Comparative Analysis Casemobivio de 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. Stock price data can be found in the company's annual 10K, filed at the SEC. 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, 2017, and by PepsiCo at December 31, 2017? c. How many shares are held as treasury stock by Coca-Cola at December 31, 2017, and by PepsiCo at December 31, 2017? d. How many Coca-Cola common shares are outstanding at December 31, 2017? How many PepsiCo shares of capital stock are outstanding at December 31, 2017? e. What amounts of cash dividends per share were declared by Coca-Cola and PepsiCo in 2017? What were the dollar amount effects of the cash dividends on each company's stockholders' equity? f. What are Coca-Cola's and PepsiCo's return on common/capital stockholders' equity for 2017? Which company gets the higher return on the equity of its shareholders? g. What are Coca-Cola's and PepsiCo's payout ratios for 2017? Tinancial Statement Analysis Cases THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME 2017 2016 2015 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 $47, 50 and 0, respectively CONSOLIDATED NET INCOME Less: Net income attributable to noncontrolling interests NET INCOME ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY $ 35,410 13,256 22,154 12,496 2.157 7,501 677 841 1,071 (1,666) 6,742 5,560 1,182 101 1,283 35 $41,863 16,465 25,398 15.262 1,510 8,626 642 733 835 (1.234) 8,136 1.586 6,550 $ 44,294 17.482 26,812 16,427 1.657 8,728 613 856 489 631 9.605 2.239 7.366 6,550 23 7,366 15 $ 1,248 $ 6,527 $ 7,351 1.69 $ Basic net income per share from continuing operations! $ 0.28 S 1.51 $ Basic net income per share from discontinued operations 0.02 BASIC NET INCOME PER SHARE $ 0.299 $ 1.51 S 1.69 Diluted net income per share from continuing operations! $ 0.27 $ 1.49 S 1.67 Diluted net income per share from discontinued operations 0.02 DILUTED NET INCOME PER SHARE $ 0.29 S 1.49 $ 1.67 AVERAGE SHARES OUTSTANDING-BASIC 4,272 4,317 4,352 Effect of dilutive securities 52 50 53 AVERAGE SHARES OUTSTANDING - DILUTED 4,324 4,367 4.405 Calculated based on net income from continuing operations less net income from continuing operations attributable to noncontrolling interests Calculated based on net income from discontinued operations less net income from discontinued operations attributable to noncontrolling 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 2017 2016 2015 COM 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 (LOSS) Less: Comprehensive income (loss) attributable to noncontrolling interests TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY $1,283 $ 6,550 $ 73 8 VASCORDS (433) (382) 861 (626) (3.959) 142 188 17 (684) 86 322 2,221 73 (53) 5.506 10 2,951 (3) $ 2,148 $ 5,496 $ 2,954 THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, (In millions except par value) 2017 2016 TOTAL COMPREHENSIVE INCOME (LOSS) Less: Comprehensive income (los) attributable to noncontrolling interests TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY 2,221 73 (53) 5.506 10 2.951 (3) $ 2,148 5 5496 5 2954 THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS 2017 2016 $8.555 9,595 18,150 4,051 3,856 2,675 2,481 2.797 $ 6,006 9.352 15.358 5.317 3667 2.655 2.000 219 7,329 36,543 20,856 1,096 4,560 8,203 6,729 1.38 9,401 368 34,010 16.260 989 10,635 6,097 3,676 10,629 726 $ 87,270 $ 87,896 December 31. (In millions except 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, less allowances of $477 and 5466, respectively Inventories Prepaid expenses and other assets Assets held for sale Assets held 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 Loans and notes payable Current maturities of long-term debe 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, 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-2.781 and 2.752 shares, respectively EQUITY ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY EQUITY ATTRIBUTABLE TO NONCONTROLLING INTERESTS TOTAL EQUITY TOTAL LIABILITIES AND EQUITY $9.490 12.498 3.527 710 $ 8,748 13.203 3,298 410 37 1,496 27,194 31,182 8,021 2.522 26,532 29,684 4,081 3,753 1.760 15,864 60,430 (10,305) (50,677) 17,072 1,905 18,977 $ 87,896 1.760 14.993 65,502 (11.205) (47.988) 23.062 158 23.220 $ 87.270 Refer to Notes to Consolidated Financial Statements. 