Comparative Analysis Case 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. Use the companies' financial information to answer the following questions. What net periodic pension expense (cost) did Coca-Cola and PepsiCo report in 2014? (Enter answers in millions.) Coca-Cola PepsiCo Net periodic pension expenses million $ million What is the year-end 2014 funded status of Coca-Cola's and PepsiCo's plans (include international)? (Enter answers in millions. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) 2014 Funded Status ($millions) Pensions OPEB Coca-Cola PepsiCo U.S. plans What relevant rates were used by Coca-Cola and PepsiCo in computing their pension amounts? (Round answers to 2 decimal places, e.g. 52.75.) Coca-Cola PepsiCo Discount rate (expense) What relevant rates were used by Coca-Cola and PepsiCo in computing their pension amounts? (Round answers to 2 decimal places, e.g. 52.75.) Coca-Cola PepsiCo Discount rate (expense) Rate of increase in compensation levels Expected long-term rate of return on plan assets Click if you would like to Show Work for this question: Open Show Work 2014 2013 2012 S S S 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 BEFORE INCOME TAXES Income taxes CONSOLIDATED NET INCOME Less: Net income attributable to noncontrolling interests NET INCOME ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY 45,998 17,889 28,109 17,218 1,183 9,708 594 483 769 (1,263) 9,325 2,201 7,124 26 46,854 18,421 28,433 17,310 895 10.228 534 463 602 576 11,477 2,851 8,626 42 48,017 19,053 28,964 17,738 447 10,779 471 397 819 137 11,809 2,723 9.086 67 7,098 $ 8,584 S 9,019 BASIC NET INCOME PER SHARE 1.625 1.94 $ 2.00 DILUTED NET INCOME PER SHARE $ $ 1.60 4,387 1.90 4,434 75 1.97 4,504 63 80 AVERAGE SHARES OUTSTANDING Effect of dilutive securities AVERAGE SHARES OUTSTANDING ASSUMING DILUTION Calculated based on nct income attributable to sharcowners of The Coca-Cola Company 4,450 4.584 THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 2014 2013 2012 $ 7,124 $ 8,626 $ 9,086 (2,382) 357 Year Ended December 31, (In millions) CONSOLIDATED NET INCOME Other comprehensive income: Net foreign currency translation adjustment Net gain (loss) on derivatives Net unrealized gain (loss) on available-for-sale securities Net change in pension and other benefit liabilities TOTAL COMPREHENSIVE INCOME Less: Comprehensive income (loss) attributable to noncontrolling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY 714 (1,187) 151 (80) 1,066 8,576 39 (182) 99 178 (668) 8,513 105 (1,039) 4,774 21 4,753 $ 8,537 $ 8,408 Refer to Notes to Consolidated Financial Statements. CONSOLIDATED BALANCE SHEETS 2014 2013 $ 10,414 6,707 17,121 3,147 4,873 3,277 2.886 December 31. (In millions except par value) ASSETS CURRENT ASSETS Cash and cash cquivalents Short-term investments TOTAL CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS Marketable securities Trade accounts receivable, less allowances of $331 and $61, respectively Inventories Prepaid expenses and other assets Assets held for sale 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 Loans and notes payable 8,958 9,052 18,010 3,665 4,466 3,100 3,066 679 32.986 9,947 3,678 4,407 14,633 6,533 6,689 12,100 1,050 9 2,023 31,304 10,393 1,119 4,661 14,967 6,744 7,415 12,312 1,140 90,055 S $ S $ 9,234 19,130 9,577 16,901 16,901 1,024 309 19,130 3,552 400 58 32,374 19,063 27,811 19,154 3,498 6,152 4,389 5,636 Loans and notes payable Current maturities of long-term debt Accrued income taxes Liabilities held for sale TOTAL CURRENT LIABILITIES LONG-TERM DEBT OTHER LIABILITIES DEFERRED INCOME TAXES THE COCA-COLA COMPANY SHAREOWNERS' EQUITY Common stock, $0.25 par value; Authorized 11,200 shares; Issued 7,040 and 7,040 shares, respectively Capital surplus Reinvested earnings Accumulated other comprehensive income (loss) Treasury stock, at cost 2,674 and 2,638 shares, respectively EQUITY ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY EQUITY ATTRIBUTABLE TO NONCONTROLLING INTERESTS TOTAL EQUITY TOTAL LIABILITIES AND EQUITY 1,760 13,154 63,408 (5,777) (42,225) 30,320 241 30,561 92,023 