the coca cola company nyse: ko - pucp -...

Sep 10th, 2012

THE COCA COLA COMPANY

NYSE: KO

Continuing Coverage: Company growth successfully focused in emerging markets

Investment Rating: Market Outperform

Stock Value

2008 2009 2010 2011

Net Income (in millions of USD) 5,807 6,824 11,809 8,572

Average shares outstanding (in millions) 2,315 2,314 2,308 2,284

Net income per share (in USD) 2.51 2.95 5.12 3.75

Valuation (in millions of dollars)

2012 2013 2014 2015 2016 2017 2018 2019 2020

2021

Free cash flow 5,907 6,453 7,134 7,722 8,354 9,034 9,766 10,552 11,399 321,424

NPV USD 235,727

WACC Free risk rate 1.89% Total Liabilities (in millions USD) 48,053

Market prime 6.01% Equity (EQT) 31,921

Country risk premium 0.00% Leveraged Beta 1.56

Shareholder’s return 11.26% Industry Beta 0.73

WACC 5.98%

Company Quick View

Location: Atlanta, United States (Principal)

Industry: Beverages

Description: Production, bottling, distribution and commercialization of non-

alcoholic beverages

Key Products and Services: Coca-Cola, Diet Coke, Fanta and Sprite

Company Web Site: www.thecoca-colacompany.com

Analysts:

Katia Corbacho Alcocer

[email protected]

Natalia Mejia Ninacondor

[email protected]

David Sáenz Pantoja

[email protected]

Katerine Salinas Cabezas

[email protected]

Assessor: Juan O’brien

[email protected]

http://www.thecoca-colacompany.com/

mailto:[email protected]





Reporte Financiero Burkenroad Perú – The Coca Cola Company Abril 11, 2009

2

STOCK PRICE

PERFORMANCE

Figure 1:

5-year Stock Price

Performance

Source: Yahoo Finance

INVESTMENT

SUMMARY

Upon determining the Coca Cola Company’s (hereinafter KO) value, by

using the discounted-cash-flow valuation method, we give KO a Market

Outperform rating with a target price of US$93 (versus average market

price of US$79 for the period between January and June 2012). As a

multinational company, currently is focused in ensuring future growth

especially in emerging markets.

Due to successful performance, KO has been considered as the world's

leading into the industry of non-alcoholic beverage concentrates and

syrups. KO produces more than 230 beverage brands and owes most of

all the world's top five soft drink brands, including Coke, diet Coke,

Fanta, and Sprite.

Up to date Coca-cola continue being a leader in the market of beverages

with 41.9% participation against 28.5% of its nearest competitor (Pepsi).

Talking about branches Coca-cola, is also first with Coke, Diet Coke

with 17% and 9.6% respectively, while Pepsi has a 9.2% of participation.


3

INVESTMENT

THESIS

Investment in Asia

Investment in Latin and

Centro America

KO has a defined strategy mainly focused in developing its investments

in emerging markets. In this sense, KO’s future plans are directed to

increase sales in Asia, market that is considered to be one of the main

growth drivers for KO’s future.

Malaysia

During 2010 KO started a 5-years life investment of about US$302

millions in Malaysia. Up to June 2011, about a third of the total planned

investment amount was already spent setting-up a bottling plant, while

the remaining amount is supposed to be used in sales, marketing and

production innovation in the following five years.

The Indian Republic

Indian market is considered as one of the ten-top markets for KO’s

abroad investments. Therefore, in June 2012, KO announced an increase

of US$3 billions in the India’s previously committed investment (in

addition to the US$2 billion already announced in November 2011), to

be spent over the next eight years in order to expand its business. It is

expected that sales in India keep growing as occurred in the last year

(about 20% in comparison with 2010 results).

China

In August 2011, KO announced a US$5 billion investment in China

starting in year 2012, and for a period of three years. Such investment

mainly will be focused in the construction of new bottling plants,

expansion of existing facilities, development of new drinks, etc.

Brazil

Brazil is the KO’s fourth-largest consumer market in the world.

Therefore, in March 2012, KO announced a planned investment of about

US$ 7.8 billion in Brazil starting 2012 and for the following 4 years.

Such investment is planned to be spent mainly in the development of a

new beverage bottling plant. The Brazilian market became attractive due

to the growth potential in the following years, mainly because Brazil will

host the World Cup and Olympic Games, with expected higher earnings

for KO as one of the main sponsor of both events.

Mexico

As part of KO’s strategy of investment in emerging markets, in march

2012, KO announced its plans to invest more than $1 billion during 2012

as part of a $5 billion, five-year investment plan. In Mexico is located

the Latin America's two largest bottlers of Coca-Cola brand products,

Coca-Cola Femsa SAB and Arca Continental SAB.

