rate of growth of .
03% to the base cost which would bring the total value to approximately $52.75 a share;
subtracting this present value of costs from the present value of revenues the overall
estimated value becomes $172B before tax.
Coca-Cola Business Case
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Coca-Cola 4 Traders
Annual Income
Statement Data
Fiscal Period
December
Actuals in M $
Estimates in M $
2
012
2
013
2
014
2
015
2
016
2
017
Sales
4
8 032
4
6 854
4
6 012
4
4 769
4
5 738
4
6 845
Operating income
(EBITDA)
1
3 232
1
3 237
1
2 930
1
2 428
1
3 056
1
3 737
Operating profit
(EBIT)
1
1 250
1
1 260
1
0 954
-
-
-
Pre-Tax Profit (EBT)
1
1 809
1
1 477
-
-
-
-
Net income
9
019
8
584
7
098
8
755
8
967
9
446
P/E ratio
-
-
-
1
9,9
1
8,9
1
7,5
EPS ( $)
1
,97
1
,90
1
,60
2
,00
2
,11
2
,28
Dividend per Share
( $)
1
,02
1
,12
1
,22
1
,32
1
,43
1
,53
Yield
2
,56%
2
,81%
3
,07%
3
,32%
3
,58%
3
,84%
Coca-Cola 4 Traders
Coca-Cola Business Case
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Coca-Cola 4 Traders
Management stratagy should be to reduce expenses while maximzing
profits. Forecasting sales at slow but steady rate at around 2-3% in the 2015 to 2019
economy is a healthy outlook using Coca-Cola’s diversification into coffee and tea.
Forcasting Coca-Cola’s operating expenses at 1% each year would enable the company to
maximize profit and retain earnings for expansion. Ideally Coca-Cola should grow the
current assests. A business needs to manage their financial borrowing to stabilize
themselves in the current market. Looking ahead, Coca-Cola needs to project long term
financing to gain fixed assests. By managing capital input/output Coca-Cola is able to
meet their obligations and start looking at building value in the market.
Coca-Cola Business Case
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Coca-Cola 4 Traders
According to ycharts 2015, Coca-Cola’s Return on Investment is around 24.34%
and their Return on Equity is 43.80%. Due to the slowing economy and diversification,
analysis shows a slight dip in Coca-Cola’s overall value before a steady climb in market
share and profits. Analysts at Marketwatch recommend purchasing at a slow steady rate
over the next several years as Coca-Cola gains more assets and pays off more debt
(Marketwatch, 2015).
.
10 Alternative Strategies
Differentiation (industry wide) Coca-Cola should incorporate unique service that
offers better and different services than its competitors, such as iced coffee and more
energy drinks. Offering only soft drinks and only owning 16 percent of the energy drink
“Monster” is a weakness for the firm. The firm should also offer coffee and expand on its
Coca-Cola Business Case
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energy drinks; this represents expansion into a growth market and has the potential to be
very productive for the firm.
Coca- Cola’s current strategy is not cost effective because prices for carbonated
beverages are culturally bound to be within a specific price range, making profits subject
to shifts in the price of commodities (ingredients). Another alterative strategy is cost
leadership, the coffee and energy drink is a huge segment. Coffee alone represents a 100
billion dollar worldwide industry and over 80 percent of U.S adults drink coffee (Lipka,
2014) making it the fastest growing niche in the beverage business. Coca-Cola could
leverage its size and expertise in commodity acquisition as well as product distribution
networks to maximize economies of scale in this industry. The core inputs are accessible
and cost effective. Coffee beans are fairly cheap; also coffee would utilize the filtered
water already required for Coca-Cola production and would result in a higher quality
product than that made in many homes (where unfiltered water is generally used). The
firm can introduce these new beverage offerings in restaurants and outlets hat the firm is
already contracted with; such as, McDonalds, Subway, and Burger King.
