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The Company reports its financial results in accordance with generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP performance measures, ratios, and trends used in managing the business, may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods. See the Table below for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three months ended June 30, 2004, and June 30, 2003. 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.
THE COCA-COLA COMPANY AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Measures
Second Quarter
(UNAUDITED)
(In Millions, except per share data and margins)
| | Three Months Ended June 30, 2004 | Three Months Ended June 30, 2003 | | | ||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | Items Impacting Results | | | | |||||||||||||||||||||
| | | Items Impacting Results | | | | | % Change - After Considering Items (Non-GAAP) | |||||||||||||||||||||||||
| | | After Considering Items (Non-GAAP) | | Charges Related to Streamlining Initiatives | After Considering Items (Non-GAAP) | | ||||||||||||||||||||||||||
| | Reported (GAAP) | Tax Settlement at Coca-Cola Femsa | Gain on Issuance of Stock by Equity Investee | Favorable Tax Settlement | Asset Write-downs | Reported (GAAP) | % Change - Reported (GAAP) | |||||||||||||||||||||||||
| Net Operating Revenues | $ | 5,965 | $ | 5,965 | $ | 5,695 | $ | 5,695 | 5 | 5 | ||||||||||||||||||||||
| Cost of goods sold | 2,030 | 2,030 | 2,127 | 2,127 | (5 | ) | (5 | ) | ||||||||||||||||||||||||
| Gross Profit | 3,935 | 3,935 | 3,568 | 3,568 | 10 | 10 | ||||||||||||||||||||||||||
| Selling, general and administrative expenses | 2,044 | 2,044 | 1,896 | 1,896 | 8 | 8 | ||||||||||||||||||||||||||
| Other operating charges | 88 | $ | (88 | ) | — | 70 | $ | (70 | ) | — | — | — | ||||||||||||||||||||
| Operating Income | 1,803 | 88 | 1,891 | 1,602 | 70 | 1,672 | 13 | 13 | ||||||||||||||||||||||||
| Interest income | 32 | 32 | 45 | 45 | (29 | ) | (29 | ) | ||||||||||||||||||||||||
| Interest expense | 47 | 47 | 43 | 43 | 9 | 9 | ||||||||||||||||||||||||||
| Equity income | 221 | $ | (37 | ) | 184 | 190 | 190 | 16 | (3 | ) | ||||||||||||||||||||||
| Other income (loss) — net | (5 | ) | (5 | ) | (44 | ) | (44 | ) | — | — | ||||||||||||||||||||||
| Gain on issuance of stock by equity investee | 49 | $ | (49 | ) | — | — | — | — | — | |||||||||||||||||||||||
| Income Before Income Taxes | 2,053 | (37 | ) | (49 | ) | 88 | 2,055 | 1,750 | 70 | 1,820 | 17 | 13 | ||||||||||||||||||||
| Income taxes | 469 | (13 | ) | (19 | ) | $ | 41 | 30 | 508 | 388 | 27 | 415 | 21 | 22 | ||||||||||||||||||
| Net Income | $ | 1,584 | $ | (24 | ) | $ | (30 | ) | $ | (41 | ) | $ | 58 | $ | 1,547 | $ | 1,362 | $ | 43 | $ | 1,405 | 16 | 10 | |||||||||
| Diluted Net Income Per Share | $ | 0.65 | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | 0.02 | $ | 0.64 | $ | 0.55 | $ | 0.02 | $ | 0.57 | 18 | 12 | |||||||||
| Average Shares Outstanding — Diluted | 2,434 | 2,434 | 2,434 | 2,434 | 2,434 | 2,434 | 2,466 | 2,466 | 2,466 | (1 | ) | (1 | ) | |||||||||||||||||||
| Gross Margin | 66.0 | % | 66.0 | % | 62.7 | % | 62.7 | % | ||||||||||||||||||||||||
| Operating Margin | 30.2 | % | 31.7 | % | 28.1 | % | 29.4 | % | ||||||||||||||||||||||||
| Effective Tax Rate | 22.8 | % | 24.7 | % | 22.2 | % | 22.8 | % | ||||||||||||||||||||||||
Note:Items to consider for comparability include primarily charges, gains, and accounting changes. Charges and accounting changes negatively impacting net income are reflected as increases to reported net income. Gains positively impacting net income are reflected as deductions to reported net income.
* Certain items may not add across due to rounding.
The Company reports its financial results in accordance with generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP performance measures, ratios, and trends used in managing the business, may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods. See the Table below for supplemental financial data and corresponding reconciliations to GAAP financial measures for the six months ended June 30, 2004, and June 30, 2003. 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.