VALUATION In order to determine KO’s target price of US$93 per stock share, we

used the discounted-cash-flow valuation method as described below.


4

Valuation method process

We defined as prior consideration, a 10-year period to forecast operating

free cash flows. In parallel we determined a weighted average cost of

capital (WACC) of 5.98%. The WACC determined includes a cost of

debt of 3.28% and a cost of equity of 11.26%. Other assumptions we

included in this valuation were a 1.89% free risk rate, a market premium

of 6.01%, and an industry Beta of 0.73. As a result, we calculated the

KO’s equity value to be approximately $212 billion. This value divided

by the current outstanding shares left us with a share price of $93.

INDUSTRY

ANALYSIS

Industry Drivers

Regulations

Bargaining Power of

Suppliers

Bargaining Power of

Customers

Water is the main ingredient used in the beverage industry (about 90% of

any product composition). Sugar is another principal ingredient in

production of beverages. In this sense, refined sugar is used in countries

as Mexico, and Europe, while in some countries like United States and

Argentina, Coca-cola is sweeten with corn syrup.

Due to the fact that corn syrup is one of the principal ingredients of KO’s

products, therefore any change or variation in the international price of

sugar (consider a commodity) would affect considerably the costs

structure in the manufacture of its products.

According to the California law, known as proposition 65, which

indicate that all products should contain some warnings when the

products are sold, if the products contain any substance that could cause

cancer or birth defects.

There is also a law that determines a tax fee over the selling, marketing

and using of some of the non-refillable beverage containers.

Almost 60% of the production costs of the beverages is represented for

sweeten, bottled and essence. The sugar is a product that is imported and

is bought locally, so the sugar is obtained from mixed sources, and

because sugar is in the stock market its price varies with the international

prices. If the sugar is acquired locally, the suppliers would have a little

bit more bargaining power upon the sell price. In the market there are a

lot of bottling companies, therefore the negotiation power that those

companies could cause is reduced.

The beverage sector has a wide range of customers (bottlers and large

distribution companies) as well as direct consumers (located in different

socioeconomic levels), that's why the customers have a low level of

negotiation. It is important to mention that KO provides both its

customers as well as direct consumers with a wide variety of options that

covers their needs and life style choices.


5

Availability of Substitutes

Competitive Rivalry

The carbonate beverages, have several substitutes that in these last years

were shown in the market, among the principal ones we have the fruits

beverages and instant beverages. Despite the market has pushed the food

and beverages with natural content, these are in general more expensive

than the gas beverages.

The principal competence of KO is Pepsi Co., both companies occupied

almost 71% of the market. Major explanation of the strong rivalry

between Coca and Pepsi, and the difference is basically variety of their

products, as well as the customers’ target each company is focused on.

Source: http://www.beverage-digest.com/pdf/top-10_2012.pdf

COMPANY

DESCRIPTION

History

A hundred and 26 years ago, a 54 year old pharmacist named John Stith

Pemberton, created the famous formula. At the beginning the beverage

was used as a remedy to cure headache and to dissimulate nauseas. Then

Mr. Pemberton’s accountant Frank Robinson named it Coca-cola and he

also was the designer of the logo. Finally Griggs Candler acquired the

company and he was the first president.

In 1895 Candler has built plants in Chicago, Dallas and Los Angeles. In

1894 Joseph A. Biednham was the first to put the beverage in bottles,

four years later Benjamin F. Thomas and Joseph B. Whitehead, secured

the beverage rights for bottled and sell it for 1 dollar.

The company decided to create a distinctive bottle to assure that the

buyers were really acquiring a Coca-cola, then in 1916 began the

manufacture of the famous bottle after a contest proposed for the bottle

companies and the Coca-cola company.

In 1919 the Candler family sold all the company stocks, and in 1928

Coca-cola was introduced to the Olympic games, back then Coca-cola

traveled with the American team to the Amsterdan Olympics.

http://www.beverage-digest.com/pdf/top-10_2012.pdf


6

Products

Key latest development

After 70 years of success, the company decided that it was time to

expand to new flavors, so they created Fanta (developed in 1940 and

introduced in 1950); Sprite (1961), TAB (1963) and Fresca (1966). In

the 90s the long association of the company was Strengthened with the

support of the Olympic games, the world cup of football, rugby world

cup, and the national basket association. New beverages were introduced

to the company, including Powerade, Qoo (fruit beverage for children)

and Dasani. The company also expands itself with acquisitions as Limca

in India Barq's beer and Inca Kola in Perú.

