UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________
FORM
11-K
_____________
x ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31,
2014
OR
o TRANSITION
REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______
to _______
Commission File No. 001-02217
COCA-COLA REFRESHMENTS BARGAINING EMPLOYEES’ 401(k) PLAN
(Full title of the plan)
THE COCA-COLA COMPANY
(Name of issuer of the securities held pursuant to the plan)
One Coca-Cola Plaza
Atlanta, Georgia 30313
(Address of the plan and address of issuer’s principal executive offices)
COCA-COLA
REFRESHMENTS
BARGAINING EMPLOYEES’
401(k) PLAN
Financial Statements and Supplemental
Schedule
As of December 31, 2014 and
2013
and for the Year Ended December
31, 2014
with Report of Independent
Registered Public Accounting Firm
Coca-Cola Refreshments
Bargaining Employees’ 401(k) Plan
Index
Report of Independent Registered Public Accounting Firm |
1 |
|
|
Financial Statements: |
|
Statements of Net Assets Available for Benefits |
2 |
Statement of Changes in Net Assets Available for Benefits |
3 |
Notes to Financial Statements |
4 |
|
|
Supplemental Schedule: |
|
Schedule H, Line 4i – Schedule of Assets (Held at End of Year) |
23 |
To The Coca-Cola Company
Benefits Committee
The Coca-Cola Company
Atlanta, Georgia
Report of Independent Registered Public Accounting
Firm
We have audited
the accompanying statements of net assets available for benefits of Coca-Cola Refreshments Bargaining Employees’ 401(k) Plan
(the “Plan”) as of December 31, 2014 and 2013 and the related statement of changes in
net assets available for benefits for the year ended December 31, 2014. These financial statements are the responsibility of the
Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with
standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred
to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2014 and
2013, and the changes in net assets available for benefits for the year ended December 31, 2014, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of
forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets held at end of
year is presented for purposes of additional analysis and is not a required part of the basic financial statements but is supplemental
information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management and
was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements.
The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements
and certain additional procedures, including comparing and reconciling such information directly to
the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves,
and other additional procedures in accordance with auditing standards generally accepted in the United States of America.
In our opinion, the information is fairly stated in all material respects in relation to the financial
statements as a whole.
/s/ BANKS, FINLEY, WHITE & CO.
College Park, Georgia
June 26, 2015
Coca-Cola Refreshments
Bargaining Employees’ 401(k) Plan
Statements of Net Assets Available for
Benefits
December 31, 2014 and 2013
| |
2014 | |
2013 |
| |
| |
|
Assets | |
| | | |
| | |
Investments in Master Trust, at fair value (Note3) | |
$ | 117,059,812 | | |
$ | 106,395,880 | |
Employer contributions receivable | |
| — | | |
| 2,069 | |
Notes receivable from Participants | |
| 6,462,233 | | |
| 5,518,938 | |
Other receivable (Note 1) | |
| — | | |
| 7,411,632 | |
Total assets reflecting all investments at fair value | |
| 123,522,045 | | |
| 119,328,519 | |
Adjustment from fair value to contract value for fully benefit-responsive investment contracts | |
| (430,989 | ) | |
| (275,418 | ) |
Net assets available for benefits | |
$ | 123,091,056 | | |
$ | 119,053,101 | |
See accompanying notes to the financial statements.
Coca-Cola Refreshments
Bargaining Employees’ 401(k) Plan
Statement of Changes in Net Assets Available
for Benefits
Year Ended December 31, 2014
Additions
to net assets attributed to: | |
|
Investment income from the Master Trust | |
$ | 7,350,542 | |
Interest income from notes receivable from Participants | |
| 212,650 | |
Employer contributions | |
| 1,009,297 | |
Participant contributions | |
| 5,324,779 | |
| |
| | |
Total additions | |
| 13,897,268 | |
| |
| | |
Deductions from net assets attributed to: | |
| | |
Distributions to Participants | |
| (9,259,774 | ) |
Administrative expenses | |
| (125,577 | ) |
| |
| | |
Total deductions | |
| (9,385,351 | ) |
| |
| | |
Net increase before transfers | |
| 4,511,917 | |
Transfers to related plan (Note 1) | |
| (473,962 | ) |
| |
| | |
Net increase in net assets available for benefits | |
| 4,037,955 | |
Net assets available for benefits: | |
| | |
Beginning of year | |
| 119,053,101 | |
End of year | |
$ | 123,091,056 | |
See accompanying notes to the financial statements.
Coca-Cola Refreshments
Bargaining Employees’ 401(k) Plan
Notes to Audited Financial Statements
Note 1 – Description of Plan
The following description of the Coca-Cola
Refreshments Bargaining Employees’ 401(k) Plan (the “Plan”) provides only general information. Participants should
refer to the summary plan description for a more comprehensive description of the Plan’s provisions.
General
The Plan is sponsored by Coca-Cola Refreshments
USA, Inc. (the “Company”), which is a wholly owned subsidiary of The Coca-Cola Company. The Plan was formed effective
July 1, 1984 and amended and restated effective January 1, 2002. The Plan is a defined contribution plan covering certain bargaining
employees of the Company, and is subject to the provisions of the Employee Retirement Income Security Act of 1974 as amended (“ERISA”).
Administration
The Plan is administered by The Coca-Cola Company
Benefits Committee (the “Committee”) which, as Plan Administrator, has substantial control of and discretion over the
administration of the Plan. The Plan Administrator has engaged a third party, Mercer HR Services, to provide recordkeeping and
administrative services.
