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

 

 

 
 

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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.

 

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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.

  

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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.

  

 

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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.

 

 

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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.

 

 

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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.

  

 

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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.

 

 

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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 

  

 

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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:

 

 

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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 

 

 

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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.

 

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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.

  

 

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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.

  

 

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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.

 

 

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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.

 

 

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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 

 

 

17
 

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 

 

 

18
 

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.

 

 

19
 

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.

 

 

20
 

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.

 

 

21
 

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 

 

 

22
 

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. 

 

 

23
 

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