1,760 12,276 61,660 (3,432) (39,091) 33,173 267 33,440 90,055 $ $ Refer to Notes to Consolidated Financial Statements. THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS 2014 2013 2012 $ $ 7,124 1,976 209 (40) (371) 415 Year Ended December 31, (In millions) OPERATING ACTIVITIES Consolidated net income 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 8,626 1.977 227 648 (201) 168 (670) 465 234 (932) 10.542 9,086 1,982 259 632 (426) (130) (98) 166 254 (1,080) 10,645 831 761 149 (439) 10,615 (17.800) 12,986 (389) 148 (2,406) 223 (268) (14,782) 12,791 (353) 872 (2,550) (14,824) 7,791 (1,486) 20 (2,780) 143 (268) (11,404) (303) (4.214) (7,506) 41,674 43,425 42,791 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 activities 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 41,674 (36,962) 1,532 (4,162) (5,350) (363) (3,631) 43,425 (38,714) 1,328 (4,832) (4,969) 17 (3,745) 42,791 (38,573) 1,489 (4,559) (4,595) 100 (3,347) (934) (611) (255) (1,456) 10,414 8,958 1,972 8,442 10,414 (4,361) 12,803 8,442 $ $ $ 2014 2013 Year Ended December 31, (In millions except per share data) EQUITY ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY NUMBER OF COMMON SHARES OUTSTANDING 4,402 (98) 4,526 (121) Balance at beginning of year Purchases of treasury stock Treasury stock issued to employees related to stock compensation plans Balance at end of year 4,469 (121) 54 4,402 4.366 4,469 COMMON STOCK $ 1,760 S 1,760 $ 1,760 CAPITAL SURPLUS 11.379 Balance at beginning of year Stock issued to employees related to stock compensation plans Tax benefit (charge) from stock compensation plans Stock-based compensation Other activities Balance at end of year 12,276 526 169 209 (26) 13,154 569 144 227 (43) 12,276 10,332 640 144 259 11,379 REINVESTED EARNINGS Balance at beginning of year Net income attributable to shareowners of The Coca-Cola Company Dividends (per share $1.22, $1.12 and S1.02 in 2014, 2013 and 2012, respectively) Balance at end of year 61,660 7,098 (5,350) 63,408 58,045 8,584 (4,969) 61,660 53,621 9,019 (4,595) 58,045 Comparative Analysis Case 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. Use the companies' financial information to answer the following questions. What net periodic pension expense (cost) did Coca-Cola and PepsiCo report in 2014? (Enter answers in millions.) Coca-Cola PepsiCo Net periodic pension expenses million $ million What is the year-end 2014 funded status of Coca-Cola's and PepsiCo's plans (include international)? (Enter answers in millions. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) 2014 Funded Status ($millions) Pensions OPEB Coca-Cola PepsiCo U.S. plans What relevant rates were used by Coca-Cola and PepsiCo in computing their pension amounts? (Round answers to 2 decimal places, e.g. 52.75.) Coca-Cola PepsiCo Discount rate (expense) What relevant rates were used by Coca-Cola and PepsiCo in computing their pension amounts? (Round answers to 2 decimal places, e.g. 52.75.) Coca-Cola PepsiCo Discount rate (expense) Rate of increase in compensation levels Expected long-term rate of return on plan assets Click if you would like to Show Work for this question: Open Show Work 2014 2013 2012 S S S 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 BEFORE INCOME TAXES Income taxes CONSOLIDATED NET INCOME Less: Net income attributable to noncontrolling interests NET INCOME ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY 45,998 17,889 28,109 17,218 1,183 9,708 594 483 769 (1,263) 9,325 2,201 7,124 26 46,854 18,421 28,433 17,310 895 10.228 534 463 602 576 11,477 2,851 8,626 42 48,017 19,053 28,964 17,738 447 10,779 471 397 819 137 11,809 2,723 9.086 67 7,098 $ 8,584 S 9,019 BASIC NET INCOME PER SHARE 1.625 1.94 $ 2.00 DILUTED NET INCOME PER SHARE $ $ 1.60 4,387 1.90 4,434 75 1.97 4,504 63 80 AVERAGE SHARES OUTSTANDING Effect of dilutive securities AVERAGE SHARES OUTSTANDING ASSUMING DILUTION Calculated based on nct income attributable to sharcowners of The Coca-Cola Company 4,450 4.584 THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 2014 2013 2012 $ 7,124 $ 8,626 $ 9,086 (2,382) 357 Year