accounting project

79

Consolidated Statement of Income PepsiCo, Inc. and Subsidiaries Fiscal years ended December 30, 2017, December 31, 2016 and December 26, 2015 (in millions except per share amounts)

2017 2016 2015 Net Revenue $ 63,525 $ 62,799 $ 63,056 Cost of sales 28,785 28,209 28,731 Gross profit 34,740 34,590 34,325 Selling, general and administrative expenses 24,231 24,805 24,613 Venezuela impairment charges — — 1,359 Operating Profit 10,509 9,785 8,353 Interest expense (1,151) (1,342) (970) Interest income and other 244 110 59 Income before income taxes 9,602 8,553 7,442 Provision for income taxes (See Note 5) 4,694 2,174 1,941 Net income 4,908 6,379 5,501 Less: Net income attributable to noncontrolling interests 51 50 49 Net Income Attributable to PepsiCo $ 4,857 $ 6,329 $ 5,452 Net Income Attributable to PepsiCo per Common Share

Basic $ 3.40 $ 4.39 $ 3.71 Diluted $ 3.38 $ 4.36 $ 3.67

Weighted-average common shares outstanding Basic 1,425 1,439 1,469 Diluted 1,438 1,452 1,485

Cash dividends declared per common share $ 3.1675 $ 2.96 $ 2.7625

See accompanying notes to the consolidated financial statements.

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79

Consolidated Balance Sheet PepsiCo, Inc. and Subsidiaries December 31, 2016 and December 26, 2015 (in millions except per share amounts)

2016 2015 ASSETS Current Assets Cash and cash equivalents $ 9,158 $ 9,096 Short-term investments 6,967 2,913 Accounts and notes receivable, net 6,694 6,437 Inventories 2,723 2,720 Prepaid expenses and other current assets 1,547 1,865

Total Current Assets 27,089 23,031 Property, Plant and Equipment, net 16,591 16,317 Amortizable Intangible Assets, net 1,237 1,270 Goodwill 14,430 14,177 Other nonamortizable intangible assets 12,196 11,811

Nonamortizable Intangible Assets 26,626 25,988 Investments in Noncontrolled Affiliates 1,950 2,311 Other Assets 636 750

Total Assets $ 74,129 $ 69,667

LIABILITIES AND EQUITY Current Liabilities Short-term debt obligations $ 6,892 $ 4,071 Accounts payable and other current liabilities 14,243 13,507

Total Current Liabilities 21,135 17,578 Long-Term Debt Obligations 30,053 29,213 Other Liabilities 6,669 5,887 Deferred Income Taxes 5,073 4,959

Total Liabilities 62,930 57,637 Commitments and contingencies Preferred Stock, no par value 41 41 Repurchased Preferred Stock (192) (186) PepsiCo Common Shareholders’ Equity Common stock, par value 12/3¢ per share (authorized 3,600 shares, issued, net of repurchased common stock at par value: 1,428 and 1,448 shares, respectively) 24 24 Capital in excess of par value 4,091 4,076 Retained earnings 52,518 50,472 Accumulated other comprehensive loss (13,919) (13,319) Repurchased common stock, in excess of par value (438 and 418 shares, respectively) (31,468) (29,185)

Total PepsiCo Common Shareholders’ Equity 11,246 12,068 Noncontrolling interests 104 107

Total Equity 11,199 12,030 Total Liabilities and Equity $ 74,129 $ 69,667

See accompanying notes to the consolidated financial statements.