Coca- Cola only focuses on certain segments of the market, with its core focus of
soft drinks, which leads to lower gains that might be found through a more diversified
strategy. The firm has been in business for over 126 years, however soft drinks are not as
popular as they have been in years past. Therefore, the firm needs to look into expanding
into other markets such as the coffee, energy drinks and snacks.
Coca-Cola should also invest in adjacent business such as owning more of
Monster Beverage Company or perhaps a full aquisition. This will bring several other
Coca-Cola Business Case
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energy drinks with its NOS, Full Throttle, Burn, Mother, BU, Gladiator, Samurai, Nalu,
BPM, Play and Power Play.
11 Pro-Forma Financial Statements
Pro-Forma statements for the Coca-Cola Co for years 2015, 2016, and 2016 have
been performed and included below. Straight-line projections using the Microsoft Excel
FORECAST() function based on the 2012 through 2013 results. An alternative strategy in
which Coca-Cola chooses to liquidate a number of excess capacity bottling plants and
applies that cash towards investment in a coffee expansion are is included in Table 2.
Assumptions for this approach include slight increase in revenue for the first few years
with accelerating growth in revenue and net income as the coffee branding efforts gain
traction and begin to produce positive cash flow for Coca-Cola. Net present values for the
projection years are included in this table, but will be discussed in the next section.
Table 1: Coca-Cola Do-Nothing-Different (DND) Pro-Forma and NPV Data
Table 2: Coca-Cola Alternative Strategy Pro-Forma and NPV Data
Coca-Cola Business Case
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12 Net Present Value Analysis
Net present value (NPV) analysis using a base year of 2014 and discount rate of
three percent was performed on the DND and alternate strategies as shown in the tables
above. In this case cash flow associated with the alternate strategy is significantly greater
than the alternative approach which indicates declining incomes making this a fairly
simple comparison. Also, because the suggested expansion into the coffee business is
assumed to be funded through liquidated bottling franchise cash, there is little up-front
change in assets or liabilities. In summary, the NPV of the DND case is $15,193 (M) and
the NPV of the alternative strategy is $22,088 (M). This great disparity makes the
selection of the alternative strategy the obvious choice.
13 Recommended Strategy
The long-term strategy for Coca-Cola is to liquidate the investment into the
bottling companies. Coca-Cola can invest into product expansion of coffee, energy drinks
and the snack industry. The company will see increases in revenue because of the large
consumer demand that is associated with the coffee alone. The energy drink industry
made over 49 billion in 2012 worldwide. Consumers are buying more energy drinks and
less soft drinks; according to the American Beverage Association In 2017 more
consumers will purchase energy drinks than sodas. This will result in a positive growth
for the firm, which can benefit the brand and improve the image of Coca-Cola.
Because of the large consumer demand, the firm should incorporate coffee and
healthy snacks into the company; there is an abundance of opportunity for offering these
products. The coffee business is a 100 billion dollar worldwide industry, which is a
natural transition for the firm. Coca-Cola has toyed with the idea of adding both coffee
Coca-Cola Business Case
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and snacks, but got beaten out by Pepsi. Coca-Cola’s public image has been tinted
because of the sugary drinks and high fructose corn syrup. The drinks have been linked to
diabetes, obesity and death. Healthy snacks account for 124 billion dollars in the US;
incorporation healthy snacks can be beneficial for Coca-Cola (Valentine, 2013).
This strategy was selected because when a firm offers differentiating products the
company can prosper without having to make significant structural changes that would be
required with a cost-leadership strategy. The quality of the products is an area that Coca-
Cola must focus on, as it transition into the new business model. This we believe will
assist in Coca-Cola's shift into new products. Coca-Cola must strengthen the relationship
between the new product and the consumer; therefore, the quality of the product is
essential to match the brand. The quality must adhere to the standards the consumer has
grown accusation to from Coca-Cola. The health and safety of the product is a suitable
alternative to the sugary soft drinks that exist within their industry today. These added
products will increase in sales, which will offer a higher net income and cash flows. The
growth of the firm is a positive advantage to this strategy. Coca-Cola will gain a
competitive edge on other firms with similar products. The implementation should meet
the 2020 deadline that has been set forth to begin implement the new strategic plan.
