References Specimen Financial Statements: PepsiCo, Inc. PepsiCo, Inc. is a world Icader in convenient snacks, foods, and beverages. The following are PepsiCo's financial statements as presented in its 2015 annual report. The complete annual report, including notes to the financial statements, is available at the company's website. Consolidated Statement of Income PepsiCo, Inc. and Subsidiaries Fiscal years ended December 26, 2015. December 27, 2014 and December 28, 2013 (in millions except per share amounts) 2014 2013 66,683 $ 66,415 30.884 31.243 35.799 35.172 26.126 25,357 2015 $ 63,056 $ 28,384 34,672 24,885 1,359 75 ** 8,353 (970) 59 20 7,442 1,941 5,501 49 s 5,452 $ 92 9.581 (909) 85 Net Revenue Cost of sales Gross profit Selling, general and administrative expenses Venezuela impairment charges 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 Basic Diluted Weighted average common shares outstanding Basic Diluted Cash dividends declared per common share 8.757 110 9.705 (911) 97 8,891 2.104 6,787 47 6,740 2.199 6.558 45 6,513 $ S S 3.71 $ 3.67 $ 4.31 $ 4.27 $ 4.37 4.32 1,469 1,509 1,485 1,527 S 2.7625 $ 2.5325 $ 1,541 1,560 2.24 See accompanying notes to the consolidated financial statements. After-tax amounts 5,501 $ (2.938) Consolidated Statement of Comprehensive Income PepsiCo, Inc. and Subsidiaries Fiscal years ended December 26, 2015. December 27, 2014 and December 28, 2013 (in millions) 2015 Pre-tas amounts Tas amounts Net income Other Comprehensive Loss Currency translation: Currency translation adjustment (2.938) $ Reclassification associated with Venezuelan entities 11 Cash flow hedges Reclassification of net losses to net income 97 (7) Net derivative losses 48 Pension and retiree medical: Reclassification of net losses to net income 246 (74 Reclassification associated with Venezuelan entities 20 (4) Remeasurement of net liabilities and translation (88) 71 Unrealized gains on securities Ta Total Other Comprehensive Loss (2,614) (8) Comprehensive income Comprehensive income attributable to noncontrolling interests Comprehensive Income Attributable to PepsiCo ill 50 (47) 172 16 (17) 2.849 (47) 2.809 Pre tax amounts 2014 Tax amounts After-tax amounts 6.558 S 05.010) $ (5.010) 249 (88) (95) 44 154 (44) Net income Other Comprehensive Loss Currency translation adjustment Cash flow hedges: Reclassification of net losses to net income Net derivative losses Pension and retiree medical: Reclassification of net losses to net income Remeasurement of net linbilities and translation Unrealized losses on securities Other Total Other Comprehensive Loss Comprehensive income Comprehensive income attributable to noncontrolling interests Comprehensive Income Attributable to PepsiCo 369 (1,323) (11) (122) 437 s (5,813) 247 (886) (6) 1 (5.544) 1,014 (43) 971 269 2013 Tax amounts Pre-tax amounts After-tax amounts 6,787 S (1,303) $ (1,303) Net income Other Comprehensive Income Currency translation adjustment Cash flow hedges Reclassification of net losses to net income Net derivative losses Pension and retiree medical: Reclassification of net losses to net income 45 (20) (17) 10 28 (10) 353 (123) 230 353 2.164 57 Pension and retiree medical: Reclassification of net losses to net income Remeasurement of net liabilities and translation Unrealized gains on securities Other Total Other Comprehensive Income Comprehensive income Comprehensive income attributable to noncontrolling interests Comprehensive Income Attributable to PepsiCo (123) (764) (28) (16) (938) 230 1.400 29 (16) 358 7,145 (45) 7.100 1.296 $ See accompanying notes to the consolidated financinl statements. 2014 2013 6.787 6,558 5 2.625 297 - 303 10 ( 25) 163 (133) 418 (266) Consolidated Statement of Cash Flows PepsiCo, Inc. and Subsidiaries Fiscal years ended December 26, 2015, December 27, 2014 and December 28, 2013 (in millions) 2015 Operating Activities Net income $ 5,501 $ Depreciation and amortization 2.16 Share-based compensation expense 295 Merger and integration charges Cash payments for merger and integration charges Restructuring and impairment charges 230 Cash payments for restructuring charges (208) Charge related to the transaction with Tingyi 73 Cash payments for restructuring and other charges related to the transaction with Tingyi Venezuela impairment charges 1,359 Venezueln remeasurement charges Excess tax benefits from share-based payment arrangements (133) Pension and retiree medical plan expenses 467 Pension and retiree medical plan contributions (205) Deferred income taxes and other tax charges and credits 78 Change in assets and liabilities Accounts and notes receivable (461) Inventories (244) Prepaid expenses and other current assets (50) Accounts payable and other current liabilities 1,692 Income taxes payable Othernet (285) Net Cash Provided by