SECURITIES AND EXCHANGE COMMISSION

(Exact name of Registrant as specified in its charter)



Delaware		58-0628465
(State or other jurisdiction of incorporation or organization)		~~58-0628465~~ (I.R.S. Employer Identification No.)
One Coca-Cola Plaza
Atlanta	Georgia	30313
(Address of principal executive offices)		~~30313~~ (Zip Code)

Registrant's telephone number, including area code:(404)676-2121

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.25 Par Value	KO	New York Stock Exchange
Floating Rate Notes Due 2019	KO19A	New York Stock Exchange
0.000% Notes Due 2021	KO21B	New York Stock Exchange
Floating Rate Notes Due 2021	KO21C	New York Stock Exchange
1.125% Notes Due 2022	KO22	New York Stock Exchange
0.125% Notes Due 2022	KO22B	New York Stock Exchange
0.75% Notes Due 2023	KO23B	New York Stock Exchange
0.500% Notes Due 2024	KO24	New York Stock Exchange
1.875% Notes Due 2026	KO26	New York Stock Exchange
0.750% Notes Due 2026	KO26C	New York Stock Exchange
1.125% Notes Due 2027	KO27	New York Stock Exchange
1.250% Notes Due 2031	KO31	New York Stock Exchange
1.625% Notes Due 2035	KO35	New York Stock Exchange
1.100% Notes Due 2036	KO36	New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý☒ No o☐

Indicate by check mark whether the Registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit ~~and post~~ such files). Yes ý☒ No o☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Indicate by check mark if the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No ý☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date.



Class of Common Stock		Shares Outstanding as of July ~~23, 2018~~22, 2019
$0.25 Par Value		~~4,252,922,447 Shares~~4,276,027,437

THE COCA-COLA COMPANY AND SUBSIDIARIES

Table of Contents



		Page ~~Number~~
	Forward-Looking Statements	1

	Part I. Financial Information

Item 1.	Financial Statements (Unaudited)	2

	Condensed Consolidated Statements of Income Three and ~~six months ended~~Six Months Ended June 28, 2019 and June 29, 2018 ~~and June 30, 2017~~	2

	Condensed Consolidated Statements of Comprehensive Income Three and ~~six months ended~~Six Months Ended June 28, 2019 and June 29, 2018 ~~and June 30, 2017~~	3

	Condensed Consolidated Balance Sheets June ~~29, 2018~~28, 2019 and December 31, ~~2017~~2018	4

	Condensed Consolidated Statements of Cash Flows Six ~~months ended~~Months Ended June 28, 2019 and June 29, 2018 ~~and June 30, 2017~~	5

	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	4740

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	7259

Item 4.	Controls and Procedures	7259

	Part II. Other Information

Item 1.	Legal Proceedings	7259

Item 1A.	Risk Factors	7360

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7361

Item 6.	Exhibits	7361
	Signatures	7664

FORWARD-LOOKING STATEMENTS

This report contains information that may constitute "forward-looking statements." Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will" and similar expressions identify forward-looking statements, which generally are not historical in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future — including statements relating to volume growth, share of sales and earnings per share growth, and statements expressing general views about future operating results — are forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. ~~Our Company undertakes~~We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our ~~Company's~~ historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in Part II, "Item 1A. Risk Factors" and elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018, and those described from time to time in our future reports filed with the Securities and Exchange Commission.

Part I. Financial Information

Item 1. Financial Statements (Unaudited)

THE COCA-COLA COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(In millions except per share data)



	Three Months Ended						Six Months Ended
	June 28, 2019			June 29, 2018			June 28, 2019			June 29, 2018
Net Operating Revenues	$	9,997		$	9,421		$	18,691		$	17,719
Cost of goods sold	3,921			3,543			7,286			6,619
Gross Profit	6,076			5,878			11,405			11,100
Selling, general and administrative expenses	2,996			2,887			5,763			5,626
Other operating charges	92			225			219			761
Operating Income	2,988			2,766			5,423			4,713
Interest income	142			173			275			339
Interest expense	236			247			481			483
Equity income (loss) — net	329			324			462			465
Other income (loss) — net	(174		)	(74		)	(405		)	(147		)
Income Before Income Taxes	3,049			2,942			5,274			4,887
Income taxes	421			611			943			1,156
Consolidated Net Income	2,628			2,331			4,331			3,731
Less: Net income attributable to noncontrolling interests	21			15			46			47
Net Income Attributable to Shareowners of The Coca-Cola Company	$	2,607		$	2,316		$	4,285		$	3,684
Basic Net Income Per Share¹	$	0.61		$	0.54		$	1.00		$	0.86
Diluted Net Income Per Share¹	$	0.61		$	0.54		$	1.00		$	0.86
Average Shares Outstanding	4,269			4,255			4,270			4,260
Effect of dilutive securities	36			35			35			38
Average Shares Outstanding Assuming Dilution	4,305			4,290			4,305			4,298

Three Months Ended Six Months Ended
June 29,
2018
June 30,
2017
June 29,
2018
June 30,
2017
NET OPERATING REVENUES $ 8,927
$ 9,702
$ 16,553
$ 18,820
Cost of goods sold 3,252
3,659
5,990
7,172
GROSS PROFIT 5,675
6,043
10,563
11,648
Selling, general and administrative expenses 2,723
3,180
5,264
6,532
Other operating charges 225
826
761
1,116
OPERATING INCOME 2,727
2,037
4,538
4,000
Interest income 170
165
335
320
Interest expense 241
231
471
423
Equity income (loss) — net 324
409
466
525
Other income (loss) — net (97 ) 244
(152 ) (291 )
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES 2,883
2,624
4,716
4,131
Income taxes from continuing operations 594
1,252
1,100
1,575
NET INCOME FROM CONTINUING OPERATIONS 2,289
1,372
3,616
2,556
Income from discontinued operations (net of income taxes of $16, $0,
$56 and $0, respectively)
42
—
115
—
CONSOLIDATED NET INCOME 2,331
1,372
3,731
2,556
Less: Net income attributable to noncontrolling interests
15
1
47
3
NET INCOME ATTRIBUTABLE TO SHAREOWNERS OF
THE COCA-COLA COMPANY $ 2,316
$ 1,371
$ 3,684
$ 2,553

Basic net income per share from continuing operations¹
$ 0.54
$ 0.32
$ 0.85
$ 0.60
Basic net income per share from discontinued operations²
0.01
—
0.02
—
BASIC NET INCOME PER SHARE³
$ 0.54
$ 0.32
$ 0.86
$ 0.60
Diluted net income per share from continuing operations¹
$ 0.53
$ 0.32
$ 0.84
$ 0.59
Diluted net income per share from discontinued operations²
0.01
—
0.02
—
DILUTED NET INCOME PER SHARE $ 0.54
$ 0.32
$ 0.86
$ 0.59
DIVIDENDS PER SHARE $ 0.39
$ 0.37
$ 0.78
$ 0.74
AVERAGE SHARES OUTSTANDING — BASIC 4,255
4,273
4,260
4,280
Effect of dilutive securities 35
54
38
50
AVERAGE SHARES OUTSTANDING — DILUTED 4,290
4,327
4,298
4,330


¹	Calculated based on net income ~~from continuing operations less net income from continuing operations~~ attributable to ~~noncontrolling interests.~~


²	~~Calculated based on net income from discontinued operations less net income from discontinued operations attributable to noncontrolling interests.~~


³	~~Certain columns may not add due to rounding.~~shareowners of The Coca-Cola Company.

Refer to Notes to Condensed Consolidated Financial Statements.