Coca-Cola has spent millions of dollars in the bottling process, according to
Rothaermel (2013). Warehouses that houses 40 million cases can cost up to $75,000,000
dollars. However, the company only needs a few of the plants they already have. That
money can be liquidated by the company to make the changes suggested.
Coca-Cola Business Case
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14 Proposed Business Model
The new business model for Coca-Cola is the shift of their current product into a
greater diversity of products for consumers to choose from. Energy drinks, coffee and
healthy snacks are the new direction to meet the qualifications of the company category.
Coca-Cola is the leading beverage company in the industry. The customers segment will
consist of a mass market or the multisegment, which is a well-developed mix for each
segment (Osterwalder & Pigneur, 2010). The value proposition will focus on one large
group of customers that consist on different age groups, ethnic groups, sexes and
lifestyles.
The new products that Coke will introduce will be chosen over the competition
because coffee and healthy snacks industry is a major part of consumer’s diets.
Consumers know the value of Coca-Cola by its offerings of quality product at a lower
price. Creating a healthier snack is essential to the Coca-Cola brand. The new model will
consist of Coca-Cola looking to replace the low cost high fructose corn syrup and
saccharine/NutraSweet with alternative sweeteners such as stevia to produce healthier
beverages and snacks.
Coca-Cola reaches most of their current customer by mass media. Coca-Cola will
reach their new customer segment by raising awareness through introducing the new
products through social media. Not only will this channel work for the consumer, it is
also cost-efficient and easily integrated with most customer routines.
Currently, Coca-Cola’s customer relationships lag behind its competitor and have
little interaction with their customers. The new business model will focus on customer
Coca-Cola Business Case
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acquisition, customer retention and upselling the new products. Coca-Cola will be
dedicated to customer representative to answer questions about the new products and
concerns over them.
It is anticipated that the revenue stream from new products will contribute
billions of overall revenues in the future. The recurring revenues form the ongoing sales
will deliver a value position and provide post –purchase support (Osterwalder & Pigneur,
2010). Coca-Cola will conduct surveys to see what their customer segment is willing to
pay for the new products. The company will see its customers currently pays its
competitor for similar of like products.
Coca-Cola will maintain the strategic alliances between their non-competitors
such as, its suppliers witch provide the system with materials. Coca-Cola will also foster
new alliances with joint ventures in the coffee and snack foods industry. Coca-Cola will
not only keep their alliance with Monster Beverages, in which the firm owns 16 percent
of; but also venture to acquire 50 percent of the Monster Beverage Company.
15 References
Coca-Cola Enterprises : Annual Reports. (2015). Retrieved from
http://ir.cokecce.com/phoenix.zhtml?c=117435&p=irol-reportsannual
Coca-Cola Return on Equity (TTM) (KO). (2015, June). Retrieved from
https://ycharts.com/companies/KO/return_on_equity
Coca-Cola Net Worth · In Businessmen, Companies. (2015). Retrieved October 2, 2015.
David, F., & David, F. (2014). Free Student Excel Template. Retrieved 09 18, 2015, from
The #1 Global Strategic Management Textbook: http://strategyclub.com/free-
student-template/
Coca-Cola Business Case
22
Forbes Welcome. (2015). Retrieved from http://www.forbes.com/companies/coca-
cola
How Is Coca-Cola Responding To The Big Trends In Carbonated Soft Drinks? -- Trefis.
