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. Which company had the greater percentage increase in total assets from 2016 to 2017? b. Using the Selected Financial Data section of these two companies, determine their 5-year average growth rates related to net sales and income from continuing operations. c. Which company had more depreciation and amortization expense for 2017? Provide a rationale as to why there is a difference in these amounts between the two companies. Specimen Financial Statements: The Coca-Cola Company The Coca-Cola Company is the world's largest beverage company. It owns or licenses and markets more than 500 nonalcoholic beverage brands, primarily sparkling beverages, but also a variety of still beverages such as waters, enhanced waters, juices and juice drinks, ready- to-drink teas and coffees, and energy and sports drinks. Finished beverage products bearing Coca-Cola trademarks sold in the United States since 1886, are now available in more than 200 countries. THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME 2017 2016 2015 $.35.410 13,256 22,194 12.496 2.157 7,501 541.863 16.465 25.398 15.262 1,510 S 1.294 17,482 26,812 16.427 1.657 8.738 8.626 Year Ended December 31. in millions except per share data) NET OPERATING REVENUES Cost of goods sold GROSS PROFIT Selling general and administrative expenses Other operating charges OPERATING INCOME Interest income Interest expense Equity income (loss) - net Other income (loss)-net INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES Income taxes from continuing operations NET INCOME FROM CONTINUING OPERATIONS Income from discontinued operations (net of income taxes of 547, 50 and 50, respectively CONSOLIDATED NET INCOME Less: Net income attributable to non controlling interests NET INCOME ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY 841 1,071 (1.1446) 733 835 (1.234) 8.136 1.586 6.550 489 631 9,605 2.239 7.366 5,560 1,182 101 1,283 35 6550 23 7.366 15 $ 1.248 $ 6,527 $ 7.351 Basic net income per share from continuing operations! 0.28 $ 1.51 S Basic net income per share from discontinued operations! BASIC NET INCOME PER SHARE $ 0.19 $ 1.51 5 1.69 Diluted net income per share from continuing operations! $ $ 1.49 $ Diluted net income per share from discontinued operations 0.02 DILUTED NET INCOME PER SHARE $ 0.19 S 1.49 5 1.67 AVERAGE SHARES OUTSTANDING - BASIC 4.272 4,152 Effect of dilutive securities 52 SO 53 AVERAGE SHARES OUTSTANDING DILUTED 4,334 4.367 4.405 Calculated based on net income from continuing operations less net income from continuing operations attributable to controlling interests. Calculated based on net income from datinued operations low net income from discontinued operations attributable to controlling interests Per share amounts do not add due to rounding Refer to Notes to Consolidated Financial Statements. THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 3016 2015 Year Ended December MI 17 CONSOLIDATED NET INCOME Other comprehensive income Net foreign currency ratio adjustment Net ganoon derivatives Net unrealidad on available for sale series Net change in pension and other benefits TOTAL COMPREHENSIVE INCOME (LOSS) Lew Comprehensive income loss tributable to sonca rolling interes TOTAL COMPREHENSIVE INCOME (LOSSI ATTRIBUTARILE TO SHAREOWNERS OF THE COCA-COLA COMPANY 36 33 1321 73 2.951 10 THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS 2017 2016 $8.555 9.595 TRISO 15.15 5.317 3.667 2.485 2,000 219 7,319 4.051 3.56 2.675 2.41 2.797 34,010 16.10 989 20.256 1.06 4,560 8.303 6,729 9,401 368 $ 87,96 10,635 6.097 3,676 10,629 725 $ 87.279 December chemises par value) ASSETS CURRENT ASSETS Cash and cash equivalents Short-term investments TOTAL CASH CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS Marketable securities Trade accounts receivable, les illowsces of 477 and 5456, respectively Inventories Prepaid expenses and other assets Assets held for sale Assets helt for sale discontinued operations TOTAL CURRENT ASSETS EQUITY METHOD INVESTMENTS OTHER INVESTMENTS OTHER ASSETS PROPERTY.PLANT AND EQUIPMENT -net TRADEMARKS WITH INDEFINITE LIVES BOTTLERS' FRANCHISE RIGHTS WITH INDEFINITE LIVES GOODWILL OTHER INTANGIBLE ASSETS TOTAL ASSETS LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable and accrued expenses Leans and notes payable Current maturities of long-term debt Accrued income taxes Liabilities held for sale Liabilities held for sale - discontinued operations TOTAL CURRENT LIABILITIES LONG TERM DEBT OTHER LIABILITIES DEFERRED INCOME TAXES THE COCA-COLA COMPANY SHAREOWNERS' EQUITY Common stock. 