What I Learned Reading The Coca-Cola Company (KO)’s Annual Report

3. A big appetite for share buybacks
Done intelligently, share buybacks can be a great way to reward long-term shareholders. Coke has a decent record of buybacks, and has done them in big numbers. Its annual report notes: “Since the inception of our initial share repurchase program in 1984 through our current program as of December 31, 2012, we have purchased approximately 3.0 billion shares of our Company’s common stock at an average price per share of $12.75.” For perspective, Coke’s average daily split-adjusted share price since 1984 is $18.76, according to S&P Capital IQ.

Total shares outstanding have declined by about 10% in the last decade:

4. Piling on the debt
Coke’s annual report says, “We use debt financing to lower our cost of capital, which increases our return on shareowners’ equity.” With interest rates recently near all-time lows, debt has been cheaper than ever, and now makes up the highest portion of Coke’s total capital in at least 12 years:

5. Water: an overlooked risk
Some of Coke’s fastest-growing geographic segments are regions where infrastructure isn’t exactly world-class, like parts of Africa, Asia, and Latin America. That makes the available of a key ingredient in soft drinks — water — less certain that you might assume. Coke actually lists water as a “key challenge” facing its business:

Water is a main ingredient in substantially all of our products. While historically we have not experienced significant water supply difficulties, water is a limited natural resource in many parts of the world, and our Company recognizes water availability, quality and sustainability, for both our operations and also the communities where we operate, as one of the key challenges facing our business.

The article 5 Things I Learned Reading Coca-Cola’s Annual Report originally appeared on Fool.com.

Fool contributor Morgan Housel has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.