(2013). Retrieved from http://www.trefis.com/stock/ko/articles/160708/how-is-
coca-cola-responding-to-the-big-trends-in-carbonated-soft-drinks/2013-01-04
Lipka, M. (2014, March, 26). Your money: Getting the biggest caffeine buzz for your
buck. Personal Finance, ().Retrieved from
http://www.reuters.com/article/2014/03/26/us-money-coffee-costs-
idUSBREA2P19620140326
Jurevicius, O. (2013). Coca Cola SWOT analysis 2013 | Strategic Management
Insight. Retrieved from http://www.strategicmanagementinsight.com/swot-
analyses/coca-cola-swot-analysis.html
SWOT analysis of Coca cola. (2015). Retrieved from
http://www.marketing91.com/swot-coca-cola
The Coca-Cola Co : Financials, earnings estimates and forecasts for The Coca-Cola Co |
KO | 4-Traders. (2015). Retrieved from http://www.4-traders.com/THE-COCA-
COLA-CO-4819/financials
The Coca-Cola System: The Coca-Cola Company. (n.d.). Retrieved from
http://www.coca-colacompany.com/our-company/the-coca-cola-system
Valentine, K. (2013, May). Coca-Cola continues Anti-obesity PR push Amid
Evidence Linking soda to Health Problems. Think Progress, ().Retrieved from
http://thinkprogress.org/health/2013/05/09/1982501/coca-cola-pr-soda/
Coca-Cola Business Case
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Watrous, M. (2015, February). Coke spills formula for growth | Food Business News.
Retrieved from
http://www.foodbusinessnews.net/articles/news_home/Business_News/2015/02/
Coke_spills_formula_for_growth.aspx?ID=%7BE0405D04-54D8-4E29-BE71-
427028AE5704%7D
Osterwalder, A. & Pigneur, Y. (2010). Business model generation. Hoboken, NJ: John
Wiley & Sons. ISBN: 9780470876411.
Coca-Cola Business Case
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16 Exhibits
Exhibits 1-5 and 7 were generated using an Microsoft Excel template produced by
David & David (2014).
Exhibit 1 SWOT Analysis
Coca-Cola Business Case
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Coca-Cola Business Case
26
Exhibit 2: SWOT Bivariate Analysis
Exhibit 3: External Factor Evaluation (EFE) and Internal Factor Evaluation (IFE)
Matrices [CITATION www14 \l 1033 ]
Coca-Cola Business Case
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Exhibit 4: Competitive Profile Matrix [CITATION www14 \l 1033 ]
High+20
Industry
Sales
Growth
Medium
0
(Percentage)
low
-20
Coca-Cola Business Case
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Exhibit 5: BCG Matrix [CITATION www14 \l 1033 ]
CONSOLIDATED
STATEMENTS
OF
|12
Months
INCOME
(USD
$)
Ended
In
Millions,
except
Per
Share
data,
unless
otherwise
specified
TRUSAITA
|ARESALTS!)
T2IGAITR
NET
OPERATING
REVENUES
$45,998|
$46,854]
$48,017
Cost
of
goods
sold
17,889
18,421]
19,053
GROSS
PROFIT
28,109] 28,433}
28,964
Selling,
general
and
administrative
expenses
17,218
17,310}
17,738
Other
operating
charges
1,183
895
447
OPERATING
INCOME
9,708
10,228]
10,779
Interest
income
594
534
471
Interest
expense
483
463 397
Equity