Up to date Coca-cola continue being a lider in the market of beverages

with 41.9% participation against 28.5% of its nearest competitor (Pepsi).

Talking about branches Coca-cola, is also first with Coke, Diet Coke

with 17% and 9.6% respectively, while Pepsi has a 9.2% of participation.

Source: http://www.thecoca-colacompany.com/citizenship/portfolio.html

Product And Marketing Agreement between Dunkin' Brands Group

Inc and KO

As per the “Product and Marketing Agreement” signed in April 2012,

from August 2012 going forward, more than 9,000 Dunkin Donuts and

Baskin Robbins (chains owned by Dunkin’ Brands Group Inc) will

eventually start with exclusive commercialization of KO products (such

as soft drinks, as well as juices, energy drinks, etc). Such agreement also

includes both companies’ brands marketing campaigns.

PEER ANALYSIS

The competence in Coca-cola is centralized in the beverage segment, and

this in particular in the non-alcoholic products is quite competitive. The

competence that the company has is regional and worldwide. Among the

principal companies that compete direct and in an indirect way with

Coca-cola we could mention Pepsico, Dr Pepper, Nestle, etc. Among the

products that compete in these companies we have, gas beverages,

waters, flavor waters, juices, nectars, etc. Bellow is table showing the

principal companies with the principal key finance indicators.

http://www.thecoca-colacompany.com/citizenship/portfolio.html


7

Pepsico Inc.(PEP)

Dr Pepper Snapple

Group Inc.(DPS)

Source: Yahoo finance

Pepsico Inc. is a company created in early 1890. The company produce,

distribute and sell gas and no gas products, sweet and salad appetizers.

Among its principal products besides Pepsi, we can mention Quaker,

Frito Lay, Gatorade and Tropicana, Pepsi is the principal competence of

Coca-cola.

Dr. Pepper was created in 1880. The company does not have bottling

companies, that's why they generally hired the services of independents

bottling companies that work with Coca-cola and Pepsi. The beverage

was first sold in USA, and then they expand to Europe, Asia, Canada,

Mexico, Australia, New Zeland and South America.

MANAGEMENT

PERFORMANCE

AND BACKGROUND

Directory of Coca-cola_______________________________________

President (CEO) Sr. Muhtar Kent

Vice President (CFO) Sr. Gary P. Fayard

Vice President y controller Sra. Kathy N. Waller

Directors Sr. Herbert A. Allen

Sr. Alexis M. Herman

Sr. Ronald W. Allen

Sr. Donald R. Keough

Sr. Howard G. Buffet

Sr. Robert A. Kotick

Sra. Maria Elena Lagomasino

Sr. Peter V. Ueberroth

Sr. Donald F. MacHenry

Sr. Jacob Wallenberg

Sr. Sam Nunn

Sr. James B. Williams

Sr. James D. Robinson III


8

General Managers__________________________________________

Harry L. Anderson Senior vicepresident, global business and

Technologies services.

Ahmet Z. Bozer President of Asia and Africa

Steven A. Cahillane President and CEO of Coca-cola

Refreshments, which is the company

bottling and customer services

Allexander B. Cummings Jr. Executive vicepresident and chief

administrative office

J. Allexander M. Douglas Jr. President of the North America group

Ceree Eberly Senior vicepresident and personal chief

Gary P. Fallard Executive vicepresident and CFO

Irial Finan Executive vicepresident and president of

Bottling and logistic

Bernhard Goepelt Senior vicepresident, general counselor

And legal chief counselor

Glenn G. Jordan President of the pacific group

Geoffrey J. Kelly General counselor

Muhtar Kent President of the general board of directors

and CEO

Dominique Reiniche President of the Europe group

José Octavio Reyes President of the Latino América group

Joseph V. Tripodi Executive vicepresident and marketing

chief

Clyde C. Tuggle Senior vicepresident and public relations

Jerry S. Wilson Senior vicepresident and customer chief

Guy Wollaert Senior vicepresident and technical office

chief

SHAREHOLDER

ANALYSIS

As of December 31, 2011, about 32% of KO’s outstanding shares were

owned by a total of 40 major institutional and mutual fund owners.

Individual investors, minor insurance companies, and minor pension

funds held the remaining 68% of shares. Such distribution is summarized

in the following chart:


9

Source: Yahoo Finance

RISK ANALYSIS

Operational Risks

KO is subject to several internal and external risks, including

operational, regulatory, and financial risks, as discussed below.

