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 are the amounts of Coca-Cola's and PepsiCo's provision for income taxes for the year 2017? Of each company's 2017 provision for income taxes, what portion is current expense and what portion is deferred expense ? b. What amount of cash was paid in 2017 for income taxes by Coca-Cola and by PepsiCo? c. What was the U.S. federal statutory tax rate in 2017? What was the effective tax rate in 2017 for Coca-Cola and PepsiCo? Why might their effective tax rates differ? d. For year-end 2017, what amounts were reported by Coca-Cola and PepsiCo as (1) gross deferred tax assets and (2) gross deferred tax liabilities? e. Do either Coca-Cola or PepsiCo disclose any net operating loss carrybacks and/or carryforwards at year-end 2017? What are the amounts, and when do the carryforwards expire? THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME 2017 2016 2015 $41.863 16,465 25,398 15.262 1,510 8,626 642 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, 90 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 $ 44.294 17.482 26,812 16,427 1.657 8,728 613 856 489 631 9.605 2,239 7,366 733 835 (1.234) 8.136 1,586 6,550 6,550 23 7,366 15 $ 1,248 $ 6,527 $ 7.351 $ 1.51 S 1.69 s $ 1.51 1.49 S S 1.69 1.67 Basic net income per share from continuing operations! Basic net income per share from discontinued operations BASIC NET INCOME PER SHARE Diluted net income per share from continuing operations! Diluted net income per share from discontinued operations? DILUTED NET INCOME PER SHARE AVERAGE SHARES OUTSTANDING BASIC Effect of dilutive securities AVERAGE SHARES OUTSTANDING -DILUTED 0. 0.02 $ 0.29 $ 0.27 0.02 $ 0.29 4,272 52 4,324 S S 1.49 4,317 50 4.367 1.67 4,352 53 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. Specimen Financial Statements: The Coca-Cola Company THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 2017 2016 2015 $ 1,283 $ 6,550 $ 7,366 861 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 (433) 188 (626) (3.959) (382) 142 17 (684) (53) 86 5.506 2.951 10 (3) 322 2,221 73 $ 2,148 $ 5,496 $ 2,954 THE COCA-COLA COMPANY AND SURSIDIARIES OF THE COCA-COLA COMPANY $ 2,148 $ 5,496 $2.954 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 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 S477 and $466, 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 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, S0.25 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 $ 6,006 9,352 15.358 5,317 3,667 2,655 2,000 219 7,329 36,545 20,856 1,096 4,560 8,203 6,729 138 9,401 368 $ 87,896 34,010 16.260 989 4.248 10.635 6,097 3,676 10,629 726 $ 87,270 $ 9.490 12.498 3.527 307 710 $ 8,748 13,205 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 S 87.270 Refer to Notes to Consolidated Financial Statements. Specimen Financial Statements: The Coca-Cola THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS 2015 2017 2016 $ 6.550 $ 7,366 7.366 1,970 236 73 $ 1,283 (101) 1,182 1.260 219 (1.256) (628) 281 1.459 1,218 (269) 3,529 6,995 (122) 6,550 1,787 258 (856) (449) 158 1.146 6-17 (224) (221) 8.796 (137) (374) 929 744 (157) 10.528 (16,520) 15,911 (3.900) (15.499) 16,624 (838) (15.831) 14,079 (2.491) 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) 29,857 (28,768) 1,595 27.281 (25,615) 1.434 (3,681) (6,043) 79 (6.545) 40,434 (37,738) 1.245 (3,564) (5.741) 251 (5.113 (6,320) (91) (7,409) 111 (65) (38) 8 242 (6) (878) 8,555 $ 6,006 1.246 7,309 $ 8,555 (1,649) 8.958 $ 7,309 Refer to Notes to Consolidated Financial Statements. KC Specimen Financial Statements: The Coca-Cola Company THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY 2017 2016 2015 4.366 4.288 53 (82) 4.259 $ 1,760 4,334 SO (86) 4.288 (86 4.324 $ 1,760 $ 1.760 14.016 14,993 655 589 130 258 13,154 532 94 236 219 (3) 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. S1.40 