Transfers from Spin-offs
The Plan was also amended effective at midnight
on December 31, 2013 to merge certain assets spun off from the Coca-Cola Bottlers’ Association 401(k) Retirement Savings
Plan attributable to current and former employees of Sacramento Coca-Cola Bottling Company (“Sacramento Coke”) whose
employment is or was subject to a collective bargaining agreement between Sacramento Coke and CBEU Local #150 into the Plan, and
provide for participation in the Plan. As a result of this amendment, the Plan’s net assets available for benefits as of
December 31, 2013 increased by $7,411,632 and is shown as other receivable in the statement of net assets available for benefits.
The transfer of these assets was received on January 2, 2014.
Coca-Cola Refreshments
Bargaining Employees’ 401(k) Plan
Notes to Audited Financial Statements
Note 1 – Description of Plan
(Continued)
Transfers to Related Plan
During 2014, the Plan transferred account balances
totaling $473,962 for participants whose employment status with the Company changed from bargaining to non-bargaining. These participants
elected to transfer their account balances from the Plan to The Coca-Cola Company 401(k) Plan.
Eligibility
Each employee who is eligible for the
Plan under the terms of a collective bargaining agreement negotiated between the Company and such bargaining unit shall become
a participant on the entry date (the first day of the calendar quarter following date of hire) at which time the participant may
elect to begin compensation deferrals, unless otherwise defined in the Plan.
Contributions
The Plan allows a participant to contribute
1% to 15% of compensation, unless otherwise defined in the Plan. The Company matches participant contributions as provided for
in the various collective bargaining agreements. Contributions are subject to certain Internal Revenue Code (the “Code”)
limitations. All contributions are invested as directed by participants.
Vesting
Participants are immediately vested in
their contributions plus actual earnings thereon. Vesting in the Company’s matching contribution portion of their accounts
plus actual earnings thereon is based on years of service.
A participant is 100% vested after three
years of credited service, unless otherwise defined in the Plan. All participants become fully vested upon death, total disability
or reaching normal retirement age as defined in the Plan.
Participant Accounts
Each participant’s account is credited
with the participant’s contributions, employer contributions, if any, rollover contributions, if any, and allocations of
Plan investment results; however, each account is also charged with an allocation of administrative expenses. Allocations are based
on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can
be provided from the participant’s vested account balance.
Coca-Cola Refreshments
Bargaining Employees’ 401(k) Plan
Notes to Audited Financial Statements
Note 1 – Description of Plan
(Continued)
Notes Receivable from Participants
Participants may borrow from their account
balances subject to certain limitations. The following applies to participant loans unless otherwise defined in the Plan:
| (a) | The maximum amount that a participant may borrow is the lesser of 50% of their vested account balance
or $50,000. The $50,000 maximum is reduced by the participant’s highest outstanding loan balance on any loans during the
preceding 12 months. |
| (b) | The minimum loan amount is $1,000. |
| (c) | The loan interest rate is the prime rate, as published in The Wall Street Journal, and is
set monthly. The loan’s interest rate is fixed for the life of the loan. |
| (d) | The loan repayment period is limited to five years for a general
purpose loan and 15 years for a loan used to purchase or build a principal residence. |
Employee Stock Ownership Plan
The portion of the Plan invested in common
stock of The Coca-Cola Company is designated as an employee stock ownership plan (“ESOP”) within the meaning of Code
Section 4975(e)(7). Participants invested in common stock of The Coca-Cola Company may elect to receive their entire dividend amount
as a cash payment made directly to them rather than have the dividend amount reinvested in their Plan account.
Withdrawals and Benefit Payments
Distributions of a participant’s
fully vested account balance shall be made during the period following his or her retirement, total disability, death or termination
of employment.
Distributions to participants shall be
made in a single lump sum or a series of installments over a certain period selected by the participant. The amount of distribution
under the Plan shall be equal to the participant’s vested account balance.
If the participant has any loan balance
at the time of distribution, the amount of cash available to the participant or beneficiary shall be reduced by the outstanding
principal balance of the loan.
Prior to retirement, a withdrawal from the balance of a participant’s
pre-tax contribution account would be available for a financial hardship or from a participant’s rollover source within the
Plan, unless otherwise defined in the Plan.
Coca-Cola Refreshments
Bargaining Employees’ 401(k) Plan
Notes to Audited Financial Statements
Note 1 – Description of Plan
(Continued)
Plan Termination
Although the Company has not expressed
any intent to do so, the Company has the right under the Plan agreement to discontinue contributions at any time and to terminate
the Plan. In the event of Plan termination, all participants become fully vested and shall receive a full distribution of their
account balances.
Note 2 –
Summary of Significant Accounting Policies
Basis of Accounting
The financial statements of the Plan are
prepared using the accrual basis of accounting.
Use of Estimates
The preparation of financial statements
in conformity with accounting principles generally accepted in the United States requires management to make estimates that affect
the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Valuation of Investments
The Plan’s investments are stated at
fair value in accordance with Accounting Standards Codification Topic 820 “Fair Value Measurements and Disclosures”
(ASC 820). See Note 3 for fair value measurements.
Purchases and sales of securities are recorded
on the trade date. Interest income is recorded as earned and dividend income is recorded as of the ex-dividend date.
Notes Receivable from Participants
Participant loans, which are classified as
receivables, are stated at the unpaid principal balance plus any accrued but unpaid interest.
Administrative Expenses
Certain administrative expenses are paid by
the Plan, as permitted by the Plan document. All other expenses are paid by the Company.
Coca-Cola Refreshments
Bargaining Employees’ 401(k) Plan
Notes to Audited Financial Statements
Note 2 – Summary of Significant Accounting
Policies (Continued)
Recent Accounting Pronouncements
In May 2015, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-07, Fair Value Measurement (Topic 820)
- Disclosures for Investments in Certain Entities that Calculate Net Asset Value per Share (or Its Equivalent). The amendments
in this ASU remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured
using the net asset value per share practical expedient. This guidance also removes the requirement to make certain disclosures
for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. The
amendments in this ASU are effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal
years. The Plan should apply the amendments retrospectively to all periods presented. Earlier application is permitted. Plan management
is currently evaluating the impact of adopting this guidance on the financial statements.