Operating Activities 10.580 026 105 (114) 667 (655) (19) (117) 663 (262) (1.058) (111) 80 1,162 371 (269 10,506 (88) 4. (51) 1.007 86 (349) 9.688 Investing Activities Capital spending (2,758) (2.859) (2.795) (2.758) 86 (86) (568) 76 (2.859) 115 (88) (2,795) 109 (109) 203 130 (4.428) 4.111 3 (5) (3,569) (6,305) 3.891 116 (10) (4.937) 61 (21) (2.625) S 8,702 $ (4,095) 3.855 $ Q.189) 4.195 (3.894) Capital spending Sales of property, plant and equipment Acquisitions and investments in noncontrolled affiliates Reduction of cash due to Venezuela deconsolidation Divestitures Short-term investments, by original maturity More than three months - purchases More than three months - maturities Three months or less, net Other investing.net Net Cash Used for Investing Activities Financing Activities Proceeds from issuances of long-term debt Payments of long-term debt Short-term borrowings, by original maturity More than three months proceeds More than three months - payments Three months or less, net Cash dividends pand Share repurchases - common Share repurchases-preferred Proceeds from exercises of stock options Excess tax benefits from share-based payment arrangements Acquisition of noncontrolling interests Other financing Net Cash Used for Financing Activities Effect of exchange rate changes on cash and cash equivalents Net Increase/Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents, Beginning of Year Cash and Cash Equivalents, End of Year 15 15 (43) 53 (4,040) (5,000) (5) 504 133 -- (52) (3,828) (21) 2,962 6,134 9,096 $ 50 (10) (2,037) (3,730) (5.012) (10) 755 114 23 (492) 1.634 (3,434) (3.001) (50) (8.264) (546) (3.241) 9.375 6.134 $ 1123 117 (20) (33) (3,789) (196) 3.078 6.297 9.375 See accompanying notes to the consolidated financial statements Consolidated Balance Sheet PepsiCo. Inc. and Subsidiaries December 26, 2015 and December 27, 2014 (in millions except per share amounts) 2015 2014 $ ASSETS Current Assets Cash and cash equivalents Short-term investments Accounts and notes receivable, net Inventories Prepaid expenses and other current assets 9,096 2,913 6,437 2,720 1,865 6,134 2.592 6,651 3.143 2.143 Total Current Assets Property, Plant and Equipment, net Amortizable Intangible Assets, net Goodwill Other nonamortizable intangible assets Nonamortizable Intangible Assets Investments in Noncontrolled Affiliates Other Assets Total Assets 23,031 16,317 1,270 14,177 11,811 25,988 2,311 750 69,667 $ 20.663 17.244 1.449 14.965 12,639 27,604 2.689 860 70.509 $ $ 4,071 S 13,507 17,378 29.213 5,887 4,959 57,637 5,076 13016 18,092 23.821 5.744 5,304 52,961 LIABILITIES AND EQUITY Current Liabilities Short-term obligations Accounts payable and other current liabilities Total Current Liabilities Long-Terin 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 1/3 per share (authorized 3,600 shares, issued, net of repurchased common stock at par value: 1,448 and 1,488 shares, respectively) Capital in excess of par value Retained earnings Accumulated other comprehensive loss Repurchased common stock, in excess of par value (418 and 378 shares, respectively) Total PepsiCo Common Shareholders' Equity Noncontrolling interests Total Equity Total Liabilities and Equity 41 (186) 41 (181) 24 4,076 50,472 (13,319) (29,185) 12,068 107 12,030 69,6675 25 4.115 49,092 (10,669) (24,985) 17.578 110 17,348 70.509 See accompanying notes to the consolidated financial statements Consolidated Statement of Equity PepsiCo. Inc. and Subsidiaries Fiscal years ended December 26, 2015, December 27, 2014 and December 28, 2013 (in millions) 2015 2014 Preferred Stoek US $ 0.85 Shares Amount Shares 2013 Shares OSS Amount 41 41 References Specimen Financial Statements: The Coca-Cola Company The Coca-Cola Company is a global leader in the beverage industry. It offers hundreds of brands, including soft drinks, fruit juices, sports drinks and other beverages in more than 200 countries. The following arc Coca-Cola's financial statements as presented in its 2015 annual report. The complete annual report, including notes to the financial statements, is available at the company's website. THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME 2015 2014 2013 $ 44.294 17,482 26,812 16,427 1.657 $ 45,998 17,889 28,109 17,218 1.183 8,728 613 856 489 631 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 BASIC NET INCOME PER SHARE DILUTED NET INCOME PER SHARE AVERAGE SHARES OUTSTANDING Effect of dilutive securities AVERAGE SHARES OUTSTANDING ASSUMING DILUTION Calculated based on net income attributable to shareowners of The Coca-Cola Company. 