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 Deconsolidation of certain entities Other activities TOTAL EQUITY ATTRIBUTABLE TO NON CONTROLLING INTERESTS 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 (42.225 (47,988) (45.066) 909 811 (3.598) (3.733) (50,677) (47988) $ 17,072 $ 23.062 (3,537 (45,066) $ 25,354 $ S S 158 35 38 210 23 (13) (25) 1 241 15 (18) (31) (15) (3) 1.805 (157) 41 $ 1,9055 158 $ 210 Refer to Notes to Consolidated 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 $ 28,785 34,740 24,231 2016 62.799 $ 28,209 34.590 24.805 2015 63,056 28,731 34,325 24,613 1.159 8.353 (970) 59 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 (Soe Note 5) 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 10,509 (1.151) 244 9,602 4,694 4,908 51 9,785 (1.342) 110 8553 2,174 6,379 SO 6.329 1.941 5.501 49 5.452 $ 4,857 s 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 $ 2016 6,379 $ 2015 5.501 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 (302) 46 (316) (24) (2.827) 3 171 1 1.109 (36) (159) (68) 16 862 5,770 (51) 5.719 $ (596) (2.652) 2.849 Comprehensive income Comprehensive income attributable to noncontrolling interests Comprehensive Income Attributable to PepsiCo 5.783 (54) S 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) 2017 2016 2015 4,90 5 379 5 sou 2.416 293 295 160 230 (113) 20 373 73 221 (230 501 (505) Operating the Not income Depreciation and to Sharebes compensation Resucturing and implement charges Cath payments for restructuring charges Charges related to the reaction with Tinggi Veneral impairment charges Pension and rare medical plan expert Pensic and retire medical plan contributors Deferred income and other charges and credits Prova un expense redo the TCI A Change in and this Accounts and receivable es Prepaid expenses and other current sets Accounts payable and her currenties Income taxes payable Othernet Net Cash Provided by Operating Activities 1.350 457 (208) 78 2,451 (349) (2001 (168) (461) (24) (50) 30 997 201 (134 9,994 1063 10.864 03.040) 99 212) 95 267 85 76 Investing Active Capital spending Sales of property, plant and en Acquisitions and invest in controlled affiliates Reduction of cash due to Venezuela decalation Diveres Shon-term investments, by original maturity More than the meth-purchases More than there motstries More than three months.al Three motors, el Oberligt Net Cash Used for resting Activities (12,500) 399 44 4,111 (18,185) 15,744 790 2 19 16 3 (7,148) 3.56 7.509 4,4063 7.518 3,105) 2,500) 8.702 (4.095) 91 59 (27) 1.505 15 (43) 125 (1,016) 53 Financing Activities Proceeds from ances of legende Payments of long-term debe Detendemos Short borrowings, by original writy More than three months proceeds More than the months.pl Three months or less, Cuh dividends paid Share purchases.com Share purchases preferred Proceeds from east of stock options Withholding payments RSUS, PSUs and PEPalerted Other financing Net Cash Used for Financing Activities Effect of exchange rate changes on cal and covalents Net Increase in Cash and Cash Iquivalente Cash and Cash Equivalents, Beginning of Year Cash and Cash Equivalents, End of Year 3.000 153 462 (145) 5.000 (5) 504 (151) (52) (130 (4,186) (252) (221) 2.962 1,452 9.158 10610 9,096 9.155 $ Consolidated Balance Sheet PepsiCo, Inc. and Subsidiaries December 30, 2017 and December 31, 2016 (in millions except per share amounts) 2016 2017 $ $ 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 Afiliates 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 $ 6,892 5,485 15,017 20,502 33,796 11,283 3.242 68,823 21.135 30.053 6,669 62.291 41 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 earnings 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 41 (197) (192) 24 3,996 52.839 (13,057) (32,757) 11,045 92 10,981 79,804 24 4,091 52.518 (13,919) (31.468) 11,246 104 11.199 73,490 $ See accompanying notes to the consolidated financial statements. 