income
(loss)
-
net
769
602
819
Other
income
(loss)
-
net
-1,263
576 137
INCOME
BEFORE
INCOME
TAXES
9,325
11,477]
11,809
Income
taxes
2,201
2,851
2,723
CONSOLIDATED
NET
INCOME
7,124 8,626 9,086
Less:
Net
income
attributable
to
noncontrolling
interests
26
42
67
NET
INCOME
ATTRIBUTABLE
TO
SHAREOWNERS
OF
THE
COCA-COLA
COMPANY
$7,098
$8,584]
$9,019
BASIC
NET
INCOME
PER
SHARE
(in
dollars
per
share)
a
$1.62 $1.94
$2|}
DILUTED
NET
INCOME
PER
SHARE
(in
dollars
per
share)
ret
$1.60
$1.90}
$1.97}
AVERAGE
SHARES
OUTSTANDING
(in
shares)
4,387 4,434 4,504
Effect
of
dilutive
securities
(in
shares)
63 75
80
AVERAGE
SHARES
OUTSTANDING
ASSUMING
DILUTION
(in
shares)
4,450
4,509
4,584
[1]
Calculated
based
on
net
income
attributable
to
shareowners
of
The
Coca-Cola Business Case
29
Exhibit 6: Coca-Cola Financial Statements
CONSOLIDATED
BALANCE
SHEETS
(USD
$)
12/31/14 12/31/13
12/31/12]
12/31/15
12/31/16]
12/31/17
In
Millions,
unless
otherwise
specified
CURRENT
ASSETS
Cash
and
cash
equivalents
$8,958
$10,414
$8,442}
$9,787}
$10,046]
$10,304
Short-term
investments
9,052 6,707
5,017]
$10,960] $12,983]
$15,001
TOTAL
CASH,
CASH
EQUIVALENTS
AND
SHORT-TERM
INVESTMENTS
18,010 17,121
13,459]
$20,748] $23,029]
$25,305
Marketable
securities
3,665 3,147
3,092}
$3,874] $4,162]
$4,448
Trade
accounts
receivable,
less
allowances
of
$331
and
$61,
respectively
4,466
4,873
4,759|
$4,406]
$4,259]
$4,113
Inventories
3,100 3,277
3,264]
$3,050]
$2,967]
$2,885
Prepaid
expenses
and
other
assets
3,066 2,886
2,781|
$3,196]
$3,339]
$3,481
Assets
held
for
sale
679
0
2,973]
($1,077)| ($2,227)|
($3,374)
TOTAL
CURRENT
ASSETS
32,986
31,304
30,328]
$34,197}
$35,530]
$36,859
EQUITY
METHOD
INVESTMENTS
9,947
10,393
9,216]
$10,583}
$10,950]
$11,315
OTHER
INVESTMENTS
3,678
1,119 1,232
$4,456
$5,682
$6,905
OTHER
ASSETS
4,407
4,661
3,585
$5,040 $5,452
$5,863
PROPERTY,
PLANT
AND
EQUIPMENT
-
net
14,633
14,967
14,476|
$14,849]
$14,928]
$15,006
TRADEMARKS
WITH
INDEFINITE
LIVES
6,533 6,744 6,527
$6,607
$6,610
$6,613
BOTTLERS'
FRANCHISE
RIGHTS
WITH
INDEFINITE
LIVES
6,689
7,415
7,405}
$6,454] $6,095]
$5,737
GOODWILL
12,100 12,312
12,255]
$12,067]
$11,990]
$11,912
OTHER
INTANGIBLE
ASSETS
1,050 1,140
1,150}
$1,013
$963
$913
TOTAL
ASSETS
92,023
90,055
86,174]
$95,266] $98,199]
$101,123
CURRENT
LIABILITIES
Accounts
payable
and
accrued
expenses
9,234
9,577 8,680
$9,718
$9,995]
$10,272
Loans
and
notes
payable
19,130 16,901
16,297|
$20,276]
$21,696]
$23,113
Current
maturities
of
long-term
debt
3,552
1,024
1,577]
$4,026]
$5,016]
$6,004
Accrued
income
taxes
400
309
471 $322
$287 $251
Liabilities
held
for
sale
58
0
796
($453)
($823)}
($1,192)
TOTAL
CURRENT
LIABILITIES
32,374
27,811
27,821|
$33,888] $36,171]
$38,448
LONG-TERM
DEBT
19,063
19,154
14,736]
$21,978] $24,147]
$26,311
OTHER
LIABILITIES
4,389
3,498
5,468
$3,373
$2,832
$2,292
DEFERRED
INCOME
TAXES
5,636
6,152
4,981
$6,245 $6,573
$6,901
THE
COCA-COLA
COMPANY
SHAREOWNERS'
EQUITY