Coca-Cola Refreshments
Bargaining Employees’ 401(k) Plan
Notes to Audited Financial Statements
Note 3 –
The Coca-Cola Company Master Trust for 401(k) Plans
The Plan participates in The Coca-Cola Company
Master Trust for 401(k) Plans (the “Master Trust”) with similar retirement plans sponsored by the Company and certain
other subsidiaries of the Company, whereby investments are held collectively for all plans by the Trustee. Each participating plan’s
investment in the Master Trust is equal to the sum of its participant account balances in relation to total Master Trust investments.
The Plan’s investments include retirement target date funds, equity and fixed income index funds, actively managed equity
and fixed income funds, a stable value fund, and common stock of The Coca-Cola Company. The investment structures include mutual
funds, collective trust funds, master trust investment funds, and direct ownership of common stock of The Coca-Cola Company.
The Plan’s investments in the Master
Trust were approximately $117.1 billion and $106.4 billion at December 31, 2014 and 2013, respectively. The Plan’s interest
in the net assets of the Master Trust was approximately 2.5% and 2.6% at December 31, 2014 and 2013, respectively. This was
determined by comparing the Plan’s investment in the Master Trust to total net assets in the Master Trust.
The following table summarizes the net assets
of the Master Trust as of December 31, 2014 and 2013 (in thousands):
| |
2014 | |
2013 |
Collective trust funds | |
$ | 2,173,484 | | |
$ | 1,976,925 | |
Mutual funds | |
| 165,710 | | |
| 184,564 | |
Master Trust Investment Funds | |
| 720,574 | | |
| 748,867 | |
Common stock | |
| 1,267,276 | | |
| 1,255,238 | |
Stable Value Fund at fair value | |
| 377,844 | | |
| 378,714 | |
Investments at fair value | |
| 4,704,888 | | |
| 4,544,308 | |
Due from broker | |
| 30 | | |
| — | |
Stable Value Fund book valuation adjustment | |
| (8,539 | ) | |
| (5,660 | ) |
Master Trust net assets | |
$ | 4,696,379 | | |
$ | 4,538,648 | |
Coca-Cola Refreshments
Bargaining Employees’ 401(k) Plan
Notes to Audited Financial Statements
Note 3 –
The Coca-Cola Company Master Trust for 401(k) Plans (Continued)
The fair values of individual investments that represented 5% or
more of the Master Trust’s net assets as of December 31, 2014 and 2013 were as follows (in thousands):
| |
2014 | |
2013 |
Common stock of The Coca-Cola Company | |
$ | 1,267,276 | | |
$ | 1,255,238 | |
Northern Trust S&P 500 Index Fund | |
| 559,764 | | |
| 495,348 | |
Stable Value Fund | |
| 377,844 | | |
| 378,714 | |
US Large Cap Active Equity Fund | |
| 323,090 | | |
| 315,528 | |
US Small-Mid Cap Active Equity Fund | |
| * | | |
| 256,450 | |
JPMCB SmartRetirement 2020 Fund | |
| 269,440 | | |
| 267,184 | |
JPMCB SmartRetirement 2025 Fund | |
| 322,219 | | |
| 300,047 | |
JPMCB SmartRetirement 2030 Fund | |
| 315,062 | | |
| 290,642 | |
* amount was less than 5%.
The net investment income of the Master Trust for the year ended
December 31, 2014 was as follows (in thousands):
Investment income: | |
|
Net appreciation (depreciation) in fair value of investments: | |
| | |
Collective trust funds | |
$ | 174,670 | |
Common stock of The Coca-Cola Company | |
| 27,865 | |
Master Trust Investment Funds | |
| 49,979 | |
Mutual funds | |
| (11,698 | ) |
| |
| 240,816 | |
Interest and dividends | |
| 47,397 | |
Net investment income | |
$ | 288,213 | |
Fair Value Measurements
ASC 820 defines fair value as the exchange
price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous
market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also established
a fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the
use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are
as follows:
Coca-Cola Refreshments
Bargaining Employees’ 401(k) Plan
Notes to Audited Financial Statements
Note 3 –
The Coca-Cola Company Master Trust for 401(k) Plans (Continued)
|
• Level 1 — |
Quoted prices in active markets for identical assets or liabilities. |
|
|
|
|
• Level 2 — |
Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. |
|
|
|
|
• Level 3 — |
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. |
The Plan’s valuation methods used to
measure fair value of its investments may produce fair values that may not be indicative of a future sale, or reflective of future
fair values. The use of different methods to determine the fair value of investments could result in different estimates of fair
value at the reporting date.