2015 2016 Amount 5 05 (0.7) Amount 41 (186) Shares 08 (0.7) (5) (185) (07) (07) (192) 25 20) (40) 1.448 24 4. 4,076 289 (138) (130) 4.115 299 (182) (6) (151) (5) 4.076 4,091 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 Preferred Stock $ (1923 (T) Balance, beginning of year Redemptions Balance, end of year (0.73 Commen Stock 24 Ralance, beginning of year 1.425 Change in repurchased common ock 8) Balance, end of year 1.430 Capital in Excess of Par Value Balance, beginning of year Share-based compensation expense 290 Stock option exercises, RSUS, PSUs and PE Punits converted (2006 Withholding tax on RSUS, PSUs and PE Punits converted Other (4) Balance, end of year Retained Earnings Balance, beginning of year 52. SIS Net income attributable to PepsiCo Cash dividends declared common Cash dividends declared preferred Balance, end of year 52.839 Accumulated Other Comprehensive Les Balance, beginning of year (13919) Other comprehensive income (los) attributable to PepsiCo 862 Balance, end of year Repurchased Common Stock Balance, beginning of year Share repurchases (18) 2.000 10 Stock option exercises RSUS. PSUs and PE Punits converted 768 Other Balance, end of year (446) (32.757) Total PepsiCo Common Shareholders' Equity 11.045 Noncontrolling Interests Balance, beginning of year 164 Net income attributable to non controlling interests 51 Distributions to noncontrolling interests Currency translation adjustment Other, nel Balance, end of year Total Equity 5 10,981 50,472 6.329 49,092 5.452 (4,071) (1) 50.472 52.518 (13.319) (600) (13.919) (10,669) (2.650) (13.319) (378) 29,185) (3.000) 712 (52) (24.985) (4,999) 794 9 12 5 5 (31.468) (415) (29.185) 12.068 107 110 50 (55) 4 (48) 104 107 S 11.199 12.030 (a) Includes total tax benefits of S110 million in 2016 and 5107 million in 2015. See accompanying notes to the consolidated financial statements APPENDIX D 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) 2016 2015 Shares Amount 2017 Shares Ous $ (0.7) Amount 41 Shares 0.8 0.8 $ $ 41 (0.7) (186) (0.7) (192) (5) (6) (181) (5) (186) (0.7) (197) (0.7) (192) (0.7) 1.428 24 1,448 25 1.488 (40) 1.448 (20) 1.428 (1) 1.410 24 24 4,091 4,076 289 (138) 4,115 299 (182 290 (236) (145) (4) (130) (6) 4.091 (151) (5 3,996 4,076 52.518 50.472 6,329 (4.282) 49,092 5.452 4.857 (4.5346) (4.071) 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 Vale Balance, beginning of year Share-based compensation expense Soock option exercises, RSUL PSUs and PE Ruits converted Withholding us on RSUS, PSUs and PEPunits converted Other Balance, end of year Retained Earnings Ralance, beginning of year Net income attributable to Pepco Cash dividends declared.common Cash dividends declared - preferred Balance, end of year Accumulated Other Comprehensive Low Balance, beginning of year Other comprehensive income loss) ambutale to PepsiCo Balance, end of year Repurchased Commen Stock Balance, beginning of year Share repurchases Stock option exercises, RSUS, PSUs and PEPts converted Other Balance, end of year Total PepsiCo Commen Shareholders' Equity Noncontrolling Interests Balance beginning of year Net income attributable to noncontrolling interests Distributions to controlling interests Currency translation adjustment Othernet Balance, end of year Total Equity $2.839 52.518 50.472 (13,919) 862 (13.319) (600) (10,669) (2.650) (13,319) (13,057) (13.919) (31.468) (2.000) 708 (418) (29) (15) (29,185) 3.000) 712 (378) (52) 12 (24,985) (4,999) 10 9 794 (438) 5 (31.468) (32,757) 11.045 (29.185) 12.068 11,246 104 107 110 51 49 30 (55) 21 5 10.981 104 11,199 107 12.030 5 (a) Includes total tax benefits of $110 million in 2016 and S107 million in 2015 See accompanying notes to the consolidated financial statements 