50 25 par vale Authorized - 11.200 shares Issued - 7,040 and 7,000 shares, respectively Capital surplus Reinvested earnings Accumulated other comprehensive income (los) Treasury stock, at cost-2.71 and 2.752 shares, respectinely EQUITY ATTRIBUTABLE TO SHAREOWNERS OF THE COCA COLA COMPANY EQUITY ATTRIBUTABLE TO NONCONTROLLING INTERESTS TOTAL EQUITY TOTAL LIABILITIES AND EQUITY $ 8,748 13,205 3.198 410 12.498 3.527 307 710 1,496 27.194 31,182 26,532 2,522 4,081 3,753 1,760 15.254 1.760 65.502 (11.2005) (47988) (10,305) (50,677) 17,072 1,905 18.77 158 Refer to Notes to Consolidated Financial Statements 5 87270 Specimen Financial Statements. The Coca-Cola Com 2017 IN 2010 6130 238 $ 1.23 (101 1,182 1.260 219 (1.256) (6251 281 1.459 1,218 (269) 3,529 6,995 7,356 970 235 73 (122) 158 1.146 647 (224) (221) 8,796 (374) 929 744 (157) 10,528 (16,520) 15.911 (3,900) (15.499 16,624 (15831) 14,079 (2.491) THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31 la millo) OPERATING ACTIVITIES Consolidated net income (Income) loss from discontinued operations Net income from continuing operations Depreciation and amortization Stock-based compensation expense Deferred income taxes Equity (income) loss - net of dividends Foreign currency adjustments Significant (gains) losses on sales of assets-net Other operating charges Other items Net change in operating assets and liabilities Net cash provided by operating activities INVESTING ACTIVITIES Purchases of investments Proceeds from disposals of investments Acquisitions of businesses, equity method investments and nonmarketable securities Proceeds from disposals of businesses, equity method investments and nonmarketable securities Purchases of property, plant and equipment Proceeds from disposals of property, plant and equipment Other investing activities Net cash provided by (used in) investing activities FINANCING ACTIVITIES Issuances of debt Payments of debt Issuances of stock Purchases of stock for treasury Dividends Other financing activities Net cash provided by (used in) financing act CASH FLOWS FROM DISCONTINUED OPERATIONS Net cash provided by (used in) operating activities from discontinued operations Net cash provided by (used in) investing activities from discontinued operations Nel cash provided by (used in) financing activities from discontinued operations Net cash provided by used in discontinued operations EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS Net increase (decrease) during the year Balance at beginning of year Balance at end of year 1.035 34821 (1,675) 104 (126) (2.385) (2.262) 150 (209) $65 (2.553) 85 (40) (6.156) 27.281 (25,615) 29.857 (28,768) 1.595 (3.682) (6,320) (91) (7.409) (3.681) (6,043) 79 (6,545) 40,434 (37.738) 1.245 (3564) (5.741) 251 (5.113) 111 (65) (38) 8 242 (6) (878) (2,549) 8.555 $ 6,006 7,309 $ 555 (1,649) 8.958 $ 7,309 Refer to Notes to Consolidated Financial Statements Statements: The Coca-Cola Company THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY 2016 2015 4.124 42 53 4.166 40 (6) 4309 $ 1,760 424 5 1.760 $ 1.760 14.993 65 14,016 SNO 130 25N 13.154 512 94 2.36 219 (3) 15,864 14.993 14.016 65 502 1,248 (6,320) 65,018 6,527 63.408 7.351 (5,741) 65,018 65.502 Year Ended December in millas except per share data EQUITY ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY NUMBER OF COMMON SHARES OUTSTANDING Balance at beginning of year Treasury stock issued to employees related to stock compensation plans Purchases of stock for treasury Balance at end of year COMMON STOCK CAPITAL SURPLUS Balance at beginning of year Stockinued to employees related to stock compensation plans Tax benefit (charge) from stock compensation plans Stock-based compensation expense Other activities Balance at end of year REINVESTED EARNINGS Balance at beginning of year Net income attributable to shareowners of The Coca-Cola Company Dividends (per share - $1.48. $1.40 and 51.32 in 2017, 2016 and 2015, respectively Balance at end of year ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Balance at beginning of year Net other comprehensive income (loss) Balance at end of year TREASURY STOCK Balance at beginning of year Treasury stock issued to employees related to stock compensation plans