The Master Trust assets, measured at fair value on a recurring
basis (at least annually) as of December 31, 2014, were as follows (in thousands):
| |
Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | |
Significant Other
Observable
Inputs (Level 2) | |
Total |
U.S. equity securities: | |
| | | |
| | | |
| | |
Collective trust funds (A) | |
$ | — | | |
$ | 559,764 | | |
$ | 559,764 | |
Common stock (B) | |
| 1,267,276 | | |
| — | | |
| 1,267,276 | |
Master Trust Investment Funds (C) | |
| — | | |
| 557,254 | | |
| 557,254 | |
International equity securities: | |
| | | |
| | | |
| | |
Collective trust funds (A) | |
| — | | |
| 30,506 | | |
| 30,506 | |
Mutual funds (D) | |
| 165,710 | | |
| — | | |
| 165,710 | |
Fixed income securities: | |
| | | |
| | | |
| | |
Collective trust funds (A) | |
| — | | |
| 22,996 | | |
| 22,996 | |
Master Trust Investment Funds (C) | |
| — | | |
| 163,320 | | |
| 163,320 | |
Other: | |
| | | |
| | | |
| | |
Stable Value Fund (E) | |
| — | | |
| 377,844 | | |
| 377,844 | |
Balanced Real Assets Fund (F) | |
| — | | |
| 3,954 | | |
| 3,954 | |
Target retirement date funds (G) | |
| — | | |
| 1,556,264 | | |
| 1,556,264 | |
| |
$ | 1,432,986 | | |
$ | 3,271,902 | | |
$ | 4,704,888 | |
Coca-Cola Refreshments
Bargaining Employees’ 401(k) Plan
Notes to Audited Financial Statements
Note 3 –
The Coca-Cola Company Master Trust for 401(k) Plans (Continued)
| (A) | The underlying investments held in the collective trust funds are equity or debt securities held
to replicate the performance of a specific equity or bond market index. The collective trust funds are valued at the net asset
value per share as determined by the manager of the funds multiplied by the number of shares held as of the measurement date. These
funds have no redemption restrictions. |
| (B) | Investments in common stock are in shares of The Coca-Cola Company and are valued using the quoted
market price multiplied by the number of shares owned as of the measurement date. |
| (C) | The Master Trust Investment Funds include the US Large Cap Active Equity Fund, U.S. Small-Mid Cap
Active Equity Fund, and the US Core-Plus Active Fixed Income Fund. The total value is calculated by multiplying the net asset value
per share by the number of shares held as of the measurement date. The underlying investments include common stock, preferred stock,
mutual funds, collective trust funds and a short-term investment account. These funds have no redemption restrictions. See Master
Trust Investment Funds for additional information. |
| (D) | Investments in mutual funds are valued at the publicly quoted net asset value of each fund. The
total value is calculated by multiplying the net asset value per share by the number of shares held as of the measurement date. |
| (E) | The fair value of the wrapper contracts in the Stable Value Fund is determined by using a replacement
cost methodology, which calculates the present value of excess future wrap fees. The underlying assets of the wrapper contracts
(units of collective trust funds holding fixed income bonds) are calculated at the net unit value multiplied by the number of units
held as of the measurement date. |
| (F) | Investments in the Balanced Real Assets Fund are valued at the net
asset value per share multiplied by the number of shares held as of the measurement date. |
| (G) | Investments in target retirement date funds are valued at the net
asset value per share multiplied by the number of shares held as of the measurement date. |
Coca-Cola Refreshments
Bargaining Employees’ 401(k) Plan
Notes to Audited Financial Statements
Note
3 – The Coca-Cola Company Master Trust for 401(k) Plans (Continued)
The Master Trust assets, measured at fair value on a recurring
basis (at least annually) as of December 31, 2013 were as follows (in thousands):
| |
Quoted Prices in
Active Markets for
Identical Assets
(Level 1) | |
Significant Other
Observable
Inputs (Level 2) | |
Total |
U.S. equity securities: | |
| | | |
| | | |
| | |
Collective trust funds (A) | |
$ | — | | |
$ | 495,348 | | |
$ | 495,348 | |
Common stock (B) | |
| 1,255,238 | | |
| — | | |
| 1,255,238 | |
Master Trust Investment Funds (C) | |
| — | | |
| 571,978 | | |
| 571,978 | |
International equity securities: | |
| | | |
| | | |
| | |
Collective trust funds (A) | |
| — | | |
| 14,825 | | |
| 14,825 | |
Mutual funds (D) | |
| 184,564 | | |
| — | | |
| 184,564 | |
Fixed income securities: | |
| | | |
| | | |
| | |
Collective trust funds (A) | |
| — | | |
| 10,650 | | |
| 10,650 | |
Master Trust Investment Funds (C) | |
| — | | |
| 176,889 | | |
| 176,889 | |
Other: | |
| | | |
| | | |
| | |
Stable Value Fund (E) | |
| — | | |
| 378,714 | | |
| 378,714 | |
Balanced Real Assets Fund (F) | |
| — | | |
| 2,177 | | |
| 2,177 | |
Target retirement date funds (G) | |
| — | | |
| 1,453,925 | | |
| 1,453,925 | |
| |
$ | 1,439,802 | | |
$ | 3,104,506 | | |
$ | 4,544,308 | |
| (A) | The underlying investments held in the collective trust funds are equity or debt securities held
to replicate the performance of a specific equity or bond market index. The collective trust funds are valued at the net asset
value per share as determined by the manager of the funds multiplied by the number of shares held as of the measurement date. These
funds have no redemption restrictions. |
| (B) | Investments in common stock are in shares of The Coca-Cola Company and are valued using the quoted
market price multiplied by the number of shares owned as of the measurement date. |
| (C) | The Master Trust Investment Funds include the US Large Cap Active Equity Fund, U.S. Small-Mid Cap
Active Equity Fund, and US Core-Plus Active Fixed Income Fund. The total value is calculated by multiplying the net asset value
per share by the number of shares held as of the measurement date. The underlying investments include common stock, mutual funds,
collective trust funds and a short-term investment account. These funds have no redemption restrictions. See Master Trust Investment
Funds for additional information. |
| (D) | Investments in mutual funds are valued at the publicly quoted net asset value of each fund. The
total value is calculated by multiplying the net asset value per share by the number of shares held as of the measurement date. |
Coca-Cola Refreshments
Bargaining Employees’ 401(k) Plan
Notes to Audited Financial Statements
Note 3 – The Coca-Cola Company
Master Trust for 401(k) Plans (Continued)
| (E) | The fair value of the wrapper contracts in the Stable Value Fund is determined by using a replacement
cost methodology, which calculates the present value of excess future wrap fees. The underlying assets of the wrapper contracts
(units of collective trust funds holding fixed income bonds) are calculated at the net unit value multiplied by the number of units
held as of the measurement date. |
| (F) | Investments in the Balanced Real Assets Fund are valued at the net asset value per share multiplied
by the number of shares held as of the measurement date. |
| (G) | Investments in target retirement date funds are valued at the net asset value per share multiplied
by the number of shares held as of the measurement date. |
During
2014 and 2013 there were no Level 3 investments.