Dependence on Bottling Partners

KO’s core business refers to commercialization of carbonated syrup and

concentrates to independent bottlers. Therefore, one of KO’s main goals

is to ensure that relationships between KO and its major customers are

well maintained, by providing them diverse incentives including not only

good prices, but also competitive marketing support. If such incentives

are not appropriately managed, KO business may suffer negative effects;

because these companies’ business include also production of own

beverages as well as distribution of products from other beverage

companies (KO’s competitors). Such dependence on these bottling

partners is one of KO weakness.

Lack of raw, supply and packaging materials risk

Most of KO’s products, as well as its bottling partners’, use various

ingredients, such as sucrose, aspartame, fruit concentrates, etc, as well as

PET for bottles and aluminum for cans. KO’s main risk would be related

to variation of prices for such materials, which depends on market


10

Financial Risks

conditions. Such increases may not always be recovered by increasing

prices of finished products, mainly because

Liquidity risk

Per definition, the current ratio and the quick ratio indicate companies’

liquidity level. In this sense, current ratio evaluates companies’ ability to

pay in a timely manner the integrity of their short-term liabilities; in the

other hand, quick ratio measures the portion of liquid assets that can be

used by companies to pay all their short-term liabilities. As shown in the

chart below, KO’s current ratio for the first 2012 quarter is greater that

the ratio shown by its peer, but pretty similar to the industry average

ratio. Liquidity Ratios

Company Current

Ratio Quick Ratio

The Coca Cola Company (KO) 1.1x 0.8x

Dr Pepper Snapple Group Inc (DPS) 0.9x 0.6x

Pepsico Inc (PEP) 1.0x 0.6x

Source: Bloomberg

Currency fluctuation risk Due to latest strong fluctuation of the U.S. Dollars (USD), and because

KO is a Company based in United States, the lost and recovery of USD

value directly influences in the determination of its earnings. The reason

why USD fluctuation affects KO’s financial performance mainly refers

to the fact that about 75% of the total KO’s operating income proceeds

from foreign operations. Therefore, as the USD strength increases, it

influences in the weakness of foreign currencies, and also affects

earnings proceeding from good sold in foreign markets, because the

worth of such goods decreases in the same proportion than the USD

becomes stronger.

Financial Instruments exposure risks

In order to cover from previous Currency Fluctuation Risk, KO hedges

most of the exposure to foreign currencies, in order to avoid negative

effects in earning from their fluctuations. In this sense, because of

remain weaknesses of some of the principal financial institutions, as a

result of the previous financial crisis, KO’s future financial instruments

transactions may be affected, mainly due to the uncertainty of such

institutions solvency.

Interest rate risk

One of KO’s financial policies refers to maintain a high level of

financing debt, based on the fact that it would decrease KO’s cost of


11

capital, and therefore positively affect to the shareholder’s equity return.

Due to this, KO is exposed to positive changes of Interest Rates, which is

often covered by financial instruments, however they would not ensure

to KO’s the fully coverage of such interest rate risk. In addition, KO

financial risk management also can be affected by the credit rating

agency’s evaluation, which is expected by KO management to remain

positive as in the latest years.

FINANCIAL

PERFORMANCE

AND

PROJECTIONS

Operational Assumptions

In the process of analyzing KO, we made several assumptions based on

public information about the Company’s future operational, investing,

and financing decisions. These assumptions led us to a target price of

US$93.

One of the main assumptions necessary to determine KO’s cash flow is

the estimated growth for annual revenues, which was obtained from

Yahoo Finance, as shown in the following chart:

Source: Yahoo Finance (http://finance.yahoo.com/q/ae?s=KO+Analyst+Estimates)

Such growth estimations are aligned to KO’s current future plan

denominated “2020 Vision”, which main objective is to reach revenues

of US$200 billion by the end of year 2020 for both worldwide KO

companies as well as bottling partners (meaning the double of 2010

revenues).

In order to determine estimated growth rate for cost of goods sold, as

well as for selling, general and administrative expenses, we determined

the average over historical information of the previous 4 years to project

KO’s operating expenses. In this regard, we expect that such growth rate

will remain the same for the next 10 year period.

Investing Assumptions

In order to determine the annual Capex for KO’s cash flow, we identified

the following ratio:

The proportion of Capex over Revenues during last 5 years was stable,

therefore in order to determine annual Capex for the 10 year-period cash

flow (from 2012 to 2021) we used the 2011 result of 15.94.