Purchases of stock for treasury Balance at end of year TOTAL EQUITY ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY EQUITY ATTRIBUTABLE TO NONCONTROLLING INTERESTS Balance at beginning of year Net income attributable to no controlling interests Net foreign currency translation adjustment Dividends paid to noncontrolling interests Contributions by noncontrolling interests Business combinations Deconsolidation of certain entities Other activities TOTAL EQUITY ATTRIBUTARLE TO NONCONTROLLING INTERESTS (11,205) 900 (10,174) (1.031) (11.205) (5.777) (4.397) (10.174 (10,305 (47,988) (45.066) 909 811 (3.598) (3.733) (50,677) (47,988) $ 17.072 S 23.062 696 (3.537) (45,066) $ 25,554 $ 210 S 1585 35 38 (15) 23 (13) (25) 241 15 (18) (31) 1 (3) 1.805 (157) 41 $ 1.905 S (34) (4) 158 6 210 S Refer to Notes to Consolidated Financial Statements Specimen Financial Statements: PepsiCo, Inc. Pepsico, Inc. is a leading global food and beverage company with a complementary portfolio of enjoyable brands, including Frito-Lay, Gatorade, Pepsi-Cola. Quaker, and Tropicana. Through its operations, authorized bottlers, contract manufacturers, and other third parties, PepsiCo makes, markets, distributes, and sells a wide variety of convenient and enjoyable beverages, foods, and snacks, serving customers and consumers in more than 200 countries and territories Consolidated Statement of Income PepsiCo, Inc. and Subsidiaries Fiscal years ended December 27, 2017 December 28, 2016 and December 29, 2015 in millions except per share amounts) $ 2017 63,525 5 28,785 34,740 24,231 2016 62.7995 28.2009 34.590 24.805 Net Revenue Cost of sales Gross profit Selling, general and administrative expenses Venezuela impairment charges Operating Profit Interest expense Interest income and other Income before income taxes Provision for income taxes (See Note 5) Net income Less: Net income attributable to noncontrolling interests Net Income Attributable to PepsiCo Net Income Attributable to PepsiCo per Common Share Baske Diluted Weighted average common shares outstanding Basic Diluted Cash dividends declared per common share 10,509 (1,151) 2:44 9,602 4,694 4,908 51 4.837 $ 9.785 (1.342) 110 8.553 2.174 2015 63,056 28,731 34 325 24,613 1.359 8,353 (970) 59 7.442 1.941 5.S01 -19 5,452 6379 SO $ 340 $ $ $ 4.39 $ 4.36 $ 3.71 3.67 1,425 1,438 3.16755 1.439 1.452 2.96 $ 1,485 2.7625 $ Consolidated Statement of Comprehensive Income PepsiCo, Inc. and Subsidiaries Fiscal years ended December 30, 2017 December 31, 2016 and December 26, 2015 (in millions) 2017 4.908 2016 6.379 $ 2015 5.501 $ Net income Other comprehensive incomokloss), net of taxes: Nel currency translation adjustment Net change on cash flow hedges Net pension and retiree medical adjustments Net change on securities Other 1.109 (36) (159) 46 (2.827) 3 171 1 (316) 16 862 5.770 (596) 5,783 (2.652) 2,849 Comprehensive income Comprehensive income attributable to noncontrolling interests Comprehensive Income Attributable to PepsiCo (51) $ 5,7195 5,729 2,802 See accompanying notes to the consolidated financial statements. Consolidated Statement of Cash Flows PepsiCo, Inc. and Subsidiaries Fiscal years ended December 30, 2017 December 31, 2016 and December 26, 2015 (in millions) 1. 2016 and December 26, 2015 clans 2015 016 5 s Operating Activities Netice Depreciation and more Share based compare Reming che 3. 230 (125) Charpes related to the wingi 501 10 461 205 Pension and real plan expenses Pension and the medical plan.com Deferred income and her tax charges and condits Provisional expense related to the TC AM Change in die Acondivable 211 co 619 1.451 H9 (461) ID 20 201 1.682 55 Prepaid expenses and current sich Accord current liblics Income mes payable Oder, Net Cash Prided by Operating Activities 64 (3411 9,99 10 10 12.75) Investing Activities Capital spending Sales of property.plant und ein Acquisisce and investments in controlled flames Reduction of cash due to Venere la decomodatie 2.9691 150 CO 99 (212) 186) RS 76 (12,500) Short levest, by original may More than three months. purchases More than three months More than three months sales Three or less.net Other invest Ne Cash Used for Investing Activities (18.555 15,744 790 16 3 19 17.145) (5) 3.569 7.500 14.06) Financing Acties Proceeds from of long-term Pays of legendele Deberdemos Short term borrowing, by original maturity, More than two-proceeds More than moss-payment 7,818 (3.105) (2.500) 