Coca-Cola Refreshments
Bargaining Employees’ 401(k) Plan
Notes to Audited Financial Statements
Note 3 – The Coca-Cola Company Master Trust for 401(k)
Plans (Continued)
Stable Value Fund
The Stable Value Fund (the “Fund”)
is a separate account which invests primarily in wrapper contracts (also known as synthetic guaranteed investment contracts) and
cash equivalents. Contracts within the Fund are fully benefit-responsive and are therefore reported at fair value on the Statements
of Net Assets Available for Benefits.
In a wrapper contract structure, the underlying
investments are owned by the Fund and held in trust for Plan participants. These contracts wrap a diversified portfolio primarily
comprised of corporate and government bonds, and collective trust funds. The Fund purchases wrapper contracts from an insurance
company or bank. The wrapper contracts amortizes the realized and unrealized gains and losses on the underlying fixed income investments,
typically over the duration of the investments, through adjustments to the future interest crediting rate (which is the rate earned
by participants in the Fund for the underlying investments). The issuers of the wrapper contracts provides assurances that the
adjustments to the interest crediting rate do not result in a future crediting rate that is less than zero.
An interest crediting rate less than zero would
result in a loss of principal or accrued interest. Wrapper contracts’ interest crediting rates are typically reset on a periodic
basis.
The key factors that generally influence future
interest crediting rates of a wrapper contract include:
| · | The level of market interest rates; |
| · | The amount and timing of participant contributions, transfers and
withdrawals into/out of the wrapper contract; |
| · | The investment returns generated by the fixed income investments
that back the wrapper contract; and |
| · | The duration of the underlying investments backing the wrapper contract. |
Coca-Cola Refreshments
Bargaining Employees’ 401(k) Plan
Notes to Audited Financial Statements
Note 3 –
The Coca-Cola Company Master Trust for 401(k) Plans (Continued)
Because changes in market interest rates affect
the yield to maturity and the market value of the underlying investments, they may have a material impact on the wrapper contract’s
interest crediting rate. In addition, participant withdrawals and transfers from the Fund are paid at contract value but funded
through the market value liquidation of the underlying investments, which also impacts the interest crediting rate. The resulting
gains and losses in the market value of the underlying investments relative to the wrapper contract value are represented on the
Plan’s Statements of Net Assets Available for Benefits as the “Adjustment from fair value to contract value for fully
benefit-responsive investment contracts.”
If the adjustment from fair value to contract
value is positive for a given contract, this indicates that the wrapper contract value is greater than the market value of the
underlying investments. The embedded market value losses will be amortized in the future through a lower interest crediting rate
than would otherwise be the case. If the adjustment from fair value to contract value figure is negative, this indicates that the
wrapper contract value is less than the market value of the underlying investments. The amortization of the embedded market value
gains will cause the future interest crediting rate to be higher than it otherwise would have been.
All wrapper contracts provide for a minimum
interest crediting rate of zero percent. In the event that the interest crediting rate should fall to zero and the requirements
of the wrapper contract are satisfied, the wrapper issuers will pay to the Plan the shortfall needed to maintain the interest crediting
rate at zero. This helps to ensure that participants’ principal and accrued interest will be protected.
Examples of events that would permit a wrapper
contract issuer to terminate a wrapper contract upon short notice include the Plan’s loss of its qualified status, uncured
material breaches of responsibilities, or material and adverse changes to the provisions of the Plan. If one of these events was
to occur, the wrapper contract issuer could terminate the wrapper contract at the market value of the underlying investments.
At December 31, 2014, fair value exceeded contract
value. Contract value represents contributions made under the contracts, plus earnings, less withdrawals and administrative expenses.
The weighted-average yield was approximately 1.5% and 1.4% for the years ended December 31, 2014 and 2013, respectively. The interest
crediting rate was approximately 1.9% and 1.8% as of December 31, 2014 and 2013, respectively. Participants investing in the Fund
are subject to risk of default by issuers of the wrapper contracts and the specific investments underlying the wrapper contracts.
There are no reserves against contract value for credit risk of the contract issuer or otherwise.
Coca-Cola Refreshments
Bargaining Employees’ 401(k) Plan
Notes to Audited Financial Statements
Note 3 –
The Coca-Cola Company Master Trust for 401(k) Plans (Continued)
The fair values of the underlying assets of the wrapper contracts
and the adjustment to contract value for the Master Trust as of December 31, 2014 and 2013 were as follows:
Fair value of the underlying assets of the wrapper contracts (in thousands): | |
2014 | |
2013 |
Short-term investment fund | |
$ | 8,683 | | |
$ | 16,254 | |
Pooled Separate Accounts | |
| 59,155 | | |
| 59,608 | |
Collective trust funds | |
| 310,006 | | |
| 302,852 | |
Fair value | |
| 377,844 | | |
| 378,714 | |
Adjustment from fair value to contract value | |
| (8,539 | ) | |
| (5,660 | ) |
Contract value | |
$ | 369,305 | | |
$ | 373,054 | |
Master Trust Investment Funds
The US Large Cap Active Equity Fund, US
Small-Mid Cap Active Equity Fund and U.S. Core-Plus Active Fixed Income Fund (the “Master Trust Investment Funds”) are
actively managed and utilize managers as specified by The Coca-Cola Company Assets Management Committee. The Master Trust Investment
Funds are separate account investment options and are available to all Plans participating in the Master Trust.