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 are the amounts of Coca-Cola's and PepsiCo's provision for income taxes for the year 2017? Of each company's 2017 provision for income taxes, what portion is current expense and what portion is deferred expense ? b. What amount of cash was paid in 2017 for income taxes by Coca-Cola and by PepsiCo? c. What was the U.S. federal statutory tax rate in 2017? What was the effective tax rate in 2017 for Coca-Cola and PepsiCo? Why might their effective tax rates differ? d. For year-end 2017, what amounts were reported by Coca-Cola and PepsiCo as (1) gross deferred tax assets and (2) gross deferred tax liabilities? e. Do either Coca-Cola or PepsiCo disclose any net operating loss carrybacks and/or carryforwards at year-end 2017? What are the amounts, and when do the carryforwards expire? THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME 2017 2016 2015 $41.863 16,465 25,398 15.262 1,510 8,626 642 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, 90 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 $ 44.294 17.482 26,812 16,427 1.657 8,728 613 856 489 631 9.605 2,239 7,366 733 835 (1.234) 8.136 1,586 6,550 6,550 23 7,366 15 $ 1,248 $ 6,527 $ 7.351 $ 1.51 S 1.69 s $ 1.51 1.49 S S 1.69 1.67 Basic net income per share from continuing operations! Basic net income per share from discontinued operations BASIC NET INCOME PER SHARE Diluted net income per share from continuing operations! Diluted net income per share from discontinued operations? DILUTED NET INCOME PER SHARE AVERAGE SHARES OUTSTANDING BASIC Effect of dilutive securities AVERAGE SHARES OUTSTANDING -DILUTED 0. 0.02 $ 0.29 $ 0.27 0.02 $ 0.29 4,272 52 4,324 S S 1.49 4,317 50 4.367 1.67 4,352 53 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. Specimen Financial Statements: The Coca-Cola Company THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 2017 2016 2015 $ 1,283 $ 6,550 $ 7,366 861 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 (433) 188 (626) (3.959) (382) 142 17 (684) (53) 86 5.506 2.951 10 (3) 322 2,221 73 $ 2,148 $ 5,496 $ 2,954 THE COCA-COLA COMPANY AND SURSIDIARIES OF THE COCA-COLA COMPANY $ 2,148 $ 5,496 $2.954 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 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 S477 and $466, 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 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, S0.25 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 $ 6,006 9,352 15.358 5,317 3,667 2,655 2,000 219 7,329 36,545 20,856 1,096 4,560 8,203 6,729 138 9,401 368 $ 87,896 34,010 16.260 989 4.248 10.635 6,097 3,676 10,629 726 $ 87,270 $ 9.490 12.498 3.527 307 710 $ 8,748 13,205 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 S 87.270 Refer to Notes to Consolidated Financial Statements. Specimen Financial Statements: The Coca-Cola THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS 2015 2017 2016 $ 6.550 $ 7,366 7.366 1,970 236 73 $ 1,283 (101) 1,182 1.260 219 (1.256) (628) 281 1.459 1,218 (269) 3,529 6,995 (122) 6,550 1,787 258 (856) (449) 158 1.146 6-17 (224) (221) 8.796 (137) (374) 929 744 (157) 10.528 (16,520) 15,911 (3.900) (15.499) 16,624 (838) (15.831) 14,079 (2.491) 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) 29,857 (28,768) 1,595 27.281 (25,615) 1.434 (3,681) (6,043) 79 (6.545) 40,434 (37,738) 1.245 (3,564) (5.741) 251 (5.113 (6,320) (91) (7,409) 111 (65) (38) 8 242 (6) (878) 8,555 $ 6,006 1.246 7,309 $ 8,555 (1,649) 8.958 $ 7,309 Refer to Notes to Consolidated Financial Statements. KC Specimen Financial Statements: The Coca-Cola Company THE COCA-COLA COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY 2017 2016 2015 4.366 4.288 53 (82) 4.259 $ 1,760 4,334 SO (86) 4.288 (86 4.324 $ 1,760 $ 1.760 14.016 14,993 655 589 130 258 13,154 532 94 236 219 (3) 