As the leaders in the soft drink industry pave the way for their followers, they continue to make improvements, struggle through rough times, and innovate ways to stay on the top. The top three companies, The Coca-Cola Company, PepsiCo Inc. , and Cadbury-Schweppes, report their financial standing each year along with their explanations for their current standing. These annual reports filed on form 10-K (domestic businesses) or 20-F (foreign business) provide shareowners of a public company with information about the company’s performance and prospects following the completion of a fiscal year.
Annual reports are a financial reporting requirement for every public company and an opportunity for management to communicate its views on such issues as business strategy and progress, competitive and economic forces, financial structure and corporate governance, among others. The scope and depth makes the annual report on form 10-K one of the most important communications published by a corporation to its investors. Individual investors, investment advisors, and equities analysts typically read annual reports to help them evaluate whether a company’s shares are an attractive investment.
Each type of investor may seek different data and information within the annual report in order to conduct their analysis and form their opinion. The 10-K or 20-F typically accompanies the annual report to allow for a full view of a company as an investment. In fiscal year 2003, The Coca Cola Company achieved their 49th consecutive year of volume growth; and in 2004, they have increased their dividend for the 42nd year in a row.
They have achieved these new levels of financial and operating performance in a particularly challenging business environment; which shows the dependability of the Coca-Cola system, the enduring appeal of their brands, their marketing and innovation capabilities, and their strong relationship with consumers and stockholders. The Coca-Cola Company defines part of their success by their ability to continually find ways to communicate with the stockholders and focus their resources on the areas of business that offer the highest potential.
The company achieves this communication by sending out continual publications to their stockholders to inform them of the progress of their plans. They provide stockholders with information to assess their progress and their plans more efficiently by answering questions directly, and by providing a business overview that complements their financial statements.
This information can be found in the Annual Report and the 10-K. From 1993 to 1997, Coca-Cola’s “Cash, Cash Equivalents and Marketable Securities” account grew from $1.08 billion to $1. 84 billion. In 1998 the account dipped slightly to $1. 80 billion, but regained growth for the next 5 years closing at $3. 48 billion at the end of this fiscal year. A substantial increase of $1. 1 billion in cash and cash equivalents can be can be accounted for due primarily to increased cash flows from operations. In 2003, the company’s net cash flow from operating activities (as stated on the Statement of Cash Flows) was approximately $5. 5 billion, a 15 percent increase from the previous year.
In the near future (2004-2008), the company expects their cumulative net cash flow from operating activities to be in excess of $32 billion. This balance of cash on hand demonstrates one of the company’s fundamental strengths: the ability to generate significant cash flows to reinvest in the business. The principal uses of the company’s cash flows include share repurchases, dividends, and capital expenditures. When a company reinvests in itself, it is a wise use of cash from the investor’s standpoint.