The following table presents a summary
of the net assets available for benefits of the Master Trust Investment Funds as of December 31, 2014 (in thousands):
| |
US Large Cap Active | |
US Small-Mid Cap Active | |
US Core-Plus Active Fixed | |
|
| |
Equity Fund | |
Equity Fund | |
Income Fund | |
Total |
Assets | |
| | | |
| | | |
| | | |
| | |
Short-term investment fund | |
$ | 18,734 | | |
$ | 7,476 | | |
$ | 201 | | |
$ | 26,411 | |
Common stocks | |
| 284,902 | | |
| 216,792 | | |
| — | | |
| 501,694 | |
Preferred stocks | |
| 4,177 | | |
| — | | |
| — | | |
| 4,177 | |
Collective trust funds | |
| 15,059 | | |
| 10,141 | | |
| — | | |
| 25,200 | |
Mutual funds | |
| — | | |
| — | | |
| 163,215 | | |
| 163,215 | |
Accrued interest and dividends | |
| 395 | | |
| 100 | | |
| 6 | | |
| 501 | |
Due from broker for securities sold | |
| 223 | | |
| 180 | | |
| — | | |
| 403 | |
Total assets at fair value | |
| 323,490 | | |
| 234,689 | | |
| 163,422 | | |
| 721,601 | |
| |
| | | |
| | | |
| | | |
| | |
Liabilities | |
| | | |
| | | |
| | | |
| | |
Accrued administrative fees | |
| 400 | | |
| 431 | | |
| 102 | | |
| 933 | |
Payable to broker for securities purchased | |
| — | | |
| 94 | | |
| — | | |
| 94 | |
Total liabilities at fair value | |
| 400 | | |
| 525 | | |
| 102 | | |
| 1,027 | |
Net assets at fair value | |
$ | 323,090 | | |
$ | 234,164 | | |
$ | 163,320 | | |
$ | 720,574 | |
Coca-Cola Refreshments
Bargaining Employees’ 401(k) Plan
Notes to Audited Financial Statements
Note 3 –
The Coca-Cola Company Master Trust for 401(k) Plans (Continued)
The following table presents a summary
of the net assets available for benefits of the Master Trust Investment Funds as of December 31, 2013 (in thousands):
| |
US Large Cap Active | |
US Small-Mid Cap Active | |
US Core-Plus Active Fixed | |
|
| |
Equity Fund | |
Equity Fund | |
Income Fund | |
Total |
| |
| |
| |
| |
|
Assets | |
| | | |
| | | |
| | | |
| | |
Short-term investment fund | |
$ | 23,537 | | |
$ | 9,225 | | |
$ | 64 | | |
$ | 32,826 | |
Common stocks | |
| 277,774 | | |
| 238,473 | | |
| — | | |
| 516,247 | |
Collective trust funds | |
| 14,522 | | |
| 10,707 | | |
| — | | |
| 25,229 | |
Mutual funds | |
| — | | |
| — | | |
| 176,891 | | |
| 176,891 | |
Accrued interest and dividends | |
| 323 | | |
| 126 | | |
| 3 | | |
| 452 | |
Due from broker for securities sold | |
| — | | |
| 50 | | |
| — | | |
| 50 | |
Total assets at fair value | |
| 316,156 | | |
| 258,581 | | |
| 176,958 | | |
| 751,695 | |
| |
| | | |
| | | |
| | | |
| | |
Liabilities | |
| | | |
| | | |
| | | |
| | |
Accrued administrative fees | |
| 212 | | |
| 252 | | |
| 69 | | |
| 533 | |
Payable to broker for securities purchased | |
| 416 | | |
| 1,879 | | |
| — | | |
| 2,295 | |
Total liabilities at fair value | |
| 628 | | |
| 2,131 | | |
| 69 | | |
| 2,828 | |
Net assets at fair value | |
$ | 315,528 | | |
$ | 256,450 | | |
$ | 176,889 | | |
$ | 748,867 | |
The following is a summary of the net
investment income (loss) in the Master Trust Investment Funds for the year ended December 31, 2014 (in thousands):
| |
US Large Cap | |
US Small-Mid | |
US Core-Plus | |
|
| |
Active Equity Fund | |
Cap Active Equity Fund | |
Active Fixed Income Fund | |
Total |
Net realized and unrealized appreciation in fair value of investments | |
$ | 28,787 | | |
$ | 7,916 | | |
$ | 4,334 | | |
$ | 41,037 | |
Interest and dividends | |
| 4,986 | | |
| 2,647 | | |
| 5,060 | | |
| 12,693 | |
Administrative fees | |
| (1,607 | ) | |
| (1,815 | ) | |
| (329 | ) | |
| (3,751 | ) |
Net investment income | |
$ | 32,166 | | |
$ | 8,748 | | |
$ | 9,065 | | |
$ | 49,979 | |
Coca-Cola Refreshments
Bargaining Employees’ 401(k) Plan
Notes to Audited Financial Statements
Note 3 –
The Coca-Cola Company Master Trust for 401(k) Plans (Continued)
The following table presents the underlying
asset and liability categories, excluding accrued interest and dividends, cash, and administrative fees, measured at fair value
on a recurring basis of the Master Trust Investment Funds as of December 31, 2014 (in thousands):
| |
Quoted Prices in | |
Significant Other | |
|
| |
Active Markets | |
Observable | |
|
| |
for Identical Assets | |
Inputs | |
|
| |
(Level 1) | |
(Level 2) | |
Total |
| |
| |
| |
|
Assets | |
| | | |
| | | |
| | |
U.S. large cap equity securities (1) | |
$ | 289,079 | | |
$ | — | | |
$ | 289,079 | |
U.S. small-mid cap equity securities (1) | |
| 216,792 | | |
| — | | |
| 216,792 | |
Collective trust funds: | |