9,708 594 483 769 (1,263) 9,325 2.201 7,124 26 $ 7,098 S 1.62 9,605 2.239 7,366 15 $ 46,854 18,421 28,433 17,310 895 10,228 534 463 602 576 11,477 2,851 8,626 42 $ 8,584 $ 1.94 $ 7,351 $ 1.69 S 1.60 S $ 1.67 4.352 53 4.405 4,387 63 4,450 1.90 4,434 75 4,509 Refer to Noles to Consolidated Financial Statements. THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 2015 2014 2013 $ 7,366 $ 7,124 $8,626 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 (3.959) 142 (684) 86 2.951 (3) (2,382) 357 714 (1,039) 4.774 21 (1,187) 151 (80) 1,066 8,576 39 $ 2,954 $4,753 $ 8,537 Refer to Notes to Consolidated Financial Statements. THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS 2015 2014 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 $352 and $331, 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 $ 7,309 8,322 15.631 4.269 3,941 2.902 2.752 3.900 S 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 33,395 12,318 3.470 4,207 12.571 3.989 6,000 11.289 11.289 854 $ 90,093 12,100 1,050 $ 92,023 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 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, 30.25 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 - 2,716 and 2,674 shares, respectively EQUITY ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY EQUITY ATTRIBUTABLE TO NONCONTROLLING INTERESTS TOTAL EQUITY TOTAL LIABILITIES AND EQUITY $ 9,660 13.129 2.677 331 1.133 26,930 28,407 4.301 4.691 $ 9,234 19,130 3,552 400 58 32 374 19,063 4.389 5,636 1,760 14,016 65,018 (10,174) (45,066) 25.354 210 25.764 $ 90,093 1,760 13,154 63,408 (5,777) (42,225 30,320 241 30,561 S 92.023 Refer to Notes to Consolidated Financial Statements. THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS 2015 2014 2013 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 $ 7,366 1,970 236 73 (122) (137) (374) 929 S 7,124 1,976 209 (40) (371) 415 831 761 $ 8,626 1,977 227 648 (201) 168 (670) 465 (374 929 744 (157) 10,528 031 761 149 (439) 10,615 (070 465 234 (932) 10,542 (15,831) 14,079 (2,491) 565 (2,553) 85 (40) (6.186) Signincant (gains) losses on sales of assets 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 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 (17,800) 12.986 (389) 148 (2,406) 223 (268) (7,506) (14,782) 12,791 (353) 872 (2,550) 111 (303) (4,214) 40,434 (37,738) 1.245 (3.564) (5,741) 251 (5.113) (878) 41,674 (36,962) 1,532 (4.162) (5,350) (363) (3.631) (934) 43,425 (38,714) 1,328 (4,832) (4,969) 17 (3,745 (611) (1,649) 8,958 (1.456) 10,414 $ 8.958 1,972 8,442 $ 10,414 Refer to Notes to Consolidated Financial Statements. THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY 2015 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 Balance at beginning of year Purchases of treasury stock Treasury stock issued to employees related to stock compensation plans 4,366 (86) 44 4,402 (98) 62 4.469 (121) 54 4.324 $ 1,760 4,366 1,760 4,402 $ 1,760 13,154 532 94 236 12,276 526 169 209 (26) 13,154 11.379 569 144 227 (43) 12.276 14,016 63,408 7,351 (5,741) 65,018 61,660 7,098 (5.350) 58,045 8,584 (4,969) 61,660 63,408 Balance at end of year COMMON STOCK CAPITAL SURPLUS Balance at beginning of year Stock issued to employees related to stock compensation plans Tax bencfit (charge) from stock compensation plans Stock-based compensation 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 $1.32, $1.22 and $1.12 in 2015, 2014 and 2013, 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 Stock issued to employees related to stock compensation plans Purchases of treasury stock Balance at end of year TOTAL QUITY 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 Acquisition of interests held by noncontrolling owners Contributions by noncontrolling interests Business combinations Deconsolidation of certain entities Other activities TOTAL EQUITY ATTRIBUTABLE TO NONCONTROLLING INTERESTS (5,777) (4,397) (10,174) (3,432) (2.345 (5,777 (3,385) (47) (3,432) (42.225) (39,091 (35,009) 696 891 745 (3,537) (4,025) (4,827) (45,066) (42,225) (39,091) $ 25,554 $ 30,320 $ 33,173 $ 241 S 15 (18) (31) 267 $ 26 (5) (25) 378 42 (3) (58) (34) 6 25 (3) (22) (89) 6 $ 210 $ 241 $ 267 Refer to Notes to Consolidated Financial Statements. Critical Thinking 14-02 a1,b (Part Level Submission) PepsiCo, Inc.'s financial statements are presented in Appendix B. Click here to view Appendix B. Financial statements of The Coca-Cola Company are presented in Appendix C. Click here to view Appendix C. The complete annual reports of PepsiCo and Coca-Cola, including the notes to the financial statements, are available at each company's respective website. (a1) Compute earnings per share and return on common stockholders' equity for both companies for 2015. Assume PepsiCo's weighted average shares were 1,469 million and Coca- Cola's weighted-average shares were 4,352 million. (Round Earnings per Share answers to 2 decimal places, e.g. 15.25 and percentage answers to 1 decimal place, e.g. 15.5%.) PepsiCo Coca-Cola Earnings per share Return on common stockholders' equity % %