THE COCA-COLA COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(In millions)

Three Months Ended Six Months Ended
June 29,
2018
June 30,
2017
June 29,
2018
June 30,
2017
CONSOLIDATED NET INCOME $ 2,331
$ 1,372
$ 3,731
$ 2,556
Other comprehensive income:

Net foreign currency translation adjustment (2,153 ) (103 ) (1,425 ) 818
Net gain (loss) on derivatives 68
(177 ) 52
(298 )
Net unrealized gain (loss) on available-for-sale securities (90 ) 5
(101 ) 164
Net change in pension and other benefit liabilities 282
(8 ) 316
33
TOTAL COMPREHENSIVE INCOME (LOSS) 438
1,089
2,573
3,273
Less: Comprehensive income (loss) attributable to noncontrolling
   interests
(142 ) 1
(51 ) 4
TOTAL COMPREHENSIVE INCOME (LOSS)
   ATTRIBUTABLE TO SHAREOWNERS
   OF THE COCA-COLA COMPANY
$ 580
$ 1,088
$ 2,624
$ 3,269



	Three Months Ended						Six Months Ended
	June 28, 2019			June 29, 2018			June 28, 2019			June 29, 2018
Consolidated Net Income	$	2,628		$	2,331		$	4,331		$	3,731
Other Comprehensive Income:
Net foreign currency translation adjustments	(645		)	(2,153		)	281			(1,425		)
Net gains (losses) on derivatives	(24		)	68			(16		)	52
Net change in unrealized gains (losses) on available-for-sale debt securities	15			(90		)	30			(101		)
Net change in pension and other benefit liabilities	37			282			68			316
Total Comprehensive Income	2,011			438			4,694			2,573
Less: Comprehensive income (loss) attributable to noncontrolling interests	60			(142		)	57			(51		)
Total Comprehensive Income Attributable to Shareowners of The Coca-Cola Company	$	1,951		$	580		$	4,637		$	2,624

Refer to Notes to Condensed Consolidated Financial Statements.

THE COCA-COLA COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In millions except par value)

June 29,
2018
December 31,
2017
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 7,975
$ 6,006
Short-term investments 5,843
9,352
TOTAL CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS 13,818
15,358
Marketable securities 5,536
5,317
Trade accounts receivable, less allowances of $487 and $477, respectively 4,565
3,667
Inventories 2,881
2,655
Prepaid expenses and other assets 2,543
2,000
Assets held for sale —
219
Assets held for sale — discontinued operations
6,681
7,329
TOTAL CURRENT ASSETS 36,024
36,545
EQUITY METHOD INVESTMENTS 20,604
20,856
OTHER INVESTMENTS 1,015
1,096
OTHER ASSETS 4,401
4,230
DEFERRED INCOME TAX ASSETS 2,999
330
PROPERTY, PLANT AND EQUIPMENT, less accumulated depreciation of
$8,284 and $8,246, respectively
7,688
8,203
TRADEMARKS WITH INDEFINITE LIVES 6,669
6,729
BOTTLERS' FRANCHISE RIGHTS WITH INDEFINITE LIVES 38
138
GOODWILL 9,863
9,401
OTHER INTANGIBLE ASSETS 292
368
TOTAL ASSETS $ 89,593
$ 87,896
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 10,842
$ 8,748
Loans and notes payable 14,715
13,205
Current maturities of long-term debt 4,023
3,298
Accrued income taxes 362
410
Liabilities held for sale —
37
Liabilities held for sale — discontinued operations
1,456
1,496
TOTAL CURRENT LIABILITIES 31,398
27,194
LONG-TERM DEBT 28,063
31,182
OTHER LIABILITIES 7,367
8,021
DEFERRED INCOME TAX LIABILITIES 2,589
2,522
THE COCA-COLA COMPANY SHAREOWNERS' EQUITY
Common stock, $0.25 par value; Authorized — 11,200 shares;
Issued — 7,040 and 7,040 shares, respectively
1,760
1,760
Capital surplus 16,117
15,864
Reinvested earnings 63,808
60,430
Accumulated other comprehensive income (loss) (11,774 ) (10,305 )
Treasury stock, at cost — 2,787 and 2,781 shares, respectively (51,588 ) (50,677 )
EQUITY ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY 18,323
17,072
EQUITY ATTRIBUTABLE TO NONCONTROLLING INTERESTS 1,853
1,905
TOTAL EQUITY 20,176
18,977
TOTAL LIABILITIES AND EQUITY $ 89,593
$ 87,896



	June 28, 2019			December 31, 2018
ASSETS
Current Assets
Cash and cash equivalents	$	6,731		$	9,077
Short-term investments	2,572			2,025
Total Cash, Cash Equivalents and Short-Term Investments	9,303			11,102
Marketable securities	4,058			5,013
Trade accounts receivable, less allowances of $524 and $501, respectively	4,888			3,685
Inventories	3,453			3,071
Prepaid expenses and other assets	2,658			2,059
Total Current Assets	24,360			24,930
Equity method investments	19,418			19,412
Other investments	894			867
Other assets	5,596			4,148
Deferred income tax assets	2,559			2,674
Property, plant and equipment, less accumulated depreciation of $8,222 and $8,335, respectively	10,254			9,598
Trademarks with indefinite lives	9,313			6,682
Bottlers' franchise rights with indefinite lives	110			51
Goodwill	16,840			14,109
Other intangible assets	652			745
Total Assets	$	89,996		$	83,216
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and accrued expenses	$	12,819		$	9,533
Loans and notes payable	13,030			13,835
Current maturities of long-term debt	2,749			5,003
Accrued income taxes	784			411
Total Current Liabilities	29,382			28,782
Long-term debt	29,296			25,376
Other liabilities	8,336			7,646
Deferred income tax liabilities	2,687			2,354
The Coca-Cola Company Shareowners' Equity
Common stock, $0.25 par value; authorized — 11,200 shares; issued — 7,040 and 7,040 shares, respectively	1,760			1,760
Capital surplus	16,833			16,520
Reinvested earnings	64,602			63,234
Accumulated other comprehensive income (loss)	(12,981		)	(12,814		)
Treasury stock, at cost — 2,765 and 2,772 shares, respectively	(52,033		)	(51,719		)
Equity Attributable to Shareowners of The Coca-Cola Company	18,181			16,981
Equity attributable to noncontrolling interests	2,114			2,077
Total Equity	20,295			19,058
Total Liabilities and Equity	$	89,996		$	83,216

Refer to Notes to Condensed Consolidated Financial Statements.

THE COCA-COLA COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In millions)


	Six Months Ended						Six Months Ended
	June 29, 2018			June 30, 2017			June 28, 2019			June 29, 2018
OPERATING ACTIVITIES
Operating Activities
Consolidated net income	$	3,731		$	2,556		$	4,331		$	3,731
(Income) loss from discontinued operations	(115		)	—
Net income from continuing operations	3,616			2,556
Depreciation and amortization	553			629			602			553
Stock-based compensation expense	121			114			88			121
Deferred income taxes	5			620			(163		)	24
Equity (income) loss — net of dividends	(147		)	(303		)	(254		)	(148		)
Foreign currency adjustments	(109		)	33			37			(119		)
Significant (gains) losses on sales of assets — net	98			259
Significant (gains) losses — net							247			98
Other operating charges	576			970			93			576
Other items	56			(68		)	180			43
Net change in operating assets and liabilities	(2,161		)	(1,468		)	(660		)	(2,193		)
Net cash provided by operating activities	2,608			3,342
INVESTING ACTIVITIES
Net Cash Provided by Operating Activities							4,501			2,686
Investing Activities
Purchases of investments	(4,833		)	(10,435		)	(2,935		)	(4,833		)
Proceeds from disposals of investments	7,621			8,729			3,395			7,621
Acquisitions of businesses, equity method investments and nonmarketable securities	(218		)	(520		)	(5,353		)	(218		)
Proceeds from disposals of businesses, equity method investments and nonmarketable securities	304			2,055			265			304
Purchases of property, plant and equipment	(612		)	(832		)	(767		)	(689		)
Proceeds from disposals of property, plant and equipment	62			42			43			63
Other investing activities	17			(240		)	(10		)	6
Net cash provided by (used in) investing activities	2,341			(1,201		)
FINANCING ACTIVITIES
Net Cash Provided by (Used in) Investing Activities							(5,362		)	2,254
Financing Activities
Issuances of debt	16,190			18,586			14,518			16,280
Payments of debt	(16,643		)	(14,910		)	(14,278		)	(16,666		)
Issuances of stock	600			917			602			600
Purchases of stock for treasury	(1,317		)	(2,197		)	(689		)	(1,317		)
Dividends	(1,662		)	(1,584		)	(1,709		)	(1,662		)
Other financing activities	(58		)	(15		)	124			(70		)
Net cash provided by (used in) financing activities	(2,890		)	797
CASH FLOWS FROM DISCONTINUED OPERATIONS
Net cash provided by (used in) operating activities from discontinued operations	78			—
Net cash provided by (used in) investing activities from discontinued operations	(87		)	—
Net cash provided by (used in) financing activities from discontinued operations	55			—
Net cash provided by (used in) discontinued operations	46			—
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS	(109		)	199
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS
Net Cash Provided by (Used in) Financing Activities							(1,432		)	(2,835		)
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents							2			(109		)
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents during the period	1,996			3,137			(2,291		)	1,996
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period	6,373			8,850			9,318			6,373
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	8,369			11,987
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents at End of Period							7,027			8,369
Less: Restricted cash and restricted cash equivalents at end of period	394			269			296			220
Cash and cash equivalents at end of period	$	7,975		$	11,718
Cash and Cash Equivalents at End of Period							$	6,731		$	8,149

Refer to Notes to Condensed Consolidated Financial Statements.