| | | |
| | | |
| | |
Short-term investment fund (2) | |
| — | | |
| 26,411 | | |
| 26,411 | |
S&P 500 Index Fund (3) | |
| — | | |
| 15,059 | | |
| 15,059 | |
Extended Equity Market Index Fund (4) | |
| — | | |
| 10,141 | | |
| 10,141 | |
Mutual funds (5) | |
| — | | |
| 163,215 | | |
| 163,215 | |
Due from broker for securities sold | |
| 403 | | |
| — | | |
| 403 | |
Total assets at fair value | |
$ | 506,274 | | |
$ | 214,826 | | |
$ | 721,100 | |
| |
| | | |
| | | |
| | |
Liabilities | |
| | | |
| | | |
| | |
Payable to broker for securities purchased | |
| 94 | | |
| — | | |
| 94 | |
Total liabilities at fair value | |
$ | 94 | | |
$ | — | | |
$ | 94 | |
| (1) | The fair value of equity securities is at the last available reported
sales price or official closing price as reported by a third-party pricing vendor on the national exchanges. |
| | |
| (2) | The short-term investment fund consists of high-grade money market
instruments with short maturities. Interest is accrued daily and distributed monthly. The fair value of this fund is based on cost
plus accrued interest. |
| | |
| (3) | The S&P 500 Index Fund seeks to approximate the risk and return
characteristics of the S&P 500 Index. This index is commonly used to represent the large cap segment of the U.S. equity market.
The fair value is based on a net asset value per share multiplied by the number of shares held as of the measurement date. |
| | |
| (4) | The Extended Equity Market Index Fund seeks to approximate the risk
and return characteristics of the Dow Jones U.S. Completion Total Stock Market Index. This index is commonly used to represent
the small- and mid-cap segments of the U.S. equity market. The fair value is based on a net asset value per share multiplied by
the number of shares held as of the measurement date. |
| | |
| (5) | Investments in mutual funds consist of actively managed PIMCO Funds
across the mortgage-backed security, U.S. Treasury, and corporate fixed income sectors. The funds are only available to institutional
separate account entities and are registered under the Investment Company Act of 1940 as an open-end investment management company
and are not publicly traded. The fair value is based on a net asset value per share multiplied by the number of shares held as
of the measurement date. |
Coca-Cola Refreshments
Bargaining Employees’ 401(k) Plan
Notes to Audited Financial Statements
Note 3 –
The Coca-Cola Company Master Trust for 401(k) Plans (Continued)
The following table presents the underlying
asset and liability categories, excluding accrued interest, cash, and administrative fees, measured at fair value on a recurring
basis of the Master Trust Investment Funds as of December 31, 2013 (in thousands):
| |
Quoted Prices in | |
Significant Other | |
|
| |
Active Markets | |
Observable | |
|
| |
for Identical Assets | |
Inputs | |
|
| |
(Level 1) | |
(Level 2) | |
Total |
| |
| |
| |
|
Assets | |
| | | |
| | | |
| | |
U.S. large cap equity securities (1) | |
$ | 277,774 | | |
$ | — | | |
$ | 277,774 | |
U.S. small-mid cap equity securities (1) | |
| 238,473 | | |
| — | | |
| 238,473 | |
Collective trust funds: | |
| | | |
| | | |
| | |
Short-term investment fund (2) | |
| — | | |
| 32,826 | | |
| 32,826 | |
S&P 500 Index Fund (3) | |
| — | | |
| 14,522 | | |
| 14,522 | |
Extended Equity Market Index Fund (4) | |
| — | | |
| 10,707 | | |
| 10,707 | |
Mutual funds (5) | |
| — | | |
| 176,891 | | |
| 176,891 | |
Due from broker for securities sold | |
| 50 | | |
| — | | |
| 50 | |
Total assets at fair value | |
$ | 516,297 | | |
$ | 234,946 | | |
$ | 751,243 | |
| |
| | | |
| | | |
| | |
Liabilities | |
| | | |
| | | |
| | |
Payable to broker for securities purchased | |
| 2,295 | | |
| — | | |
| 2,295 | |
Total liabilities at fair value | |
$ | 2,295 | | |
$ | — | | |
$ | 2,295 | |
| (1) | The fair value of equity securities is at the last available reported
sales price or official closing price as reported by a third-party pricing vendor on the national exchanges. |
| | |
| (2) | The short-term investment fund consists of high-grade money market
instruments with short maturities. Interest is accrued daily and distributed monthly. The fair value of this fund is based on cost
plus accrued interest. |
| | |
| (3) | The S&P 500 Index Fund seeks to approximate the risk and return
characteristics of the S&P 500 Index. This index is commonly used to represent the large cap segment of the U.S. equity market.