81

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 Operating Activities Net income $ 4,908 $ 6,379 $ 5,501 Depreciation and amortization 2,369 2,368 2,416 Share-based compensation expense 292 284 295 Restructuring and impairment charges 295 160 230 Cash payments for restructuring charges (113) (125) (208) Charges related to the transaction with Tingyi — 373 73 Venezuela impairment charges — — 1,359 Pension and retiree medical plan expenses 221 501 467 Pension and retiree medical plan contributions (220) (695) (205) Deferred income taxes and other tax charges and credits 619 452 78 Provisional net tax expense related to the TCJ Act 2,451 — — Change in assets and liabilities:

Accounts and notes receivable (202) (349) (461) Inventories (168) (75) (244) Prepaid expenses and other current assets 20 10 (50) Accounts payable and other current liabilities 201 997 1,692 Income taxes payable (338) 329 55

Other, net (341) 64 (134) Net Cash Provided by Operating Activities 9,994 10,673 10,864

Investing Activities Capital spending (2,969) (3,040) (2,758) Sales of property, plant and equipment 180 99 86 Acquisitions and investments in noncontrolled affiliates (61) (212) (86) Reduction of cash due to Venezuela deconsolidation — — (568) Divestitures 267 85 76 Short-term investments, by original maturity:

More than three months - purchases (18,385) (12,504) (4,428) More than three months - maturities 15,744 8,399 4,111 More than three months - sales 790 — — Three months or less, net 2 16 3

Other investing, net 29 9 (5) Net Cash Used for Investing Activities (4,403) (7,148) (3,569)

Financing Activities Proceeds from issuances of long-term debt 7,509 7,818 8,702 Payments of long-term debt (4,406) (3,105) (4,095) Debt redemptions — (2,504) — Short-term borrowings, by original maturity:

More than three months - proceeds 91 59 15 More than three months - payments (128) (27) (43) Three months or less, net (1,016) 1,505 53

Cash dividends paid (4,472) (4,227) (4,040) Share repurchases - common (2,000) (3,000) (5,000) Share repurchases - preferred (5) (7) (5) Proceeds from exercises of stock options 462 465 504 Withholding tax payments on RSUs, PSUs and PEPunits converted (145) (130) (151) Other financing (76) (58) (52) Net Cash Used for Financing Activities (4,186) (3,211) (4,112) Effect of exchange rate changes on cash and cash equivalents 47 (252) (221) Net Increase in Cash and Cash Equivalents 1,452 62 2,962 Cash and Cash Equivalents, Beginning of Year 9,158 9,096 6,134 Cash and Cash Equivalents, End of Year $ 10,610 $ 9,158 $ 9,096

See accompanying notes to the consolidated financial statements.

73

THE COCA-COLA COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

Year Ended December 31, 2016 2015 2014 (In millions except per share data)

NET OPERATING REVENUES $ 41,863 $ 44,294 $ 45,998 Cost of goods sold 16,465 17,482 17,889 GROSS PROFIT 25,398 26,812 28,109 Selling, general and administrative expenses 15,262 16,427 17,218 Other operating charges 1,510 1,657 1,183 OPERATING INCOME 8,626 8,728 9,708 Interest income 642 613 594 Interest expense 733 856 483 Equity income (loss) — net 835 489 769 Other income (loss) — net (1,234) 631 (1,263) INCOME BEFORE INCOME TAXES 8,136 9,605 9,325 Income taxes 1,586 2,239 2,201 CONSOLIDATED NET INCOME 6,550 7,366 7,124 Less: Net income attributable to noncontrolling interests 23 15 26 NET INCOME ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY $ 6,527 $ 7,351 $ 7,098 BASIC NET INCOME PER SHARE1 $ 1.51 $ 1.69 $ 1.62 DILUTED NET INCOME PER SHARE1 $ 1.49 $ 1.67 $ 1.60 AVERAGE SHARES OUTSTANDING 4,317 4,352 4,387 Effect of dilutive securities 50 53 63 AVERAGE SHARES OUTSTANDING ASSUMING DILUTION 4,367 4,405 4,450 1 Calculated based on net income attributable to shareowners of The Coca-Cola Company.

Refer to Notes to Consolidated Financial Statements.