December 31, 2007 2008 2009 2010 2011

Capital Expenditures (Capex) 1,648 1,968 1,993 2,215 2,920

Property, plant and equipment - net 8,493 8,326 9,561 14,727 14,939

Property, plant and equipment - gross 9,656 9,554 10,797 16,170 16,893

Net Operating Revenues (NOR) 28,857 31,944 30,990 35,119 46,542

NOR / Capex 17.51 16.23 15.55 15.86 15.94

http://finance.yahoo.com/q/ae?s=KO+Analyst+Estimates


12

Financial Performance

Profitability

KO's gross profit margin for fiscal year 2011 decreased to 60.9% from

63.9% in 2010, mainly explained for the difference between sales’

increase in 2011 versus 2010 of 32.5%, while cost of goods sold

increased in 44.8%, for same periods. Such difference may be explained

for the acquisition of the CCE North American business, mainly due to

the increase of the purchase cost of supplies such PET, metals, etc.

Liquidity

According to the liquidity ratios average obtained in the chart above, KO

showed a weaker liquidity position versus 2010, based on the result of its

quick ratio of 0.92 and 1.02, respectively. Such situation may indicate a

potential lack of ability to cover short-term cash needs, but not in the

case of KO because one of its main strength is the ability of generating

cash, and the consistently accomplishment of its financial commitments.

Efficiency

Inventories balance by the end of 2011 amounted to US$3 billion,

showing a stock increase of 16.7% versus 2010. Also, we observed that

in the last 3 years KO showed a decrease of the “days’ inventory

outstanding ratio” from 85 days in 2010 to 68 days in 2011.

Accounts receivable showed a balance in 2011 of US$4.9 billion, which

in comparison to 2010 decreased in 11.1%. Also, we observed that “daily

sales outstanding ratio” in 2011 was 38.06 days in comparison to 45.41

days in 2010, which indicates KO’s ability to collect cash in waiting.

Accounts payable balance as of 2011 amounted to US$9 billion,

increased in 1.1% versus same balance in 2010. In regards to “days

payable outstanding ratio” we observed that it decreased in 2011 versus

2010 (199 and 283 days, respectively), however despite of this it still

indicates that KO’s credit terms with suppliers are still appropriate and

Liquidity Ratios

2009 2010 2011 Average

Current ratio 1.28 1.17 1.05 1.17

Quick ratio 1.11 1.02 0.92 1.02

Efficiency Ratios 2009 2010 2011 Average

Current Receivables turnover ratio 8.25 7.93 9.46 8.54

Debtors payment period 43.66 45.41 38.06 42.37

Inventory turnover ratio 4.19 4.25 5.26

Days Inventory Outstanding 86.02 84.80 68.45 79.76

Current Payables turnover ratio 1.48 1.27 1.81

Creditors payment period 243.25 283.49 199.44 242.06


13

allow KO to obtain indirect financing.

Debt

KO shows leverage level of 1.51 in 2011, which has been increasing

during last 3 years. This indicates that KO in the last year has been over-

leveraged with debt, which is explained in the strategy followed by KO

of obtaining financial capital by using debt financing, instead of issuance

of stock.

On the other hand, the “long term debt to total asset ratio” has increased

in 2011 in comparison with previous years to 8% from 5.91% in 2010

and 0.29% in 2009, which means that KO’s level of long debt had an

important growth during last year.

Also it is important to mention that as part of KO cash flow strategy is

included the continuous review of the level of short-term and long-term

debt, mainly in order to determine whether or not it is necessary the use

of the short-term Commercial Paper program, or the replacement of

short-term debt to long-term financing.

Sensitivity analysis

We performed the analysis by changing some main assumptions, as

follows:

Stock price

According to the analysis performed and in order to get closer to the

current share price as of end of June 2012 (US$78), KO growth rate from

2022 to perpetuity must decrease to 1%, which seems not possible due to

the growing markets where KO is currently involved.

Debt Ratios

2009 2010 2011 Average

Debt to equity ratio 0.92 1.33 1.51 1.25

Long Term Debt to Total Asset Ratio 0.29% 5.91% 8.00% 4.74%

Sales growth

perpetuity

Share price

92.02

-0.5% 63.06

0.0% 66.92

1.0% 76.95

1.5% 83.65

2.0% 92.02

2.5% 102.81


14

Cost of goods sold

By the end of 2011, the cost of goods sold represents the 36% of total

sales. As per our analysis, such percentage would have to increase up to

37% in order to get closer to the share price as of the end of June 2012.

Such increase is unlikely to occur due to efficient cost control currently

implemented by KO.

WACC

As a result of the cash flow prepared for KO (for a 10 years-period), we

obtained a WACC of 5.98%. Therefore only if the WACC increases up

to 6.5% the KO share price would be closer to the current share price up

to the end of June 2012.