THE COCA-COLA COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and notes required by U.S. GAAP for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the Notes to Consolidated Financial Statements included in the Annual Report on Form 10-K of The Coca-Cola Company for the year ended December 31, ~~2017~~2018.

When used in these notes, the terms "The Coca-Cola Company," "Company," "we," "us" and "our" mean The Coca-Cola Company and all entities included in our condensed consolidated financial statements. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June ~~29, 2018~~28, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2018~~2019. Sales of our nonalcoholic ready-to-drink beverages are somewhat seasonal, with the second and third calendar quarters accounting for the highest sales volumes. The volume of sales in the beverage business may be affected by weather conditions.

Each of our interim reporting periods, other than the fourth interim reporting period, ends on the Friday closest to the last day of the corresponding quarterly calendar period. The second quarter of ~~2018~~2019 and the second quarter of ~~2017~~2018 ended on June 28, 2019 and June 29, 2018 ~~and~~ ~~June 30, 2017~~, respectively. Our fourth interim reporting period and our fiscal year end on December 31 regardless of the day of the week on which December 31 falls.

~~Certain prior year amounts~~Operating Segments

In January 2019, we established a new operating segment, Global Ventures, which includes the results of Costa Limited ("Costa"), which we acquired in January 2019, and the results of our innocent and doğadan businesses as well as fees earned pursuant to distribution coordination agreements between the Company and Monster Beverage Corporation ("Monster"). Additionally, during the three months ended June 28, 2019, the Company updated its plans for Coca-Cola Beverages Africa Proprietary Limited ("CCBA") and now intends to maintain its majority stake in CCBA for the foreseeable future. As a result, the Company now presents the financial results of CCBA within its results from continuing operations and includes the results of CCBA in the ~~condensed consolidated financial statements~~Bottling Investments operating segment. Accordingly, all prior period operating segment and ~~accompanying notes have~~Corporate information presented herein has been ~~revised~~adjusted to ~~conform~~reflect these changes. Refer to ~~the current year presentation as a result~~Note 2 and Note 17.

As of June 28, 2019, our organizational structure consisted of the ~~adoption~~following operating segments: Europe, Middle East and Africa; Latin America; North America; Asia Pacific; Global Ventures; and Bottling Investments. Our operating structure also included Corporate, which consists of ~~accounting standards that became effective January 1, 2018, as applicable. Refer~~two components: (1) a center focused on strategic initiatives, policy and governance, and (2) an enabling services organization focused on both simplifying and standardizing key transactional processes and providing support to ~~the "Recently Adopted Accounting Guidance" section within this note below for further details.~~business units through global centers of excellence.

Advertising Costs

The Company's accounting policy related to advertising costs for annual reporting purposes is to expense production costs of print, radio, television and other advertisements as of the first date the advertisements take place. All other marketing expenditures are expensed in the annual period in which the expenditure is incurred.

For interim reporting purposes, we allocate our estimated full year marketing expenditures that benefit multiple interim periods to each of our interim reporting periods. We use the proportion of each interim period's actual unit case volume to the estimated full year unit case volume as the basis for the allocation. This methodology results in our marketing expenditures being recognized at a standard rate per unit case. At the end of each interim reporting period, we review our estimated full year unit case volume and our estimated full year marketing expenditures that benefit multiple interim periods in order to evaluate if a change in estimate is necessary. The impact of any changes in these full year estimates is recognized in the interim period in which the change in estimate occurs. Our full year marketing expenditures are not impacted by this interim accounting policy.

~~Shipping~~Leases

Effective January 1, 2019, we adopted Accounting Standards Codification 842, Leases ("ASC 842"). We determine if an arrangement contains a lease at inception based on whether or not the Company has the right to control the asset during the contract period and ~~Handling Costs~~other facts and circumstances.

~~Shipping and handling costs related~~

Lessee

We are the lessee in a lease contract when we obtain the right to control the ~~movement of goods from our manufacturing locations to our sales distribution centers~~asset. Operating leases are included in the line item cost of goods sold in our condensed consolidated statements of income. Shipping and handling costs incurred to move goods from our manufacturing locations or sales distribution centers to our customers are also included in the line item cost of goods sold in our condensed consolidated statements of income, except for costs incurred to distribute goods sold by our Company-owned bottlers to our customers, which are included in the line item selling, general and administrative expenses. Our customers generally do not pay us separately for shipping and handling costs. Effective January 1, 2018, we adopted Accounting Standards Codification 606, ~~Revenue from Contracts with Customers~~ ~~("ASC 606")~~. Upon adoption, we made a policy election to recognize the cost of shipping and handling activities that are performed after a customer obtains control of the goods as costs to fulfill our promise to provide goods to the customer. As a result of this election, the Company does not evaluate whether shipping and handling activities are services promised to customers. If revenue is recognized for the related goods before the shipping and handling activities occur, the related costs of those shipping and handling activities are accrued. Refer to Note 3 for additional information regarding revenue recognition.

~~Sales, Use, Value-Added and Excise Taxes~~

~~The Company collects taxes imposed directly on its customers related to sales, use, value-added, excise and~~items other similar taxes. The Company then remits such taxes on behalf of its customers to the applicable governmental authorities. Upon adoption of ASC 606, we made a policy election to exclude from net operating revenues the tax amounts imposed on revenue-producing transactions that were collected from our customers to be remitted to governmental authorities. Accordingly, such tax amounts are recorded in the line item trade accounts receivable in our consolidated balance sheet when collection of taxes from the customer has not yet occurred and are recorded in the line itemassets, accounts payable and accrued expenses, and other liabilities in our consolidated balance ~~sheet until they~~sheet. Operating lease right-of-use ("ROU") assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease, both of which are ~~remitted to the applicable governmental authorities. Taxes imposed directly~~recognized based on the ~~Company, whether based~~present value of the future minimum lease payments over the lease term at the commencement date. Leases with a lease term of 12 months or less at inception are not recorded on ~~receipts from sales, inventory procurement costs, or manufacturing activities,~~our consolidated balance sheet and are ~~recorded in~~expensed on a straight-line basis over the ~~line item cost of goods sold~~lease term in our consolidated statement of income. We determine the lease term by assuming the exercise of renewal options that are reasonably certain. As most of our leases do not provide an implicit interest rate, we use our local incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. When our contracts contain lease and non-lease components, we account for both components as a single lease component. Refer to Note 38 for ~~additional information regarding revenue recognition.~~further discussion.

Lessor

~~Net Income~~

~~The following table presents information related to net~~We have various arrangements for certain fountain equipment under which we are the lessor. These leases meet the criteria for operating lease classification. Lease income ~~from continuing operations and net income from discontinued operations (in millions):~~

Three Months Ended Six Months Ended
June 29, 2018
June 30, 2017
June 29, 2018
June 30, 2017
CONTINUING OPERATIONS
Net income from continuing operations $ 2,289
$ 1,372
$ 3,616
$ 2,556
Less: Net income (loss) from continuing operations attributable to
   noncontrolling interests
(1 ) 1
2
3
Net income from continuing operations attributable to shareowners of
   The Coca-Cola Company
$ 2,290
$ 1,371
$ 3,614
$ 2,553
DISCONTINUED OPERATIONS

Net income from discontinued operations $ 42
$ —
$ 115
$ —
Less: Net income from discontinued operations attributable to
   noncontrolling interests
16
—
45
—
Net income from discontinued operations attributable to shareowners of
The Coca-Cola Company $ 26
$ —
$ 70
$ —
CONSOLIDATED
Consolidated net income $ 2,331
$ 1,372
$ 3,731
$ 2,556
Less: Net income attributable to noncontrolling interests 15
1
47
3
Net income attributable to shareowners of The Coca-Cola Company $ 2,316
$ 1,371
$ 3,684
$ 2,553

associated with these leases is not material.