THE COCA-COLA COMPANY AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Measures
June Year-To-Date
(UNAUDITED)
(In Millions, except per share data and margins)
| | Six Months Ended June 30, 2004 | Six Months Ended June 30, 2003 | | | |||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | Items Impacting Results | | | | ||||||||||||||||||||||||
| | | Items Impacting Results | | | | | % Change - After Considering Items (Non-GAAP) | ||||||||||||||||||||||||||||
| | | After Considering Items (Non-GAAP) | | | Charges Related to Streamlining Initiatives | After Considering Items (Non-GAAP) | | ||||||||||||||||||||||||||||
| | Reported (GAAP) | Tax Settlement at Coca-Cola Femsa | Gain on Issuance of Stock by Equity Investee | Favorable Tax Settlement | Asset Write-downs | Reported (GAAP) | Gain on Vitamin Settlement | % Change - Reported (GAAP) | |||||||||||||||||||||||||||
| Net Operating Revenues | $ | 11,043 | $ | 11,043 | $ | 10,197 | $ | 10,197 | 8 | 8 | |||||||||||||||||||||||||
| Cost of goods sold | 3,783 | 3,783 | 3,744 | $ | 52 | 3,796 | 1 | (0 | ) | ||||||||||||||||||||||||||
| Gross Profit | 7,260 | 7,260 | 6,453 | (52 | ) | 6,401 | 13 | 13 | |||||||||||||||||||||||||||
| Selling, general and administrative expenses | 3,918 | 3,918 | 3,546 | 3,546 | 10 | 10 | |||||||||||||||||||||||||||||
| Other operating charges | 88 | $ | (88 | ) | — | 229 | $ | (229 | ) | — | — | — | |||||||||||||||||||||||
| Operating Income | 3,254 | 88 | 3,342 | 2,678 | (52 | ) | 229 | 2,855 | 22 | 17 | |||||||||||||||||||||||||
| Interest income | 67 | 67 | 101 | 101 | (34 | ) | (34 | ) | |||||||||||||||||||||||||||
| Interest expense | 91 | 91 | 88 | 88 | 3 | 3 | |||||||||||||||||||||||||||||
| Equity income | 316 | $ | (37 | ) | 279 | 239 | 239 | 32 | 17 | ||||||||||||||||||||||||||
| Other income (loss) — net | (30 | ) | (30 | ) | (57 | ) | (57 | ) | — | — | |||||||||||||||||||||||||
| Gain on issuance of stock by equity investee | 49 | $ | (49 | ) | — | — | — | — | |||||||||||||||||||||||||||
| Income Before Income Taxes | 3,565 | (37 | ) | (49 | ) | 88 | 3,567 | 2,873 | (52 | ) | 229 | 3,050 | 24 | 17 | |||||||||||||||||||||
| Income taxes | 854 | (13 | ) | (19 | ) | $ | 41 | 30 | 893 | 676 | (18 | ) | 83 | 741 | 26 | 21 | |||||||||||||||||||
| Net Income | $ | 2,711 | $ | (24 | ) | $ | (30 | ) | $ | (41 | ) | $ | 58 | $ | 2,674 | $ | 2,197 | $ | (34 | ) | $ | 146 | $ | 2,309 | 23 | 16 | |||||||||
| Diluted Net Income Per Share | $ | 1.11 | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | 0.02 | $ | 1.10 | $ | 0.89 | $ | (0.01 | ) | $ | 0.06 | $ | 0.94 | 25 | 17 | |||||||||
| Average Shares Outstanding — Diluted | 2,439 | 2,439 | 2,439 | 2,439 | 2,439 | 2,439 | 2,469 | 2,469 | 2,469 | 2,469 | (1 | ) | (1 | ) | |||||||||||||||||||||
| Gross Margin | 65.7 | % | 65.7 | % | 63.3 | % | 62.8 | % | |||||||||||||||||||||||||||
| Operating Margin | 29.5 | % | 30.3 | % | 26.3 | % | 28.0 | % | |||||||||||||||||||||||||||
| Effective Tax Rate | 24.0 | % | 30.3 | % | 23.5 | % | 24.3 | % | |||||||||||||||||||||||||||
Note:Items to consider for comparability include primarily charges, gains, and accounting changes. Charges and accounting changes negatively impacting net income are reflected as increases to reported net income. Gains positively impacting net income are reflected as deductions to reported net income.
* Certain items may not add across due to rounding.
The Company reports its financial results in accordance with generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP performance measures, ratios and trends used in managing the business, may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP measures can provide meaningful reflection of underlying trends of the business. See the tables below for supplemental financial data and corresponding reconciliations to GAAP financial measures for the six months ended June 30, 2004 and June 30, 2003. 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.
THE COCA-COLA COMPANY
RECONCILIATION OF OPERATING INCOME EXCLUDING ASSET WRITE-DOWNS, VITAMIN SETTLEMENT, STREAMLINING INITIATIVES, AND CURRENCY IMPACT
(In millions)
| | June Year-to-date | | ||||||
|---|---|---|---|---|---|---|---|---|
| | 2004 | 2003 | % Change | |||||
| Reported operating income | $ | 3,254 | $ | 2,678 | 22 | |||
| Asset write-downs | 88 | |||||||
| Gain on vitamin settlement | (52 | ) | ||||||
| Charges related to streamlining initiatives | 229 | |||||||
| Operating income excluding asset write-downs, vitamin settlement and streamlining initiatives | $ | 3,342 | $ | 2,855 | 17 | |||
| Positive currency impact | 9 | |||||||
| Operating income excluding asset write-downs, vitamin settlement, streamlining initiatives, and currency impact | 8 | |||||||