The fair value is based on a net asset value per share multiplied by the number of shares held as of the measurement date. |
| | |
| (4) | The Extended Equity Market Index Fund seeks to approximate the risk
and return characteristics of the Dow Jones U.S. Completion Total Stock Market Index. This index is commonly used to represent
the small- and mid-cap segments of the U.S. equity market. The fair value is based on a net asset value per share multiplied by
the number of shares held as of the measurement date. |
Coca-Cola Refreshments
Bargaining Employees’ 401(k) Plan
Notes to Audited Financial Statements
Note 3 –
The Coca-Cola Company Master Trust for 401(k) Plans (Continued)
| (5) | Investments in mutual funds consist of actively managed PIMCO Funds
across the mortgage-backed security, U.S. Treasury, and corporate fixed income sectors. The funds are only available to institutional
separate account entities and are registered under the Investment Company Act of 1940 as an open-end investment management company
and are not publicly traded. The fair value is based on a net asset value per share multiplied by the number of shares held as
of the measurement date. |
Transactions with Parties-in-Interest
During the year ended December 31, 2014,
the Master Trust had the following transactions relating to common stock of The Coca-Cola Company (in thousands):
| |
Shares | |
Fair Value |
Purchases | |
| 4,121 | | |
$ | 168,018 | |
Sales | |
| 3,137 | | |
$ | 128,673 | |
In-kind distributions | |
| 1,354 | | |
$ | 55,172 | |
Dividends received | |
| N/A | | |
$ | 36,732 | |
The Master Trust held the following investments in common stock
of The Coca-Cola Company as of December 31, 2014 and 2013 (in thousands):
| |
Shares | |
Fair Value |
December 31, 2014 | |
| 30,016 | | |
$ | 1,267,276 | |
December 31, 2013 | |
| 30,386 | | |
$ | 1,255,238 | |
Note 4 – Income Tax Status
The Plan has received a determination letter
from the Internal Revenue Service dated September 2, 2009, stating that the Plan is qualified under Section 401(a) of the Code
and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the Internal Revenue Service, the
Plan was amended. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The
Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore,
believes that the Plan, as amended, is qualified and the related trust is tax exempt.
Accounting principles generally accepted in
the United States require the management of the Plan to evaluate tax positions taken by the Plan and recognize a tax liability
(or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the
Internal Revenue Service. The Plan Administrator has analyzed the tax positions taken by the Plan, and has concluded that as of
December 31, 2014, there are no uncertain positions taken or expected to be taken that would require recognition of a liability
(or asset) or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there
are currently no audits for any tax periods in progress. The Plan Administrator
believes the Plan is no longer subject to income tax examinations for years prior to 2012.
Coca-Cola Refreshments
Bargaining Employees’ 401(k) Plan
Notes to Audited Financial Statements
Note 5 – Risks and Uncertainties
The Master Trust invests in various investment
securities as directed by participants. Investment securities are exposed to various risks such as interest rate, market and credit
risks. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values
of investment securities will occur in the near term and that such changes could materially affect participants’ account
balances and the amounts reported in the statements of net assets available for benefits.
Note 6 – Reconciliation of Financial Statements to Form
5500
The following is a reconciliation of the
net assets available for benefits per the financial statements to the Form 5500 as of December 31, 2014 and 2013:
| |
2014 | |
2013 |
Net assets available for benefits per the financial statements | |
$ | 123,091,056 | | |
$ | 119,053,101 | |
Adjustment from contract value to fair value for fully benefit- responsive investment contracts | |
| 430,989 | | |
| 275,418 | |
Net assets available for benefits per Form 5500 | |
$ | 123,522,045 | | |
$ | 119,328,519 | |
The following is a reconciliation of investment income from the
Master Trust per the financial statements to the Form 5500 for the year ended December 31, 2014:
Investment income from the Master Trust per the financial statements | |
$ | 7,350,542 | |
Adjustment from contract to fair value for fully benefit-responsive investment contracts: | |
| | |
Current year | |
| 430,989 | |
Prior year | |
| (275,418 | ) |
Less: Administrative expenses reported at Master Trust level | |
| (125,577 | ) |
Investment income from Master Trust per Form 5500 | |
$ | 7,380,536 | |
Coca-Cola Refreshments
Bargaining Employees’ 401(k) Plan
EIN: 58-0503352 Plan Number: 003
Schedule
H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2014
(a) |
(b) Identity of issue,
borrower, lessor or
similar party |
(c) Description of investment, including maturity
date, rate of interest, collateral, par,
or maturity value |
(e) Current value |
|
|
|
|
* |
Participants |
Loans with interest rates ranging from 3.25% to 9.50%. Maturities through 2029. |
$ 6,462,233 |
* Parties-in-interest
Note: Column (d) is omitted as cost is
not required for participant-directed investments.
SIGNATURES
The Plan. Pursuant to the requirements
of the Securities Exchange Act of 1934, The Coca-Cola Company Benefits Committee has duly caused this annual report to be
signed on its behalf by the undersigned hereunto duly authorized.
|
COCA-COLA REFRESHMENTS BARGAINING |
|
EMPLOYEES’ 401(k) PLAN |
|
(Name of Plan) |
|
|
|
|
|
|
|
|
/s/ Stacy L. Apter |
|
|
Stacy L. Apter |
|
|
Member, The Coca-Cola Company Benefits Committee |
Date: June 29, 2015
EXHIBIT INDEX
Exhibit No. |
|
Description |
|
|
|
23 |
|
Consent of Independent Registered Public Accounting Firm |
Exhibit 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
We hereby consent to the incorporation by reference
in the registration statements listed below of our report dated June 26, 2015, with respect to the statements of net assets available
for benefits of Coca-Cola Refreshments Bargaining Employees’ 401(k) Plan as of December 31, 2014 and 2013, the related statement
of changes in net assets available for benefits for the year ended December 31, 2014, and the related supplemental schedule of
schedule H, line 4i – schedule of assets (held at end of year) as of December 31, 2014, which report appears in the annual
report on Form 11-K of Coca-Cola Refreshments Bargaining Employees’ 401(k) Plan for the year ended December 31, 2014:
|
1. |
Registration Statement No. 333-172541 on Form S-8, dated March 1, 2011, as amended |
|
|
|
|
2.
|
Registration Statement No. 333-194214 on Form S-8, dated February
28, 2014
|
/s/ BANKS, FINLEY, WHITE & CO.
College Park, Georgia
June 29, 2015
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