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents

We classify time deposits and other investments that are highly liquid and have maturities of three months or less at the date of purchase as cash equivalents or restricted cash equivalents, as applicable. Restricted cash and restricted cash equivalents generally consist of amounts held by our captive insurance companies, which are included in the line item other assets on our consolidated balance ~~sheets~~sheet, and amounts classified in assets held for sale. We manage our exposure to counterparty credit risk through specific minimum credit standards, diversification of counterparties and procedures to monitor our concentrations of credit risk.

The following table provides a summary of cash, cash equivalents, restricted cash and restricted cash equivalents that constitute the total amounts shown in the condensed consolidated statements of cash flows (in millions):


	June 29, 2018		December 31, 2017		June 28, 2019		December 31, 2018
Cash and cash equivalents	$	7,975	$	6,006	$	6,731	$	9,077
Cash and cash equivalents included in assets held for sale	—		13		—		—
Cash and cash equivalents included in assets held for sale — discontinued operations	173		97
Cash and cash equivalents included in other assets¹	221		257		296		241
Cash, cash equivalents, restricted cash and restricted cash equivalents	$	8,369	$	6,373	$	7,027	$	9,318
	June 30, 2017		December 31, 2016		June 29, 2018		December 31, 2017
Cash and cash equivalents	$	11,718	$	8,555	$	8,149	$	6,102
Cash and cash equivalents included in assets held for sale	21		49		—		13
Cash and cash equivalents included in other assets¹	248		246		220		258
Cash, cash equivalents, restricted cash and restricted cash equivalents	$	11,987	$	8,850	$	8,369	$	6,373

¹Amounts represent cash and cash equivalents in our solvency capital portfolio set aside primarily to cover pension obligations in certain of

our European and Canadian pension plans. Refer to Note 4.

~~Hyperinflationary Economies~~

A hyperinflationary economy is one that has cumulative inflation of 100 percent or more over a three-year period. In accordance with U.S. GAAP, local subsidiaries in hyperinflationary economies are required to use the U.S. dollar as their functional currency and remeasure the monetary assets and liabilities not denominated in U.S. dollars using the rate applicable to conversion of a currency for purposes of dividend remittances. All exchange gains and losses resulting from remeasurement are recognized currently in income.

Venezuela has been designated as a hyperinflationary economy. We sell concentrate to our bottling partner in Venezuela from outside the country. These sales are denominated in U.S. dollars. We also have certain U.S. dollar-denominated intangible assets associated with products sold in Venezuela. As a result of weaker sales and the volatility of foreign currency exchange rates resulting from continued political instability, we recorded impairment charges of $14 million and $34 million during the three and six months ended June 30, 2017, respectively, in the line item other operating charges in our condensed consolidated statements of income. As a result of these impairment charges, the remaining carrying value of all U.S. dollar-denominated intangible assets associated with products sold in Venezuela is zero.

Recently Issued Accounting Guidance

Recently Adopted Accounting Guidance

~~In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09,~~ ~~Revenue from Contracts with Customers~~, which replaces most existing revenue recognition guidance in U.S. GAAP and is intended to improve and converge with international standards the financial reporting requirements for revenue from contracts with customers. ASU 2014-09 and its amendments were included primarily in ASC 606. The core principle of ASC 606 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. ASC 606 also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. We adopted ASC 606 effective January 1, 2018, using the modified retrospective method. We recognized a cumulative effect adjustment to decrease the opening balance of reinvested earnings as of January 1, 2018 by $257 million, net of tax. Refer to Note 3.

~~In January 2016, the FASB issued ASU 2016-01,~~ ~~Financial Instruments — Overall: Recognition and Measurement of Financial Assets and Financial Liabilities~~ ("ASU 2016-01"), which addresses certain aspects of the recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 was effective for the Company beginning January 1, 2018 and we are now recognizing any changes in the fair value of certain equity investments in net income as prescribed by the new standard rather than in other comprehensive income ("OCI"). We recognized a cumulative effect adjustment to increase the opening balance of reinvested earnings as of January 1, 2018 by $409 million, net of tax. Refer to Note 4 for additional disclosures required by this ASU.

~~In August 2016, the FASB issued ASU 2016-15,~~ ~~Classification of Certain Cash Receipts and Cash Payments~~, which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. ASU 2016-15 was effective for the Company beginning January 1, 2018 and was adopted using the retrospective transition approach to all periods presented.

The impact of the adoption of ASU 2016-15 on our consolidated statement of cash flows was a change in presentation related to our proceeds from the settlement of corporate-owned life insurance policies. We revised our condensed consolidated statement of cash flows to reflect these proceeds in the line item other investing activities, which were previously presented in the line item net change in operating assets and liabilities. During the six months ended June 30, 2017, the amount of proceeds received from the settlement of corporate-owned life insurance policies was $49 million.

~~In October 2016, the FASB issued ASU 2016-16,~~ ~~Intra-Entity Transfers of Assets Other Than Inventory~~ ("ASU 2016-16"), which requires the Company to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 was effective for the Company beginning January 1, 2018 and was adopted using a modified retrospective basis. We recorded a $2.9 billion cumulative effect adjustment to increase the opening balance of reinvested earnings with the majority of the offset being recorded as a deferred tax asset in the line item deferred income tax assets in our condensed consolidated balance sheet. Refer to Note 14.

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Restricted Cash~~. The amendments in this update address diversity in practice that exists in the classification and presentation of changes in amounts generally described as restricted cash and require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts that an entity defines as restricted cash for purposes of this standard or otherwise does not present in the line item cash and cash equivalents on its balance sheet. ASU 2016-18 was effective for the Company beginning January 1, 2018 and was adopted using the retrospective transition method to all periods presented.

Prior to the adoption of this ASU, we presented the transfer of cash and cash equivalents into or out of our captive insurance companies in the line items purchases of investments and proceeds from disposals of investments in our consolidated cash flow statement. We did not present the purchases of investments and proceeds from disposals of investments within our captive insurance companies. Cash flows related to cash and cash equivalents included in our insurance captives are now presented in the line items purchases of investments and proceeds from disposals of investments within the investing activities section of our consolidated statement of cash flows. During the six months ended June 30, 2017, the purchases of investments and proceeds from disposals of investments within our captive insurance companies were $388 million and $384 million, respectively.

Prior to the adoption of this ASU, we treated the change in cash and cash equivalents included in assets held for sale as an adjustment to the line item other investing activities within the statement of cash flows. With the adoption of this ASU, we no longer make this adjustment and restated the prior year to remove this adjustment. During the six months ended June 30, 2017, the change in cash and cash equivalents included in assets held for sale was $28 million. Refer to the heading "Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents" above for additional disclosures required by this ASU.

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Clarifying the Definition of a Business~~, which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 was effective for the Company beginning January 1, 2018 and was adopted prospectively. The impact on our consolidated financial statements will depend on the facts and circumstances of any specific future transactions.

~~In March 2017, the FASB issued ASU 2017-07,~~ ~~Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~ ("ASU 2017-07"), which requires that the service cost component of the Company's net periodic pension cost and net periodic postretirement benefit cost be included in the same line item as other compensation costs arising from services rendered by employees, with the non-service components of net periodic benefit cost and other benefit plan charges and credits being classified outside of a subtotal of income from operations. ASU 2017-07 was effective for the Company beginning January 1, 2018 and was adopted retrospectively for the presentation of the other components of net periodic benefit cost and other benefit plan charges and credits in our condensed consolidated statements of income. As part of our adoption, we elected to use a practical expedient which allows us to use information previously disclosed in our note on pension and other postretirement benefit plans as the estimation basis for applying the retrospective presentation requirements of this ASU. For the three and six months ended June 30, 2017, we reclassified $41 million and $60 million of income, respectively, related to our non-service cost components of net periodic benefit cost and other benefit plan charges and credits from operating income to other income (loss) — net in our condensed consolidated statements of income. Refer to Note 13 for additional disclosures required by this ASU.