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. S1.40 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 Deconsolidation of certain entities Other activities TOTAL EQUITY ATTRIBUTABLE TO NON CONTROLLING INTERESTS 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 (42.225 (47,988) (45.066) 909 811 (3.598) (3.733) (50,677) (47988) $ 17,072 $ 23.062 (3,537 (45,066) $ 25,354 $ S S 158 35 38 210 23 (13) (25) 1 241 15 (18) (31) (15) (3) 1.805 (157) 41 $ 1,9055 158 $ 210 Refer to Notes to Consolidated 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 $ 28,785 34,740 24,231 2016 62.799 $ 28,209 34.590 24.805 2015 63,056 28,731 34,325 24,613 1.159 8.353 (970) 59 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 (Soe Note 5) 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 10,509 (1.151) 244 9,602 4,694 4,908 51 9,785 (1.342) 110 8553 2,174 6,379 SO 6.329 1.941 5.501 49 5.452 $ 4,857 s 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 $ 2016 6,379 $ 2015 5.501 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 (302) 46 (316) (24) (2.827) 3 171 1 1.109 (36) (159) (68) 16 862 5,770 (51) 5.719 $ (596) (2.652) 2.849 Comprehensive income Comprehensive income attributable to noncontrolling interests Comprehensive Income Attributable to PepsiCo 5.783 (54) S 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) 2017 2016 2015 4,90 5 379 5 sou 2.416 293 295 160 230 (113) 20 373 73 221 (230 501 (505) Operating the Not income Depreciation and to Sharebes compensation Resucturing and implement charges Cath payments for restructuring charges Charges related to the reaction with Tinggi Veneral impairment charges Pension and rare medical plan expert Pensic and retire medical plan contributors Deferred income and other charges and credits Prova un expense redo the TCI A Change in and this Accounts and receivable es Prepaid expenses and other current sets Accounts payable and her currenties Income taxes payable Othernet Net Cash Provided by Operating Activities 1.350 457 (208) 78 2,451 (349) (2001 (168) (461) (24) (50) 30 997 201 (134 9,994 1063 10.864 03.040) 99 212) 95 267 85 76 Investing Active Capital spending Sales of property, plant and en Acquisitions and invest in controlled affiliates Reduction of cash due to Venezuela decalation Diveres Shon-term investments, by original maturity More than the meth-purchases More than there motstries More than three months.al Three motors, el Oberligt Net Cash Used for resting Activities (12,500) 399 44 4,111 (18,185) 15,744 790 2 19 16 3 (7,148) 3.56 7.509 4,4063 7.518 3,105) 2,500) 8.702 (4.095) 91 59 (27) 1.505 15 (43) 125 (1,016) 53 Financing Activities Proceeds from ances of legende Payments of long-term debe Detendemos Short borrowings, by original writy More than three months proceeds More than the months.pl Three months or less, Cuh dividends paid Share purchases.com Share purchases preferred Proceeds from east of stock options Withholding payments RSUS, PSUs and PEPalerted Other financing Net Cash Used for Financing Activities Effect of exchange rate changes on cal and covalents Net Increase in Cash and Cash Iquivalente Cash and Cash Equivalents, Beginning of Year Cash and Cash Equivalents, End of Year 3.000 153 462 (145) 5.000 (5) 504 (151) (52) (130 (4,186) (252) (221) 2.962 1,452 9.158 10610 9,096 9.155 $ Consolidated Balance Sheet PepsiCo, Inc. and Subsidiaries December 30, 2017 and December 31, 2016 (in millions except per share amounts) 2016 2017 $ $ 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 Afiliates 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 $ 6,892 5,485 15,017 20,502 33,796 11,283 3.242 68,823 21.135 30.053 6,669 62.291 41 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 earnings 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 41 (197) (192) 24 3,996 52.839 (13,057) (32,757) 11,045 92 10,981 79,804 24 4,091 52.518 (13,919) (31.468) 11,246 104 11.199 73,490 $ See accompanying notes to the consolidated financial statements. 