2017 2015 2016 $ 6.550 $ 7,366 $ 1.283 (101) 1,182 1,260 219 (1.256) (628) 281 1.459 1.218 (269) 3,529 6,995 6.550 1,787 258 (856) (449) 158 1.146 647 (224) (221) 8,796 7,366 1.970 236 73 (122) (137) (374) 929 744 (157) 10.528 (16,520) 15,911 (3.900) (15.499) 16,624 (838) (15.831) 14,079 (2,491) THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31. (In millions) 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 activities 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 Net 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 3.821 (1.675) 104 (126) (2,385) 1,035 (2.262) 150 (209) (999) 565 (2,553) 85 (40) (6,186) 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 (3,564) (5,741) 251 (5.113) 111 (65) (38) 8 242 (6) (878 (2,549) 8,555 $ 6,006 1,246 7,309 $ 8,555 (1.649) 8,958 $ 7,309 Pefer to Notes to Consolidated Financial Statements THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY 2017 2016 2015 53 (82) 4.259 $ 1,760 50 (86) 4,288 $ 1.760 4.366 44 (86) 4.324 $ 1.760 14,993 655 14.016 589 130 258 13.154 532 94 236 219 15,864 14.993 14,016 Year Ended December 31. (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 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 Stock issued 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 $1.32 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 noncontrolling interests Net foreign currency translation adjustment Dividends paid to noncontrolling interests Contributions by noncontrolling interests Business combinations 65,502 1.248 (6,320) 60,430 65,018 6.527 (6,043) 65.502 63,408 7,351 (5,741) 65.018 (11,205) 900 (10.305) (10,174) (1.031) (11.205) (5.777 (4.397) (10.174 (47,988) (45.066) 909 811 (3.598) (3.733) (50.677) (47.988) $ 17.072 $ 23.062 (42.225 696 (3.537) (45.066) $ 25,554 $ S 158 5 35 38 (15) 210 23 (13) (25) 241 15 (18) (31) 1 1,805 (157) (3) (34) Deconsolidation of certain entities Other activities TOTAL EQUITY ATTRIBUTABLE TO NONCONTROLLING INTERESTS lala le 6 $ 1,905 $ 158 $ Refer to Notes to Consolidated Financial Statements. 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 $ 28,785 34,740 24,231 2016 62.799 $ 28,209 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 Basie Diluted Weighted average common shares outstanding Basic Diluted Cash dividends declared per common share 10,509 (1.151) 244 9,602 4,694 4,908 51 4,857 9,785 (1.342) 110 8.553 2.174 6.379 SO 6.329 2015 63,056 28,731 34 325 24,613 1.359 8.353 (970) 59 7,442 1,941 5.501 49 5,452 $ S $ $ $ 3.40 $ 3.38 $ 4.39 $ 4.36 $ 3.71 3.67 1,425 1.438 3.1675 $ 1.439 1.452 2.96 $ 1,469 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 S 2016 6,379 $ 2015 5,501 (302) 46 (316) Net income Other comprehensive income/loss), net of taxes: Net currency translation adjustment Net change on cash flow hedges Net pension and retiree medical adjustments Net change on securities Other (2.827) 3 171 1 1,109 (36) (159) (68) 16 862 5.770 (51) 5,719 (596) 5.783 (54) 5.7295 (2.652) 2.849 (47) 2,802 $ Comprehensive income Comprehensive income attributable to noncontrolling interests Comprehensive Income Attributable to PepsiCo See accompanying notes to the consolidated financial statements. Con Sustement of Cash Flows PepsiCo, Inc. and Subsidiaries Fiscal years ended December 30, 2017, December 31, 2016 and December 26, 2015 in millions) - als and December 28, 2009 sans nomidega 2017 2016 5 Opting Athe Net income Der and more Shwe-based compensation expense Restructuring and impairment chwo Cash payment for restructuring charges Charges and the transaction with Tingi Vel impairment charges Pemindre medical plan expenses Pensieri dical plan contribution Deferred income under charges and credits Provisional tax expened to the TCHA 3.500 293 210 73 1.159 (130 