75

THE COCA-COLA COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2016 2015

(In millions except par value)

ASSETS CURRENT ASSETS

Cash and cash equivalents $ 8,555 $ 7,309 Short-term investments 9,595 8,322

TOTAL CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS 18,150 15,631 Marketable securities 4,051 4,269 Trade accounts receivable, less allowances of $466 and $352, respectively 3,856 3,941 Inventories 2,675 2,902 Prepaid expenses and other assets 2,481 2,752 Assets held for sale 2,797 3,900

TOTAL CURRENT ASSETS 34,010 33,395 EQUITY METHOD INVESTMENTS 16,260 12,318 OTHER INVESTMENTS 989 3,470 OTHER ASSETS 4,248 4,110 PROPERTY, PLANT AND EQUIPMENT — net 10,635 12,571 TRADEMARKS WITH INDEFINITE LIVES 6,097 5,989 BOTTLERS' FRANCHISE RIGHTS WITH INDEFINITE LIVES 3,676 6,000 GOODWILL 10,629 11,289 OTHER INTANGIBLE ASSETS 726 854

TOTAL ASSETS $ 87,270 $ 89,996 LIABILITIES AND EQUITY

CURRENT LIABILITIES Accounts payable and accrued expenses $ 9,490 $ 9,660 Loans and notes payable 12,498 13,129 Current maturities of long-term debt 3,527 2,676 Accrued income taxes 307 331 Liabilities held for sale 710 1,133

TOTAL CURRENT LIABILITIES 26,532 26,929 LONG-TERM DEBT 29,684 28,311 OTHER LIABILITIES 4,081 4,301 DEFERRED INCOME TAXES 3,753 4,691 THE COCA-COLA COMPANY SHAREOWNERS' EQUITY

Common stock, $0.25 par value; Authorized — 11,200 shares; Issued — 7,040 and 7,040 shares, respectively 1,760 1,760

Capital surplus 14,993 14,016 Reinvested earnings 65,502 65,018 Accumulated other comprehensive income (loss) (11,205) (10,174) Treasury stock, at cost — 2,752 and 2,716 shares, respectively (47,988) (45,066)

EQUITY ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY 23,062 25,554 EQUITY ATTRIBUTABLE TO NONCONTROLLING INTERESTS 158 210 TOTAL EQUITY 23,220 25,764

TOTAL LIABILITIES AND EQUITY $ 87,270 $ 89,996

Refer to Notes to Consolidated Financial Statements.

76

THE COCA-COLA COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31, 2016 2015 2014 (In millions)

OPERATING ACTIVITIES Consolidated net income $ 6,550 $ 7,366 $ 7,124 Depreciation and amortization 1,787 1,970 1,976 Stock-based compensation expense 258 236 209 Deferred income taxes (856) 73 (40) Equity (income) loss — net of dividends (449) (122) (371) Foreign currency adjustments 158 (137) 415 Significant (gains) losses on sales of assets — net 1,146 (374) 831 Other operating charges 647 929 761 Other items (224) 744 149 Net change in operating assets and liabilities (221) (157) (439)

Net cash provided by operating activities 8,796 10,528 10,615 INVESTING ACTIVITIES Purchases of investments (15,499) (15,831) (17,800) Proceeds from disposals of investments 16,624 14,079 12,986 Acquisitions of businesses, equity method investments and nonmarketable securities (838) (2,491) (389) Proceeds from disposals of businesses, equity method investments and nonmarketable securities 1,035 565 148 Purchases of property, plant and equipment (2,262) (2,553) (2,406) Proceeds from disposals of property, plant and equipment 150 85 223 Other investing activities (209) (40) (268)

Net cash provided by (used in) investing activities (999) (6,186) (7,506) FINANCING ACTIVITIES Issuances of debt 27,281 40,434 41,674 Payments of debt (25,615) (37,738) (36,962) Issuances of stock 1,434 1,245 1,532 Purchases of stock for treasury (3,681) (3,564) (4,162) Dividends (6,043) (5,741) (5,350) Other financing activities 79 251 (363)

Net cash provided by (used in) financing activities (6,545) (5,113) (3,631) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (6) (878) (934) CASH AND CASH EQUIVALENTS Net increase (decrease) during the year 1,246 (1,649) (1,456) Balance at beginning of year 7,309 8,958 10,414

Balance at end of year $ 8,555 $ 7,309 $ 8,958

Refer to Notes to Consolidated Financial Statements.