~~In March 2018, the FASB issued ASU 2018-05,~~ ~~Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118.~~ The amendments in this update provide guidance on when to record and disclose provisional amounts for certain income tax effects of the Tax Cuts and Jobs Act ("Tax Reform Act"). The amendments also require any provisional amounts or subsequent adjustments to be included in net income from continuing operations. Additionally, this ASU discusses required disclosures that an entity must make with regard to the Tax Reform Act. This ASU is effective immediately as new information is available to adjust provisional amounts that were previously recorded. The Company has adopted this standard and will

~~continue to evaluate indicators that may give rise to a change in our tax provision as a result of the Tax Reform Act. Refer to Note 14 for additional information on the Tax Reform Act.~~

~~Accounting Guidance Not Yet Adopted~~

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases, which~~842 requires lessees to recognize ~~right-of-use~~operating lease ROU assets, representing their right to use the underlying asset for the lease term, and operating lease liabilities on the balance sheet for all leases with lease terms greater than 12 months. The guidance also ~~modifies the classification criteria and the accounting for sales-type and direct financing leases by lessors. Additionally, the guidance~~ requires qualitative and quantitative disclosures designed to assess the amount, timing and uncertainty of cash flows arising from leases. ~~The Company is progressing with~~We adopted ASC 842 using the modified retrospective method and utilized the optional transition method under which we continue to apply the legacy guidance in ASC 840, Leases, including its preparation for the adoption and implementation of this new accounting standard, including assessing our lease arrangements, evaluating practical expedient and accounting policy elections, and implementing software to meet the reportingdisclosure requirements, ~~of this standard. We have identified an interim software solution to be used upon adoption for lessee accounting and are~~ in the process of evaluating a long-term software solution. The Company has established a cross-functional implementation team to assist in identifying changes to our business processes and controls to support adoption of the new standard.

ASU 2016-02 is effective for the Company beginning January 1, 2019. The standard requires the use of a modified retrospective transition approach, which includes a number of optional practical expedients that entities may elect to apply. The Company is currently planning on electingcomparative period presented. In addition, we elected the package of practical expedients permitted under the transition guidance which permits us to ~~not reassess prior conclusions related to contracts containing leases,~~carry forward the historical lease classification, ~~and initial direct costs and is evaluating the~~among other ~~practical expedients available under the guidance. In March 2018, the FASB approved a~~ new, optional transition method that will give companies the option to use the effective date as the date of initial application on transition. The Company plans to elect this transition method, and asthings. As a result ~~we will not adjust~~of the adoption, our ~~comparative period financial information or make~~operating lease ROU assets and operating lease liabilities were $1,330 million and $1,353 million, respectively, as of June 28, 2019, which include preliminary amounts recorded resulting from the ~~new required lease disclosures for periods before the effective date.~~ acquisition of Costa in January 2019. The ~~Company anticipates the~~ adoption of this ~~new~~ standard ~~will result in a significant increase in lease-related assets and liabilities on~~did not impact our ~~consolidated balance sheet. The impact on the Company's~~ consolidated statement of income ~~is being evaluated. As the impact of this standard is non-cash in nature, we do not anticipate its adoption having an impact on the Company's~~or our consolidated statement of cash flows. Refer to Note 8 for further discussion.

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments — Measurement of Credit Losses on Financial Instruments~~, which requires measurement and recognition of expected credit losses for financial assets held. ASU 2016-13 is effective for the Company beginning January 1, 2020 and we are currently evaluating the impact that it will have on our consolidated financial statements.

In August 2017, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued ~~ASU~~Accounting Standards Update ("ASU") 2017-12, Targeted Improvements to Accounting for Hedging Activities,which eliminates the requirement to separately measure and report hedge ineffectiveness and requires companies to recognize all elements of hedge accounting that impact earnings in the same line item in the statement of income where the hedged item resides. The amendments in this update include new alternatives for measuring the hedged item for fair value hedges of interest rate risk and ease the requirements for effectiveness testing, hedge documentation and applying the critical terms match method. ~~Finally, the standard introduces new alternatives that permit companies to reduce the risk of material error if the shortcut method is misapplied.~~We adopted ASU 2017-12 is effective ~~for the Company beginning~~ January 1, 2019 ~~and is~~using the modified retrospective method. We recognized a cumulative effect adjustment to decrease the opening balance of reinvested earnings as of January 1, 2019 by $12 million, net of tax. Refer to Note 6 for additional disclosures required ~~to be applied prospectively. The Company is currently evaluating the impact that ASU 2017-12 will have on our consolidated financial statements.~~by this ASU.

In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which permits entities to reclassify the disproportionate income tax effects of the Tax Cuts and Jobs Act of 2017 (the "Tax Reform ~~Act~~Act") on items within accumulated other comprehensive income (loss) ("AOCI") to ~~retained~~reinvested earnings. These disproportionate income tax effect items are referred to as "stranded tax effects." ~~Amendments~~The amendments in this update only relate to the reclassification of the income tax effects of the Tax Reform Act. Other accounting guidance that requires the effect of changes in tax laws or rates to be included in net income ~~from continuing operations~~ is not affected by this update. We adopted ASU 2018-02 effective January 1, 2019. We recognized a cumulative effect adjustment to increase the opening balance of reinvested earnings as of January 1, 2019 by $513 million.

Accounting Guidance Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Measurement of Credit Losses onFinancial Instruments, which requires measurement and recognition of expected credit losses for financial assets held. ASU 2016-13 is effective for the Company beginning January 1, ~~2019~~2020 and ~~should~~is required to be applied ~~either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Reform Act is recognized. The Company is~~prospectively. We are currently evaluating the impact that ASU ~~2018-02~~2016-13 will have on our consolidated financial statements.

NOTE 2: ACQUISITIONS AND DIVESTITURES

Acquisitions

During the six months ended June 28, 2019, our Company's acquisitions of businesses, equity method investments and nonmarketable securities totaled $5,353 million, which primarily related to the acquisition of Costa and the remaining equity ownership interest in C.H.I. Limited ("CHI"), a Nigerian producer of value-added dairy and juice beverages and iced tea.

During the six months ended June 29, 2018, our Company's acquisitions of businesses, equity method investments and nonmarketable securities totaled $218 million, which primarily related to the acquisition of additional interests in the ~~Company's~~Company’s franchise bottlers in the United Arab Emirates and in Oman, both of which were previously equity method investees of the Company. As a result of the additional interest acquired in the Oman bottler, we obtained a controlling interest, resulting in its consolidation.

Costa Limited

In January 2019, the Company acquired Costa in exchange for $4.9 billion of cash, net of cash acquired. Costa is a coffee company with retail outlets in over 30 countries, the Costa Express vending system and a state-of-the-art roastery. We believe this acquisition will allow us to increase our presence in the hot beverage market as Costa has a scalable platform across multiple formats and channels, including opportunities to introduce ready-to-drink products. As of June 28, 2019, $2.4 billion of the purchase price was preliminarily allocated to the Costa trademark and $2.5 billion was preliminarily allocated to goodwill. The goodwill recognized as part of this acquisition is primarily related to synergistic value created from the opportunity for additional expansion as well as our ability to market and distribute Costa in ready-to-drink form throughout our bottling system. It also includes certain other intangible assets that do not qualify for separate recognition, such as an assembled workforce. The goodwill is not tax deductible and has been assigned to the Global Ventures operating segment. The preliminary allocation of the purchase price is subject to refinement when valuations are finalized. As of June 28, 2019, the valuations that have not been finalized primarily relate to operating lease ROU assets and operating lease liabilities and certain fixed assets. The final purchase price allocation will be completed as soon as possible, but no later than the first quarter of 2020.

C.H.I. Limited

In January 2019, the Company acquired the remaining 60 percent interest in CHI in exchange for $260 million of cash, net of cash acquired, under the terms of the agreement for our original investment in CHI. Upon consolidation, we recognized a net charge of $121 million, which included the remeasurement of our previously held equity interest in CHI to fair value and the reversal of the related cumulative translation adjustments. The fair value of our previously held equity investment was determined using a discounted cash flow model based on Level 3 inputs. The net charge was recorded in the line item other income (loss) — net in our condensed consolidated statement of income.