Crossed-drivers sensibility analysis

We also performed a crossed analysis of the main drivers in order to

determine how the NPV is affected as shown in the following chart:

Cost of goods

sold

Share price

92.02

29.0% 125.79

31.0% 114.42

33.0% 103.05

35.0% 91.69

37.0% 80.32

39.0% 68.95

WACC Share price

92.02

5.0% 127.83

5.5% 107.08

6.0% 91.54

6.5% 79.48

7.0% 69.85

7.5% 61.99

NPV Cost of goods sold

Sales growth perpetuity 233,952 29.0% 31.0% 33.0% 35.0% 37.0% 39.0%

0.0% 234,662 215,116 195,570 176,023 156,477 136,931

0.5% 248,539 227,827 207,115 186,403 165,691 144,979

1.0% 265,201 243,089 220,977 198,865 176,754 154,642

1.5% 285,580 261,756 237,932 214,108 190,285 166,461

2.0% 311,077 285,111 259,145 233,179 207,213 181,247

2.5% 343,896 315,173 286,450 257,727 229,004 200,281


15

As a result of the previous analysis, we determined that in order to

stabilize VPN, and in the case that revenues growth would be 0%, the

cost of goods sold should be reduced to 29% over revenues.

Risk analysis

From the performed analysis we determined that the probability of

obtaining a price stock greater than US$93 is 49.57%. It has been used as

the basis a standard deviation of 38.92.

Reporte Financiero Burkenroad Perú – The Coca Cola Company

16

Table 1

Annual Balance Sheets (in millions of US Dollars)

December 31, 2008 2009 2010 2011

Cash and cash equivalents 4,701 7,021 8,517 12,803

Short-term investements 0 2,130 2,682 1,088

Total Cash, cash equivalents and short-term investments 4,701 9,151 11,199 13,891

Marketable securities 278 62 138 144

Trade accounts receivable, less allow ances of US$83 and US$48,

respectively

3,090 3,758 4,430 4,920

Inventories 2,187 2,354 2,650 3,092

Prepaid expenses and other assets 1,920 2,226 3,162 3,450

Total Current Assets 12,176 17,551 21,579 25,497

Equity method investments 5,316 6,217 6,954 7,233

Other investments, principally bottling companies 463 538 631 1,141

Other assets 1,733 1,976 2,121 3,495

Property, plant and equipment - net 8,326 9,561 14,727 14,939

Trademarks w ith indefinite lives 6,059 6,183 6,356 6,430

Bottler's franchise rights w ith indefinite lives 0 1,953 7,511 7,770

Goodw ill 4,029 4,224 11,665 12,219

Other intangible assets 2,417 468 1,377 1,250

Total Non - Current Assets 28,343 31,120 51,342 54,477

Total Assets 40,519 48,671 72,921 79,974

Accounts payable and accrued expenses 6,205 6,657 8,859 9,009

Loans and notes payable 6,066 6,749 8,100 12,871

Current maturities of long-term debt 465 51 1,276 2,041

Accrued income taxes 252 264 273 362

Total Current Liabilities 12,988 13,721 18,508 24,283

Long-term debt 2,781 5,059 14,041 13,656

Other liabilities 3,011 2,965 4,794 5,420

Deferred income taxes 877 1,580 4,261 4,694

Total Non - Current Liabilities 6,669 9,604 23,096 23,770

Total Liabilities 19,657 23,325 41,604 48,053

Common stock 880 880 880 880

Capital surplus 7,966 8,537 10,057 11,212

Reinvested earnings 38,513 41,537 49,278 53,550

Accumulated other comprehensive income (loss) -2,674 -757 -1,450 -2,703

Treasury stock, at cost -24,213 -25,398 -27,762 -31,304

Equity attributable to shareow ners of the Coca Cola Company 20,472 24,799 31,003 31,635

Equity attributable to noncontrolling interests 390 547 314 286

Total Equity 20,862 25,346 31,317 31,921

Total Liabilities and Equity 40,519 48,671 72,921 79,974


17

Table 2

Annual Income Statements (in millions of US Dollars)

THE COCA COLA COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In millions of USD)

Year Ended December 31, 2008 2009 2010 2011

Net Operating Revenues 31,944 30,990 35,119 46,542

Cost of goods sold 11,374 11,088 12,693 18,216

Gross Profit 20,570 19,902 22,426 28,326

Selling, general and administrative expenses 11,774 11,358 13,158 17,440

Other operating charges 350 313 819 732

Operating Income 8,446 8,231 8,449 10,154

Interest Income 333 249 317 483

Interest Expense 438 355 733 417

Equity income (loss) - net (874) 781 1,025 690

Other income (loss) - net 39 40 5,185 529

Income before income taxes 7,506 8,946 14,243 11,439

Income taxes 1,632 2,040 2,384 2,805

Consolidated net income 5,874 6,906 11,859 8,634

Less: Net income attributable to noncontrolling interests 67 82 50 62

Net income attributable to shareow ners of the Coca Cola Company 5,807 6,824 11,809 8,572