Common
stock,
$0.25
par
value;
Authorized
a€”
11,200
shares;
Issued
a€”
7,040
and
7,040
shares,
respectively
1,760 1,760
1,760]
$1,760} $1,760]
$1,760
Capital
surplus
13,154
12,276
11,379]
$14,045]
$14,935]
$15,822
Reinvested
earnings
63,408
61,660
58,045]
$66,401}
$69,090]
$71,771
Accumulated
other
comprehensive
income
(loss)
-5,777
-3,432
-3,385|
($6,590)|
($7,789)|
($8,985)
Treasury
stock,
at cost
4€”
2,674
and
2,638
shares,
respectively
-42,225
-39,091
-35,009]
($45,991)
|
($49,609)|
($53,217)
EQUITY
ATTRIBUTABLE
TO
Coca-Cola Business Case
30
CONSOLIDATED
STATEMENTS
OF
12
Months
Ended
In
Millions,
unless
otherwise
specified
OPERATING
ACTIVITIES
CONSOLIDATED NET
INCOME
$7,124
Depreciation
and
amortization
$1,976
Stock-based
compensation
expense
$209
Deferred
income
taxes
($40)
Equity
(income)
loss
-
net
of
dividends
($371)
Foreign
currency
adjustments
$415
Significant
(gains)
losses
on
sales
of
assets
-
net
$831
Other
operating
charges
$761
Other
items
$149
Net
change
in
operating
assets
and
liabilities
($439)
Net
cash
provided
by
operating
activities
$10,615
INVESTING
ACTIVITIES
Purchases
of
investments
Proceeds
from
disposals
of
investments
$12,986
Acquisitions
of
businesses,
equity
method
investments
and
nonmarketable
securities
($389)
Proceeds
from
disposals
of
businesses,
equity
method
investments
and
nonmarkatable
securities
$148
Purchases
of
property,
plant
and
equipment
($2,406)
Proceeds
from
disposals
of
property,
plant
and
equipment
$223
Other
investing
activities
($268)
Net
cash
provided
by
(used
in)
investing
activities
($7,506)
FINANCING
ACTIVITIES
Issuances
of
debt
$41,674
$8,626
$1,977
$227
$648
($201)
$168
($670)
$465
$234
($932)
$10,542
$12,791
($353)
$872
($2,550)
$111
($303)
12/31/14
12/31/13 12/31/12
$9,086
$1,982
$259
$632
($426)
($130)
($98)
$166
$254
($1,080)
$10,645
($17,800)
|
($14,782)
|
($14,824)
$7,791
($1,486)
$20
($2,780)
$143
($268)
($4,214)
($11,404)
$43,425 $42,791
Payments
of
debt
($36,962)
|
($38,714)
|
($38,573)
Issuances
of
stock
$1,532
Purchases
of
stock
for
treasury
($4,162)
Dividends
($5,350)
Other
financing
activities
($363)
Net
cash
provided
by
(used
in)
financing
activities
($3,631)
EFFECT
OF
EXCHANGE
RATE
CHANGES
ON
CASH
AND
CASH
EQUIVALENTS
($934)
CASH
AND
CASH
EQUIVALENTS
Net
increase
(decrease)
during the
year
($1,456)
Balance
at
beginning
of
year
$10,414
Balance
at
end
of
year
$8,958
$1,328
($4,832)
($4,969)
S17
($3,745)
($611)
$1,972
$8,442
$10,414
$1,489
($4,559)
($4,595)
$100
($3,347)
($255)
($4,361)
$12,803
$8,442
Coca-Cola Business Case
31
Revenue
(in
millions)
Assets
(in
millions)
PETS
oe
a
|
Revenue
(in
millions)
Net
Income
(in
millions)
Assets
(in
millions)
Liabilities
(in
millions)
SS
Coca-Cola Business Case
32
Exhibit 7: Financial Charts
PCM
Tae
|
Pe
Mri)
Se
Goodwill
+
Intangibles
(in
millions)
Inventory
(in
millions)
Long
Term
Debt
(in
millions)
ee
Coca-Cola Business Case
33
Coca-Cola Business Case
34
