Comparative Analysis Case

The Coca-Cola Company and PepsiCo, Inc.^*

The financial statements of Coca-Cola and PepsiCo are presented in Appendices C and D, respectively. The companies' complete annual reports, including the notes to the financial statements, are available online.

Instructions

Use the companies' financial information to answer the following questions.

(a)

What is the par or stated value of Coca-Cola's and PepsiCo's common or capital stock?

(b)

What percentage of authorized shares was issued by Coca-Cola at December 31, 2014, and by PepsiCo at December 31, 2014?

(c)

How many shares are held as treasury stock by Coca-Cola at December 31, 2014, and by PepsiCo at December 31, 2014?

(d)

How many Coca-Cola common shares are outstanding at December 31, 2014? How many PepsiCo shares of capital stock are outstanding at December 31, 2014?

(e)

What amounts of cash dividends per share were declared by Coca-Cola and PepsiCo in 2014? What were the dollar amount effects of the cash dividends on each company's stockholders' equity?

THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31,	2014	2013	2012
(In millions except per share data)
NET OPERATING REVENUES	$45,998	$46,854	$48,017
Cost of goods sold	17,889	18,421	19,053
GROSS PROFIT	28,109	28,433	28,964
Selling, general and administrative expenses	17,218	17,310	17,738
Other operating charges	1,183	895	447
OPERATING INCOME	9,708	10,228	10,779
Interest income	594	534	471
Interest expense	483	463	397
Equity income (loss) net	769	602	819
Other income (loss) net	(1,263)	576	137
INCOME BEFORE INCOME TAXES	9,325	11,477	11,809
Income taxes	2,201	2,851	2,723
CONSOLIDATED NET INCOME	7,124	8,626	9,086
Less: Net income attributable to noncontrolling interests	26	42	67
NET INCOME ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY	$7,098	$8,584	$9,019
BASIC NET INCOME PER SHARE*	$1.62	$1.94	$2.00
DILUTED NET INCOME PER SHARE*	$1.60	$1.90	$1.97
AVERAGE SHARES OUTSTANDING	4,387	4,434	4,504
Effect of dilutive securities	63	75	80
AVERAGE SHARES OUTSTANDING ASSUMING DILUTION	4,450	4,509	4,584

THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year Ended December 31,	2014	2013	2012
(In millions)
CONSOLIDATED NET INCOME	$7,124	$8,626	$9,086
Other comprehensive income:
Net foreign currency translation adjustment	(2,382)	(1,187)	(182)
Net gain (loss) on derivatives	357	151	99
Net unrealized gain (loss) on available-for-sale securities	714	(80)	178
Net change in pension and other benefit liabilities	(1,039)	1,066	(668)
TOTAL COMPREHENSIVE INCOME	4,774	8,576	8,513
Less: Comprehensive income (loss) attributable to noncontrolling interests	21	39	105
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY	$4,753	$8,537	$8,408

THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
December 31,	2014	2013
(In millions except par value)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$8,958	$10,414
Short-term investments	9,052	6,707
TOTAL CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS	18,010	17,121
Marketable securities	3,665	3,147
Trade accounts receivable, less allowances of $331 and $61, respectively	4,466	4,873
Inventories	3,100	3,277
Prepaid expenses and other assets	3,066	2,886
Assets held for sale	679
TOTAL CURRENT ASSETS	32,986	31,304
EQUITY METHOD INVESTMENTS	9,947	10,393
OTHER INVESTMENTS	3,678	1,119
OTHER ASSETS	4,407	4,661
PROPERTY, PLANT AND EQUIPMENT net	14,633	14,967
TRADEMARKS WITH INDEFINITE LIVES	6,533	6,744
BOTTLERS' FRANCHISE RIGHTS WITH INDEFINITE LIVES	6,689	7,415
GOODWILL	12,100	12,312
OTHER INTANGIBLE ASSETS	1,050	1,140
TOTAL ASSETS	$92,023	$90,055
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$9,234	$9,577
Loans and notes payable	19,130	16,901
Current maturities of long-term debt	3,552	1,024
Accrued income taxes	400	309
Liabilities held for sale	58
TOTAL CURRENT LIABILITIES	32,374	27,811
LONG-TERM DEBT	19,063	19,154
OTHER LIABILITIES	4,389	3,498
DEFERRED INCOME TAXES	5,636	6,152
THE COCA-COLA COMPANY SHAREOWNERS' EQUITY
Common stock, $0.25 par value; Authorized 11,200 shares;
Issued 7,040 and 7,040 shares, respectively	1,760	1,760
Capital surplus	13,154	12,276
Reinvested earnings	63,408	61,660
Accumulated other comprehensive income (loss)	(5,777)	(3,432)
Treasury stock, at cost 2,674 and 2,638 shares, respectively	(42,225)	(39,091)
EQUITY ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY	30,320	33,173
EQUITY ATTRIBUTABLE TO NONCONTROLLING INTERESTS	241	267
TOTAL EQUITY	30,561	33,440
TOTAL LIABILITIES AND EQUITY	$92,023	$90,055

THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,	2014	2013	2012
(In millions)
OPERATING ACTIVITIES
Consolidated net income	$7,124	$8,626	$9,086
Depreciation and amortization	1,976	1,977	1,982
Stock-based compensation expense	209	227	259
Deferred income taxes	(40)	648	632
Equity (income) loss net of dividends	(371)	(201)	(426)
Foreign currency adjustments	415	168	(130)
Significant (gains) losses on sales of assets net	831	(670)	(98)
Other operating charges	761	465	166
Other items	149	234	254
Net change in operating assets and liabilities	(439)	(932)	(1,080)
Net cash provided by operating activities	10,615	10,542	10,645
INVESTING ACTIVITIES
Purchases of investments	(17,800)	(14,782)	(14,824)
Proceeds from disposals of investments	12,986	12,791	7,791
Acquisitions of businesses, equity method investments and nonmarketable securities	(389)	(353)	(1,486)
Proceeds from disposals of businesses, equity method investments and nonmarketable securities	148	872	20
Purchases of property, plant and equipment	(2,406)	(2,550)	(2,780)
Proceeds from disposals of property, plant and equipment	223	111	143
Other investing activities	(268)	(303)	(268)
Net cash provided by (used in) investing activities	(7,506)	(4,214)	(11,404)
FINANCING ACTIVITIES
Issuances of debt	41,674	43,425	42,791
Payments of debt	(36,962)	(38,714)	(38,573)
Issuances of stock	1,532	1,328	1,489
Purchases of stock for treasury	(4,162)	(4,832)	(4,559)
Dividends	(5,350)	(4,969)	(4,595)
Other financing activities	(363)	17	100
Net cash provided by (used in) financing activities	(3,631)	(3,745)	(3,347)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	(934)	(611)	(255)
CASH AND CASH EQUIVALENTS
Net increase (decrease) during the year	(1,456)	1,972	(4,361)
Balance at beginning of year	10,414	8,442	12,803
Balance at end of year	$8,958	$10,414	$8,442

THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY
Year Ended December 31,	2014	2013	2012
(In millions except per share data)
EQUITY ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY NUMBER OF COMMON SHARES OUTSTANDING
Balance at beginning of year	4,402	4,469	4,526
Purchases of treasury stock	(98)	(121)	(121)
Treasury stock issued to employees related to stock compensation plans	62	54	64
Balance at end of year	4,366	4,402	4,469
COMMON STOCK	$1,760	$1,760	$1,760
CAPITAL SURPLUS
Balance at beginning of year	12,276	11,379	10,332
Stock issued to employees related to stock compensation plans	526	569	640
Tax benefit (charge) from stock compensation plans	169	144	144
Stock-based compensation	209	227	259
Other activities	(26)	(43)	4
Balance at end of year	13,154	12,276	11,379
REINVESTED EARNINGS
Balance at beginning of year	61,660	58,045	53,621
Net income attributable to shareowners of The Coca-Cola Company	7,098	8,584	9,019
Dividends (per share $1.22, $1.12 and $1.02 in 2014, 2013 and 2012, respectively)	(5,350)	(4,969)	(4,595)
Balance at end of year	63,408	61,660	58,045
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance at beginning of year	(3,432)	(3,385)	(2,774)
Net other comprehensive income (loss)	(2,345)	(47)	(611)
Balance at end of year	(5,777)	(3,432)	(3,385)
TREASURY STOCK
Balance at beginning of year	(39,091)	(35,009)	(31,304)
Stock issued to employees related to stock compensation plans	891	745	786
Purchases of treasury stock	(4,025)	(4,827)	(4,491)
Balance at end of year	(42,225)	(39,091)	(35,009)
TOTAL EQUITY ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY	$30,320	$33,173	$32,790
EQUITY ATTRIBUTABLE TO NONCONTROLLING INTERESTS
Balance at beginning of year	$267	$378	$286
Net income attributable to noncontrolling interests	26	42	67
Net foreign currency translation adjustment	(5)	(3)	38
Dividends paid to noncontrolling interests	(25)	(58)	(48)
Acquisition of interests held by noncontrolling owners		(34)	(15)
Contributions by noncontrolling interests		6
Business combinations	(22)	25	50
Deconsolidation of certain entities		(89)
TOTAL EQUITY ATTRIBUTABLE TO NONCONTROLLING INTERESTS

2014 2013 2012 S 66,683 S 66,415 S65,492 31,291 34,201 24,970 119 9,112 (899) Net Revenue Cost of sales Gross profit Selling, general and administrative expenses Amortization of intangible assets Operating Profit Interest expense Interest income and other Income before income taxes Provision for income taxes Net income Less: Net income attributable to noncontrolling interests Net Income Attributable to PepsiCo Net Income Attributable to PepsiCo per Common Share 30,884 35,799 26.126 92 9,581 31,243 35,172 25,357 110 9,705 (911) 97 (909) 85 8,757 2,199 6,558 45 8,304 2,090 6,214 36 6,178 8,891 2,104 6,787 47 6,513 $ 6,740 S Basic Diluted 4.31 $ 4.27 $ 4.37 S 4.32 S 3.96 3.92 Weighted-average common shares outstanding Basic Diluted 1,541 1,560 2.24 S 1,557 1,575 2.1275 1,509 1,527 Cash dividends declared per common share $ 2.5325 S