18

Tabla 3

Cash Flow Forecast (in millions of US Dollars)

CASH FLOW FORECAST 2 4 5 6 7 8 9 10

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Net Operating Revenues 48,496.76 52,715.98 56,706.58 60,999.27 65,616.92 70,584.12 75,927.33 81,675.03 87,857.83 94,508.67

Cost of goods sold (16,945.00) (18,419.22) (19,813.55) (21,313.44) (22,926.87) (24,662.43) (26,529.38) (28,537.65) (30,697.95) (33,021.79)

Gross Profit 31,551.76 34,296.76 36,893.03 39,685.83 42,690.05 45,921.68 49,397.96 53,137.38 57,159.88 61,486.88

Selling, general and administrative expenses (18,172.48) (19,753.49) (21,248.82) (22,857.36) (24,587.66) (26,448.95) (28,451.13) (30,604.89) (32,921.68) (35,413.85)

Other operating charges (762.74) (829.10) (891.87) (959.38) (1,032.01) (1,110.13) (1,194.16) (1,284.56) (1,381.80) (1,486.41)

EBITDA 12,616.54 13,714.17 14,752.34 15,869.09 17,070.38 18,362.61 19,752.66 21,247.93 22,856.40 24,586.63

Depreciation (1,798.16) (2,128.90) (2,484.67) (2,867.37) (3,279.05) (3,721.89) (4,198.25) (4,710.67) (5,261.88) (5,854.82)

EBIT 10,818.37 11,585.28 12,267.67 13,001.72 13,791.33 14,640.72 15,554.41 16,537.26 17,594.52 18,731.81

Taxes (2,650.50) (2,838.39) (3,005.58) (3,185.42) (3,378.88) (3,586.98) (3,810.83) (4,051.63) (4,310.66) (4,589.29)

Depreciation 1,798.16 2,128.90 2,484.67 2,867.37 3,279.05 3,721.89 4,198.25 4,710.67 5,261.88 5,854.82

NOPAT 9,966.03 10,875.78 11,746.76 12,683.67 13,691.50 14,775.63 15,941.83 17,196.30 18,545.74 19,997.34

CAPEX (3,042.64) (3,307.35) (3,557.72) (3,827.04) (4,116.74) (4,428.38) (4,763.61) (5,124.21) (5,512.12) (5,929.38)

Working capital investment (1,016.15) (1,115.53) (1,055.08) (1,134.95) (1,220.87) (1,313.29) (1,412.70) (1,519.65) (1,634.68) (1,758.43)

Perpetuity 309,114.54

FCF 5,907.24 6,452.91 7,133.96 7,721.68 8,353.89 9,033.96 9,765.52 10,552.45 11,398.95 321,424.07

WACC 5.98%

NPV 235,727

LT Liabilities (in millions US$) 23,770

Equity value (in millions US$) 211,957

Shares outstanding (in millions) 2,284

Stock value (in US$) 93


19

Table 4

Balance Sheet Forecast (in million of US Dollars)


CONSOLIDATED BALANCE SHEET (FORECAST)


December 31, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Cash and cash equivalents 14,753 16,037 17,251 18,557 19,961 21,473 23,098 24,847 26,727 28,751

Short-term investements

Total Cash, cash equivalents & ST investments 14,753 16,037 17,251 18,557 19,961 21,473 23,098 24,847 26,727 28,751

Marketable securities

Trade accounts receivable 5,708 6,205 6,675 7,180 7,724 8,308 8,937 9,614 10,341 11,124

Inventories 3,754 4,081 4,390 4,722 5,079 5,464 5,877 6,322 6,801 7,316

Prepaid expenses and other assets

Total Current Assets 24,216 26,323 28,315 30,459 32,764 35,245 37,913 40,783 43,870 47,191

Equity method investments 6,430 6,430 6,430 6,430 6,430 6,430 6,430 6,430 6,430 6,430

Other assets 2,331 2,331 2,331 2,331 2,331 2,331 2,331 2,331 2,331 2,331

Property, plant and equipment - net 16,183 17,362 18,435 19,395 20,232 20,939 21,504 21,918 22,168 22,243

Trademarks w ith indefinite lives 6,257 6,257 6,257 6,257 6,257 6,257 6,257 6,257 6,257 6,257

Bottler's franchise rights w ith indefinite lives 4,309 4,309 4,309 4,309 4,309 4,309 4,309 4,309 4,309 4,309

