Coke To Keep Mum on Earnings Estimates

December 13, 2002 ( - The world's largest soft drink maker says it will no longer provide earnings estimates, because they distract the firm - and investors - from a focus on long-term initiatives.

Somewhat ironically, at the same time Coke said nothing has changed in its earnings outlook for 2002 and it remains comfortable with analysts’ profit expectations for the coming year, according to Reuters.

Coke said it will no longer provide any quarterly or annual earnings per share guidance, nor will it update its outlook for full year earnings per share expectations for 2003 as the year progresses.   However, Coke said it will “continue to provide investors with perspective on its value drivers, its strategic initiatives and those factors critical to understanding its business and operating environment

Coke said it had reviewed all of its pension assumptions and has lowered its expected return on plan assets from 8.5% to approximately 7.5%, “reflecting a blend of its U.S. and international programs.”   The company said that the net effect of all pension changes is that earnings will be negatively impacted by approximately a penny/share of additional pension expense in 2003. Coke also said it plans to make a $150 million contribution next year to maintain a fully funded US pension plan.

The firm also affirmed its intention to expense stock options beginning in 2002, noting an anticipated 3 cents/share impact on earnings per share in 2003 as a result, based on current accounting guidelines.  

In a press release the firm said that the Financial Accounting Standards Board (FASB) may yet provide companies with a choice of transition methods when expensing stock options, and Coke expects to make a final decision regarding the transition method after evaluating the final accounting guidance (see  FASB Studies Three Option Expensing Paths ).

Coke was one of the first US companies to declare its intention to expense stock options.