Coca Cola 2003 Annual Report Download - page 27

Measurements
We believe these value drivers, when properly implemented, will result in: (1) maintaining or improving our
gross profit margin; (2) providing additional leverage over time through reduced expenses as a percentage of net
operating revenues; and (3) optimizing our cost of capital. The ultimate measure of our success will be reflected
in the items below.
Results of Operations. Net operating revenues, gross profit, operating income, income before income taxes
and net income per share represent key measurements of these value drivers. In 2003, net operating revenues
totaled approximately $21.0 billion, an 8 percent increase from 2002. Gross profit totaled $13.3 billion in 2003, a
7 percent increase from 2002. Operating income was approximately $5.2 billion, a 4 percent decrease from 2002.
This amount included a charge of $573 million primarily related to streamlining initiatives. Income before
income taxes was approximately $5.5 billion, virtually the same as 2002. Net income per share (basic and diluted)
was $1.77. These measurements will continue to be a key management focus in 2004 and beyond. Refer to
MD&A heading ‘‘Operations Review.’’
Liquidity and Capital Resources. In 2003, our net cash provided by operating activities was approximately
$5.5 billion, a 15 percent increase from 2002. For years 2004 through 2008, we expect our cumulative net cash
provided by operating activities to be in excess of $32 billion. We believe this demonstrates one of our
Company’s strengths—the ability to generate significant cash flows to reinvest in our business. We utilize the
cash in ways that management believes provides the greatest value. Principal uses of our cash flows are:
•Share repurchases. In 2003, share repurchases were approximately $1.5 billion, and we expect 2004 share
repurchases to be at least $2 billion.
•Dividends. In 2003, dividends were approximately $2.2 billion, and we increased dividends in 2004.
•Capital expenditures. These totaled $812 million in 2003, and we expect 2004 capital expenditures to be
less than $1 billion.
Refer to MD&A heading ‘‘Liquidity, Capital Resources and Financial Condition.’’
Opportunities, Challenges and Risks
Operating in more than 200 countries provides unique opportunities for our Company. Challenges and risks
accompany these opportunities. Our Company’s promise, six strategic priorities and the value drivers of our
business provide the foundation for our response to the opportunities, challenges and risks before us.
Looking forward, management has identified certain challenges and risks that demand the attention of the
beverage industry and our Company. Of these, three key challenges and risks are discussed below.
Obesity and Inactive Lifestyles. Increasing consumer and regulatory awareness of the health problems arising
from obesity and inactive lifestyles represents a serious risk. We recognize that obesity is a complex and serious
public health problem. Our commitment to consumers begins with our broad product line, led by Coca-Cola and
a wide selection of diet and light beverages, juices and juice drinks, sports drinks and waters. Our commitment
also includes adhering to the right policies in schools and in the marketplace; supporting programs to encourage
physical activity and to promote nutrition education; and continuously meeting changing consumer needs
through beverage innovation, choice and variety. We are committed to playing an appropriate role in helping to
address this issue in cooperation with governments, educators and consumers through science-based solutions
and programs.
Water Quality and Quantity. Water represents another issue that will increasingly require our Company’s
attention and collaboration with the beverage industry. Water is the main ingredient in every product our
industry offers. It is also a limited resource facing unprecedented challenges from over-exploitation, increasing
pollution and poor management.
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