Ended December 31, (In millions) CONSOLIDATED NET INCOME Other comprehensive income: Net foreign currency translation adjustment Net gain (loss) on derivatives Net unrealized gain (loss) on available-for-sale securities Net change in pension and other benefit liabilities TOTAL COMPREHENSIVE INCOME Less: Comprehensive income (loss) attributable to noncontrolling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY 714 (1,187) 151 (80) 1,066 8,576 39 (182) 99 178 (668) 8,513 105 (1,039) 4,774 21 4,753 $ 8,537 $ 8,408 Refer to Notes to Consolidated Financial Statements. CONSOLIDATED BALANCE SHEETS 2014 2013 $ 10,414 6,707 17,121 3,147 4,873 3,277 2.886 December 31. (In millions except par value) ASSETS CURRENT ASSETS Cash and cash cquivalents Short-term investments TOTAL CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS Marketable securities Trade accounts receivable, less allowances of $331 and $61, respectively Inventories Prepaid expenses and other assets Assets held for sale 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 Loans and notes payable 8,958 9,052 18,010 3,665 4,466 3,100 3,066 679 32.986 9,947 3,678 4,407 14,633 6,533 6,689 12,100 1,050 9 2,023 31,304 10,393 1,119 4,661 14,967 6,744 7,415 12,312 1,140 90,055 S $ S $ 9,234 19,130 9,577 16,901 16,901 1,024 309 19,130 3,552 400 58 32,374 19,063 27,811 19,154 3,498 6,152 4,389 5,636 Loans and notes payable Current maturities of long-term debt Accrued income taxes Liabilities held for sale TOTAL CURRENT LIABILITIES LONG-TERM DEBT OTHER LIABILITIES DEFERRED INCOME TAXES THE COCA-COLA COMPANY SHAREOWNERS' EQUITY Common stock, $0.25 par value; Authorized 11,200 shares; Issued 7,040 and 7,040 shares, respectively Capital surplus Reinvested earnings Accumulated other comprehensive income (loss) Treasury stock, at cost 2,674 and 2,638 shares, respectively EQUITY ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY EQUITY ATTRIBUTABLE TO NONCONTROLLING INTERESTS TOTAL EQUITY TOTAL LIABILITIES AND EQUITY 1,760 13,154 63,408 (5,777) (42,225) 30,320 241 30,561 92,023 1,760 12,276 61,660 (3,432) (39,091) 33,173 267 33,440 90,055 $ $ Refer to Notes to Consolidated Financial Statements. THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS 2014 2013 2012 $ $ 7,124 1,976 209 (40) (371) 415 Year Ended December 31, (In millions) OPERATING ACTIVITIES Consolidated net income 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 8,626 1.977 227 648 (201) 168 (670) 465 234 (932) 10.542 9,086 1,982 259 632 (426) (130) (98) 166 254 (1,080) 10,645 831 761 149 (439) 10,615 (17.800) 12,986 (389) 148 (2,406) 223 (268) (14,782) 12,791 (353) 872 (2,550) (14,824) 7,791 (1,486) 20 (2,780) 143 (268) (11,404) (303) (4.214) (7,506) 41,674 43,425 42,791 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 activities 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 41,674 (36,962) 1,532 (4,162) (5,350) (363) (3,631) 43,425 (38,714) 1,328 (4,832) (4,969) 17 (3,745) 42,791 (38,573) 1,489 (4,559) (4,595) 100 (3,347) (934) (611) (255) (1,456) 10,414 8,958 1,972 8,442 10,414 (4,361) 12,803 8,442 $ $ $ 2014 2013 Year Ended December 31, (In millions except per share data) EQUITY ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY NUMBER OF COMMON SHARES OUTSTANDING 4,402 (98) 4,526 (121) Balance at beginning of year Purchases of treasury stock Treasury stock issued to employees related to stock compensation plans Balance at end of year 4,469 (121) 54 4,402 4.366 4,469 COMMON STOCK $ 1,760 S 1,760 $ 1,760 CAPITAL SURPLUS 11.379 Balance at beginning of year Stock issued to employees related to stock compensation plans Tax benefit (charge) from stock compensation plans Stock-based compensation Other activities Balance at end of year 12,276 526 169 209 (26) 13,154 569 144 227 (43) 12,276 10,332 640 144 259 11,379 REINVESTED EARNINGS Balance at beginning of year Net income attributable to shareowners of The Coca-Cola Company Dividends (per share $1.22, $1.12 and S1.02 in 2014, 2013 and 2012, respectively) Balance at end of year 61,660 7,098 (5,350) 63,408 58,045 8,584 (4,969) 61,660 53,621 9,019 (4,595) 58,045