2015 2016 Amount 5 05 (0.7) Amount 41 (186) Shares 08 (0.7) (5) (185) (07) (07) (192) 25 20) (40) 1.448 24 4. 4,076 289 (138) (130) 4.115 299 (182) (6) (151) (5) 4.076 4,091 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 Preferred Stock $ (1923 (T) Balance, beginning of year Redemptions Balance, end of year (0.73 Commen Stock 24 Ralance, beginning of year 1.425 Change in repurchased common ock 8) Balance, end of year 1.430 Capital in Excess of Par Value Balance, beginning of year Share-based compensation expense 290 Stock option exercises, RSUS, PSUs and PE Punits converted (2006 Withholding tax on RSUS, PSUs and PE Punits converted Other (4) Balance, end of year Retained Earnings Balance, beginning of year 52. SIS Net income attributable to PepsiCo Cash dividends declared common Cash dividends declared preferred Balance, end of year 52.839 Accumulated Other Comprehensive Les Balance, beginning of year (13919) Other comprehensive income (los) attributable to PepsiCo 862 Balance, end of year Repurchased Common Stock Balance, beginning of year Share repurchases (18) 2.000 10 Stock option exercises RSUS. PSUs and PE Punits converted 768 Other Balance, end of year (446) (32.757) Total PepsiCo Common Shareholders' Equity 11.045 Noncontrolling Interests Balance, beginning of year 164 Net income attributable to non controlling interests 51 Distributions to noncontrolling interests Currency translation adjustment Other, nel Balance, end of year Total Equity 5 10,981 50,472 6.329 49,092 5.452 (4,071) (1) 50.472 52.518 (13.319) (600) (13.919) (10,669) (2.650) (13.319) (378) 29,185) (3.000) 712 (52) (24.985) (4,999) 794 9 12 5 5 (31.468) (415) (29.185) 12.068 107 110 50 (55) 4 (48) 104 107 S 11.199 12.030 (a) Includes total tax benefits of S110 million in 2016 and 5107 million in 2015. See accompanying notes to the consolidated financial statements APPENDIX D 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) 2016 2015 Shares Amount 2017 Shares Ous $ (0.7) Amount 41 Shares 0.8 0.8 $ $ 41 (0.7) (186) (0.7) (192) (5) (6) (181) (5) (186) (0.7) (197) (0.7) (192) (0.7) 1.428 24 1,448 25 1.488 (40) 1.448 (20) 1.428 (1) 1.410 24 24 4,091 4,076 289 (138) 4,115 299 (182 290 (236) (145) (4) (130) (6) 4.091 (151) (5 3,996 4,076 52.518 50.472 6,329 (4.282) 49,092 5.452 4.857 (4.5346) (4.071) 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 Vale Balance, beginning of year Share-based compensation expense Soock option exercises, RSUL PSUs and PE Ruits converted Withholding us on RSUS, PSUs and PEPunits converted Other Balance, end of year Retained Earnings Ralance, beginning of year Net income attributable to Pepco Cash dividends declared.common Cash dividends declared - preferred Balance, end of year Accumulated Other Comprehensive Low Balance, beginning of year Other comprehensive income loss) ambutale to PepsiCo Balance, end of year Repurchased Commen Stock Balance, beginning of year Share repurchases Stock option exercises, RSUS, PSUs and PEPts converted Other Balance, end of year Total PepsiCo Commen Shareholders' Equity Noncontrolling Interests Balance beginning of year Net income attributable to noncontrolling interests Distributions to controlling interests Currency translation adjustment Othernet Balance, end of year Total Equity $2.839 52.518 50.472 (13,919) 862 (13.319) (600) (10,669) (2.650) (13,319) (13,057) (13.919) (31.468) (2.000) 708 (418) (29) (15) (29,185) 3.000) 712 (378) (52) 12 (24,985) (4,999) 10 9 794 (438) 5 (31.468) (32,757) 11.045 (29.185) 12.068 11,246 104 107 110 51 49 30 (55) 21 5 10.981 104 11,199 107 12.030 5 (a) Includes total tax benefits of $110 million in 2016 and S107 million in 2015 See accompanying notes to the consolidated financial statements