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By: Corey Leskanic, Mark Dowicz, Gabriella Grippa, DanielleTantillo . Letter to Shareholders. Corey Leskanic (CEO). Major Accomplishments 2012. Introduced 500-plus new products in 2012, including more than 100 low- and no-calorie choices
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By: Corey Leskanic, Mark Dowicz, Gabriella Grippa, DanielleTantillo
Letter to Shareholders Corey Leskanic (CEO)
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
2012 vs. 2011 Revenue 2012 vs. 2011 • decreased $222 million Net income Growth 2012 vs. 2011 • Decreased $72 Million Stock Performance 2012 vs. 2011 • $25.78 Dec. 30, 2011--- $31.73 Dec. 31, 2012 • increase 23%
2013 Growth Opportunities • Emphasize core brands (Coca-Cola, Coca-Cola Light, Diet Coke, Coca-Cola Zero) • Coca-Cola Light 6.5% volume growth (growth in physical volume of sales) • Most popular, big potential growth • Natural Sweeteners (new consumer preference)- stevia w/ Sprite & Vitamin Water • Environment- Bottling
Business Review Mark Dowicz (COO)
Business Review New Products: • Ayataka (Green Tea) • I Lohas (Water) • Partnership with JBF INdustries Ltd. • Zico Coconut Water • Dasani Drops • Odwalla Smoothie Refreshers New Markets:
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
Business Review (continued) Risks: • Lack of popularity of many products • Changing health consciousness attitude • Health issues • Commodity costs are rising
Income Statement Gabriella Grippa (CFO)
Something to keep in mind... • 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
Why did the company's revenue go down? • Customer marketing programs • allowances • coupon programs Result: reduction in net sales ($1.0 billion in 2011 and 2012) • Unfavorable currency exchange rate changes, impact of volume decline, bottle and can net pricing per case growth, challenging operating conditions, ongoing macroeconomic weakness
Cost of Revenue (in millions) • Payments to licensors for marketing programs = reduction in cost of sales • 2012 packaging costs per case grew due to increase cost of key raw materials like sugar.
Gross Margin Percentage & Expenses GDP Operating Expenses
Taxes (in millions) • Increase French excise tax on beverages w/ added sweetener • Tax rate reductions in UK and Sweden • Tax law change in Belgium
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.
Earnings per Share (in millions) • 2012 paid dividends of $187 million • February 2012, increase dividend from $0.13 to $0.16 per share
Return on Investment (in millions) • Became less efficient
Balance Statement Danielle Tantillo (CFO)
Current Asset • Cash increased (net income higher in 2011) • Accounts Receivables (increased) • Inventory- decreased
Long Term Assets • Property, Plant, and Equipment
Long Term Assets(continued) • Franchise License Intangible Assets and Goodwill
Current Liabilities • Accounts Payable and Accrued Expenses
Current Liabilities • Debt
Long Term Liabilities • Long Term Debt
Shareholders Equity • 339,064,025 shares of common stock • Share Repurchases • 65 million shares (no more than $1.5 billion) • 2011: $1,014 million • 2012: $1,831 million
Retained Earnings • Dividends $187 million • Increased net income • Bought back more common stock • 2012: 1,831 • 2011: 1,014
Ratio Interpretations Current Ratio • 2012- current assets were barely larger than current liabilities • assets should be higher than liabilities • should be greater than one= IS NOT • the ratios show that at 1.07 in 2012 • Current debt increased $616 million dollars
Ratio Interpretations Quick Ratio • Ability of current assets (without inventory) to cover the current liabilities. • Shows if coca-cola has the resources necessary to cover its current liabilities • Worse from 2011--> 1.24 to 0.92
Ratio Interpretations Debt to Asset Ratio • Coca-cola's financial risk increased from 33.12% to 36.5% I • Increased debt over their assets • Debt increased by $616 million dollars. Times-Covered Ratio • Decreased from 35.65 to 30.85 • Profits can still keep declining and they will still be able to meet interest charges
Ratio Interpretations Inventory Turnover • Increased from 13.04 to 13.37 from 2011 to 2012 • cost of sales decrease from 2011 to 2012 • Inventory increased from 2011 to 2012. • Took longer to get rid of all the inventory Days Sales Outstanding • Increased from 50.23 in 2011 to 53.29 in 2012 • Take longer to receive what customers owe