Goodw ill 8,034 8,034 8,034 8,034 8,034 8,034 8,034 8,034 8,034 8,034

Other intangible assets 1,378 1,378 1,378 1,378 1,378 1,378 1,378 1,378 1,378 1,378

Total Non - Current Assets 44,922 46,101 47,174 48,134 48,971 49,678 50,243 50,657 50,907 50,982

Total Assets 69,138 72,423 75,489 78,592 81,736 84,922 88,156 91,439 94,777 98,172

Accounts payable and accrued expenses 11,394 12,385 13,322 14,331 15,416 16,583 17,838 19,188 20,641 22,203

Loans and notes payable 12,871 10,963 9,889 4,475 - - - - -

Current maturities of long-term debt 2,041 2,041 2,041 2,041 2,041 2,041 2,041 2,041 2,041 -

Accrued income taxes 288 288 288 288 288 288 288 288 288 288

Total Current Liabilities 26,593 25,677 25,540 21,135 17,744 18,911 20,167 21,517 22,970 22,491

Long-term debt 13,656 12,103 10,549 9,011 7,473 5,935 4,397 2,859 1,321 -

Other liabilities 4,048 4,048 4,048 4,048 4,048 4,048 4,048 4,048 4,048 4,048

Deferred income taxes 2,853 2,853 2,853 2,853 2,853 2,853 2,853 2,853 2,853 2,853

Total Non - Current Liabilities 20,557 19,003 17,450 15,912 14,374 12,836 11,298 9,760 8,222 6,901

Total Liabilities 47,150 44,680 42,990 37,046 32,118 31,747 31,464 31,277 31,191 29,392

Common stock 880 880 880 880 880 880 880 880 880 880

Capital surplus 11,212 11,212 11,212 11,212 11,212 11,212 11,212 11,212 11,212 11,212

Reinvested earnings 43,519 49,275 54,030 63,077 71,148 74,706 78,222 81,693 85,116 90,311

Accum. other comprehensive income (loss) (2,703) (2,703) (2,703) (2,703) (2,703) (2,703) (2,703) (2,703) (2,703) (2,703)

Treasury stock, at cost (31,304) (31,304) (31,304) (31,304) (31,304) (31,304) (31,304) (31,304) (31,304) (31,304)

Equity attributable to shareow ners 21,604 27,360 32,115 41,162 49,233 52,791 56,307 59,778 63,201 68,396

Equity attributable to noncontrolling interests 384 384 384 384 384 384 384 384 384 384

Total Equity 21,988 27,744 32,499 41,546 49,618 53,175 56,692 60,163 63,586 68,781

Total Liabilities and Equity 69,138 72,423 75,489 78,592 81,736 84,922 88,156 91,439 94,777 98,172


20

Tabla 5

Income Statement Forecast (in million of US Dollars)


CONSOLIDATED INCOME STATEMENT (FORECAST)


Year Ended December 31, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Net Operating Revenues 48,497 52,716 56,707 60,999 65,617 70,584 75,927 81,675 87,858 94,509

Cost of goods sold 18,743 20,548 22,298 24,181 26,206 28,384 30,728 33,248 35,960 38,877

Gross Profit 29,754 32,168 34,408 36,818 39,411 42,200 45,200 48,427 51,898 55,632

Selling, general and administrative expenses 18,172 19,753 21,249 22,857 24,588 26,449 28,451 30,605 32,922 35,414

Other operating charges 763 829 892 959 1,032 1,110 1,194 1,285 1,382 1,486

Operating Income 10,818 11,585 12,268 13,002 13,791 14,641 15,554 16,537 17,595 18,732

Interest Income 459 499 537 577 621 668 719 773 832 895

Interest Expense 667 725 780 839 902 971 1,044 1,123 1,208 1,299

Equity income (loss) - net 1,119 1,216 1,308 1,407 1,514 1,628 1,752 1,884 2,027 2,180

Other income (loss) - net 551 599 645 693 746 802 863 928 999 1,074

Income before income taxes 12,281 13,175 13,978 14,841 15,770 16,769 17,844 19,000 20,244 21,582

Income taxes 3,009 3,228 3,425 3,636 3,864 4,108 4,372 4,655 4,960 5,287

Consolidated net income 9,272 9,947 10,553 11,205 11,906 12,661 13,472 14,345 15,284 16,294

Less: Net income attributable to noncontrolling

interests

91 99 106 114 123 132 142 153 165 177

Net income attributable to shareow ners of the

Coca Cola Company

9,181 9,848 10,447 11,091 11,783 12,528 13,330 14,192 15,119 16,117

Reporte Financiero Burkenroad Perú Abril 3, 2009

21

the coca cola company nyse: ko - pucp -...

Documents