500 9 205 Account and be 2,451 02 Prepaid expenses and other cum se Accounts payable and others Income taxes pay Others Net Cash Provided by Operating Acties 201 10 92 55 54 10673 10.64 190 461 Go 99 2.758) 36 18 Investing Activities Capital spending Sales of property, plant and equipment Acquisitions and investments in controlled Reduction of cash dee meala deconsolidar Diveres Short-term investment by riginal marity More than three months - purchase More than three months aus More than three months - sales Three months or less.net Other investing.net Net Cash Used for investing Activities 5 (56) 76 15.744 790 15 19 (4,00 (5) 7.818 (3.105 8.703 14.406) 14.095) 91 19 (43) (27) 1.305 (1,416 31 Financing Activities Proceeds from suces of long-term debe Payments of long-term debe Debt redemptions Short-term borrowings, by original maturity: More than three months preces More than three months. yments Three months or less.net Cash dividends paid Share repurchases common Share purchases - preferred Proceeds from exercises of stock options Witholding tax payment on RSUS. PSUs and PEP Other financing Net Cashleed for Financing Actities Effect of exchange rate changes on cash and chequivalent (2.000) 151 (10 211) 1453 215 10.619 5 5 Net Increase in Cash and Cash Equhalets Cash and Cash Equivalents, Begining of Year Cash and Cash Equivalents, End of Year Sering to the concl. specia Financial Statements: PepsiCo, Inc. D AROM Consolidated Balance Sheet PepsiCo, Inc. and Subsidiaries December 30, 2017 and December 31, 2016 (in millions except per share amounts) 2017 2016 $ 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 Amliates 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 $ $ 5,485 $ 15,017 20,502 33,796 11,283 3.242 68,823 6.892 14,243 21.135 30.053 6,669 4,434 62.291 41 41 (197) (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 1/4 per share (authorized 3.600 shares, issued, net of repurchased common stock at par value: 1.420 and 1.428 shares, respectively) Capital in excess of par value Retained camings 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 4,091 $2.518 (13,919) (31,468 11.246 104 11,199 73.490 $ See accompanying notes to the consolidated financial statements. Specimen Financial Statements: PepsiCo, Inc. Consolidated Statement of Equity PepsiCo, Inc. and Subsidiaries Fiscal years ended December 30, 2017 December 31, 2016 and December 26, 2015 (in millions) 2017 Shares 2016 Shares 03 5 10.T) Amos 28 (0.7) 2015 Shares ON s 0.7) Amos 41 41 (192) (5) 41 (186) (181) 10.71 (197) 0.73 (6) (192) 10.7) (185) 1.418 24 25 18) 1,420 1.448 (20) 1,435 1,488 (40) 1,445 24 24 4,091 4.076 4,115 199 290 (236) (145) (138 (130) 16) (151) 15) 4075 3,996 50,472 $2.518 487 49,092 5.432 6.329 (4.0TI) Preferred Stock Balance, beginning of your Redemptions Balance, end of year Commen Stock Balance, beginning of year Change in repurchased common stock Balance end of year Capital in Excew of Par Value Balance, beginning of year Share-based compensation expense Stock option exercises, RSUS, PSUs and PE Punits 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 Los Balance, beginning of year Other comprehensive income los atributable to PepsiCo Balance, end of year Repurchased Common Stock Balance, beginning of year Share repurchases Stock option exercises, RSU, PSUs and PEPts converted Other Balance, end of year Total PepsiCo Commen Shareholders' Equity Nomcontrolling Interests Balance, beginning of year Net income attributable to noncontrolling interests Distributions to moncontrolling intereses Currency translation adjustment Othernet Balance, end of year Total Equity $2.839 52.315 50,472 (13319) (13.919) 862 (10.669) 13.057) (13.9191 (13.319) (418) (375) (24.985) (29) 9 (29.185) (3.000 712 10 708 3 5 (418) (446) 32.787) 11.045 (31.465) 11.246 (29,185) 12.068 107 110 31 30 49 (55) 4 (2) (2) 104 5 107 12.000 5 10.981 11.199 (Includes total tax benefits of $110 million in 2016 and 107 million in 2015 See accompanying notes to the consolidated financial statements
