10-KPeriod: FY2007

COCA COLA CO Annual Report, Year Ended Dec 31, 2007

Filed February 28, 2008For Securities:KO

Summary

The Coca-Cola Company's 2007 10-K filing reveals a robust year characterized by significant revenue growth, driven largely by strategic acquisitions and expanding global unit case volume. Net operating revenues increased by 20% to $28.9 billion, with international operations continuing to be the primary revenue driver, accounting for 74% of the total. The company successfully integrated several key acquisitions, including glacéau, 18 German bottling operations, Fuze, and Leao Junior, which bolstered its portfolio, particularly in the still beverage and enhanced water categories. Despite a slight dip in North American unit case volume, global unit case volume saw a healthy 6% increase, signaling strong consumer demand worldwide. Profitability was impacted by increased costs of goods sold and selling, general, and administrative expenses, partly due to integration costs and higher commodity prices. However, the company demonstrated strong operational income growth of 15%. Coca-Cola continued its commitment to shareholder returns through a 12% increase in its quarterly dividend and ongoing share repurchases, underscoring a focus on both strategic growth and shareholder value.

Financial Highlights

30 data points
Beta

Revenue

$28.86B

63.9% Gross Margin

Net Income

$5.98B

20.7% Net Margin

EPS (Diluted)

$1.28

Cash & Equivalents

$4.09B

Free Cash Flow

$5.50B

Financial Statements
Beta
Revenue$28.86B
Cost of Revenue$10.41B
Gross Profit$18.45B
SG&A Expenses$10.95B
Operating Income$7.25B
Interest Expense$456.00M
Net Income$5.98B
EPS (Basic)$1.29
EPS (Diluted)$1.28
Shares Outstanding (Basic)4.63B
Shares Outstanding (Diluted)4.66B

Key Highlights

  • 1Net operating revenues grew 20% year-over-year to $28.9 billion, driven by acquisitions and volume growth.
  • 2Global unit case volume increased by 6%, demonstrating broad consumer demand across diverse markets.
  • 3Significant acquisitions in 2007, including glacéau and German bottling operations, expanded the company's portfolio and geographic reach.
  • 4International operations remain the primary revenue source, contributing 74% of total net operating revenues.
  • 5Operational income increased by 15% to $7.3 billion, reflecting strong underlying business performance despite integration costs.
  • 6The company raised its quarterly dividend by 12% and continued its share repurchase program, demonstrating a commitment to shareholder returns.
  • 7Strategic focus on growing still beverages and strengthening the global bottling system were key themes throughout the year.

Frequently Asked Questions

Coca-Cola's revenue growth in 2007 was primarily driven by a 20% increase in net operating revenues, fueled by significant strategic acquisitions (like glacéau and German bottling operations) and a 6% increase in global unit case volume. Structural changes, encompassing acquisitions and consolidations of bottling operations, contributed 8% to revenue growth, while price, product, and geographic mix accounted for a 2% increase. Favorable currency fluctuations also contributed positively to revenue.

Acquisitions played a significant role in the company's 2007 financial performance. Notably, the acquisition of glacéau significantly boosted the North America segment and expanded the company's presence in the enhanced water and still beverage categories. The consolidation of 18 German bottling operations and other acquisitions impacted the Bottling Investments and European Union segments. These acquisitions led to increased revenues and goodwill but also contributed to higher cost of goods sold and SG&A expenses due to integration costs and expanded operations.

The filing highlights several key risks and challenges, including the growing public concern over obesity and its potential impact on demand for sugar-sweetened beverages; water scarcity and quality issues impacting production; increased competition from global and local players; evolving consumer preferences favoring healthier options; and reliance on bottling partners. Additionally, currency fluctuations, unfavorable economic conditions in international markets, and potential legal or regulatory changes are identified as significant risks.

Coca-Cola maintained prudent debt levels, utilizing debt financing to lower its cost of capital. In 2007, debt issuances totaled approximately $10 billion, primarily to finance acquisitions, including the issuance of $1.75 billion in long-term notes. The company also managed its short-term borrowings, including commercial paper, and had significant available lines of credit. Its strong operating cash flows provided ample liquidity to meet financial commitments and fund dividends and share repurchases.