Divestitures

During the six months ended June ~~30, 2017, our Company's acquisitions~~28, 2019, proceeds from disposals of businesses, equity method investments and nonmarketable securities totaled ~~$520~~$265 million, which primarily related to the ~~acquisition~~sale of ~~AdeS,~~ a ~~plant-based beverage business, by~~portion of our equity method investment in Embotelladora Andina S.A. ("Andina"). We recognized a gain of $39 million as a result of the ~~Company and several~~sale, which was recorded in the line item other income (loss) — net in our condensed consolidated statement of ~~its bottling partners~~income. We continue to account for our remaining interest in ~~Latin America. Additionally, in conjunction with the refranchising of Coca-Cola Refreshments' ("CCR") Southwest operating unit ("Southwest Transaction"), we obtained~~Andina as an equity ~~interest in AC Bebidas, S. de R.L. de C.V. ("AC Bebidas"),~~method investment as a ~~subsidiary~~result of ~~Arca Continental, S.A.B. de C.V. ("Arca").~~

~~Divestitures~~our representation on Andina's Board of Directors and other governance rights.

During the six months ended June 29, 2018, proceeds from disposals of businesses, equity method investments and nonmarketable securities totaled $304 million, which primarily related to the proceeds from the refranchising of our Latin American bottling operations.

During the six months ended June 30, 2017, proceeds from disposals of businesses, equity method investments and nonmarketable securities totaled $2,055 million, primarily related to proceeds from the refranchising of certain bottling territories in North America and China.

Refranchising of Latin American Bottling Operations

~~As of December 31, 2017, certain of the Company's bottling operations in Latin America were classified as held for sale.~~ During the three and six months ended June 29, 2018, the Company sold its bottling operations in Latin America to Coca-Cola FEMSA, S.A.B. de C.V. ("Coca-Cola FEMSA"), an equity method investee. We received net cash proceeds of $277 million as a result of these sales and recognized a net gain of $36 million, which was included in the line item other income (loss) — net in our condensed consolidated statement of income.

~~Refranchising of China Bottling Operations~~

During the three months ended June 30, 2017, the Company sold a substantial portion of its bottling operations in China to the two existing local franchise bottlers. We received $740 million as a result of these sales and recognized a gain of $9 million, which was included in the line item other income (loss) — net in our condensed consolidated statement of income. On June 30, 2017, we received an advance payment of $191 million related to the remaining bottling operations and a related cost method investment, which were sold on July 1, 2017.

North America Refranchising— United States

In conjunction with implementing a new beverage partnership model in North America, in 2018 the Company ~~refranchised~~completed the refranchising of all of our bottling territories in the United States that were previously managed by ~~CCR~~Coca-Cola Refreshments

("CCR") to certain of our unconsolidated bottling partners. These territories generally border these bottlers' existing territories, allowing each bottler to better service local customers and provide more efficient execution. By entering into comprehensive beverage agreements ("CBAs") with each of the bottlers, we granted certain exclusive territory rights for the distribution, promotion, marketing and sale of Company-owned and licensed beverage products as defined by the CBA.

Each CBA generally has a term of 10 years and is renewable, in most cases by the bottler and in some cases by the Company, indefinitely for successive additional terms of 10 years each. Under the CBA, except for the CBA entered into in conjunction with the Southwest Transaction and for additional territories sold to AC Bebidas as well as the CBA entered into with Liberty Coca-Cola Beverages, the bottlers make ongoing quarterly payments to the Company based on their gross profit in the refranchised territories throughout the term of the CBA, including renewals, in exchange for the grant of the exclusive territory rights. Liberty Coca-Cola Beverages, the co-owners of which are former management of CCR, will make ongoing quarterly payments based on the gross profit in its refranchised territories upon the earlier of reaching a predefined level of profitability or the 41^st ~~quarter following the closing date.~~

Contemporaneously with the grant of these rights, the Company sold the distribution assets, certain working capital items, and the exclusive rights to distribute certain beverage brands not owned by the Company, but distributed by CCR, in each of these territories, excluding the territory included in the Southwest Transaction, to the respective bottlers in exchange for cash.

During the six months ended June 29, 2018 and June 30, 2017, cash proceeds from these sales totaled $3 million and $1,118 million, respectively. Included in the cash proceeds for the six months ended June 30, 2017 was $224 million from Coca-Cola Bottling Co. Consolidated ("CCBCC"), an equity method investee.

Under the applicable accounting guidance, we were required to derecognize all of the tangible assets sold as well as the intangible assets transferred, including distribution rights, customer relationships and an allocated portion of goodwill related to these territories. We recognized net charges of $102 ~~million and $1,274~~ million during the three months ended June 29, 2018 and ~~June 30, 2017, respectively. During~~net charges of $4 million and $104 million during the six months ended June ~~29, 2018~~28, 2019 and June ~~30, 2017, the Company recognized net charges of $104 million and $1,771 million,~~29, 2018, respectively. These net charges were included in the line item other income (loss) — net in our condensed consolidated statements of ~~income. The net charges in 2018~~income and were primarily related to post-closing

adjustments as contemplated by the related agreements. The net charges in 2017 were primarily related to the derecognition of the intangible assets transferred or reclassified as held for sale. In total, we expect to recover the value of the intangible assets transferred to the bottlers under the CBAs through the future quarterly payments; however, as the payments for the territory rights are dependent on the bottlers' future gross profit in these territories, they are considered a form of contingent consideration.

There is diversity in practice as it relates to the accounting for contingent consideration by the seller. The seller can account for the future contingent payments received as a gain contingency, recognizing the amounts in the statement of income only after the related contingencies are resolved and the gain is realized, which in this arrangement will be quarterly as the bottlers earn gross profit in the transferred territories. Alternatively, the seller can record a receivable for the contingent consideration at fair value on the date of sale and record any future differences between the payments received and this receivable in the statement of income as they occur. We elected the gain contingency treatment since the quarterly payments will be received throughout the terms of the CBAs, including all subsequent renewals, regardless of the cumulative amount received as compared to the value of the intangible assets transferred.

During the three months ended June 29, 2018, ~~and June 30, 2017,~~ the Company recorded charges of $2 million ~~and $109 million, respectively,~~ primarily related to payments made to certain of our unconsolidated bottling partners in order to convert the bottling agreements for their legacy territories and any previously refranchised territories to a single form of ~~CBA~~comprehensive beverage agreement ("CBA") with additional requirements. During the six months ended June ~~29, 2018~~28, 2019 and June ~~30, 2017,~~29, 2018, the Company recorded charges of ~~$21~~$4 million and ~~$215~~$21 million, respectively, related to such payments. The additional requirements generally include a binding national governance model, mandatory incidence pricing and additional core performance requirements, among other things. As a result of these conversions, the legacy territories and any previously refranchised territories for each of the related bottling partners will be governed under similar CBAs, which will provide consistency across each such bottler's respective territory, as well as consistency with other U.S. bottlers that have been granted or converted to this form of CBA. The charges related to these payments were included in the line item other income (loss) — net in our condensed consolidated statements of ~~income~~income.

Refer to Note 17 for the impact these items had on our operating segments and Corporate.

Coca-Cola Beverages Africa Proprietary Limited

Due to the Company's original intent to refranchise CCBA, CCBA was accounted for as held for sale and a discontinued operation from October 2017, when the Company became the controlling shareowner of CCBA, through the first quarter of 2019. While the Company had discussions with a number of potential partners throughout the period CCBA was held for sale, during the second quarter of 2019, the Company updated its plans for CCBA and now intends to maintain its controlling stake in CCBA for the foreseeable future. As a result, CCBA no longer qualifies as held for sale or as a discontinued operation, and CCBA's financial results are now presented within the Company's continuing operations. The financial results for prior periods have also been retrospectively reclassified herein. As of the date we changed our plans, the Company was required to measure CCBA's property, plant and equipment and definite-lived intangible assets at the lower of their current fair values or their carrying amounts before they were classified as held for sale, adjusted for depreciation and amortization expense that would have been recognized had the business been classified as held and used during the period that CCBA was classified as held for sale. As a result, the Company reallocated the allowance for reduction of assets held for sale balance that was originally recorded during the third quarter of 2018 to reduce the carrying value of CCBA's property, plant and equipment by $225 million and CCBA's definite-lived intangible assets by $329 million based on the relative amount of depreciation and amortization that would have been recognized during the periods they were held for sale. We also recorded a $160 million adjustment to reduce the carrying value of CCBA's property, plant and equipment and definite-lived intangible assets by an additional $34 million and $126 million, respectively, during the three and six months ended June ~~29, 2018 and June 30, 2017.~~

On April 1, 2017, the Company refranchised the Southwest operating unit of CCR, which includes Texas and parts of Oklahoma, New Mexico and Arkansas, in the Southwest Transaction. In conjunction with the Southwest Transaction, Arca contributed its existing beverage business to AC Bebidas. CCR contributed its Southwest operating unit, including all of its assets and liabilities, to AC Bebidas in exchange for an approximate 20 percent interest in AC Bebidas. Arca owns the remaining interest in AC Bebidas. CCR also made cash payments of $144 million, net of cash received. As a result of the Southwest Transaction, the Company recognized a gain of $1,060 million due to the difference in the recorded carrying value of the net assets transferred compared to the value of the interest it obtained in AC Bebidas of $2,960 million, which was determined using an income and market approach (a Level 3 measurement). This gain was recorded28, 2019. These additional adjustments were included in the line item other income (loss) — net in our condensed consolidated ~~statement~~statements of income. The Company accounts for its interest in AC Bebidas as an equity method investment based on our equity ownership percentage, our representation on AC Bebidas' Board of Directors, material intercompany transactions and other governance rights.