8.702 (4.095) 91 (128 15 (43) 1.505 51 (400) (5,000) 15) 3.000) (7) Cash dividends paid Slure purchases.com Share repurchases preferred Proceeds from exercises of stock options Witolding tax payments RSUS, PSUs PEP Other financing Net Cushed for Financing Activities Effect of exchange rate changes on cash and cash equivalen Net Increase in Cash and Cash Eghalets Cash and Cub Equivalents, Beginning of Year Cushund Cash Equivalents, Fodor Year (145) 504 (130) (151) (418 0211) (52) 14.112) 9,15 10 LO 94096 2.962 6,134 5 Consolidated Balance Sheet PepsiCo, Inc. and Subsidiaries December 30, 2017 and December 31, 2016 (in millions except per share amounts) 2017 2016 5 ASSETS Current Assets Cash and cash equivalents Short-term investments Accounts and notes receivable, net Inventories Prepaid expenses and other current assets Total Current Assets Property, Plant and Equipment, net Amortizable Intangible Assets, net Goodwill Other nonamortizable intangible assets Nonamortizable Intangible Assets Investments in Noncontrolled Amiliates Other Assets Total Assets 10.610 8.900 7,024 2.947 1,546 31,027 17,240 1,268 14,744 12.570 27,314 2.042 913 79,804 9.158 6,967 6,694 2.723 908 26,450 16.591 1.237 14.430 12.196 26,626 1,950 636 73.490 $ S 6,892 5,485 15,017 20.502 33,796 11,283 21,135 30.053 6,669 4,434 62.291 68,823 41 (197) 41 (192) LIABILITIES AND EQUITY Current Liabilities Short-term debt obligations Accounts payable and other current liabilities Total Current Liabilities Long-Term Debt Obligations Other Liabilities Deferred Income Taxes Total Liabilities Commitments and contingencies Preferred Stock, no par value Repurchased Preferred Stock PepsiCo Common Shareholders' Equity Common stock, par value 1% per share (authorized 3.600 shares, issued, net of repurchased common stock at par value: 1,420 and 1428 shares, respectively) Capital in excess of par value Retained eamings Accumulated other comprehensive loss Repurchased common stock, in excess of par value (446 and 438 shares, respectively) Total PepsiCo Common Shareholders' Equity Noncontrolling interests Total Equity Total Liabilities and Equity 3,996 52.839 (13,057) (32,757) 11,045 92 10,981 79,804 24 4,091 52518 (13,919) (31,468) 11.246 104 11.199 73.490 S See accompanying notes to the consolidated financial statements. Consolidated Statement of Equity PepsiCo, Inc. and Subsidiaries Fiscal years ended December 30, 2017 December 31, 2016 and December 26, 2015 (in millions) 2015 2015 2017 Shares 08 Shares Amount 41 (181) 5) S Amount 41 (156) Shares 0.8 10.72 $ (0.7) Amount 41 (1921 (5) (197) 0.7) (186) (6) (192) 0.7) 0.7) (0.71 24 (1) 24 (40 (20) 1.448 24 1.420 4,115 4,076 299 4,091 290 (216) (145) (151) 29 (138) (130) (6) 4.091 4,076 3.996 50.472 6.129 52.518 4,857 (4.535) 49,092 5,452 (4.071) (1) 50,472 52.518 Preferred Stock Balance, beginning of year Redemptions Balance, end of year Common Steck Balance, beginning of year Change in repurchased common stock Balance, end of year Capital in Excess of Par Value Balance, beginning of year Share-based compensation expense Stock option exercises, RSUS, PSUs and PEPunits converted Withholding tax on RSUS. PSUs and PEPunits converted Other Balance, end of year Retained Earnings Balance, beginning of year Net income attributable to PepsiCo Cash dividends declared.common Cash dividends declared - preferred Balance, end of year Accumulated Other Comprehensive Lost Balance, beginning of year Other comprehensive income los) attributable to PepsiCo Balance, end of year Repurchased Common Stock Balance, beginning of year Share repurchases Stock option exercises, RSUS. PSUs and PEPunits converted Other Balance, end of year Total PepsiCo Common Shareholders' Equity Noncontrolling Interests Balance, beginning of year Net income attributable to noncontrolling interests Distributions to noncontrolling interests Currency translation adjustment Othernet Balance, end of year Total Equity 52.839 (13,919) (10.669) (2.650) (13.319) (13.319) (000) (13.919) 862 (13.057) (418) (29) (29.185) (3.000) 712 (378) (52) (31.468) (2.000) 70N (24.985) (4.999) (18) 9 12 10 794 5 5 (446) (438) (418) (29,185) (32.757) 11,045 (31.468) 11.246 12.068 104 107 110 51 49 50 (55) (62) 4 (1) (2) (48) (2) (2) 107 12.030 92 104 $ 10,981 $ 11.199 S (a) Includes total tax benefits of $110 million in 2016 and S107 million in 2015. See accompanying notes to the consolidated financial statements