~~Refer to Note 16 for the impact these items had on our operating segments.~~

~~Assets and Liabilities Held for Sale~~

As of December 31, 2017, the Company had certain bottling operations in North America and Latin America that met the criteria to be classified as held for sale, which requires us to present the related assets and liabilities as separate line items in our condensed consolidated balance sheet. These operations were refranchised in 2018.

~~The following table presents information related to the major classes of assets and liabilities that were classified as held for sale in our condensed consolidated balance sheets (in millions):~~

December 31, 2017

Cash, cash equivalents and short-term investments $ 13

Trade accounts receivable, less allowances 10

Inventories 11

Prepaid expenses and other assets 12

Other assets 7

Property, plant and equipment — net 85

Bottlers' franchise rights with indefinite lives 5

Goodwill 103

Other intangible assets 1

Allowance for reduction of assets held for sale (28 )
Assets held for sale $ 219
¹
Accounts payable and accrued expenses $ 22

Other liabilities 12

Deferred income taxes 3

Liabilities held for sale $ 37
²

¹Consists of total assets relating to North America refranchising of $9 million and the refranchising of Latin America bottling operations of $210 million, which are included in the Bottling Investments operating segment.

² Consists of total liabilities relating to North America refranchising of $5 million and the refranchising of Latin America bottling operations of $32 million, which are included in the Bottling Investments operating segment.

~~We determined that the operations included in the table above did not meet the criteria to be classified as discontinued operations under the applicable guidance.~~

~~Discontinued Operations~~

In October 2017, the Company and Anheuser-Busch InBev ("ABI") completed the transition of ABI's controlling interest in Coca-Cola Beverages Africa Proprietary Limited ("CCBA") to the Company for $3,150 million. We plan to hold our controlling interest in CCBA temporarily and are currently in discussions with several potential buyers and anticipate divesting of this interest in 2018. Accordingly, we have presented the financial position and results of operations of CCBA as discontinued operations in the accompanying condensed consolidated financial statements. We were not required to record these assets and liabilities at fair value less any costs to sell because their fair value approximates their carrying value.

The preliminary goodwill recorded at the time of the transaction was $4,262 million, none of which is tax deductible. This goodwill is in part due to the significant synergies that are expected from the consolidation of the bottling system in Southern and East Africa, especially within the country of South Africa. The initial accounting for the business combination is currently incomplete, although preliminary purchase accounting entries have been recorded, including a preliminary allocation of goodwill between CCBA and the reporting units expected to benefit from this transaction. The balance sheet line items that are expected to be impacted by the completion of purchase accounting are assets held for sale — discontinued operations and liabilities held for sale — discontinued operations in the condensed consolidated financial statements.

The following table presents information related to the major classes of assets and liabilities of CCBA that were classified as held for sale — discontinued operations in our condensed consolidated balance sheets (in millions):

June 29, 2018
December 31, 2017

Cash, cash equivalents and short-term investments $ 173
$ 97

Trade accounts receivable, less allowances 257
299

Inventories 289
299

Prepaid expenses and other assets 68
52

Equity method investments 6
7

Other assets 39
29

Property, plant and equipment — net 1,440
1,436

Goodwill 3,660
4,248

Other intangible assets

749
862

Assets held for sale — discontinued operations $ 6,681
$ 7,329

Accounts payable and accrued expenses $ 542
$ 598

Loans and notes payable 439
404

Current maturities of long-term debt 6
6

Accrued income taxes 31
40

Long-term debt 17
19

Other liabilities 9
10

Deferred income taxes 412
419

Liabilities held for sale — discontinued operations

$ 1,456
$ 1,496

NOTE 3: REVENUE RECOGNITION

We adopted ASC 606 effective January 1, 2018, using the modified retrospective method. We have implemented this standard for all contracts at the effective date. Under this method, we recorded the cumulative effect of applying this guidance through an adjustment to the opening balance of reinvested earnings on the adoption date. The cumulative adjustment was a reduction of reinvested earnings of $257 million, net of tax, which was primarily related to changing when we recognize the effects of certain variable consideration payments, as described below.

The Company has changed our accounting policies and practices, business processes, systems and controls, as well as designed and implemented specific controls over our evaluation of the impact of the new guidance on the Company, including the cumulative effect calculation, disclosure requirements and the collection of relevant data for the reporting process.

Our Company markets, manufactures and ~~sells~~sells:

beverage concentrates, sometimes referred to as "beverage bases," and syrups, including fountain syrups (we refer to this part of our business as our "concentrate business" or "concentrate operations"); and

finished ~~goods.~~ sparkling soft drinks and other nonalcoholic beverages (we refer to this part of our business as our "finished product business" or "finished product operations").

Generally, finished product operations generate higher net operating revenues but lower gross profit margins than concentrate operations.

In our domestic and international concentrate operations, we typically generate net operating revenues by selling concentrates, syrups and certain finished beverages to authorized bottling ~~and canning~~ operations ~~(to which~~(which we typically refer to as our "bottlers" or our "bottling partners"). Our bottling partners either combine the concentrates with sweeteners (depending on the product), still water and/or sparkling water, or combine the syrups with sparkling water to produce finished beverages. The finished beverages are packaged in authorized containers, such as cans and refillable and ~~non-refillable~~nonrefillable glass and plastic bottles, bearing our trademarks or trademarks licensed to us and are then sold to retailers directly or, in some cases, through wholesalers or other bottlers. In addition, outside the United States, our bottling partners are typically authorized to manufacture fountain syrups, using our concentrate, which they sell to fountain retailers for use in producing beverages for immediate consumption, or to authorized fountain wholesalers who in turn sell and distribute the fountain syrups to fountain retailers. Our concentrate operations are included in our geographic operating segments.

Our finished product operations generate net operating revenues by selling sparkling soft drinks and a variety of other finished nonalcoholic beverages, such as water, enhanced water and sports drinks; juice, dairy and plant-based beverages; tea and coffee; and energy drinks, to retailers or to distributors and wholesalers who distribute them to ~~retailers.~~retailers or Company-owned Costa retail outlets. These operations consist primarily of Company-owned or -controlled bottling, sales and distribution operations, which are included in our Bottling Investments operating segment. In certain markets, the Company also operates non-bottling finished product operations in which we sell finished beverages to distributors and wholesalers ~~which~~that are generally not one of the Company's bottling partners. These operations are generally included in one of our geographic operating ~~segments.~~segments or our Global Ventures operating segment. In the United States, we manufacture fountain syrups and sell them to fountain retailers, who use the fountain syrups to produce beverages for immediate consumption, or to authorized fountain wholesalers or bottling partners who resell the fountain syrups to fountain

retailers. These fountain syrup sales are included in our North America operating segment. ~~Generally, finished product operations produce higher net operating revenues but lower gross profit margins compared~~

We adopted Accounting Standards Codification 606, Revenue from Contracts with Customers ("ASC 606") effective January 1, 2018 using the modified retrospective method. We have applied this standard to ~~concentrate operations.~~

all contracts at the effective date and contracts entered into thereafter. Revenue is recognized when performance obligations under the terms of the contracts with our customers are satisfied. Our performance obligation generally consists of the promise to sell concentrates or finished products to our bottling partners, wholesalers, distributors or retailers. Control of the concentrates or finished products is transferred upon shipment to, or receipt at, our customers' locations, as determined by the specific terms of the contract. Once control is transferred to the customer and we have completed our performance obligation, ~~and~~ revenue is recognized. Our sales terms generally do not allow for a right of return except for matters related to any manufacturing defects on our part. After completion of our performance obligation, we have an unconditional right to consideration as outlined in the contract. Our receivables will generally be collected in less than six months, in accordance with the underlying payment terms. All of our performance obligations under the terms of contracts with our customers have an original duration of one year or less.

Our customers and bottling partners may be entitled to cash discounts, funds for promotional and marketing activities, volume-based incentive programs, support for infrastructure programs and other similar programs. In some markets, in an effort to allow our Company and our bottling partners to grow together through shared value, aligned financial objectives and the flexibility necessary to meet consumers' always changing needs and tastes, we ~~worked~~work with our bottling partners to develop and implement an incidence-based concentrate pricing model. Under this model, the ~~concentrate~~ price we charge bottlers for concentrate they use to prepare and package finished products is impacted by a number of factors, including, but not limited to, ~~bottler pricing,~~the prices charged by the bottlers for such finished products, the channels ~~and packages~~ in which ~~the finished products produced from the concentrate~~they are ~~sold.~~sold and package mix. The amounts associated with the arrangements described above are defined as variable consideration under ASC 606 and an estimate of which is included in the transaction price as a component of net operating revenues in our ~~condensed~~ consolidated statement of income upon completion of our performance obligations. The total revenue recorded, including any variable consideration, cannot exceed the amount for which it is probable that a significant reversal will not occur when uncertainties related to variability are resolved. As a result, we are recognizing revenue based on our faithful depiction of the consideration that we expect to receive. In making our estimates of variable consideration, we consider past results and make significant assumptions related to: (1) customer sales volumes; (2) customer ending inventories; (3) customer selling price per unit; (4) selling channels; and (5)

discount rates, rebates and other pricing allowances, as applicable. In gathering data to estimate our variable consideration, we generally calculate our estimates using a portfolio approach at the country and product line level rather than at the individual contract level. The result of making these estimates will impact the line items trade accounts receivable and accounts payable and accrued expenses in our ~~condensed~~ consolidated balance sheet. The actual amounts ultimately paid and/or received may be different from our estimates. The change in the amount of variable consideration recognized during the three and six months ended June ~~29, 2018~~28, 2019 related to performance obligations satisfied in prior periods was immaterial.

In addition to changes in the timing of when we record variable consideration, ASC 606 provided clarification about the classification of certain costs relating to revenue arrangements with customers. As a result, during the three and six months ended June 29, 2018, we recorded certain amounts in cost of goods sold or selling, general and administrative expenses that were previously classified as reductions in net operating revenues. The Company also re-evaluated the principal versus agent considerations pertaining to certain of its arrangements with third-party manufacturers and co-packers. We recorded certain costs in net operating revenues which were previously recorded in cost of goods sold related to arrangements in which we concluded we did not control the goods before they were delivered to our customers.

The following tables compare the amounts reported in the condensed consolidated statements of income and condensed consolidated balance sheet to the amounts had the previous revenue recognition guidance been in effect (in millions):

Three Months Ended June 29, 2018 Six Months Ended June 29, 2018
As Reported
Balances without Adoption of ASC 606
Increase (Decrease) Due to Adoption
As Reported
Balances without Adoption of ASC 606
Increase (Decrease) Due to Adoption

Net operating revenues $ 8,927
$ 8,767
$ 160
¹
$ 16,553
$ 16,202
$ 351
¹
Cost of goods sold 3,252
3,044
208
5,990
5,591
399

Gross profit 5,675
5,723
(48 ) 10,563
10,611
(48 )
Selling, general and administrative expenses 2,723
2,724
(1 ) 5,264
5,264
—

Operating income 2,727
2,774
(47 ) 4,538
4,586
(48 )
Income from continuing operations before income taxes 2,883
2,930
(47 ) 4,716
4,764
(48 )
Income taxes from continuing operations 594
575
19
1,100
1,081
19

Net income from continuing operations 2,289
2,317
(28 ) 3,616
3,645
(29 )
Income from discontinued operations 42
43
(1 ) 115
113
2

Consolidated net income 2,331
2,360
(29 ) 3,731
3,758
(27 )
Net income attributable to shareowners of The Coca-Cola
Company
2,316
2,345
(29 ) 3,684
3,711
(27 )

¹~~The increase in net operating revenues was primarily due to the reclassification of shipping and handling costs.~~

June 29, 2018
As Reported
Balances without Adoption of ASC 606
Increase (Decrease) Due to Adoption

ASSETS
Trade accounts receivable $ 4,565
$ 4,503
$ 62
¹
Prepaid expenses and other assets 2,543
2,545
(2 )
Total current assets 36,024
35,964
60

Deferred income tax assets

2,999
2,934
65

Total assets 89,593
89,468
125

LIABILITIES AND EQUITY

Accounts payable and accrued expenses $ 10,842
$ 10,382
$ 460
²
Total current liabilities 31,398
30,938
460

Deferred income tax liabilities 2,589
2,640
(51 )
Reinvested earnings 63,808
64,092
(284 )
Total equity 20,176
20,460
(284 )
Total liabilities and equity 89,593
89,468
125

¹~~The increase was primarily due to incremental estimated variable consideration receivables from third-party customers.~~

²~~The increase was primarily due to incremental estimated variable consideration payables due to third-party customers.~~

~~The following table presents~~present net operating revenues disaggregated between the United States and International and further by line of business (in millions):



	United States		International		Total
Three Months Ended June 28, 2019
Concentrate operations	$	1,415	$	4,163	$	5,578
Finished product operations	1,688		2,731		4,419
Total	$	3,103	$	6,894	$	9,997
Three Months Ended June 29, 2018
Concentrate operations	$	1,250	$	4,300	$	5,550
Finished product operations	1,786		2,085		3,871
Total	$	3,036	$	6,385	$	9,421


	United States		International		Total		United States		International		Total
Three Months Ended June 29, 2018
Six Months Ended June 28, 2019
Concentrate operations	$	1,258	$	4,417	$	5,675	$	2,600	$	7,756	$	10,356
Finished product operations	1,786		1,466		3,252		3,148		5,187		8,335
Total	$	3,044	$	5,883	$	8,927	$	5,748	$	12,943	$	18,691
Six Months Ended June 29, 2018
Concentrate operations	$	2,374	$	8,196	$	10,570	$	2,361	$	7,935	$	10,296
Finished product operations	3,258		2,725		5,983		3,257		4,166		7,423
Total	$	5,632	$	10,921	$	16,553	$	5,618	$	12,101	$	17,719

Refer to Note 1617 for additional revenue disclosures by operating ~~segment.~~segment and Corporate.

NOTE 4: INVESTMENTS

~~Equity Securities~~

~~Effective January 1, 2018, we adopted ASU 2016-01, which requires us to~~We measure all equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in earnings. ~~We record dividend income when applicable dividends are declared, which is reported in other income (loss) — net in our condensed consolidated statements of income.~~ We use quoted market prices to determine the fair value of equity securities with readily determinable fair values. For equity securities without readily determinable fair values, we have elected the measurement alternative under which we measure these investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Management assesses each of these investments on an individual basis. Additionally, on a quarterly basis, management is required to make a qualitative assessment of whether the investment is impaired. During the three and six months ended June 29, 2018, the Company did not recognize any fair value adjustments for equity securities without readily determinable fair values. We recognized a cumulative effect adjustment of $409 million, net of tax, to increase the opening balance of reinvested earnings with an offset to AOCI as of January 1, 2018 in connection with the adoption of ASU 2016-01.

For fiscal periods beginning prior to January 1, 2018, marketable equity securities not accounted for under the equity method were classified as trading or available-for-sale. Both realized and unrealized gains and losses on equity securities classified as trading securities were recognized in net income. For equity securities classified as available-for-sale, realized gains and losses were included in net income. Unrealized gains and losses on equity securities classified as available-for-sale were recognized in AOCI, net of deferred taxes. In addition, the Company held equity securities without readily determinable fair values that were recorded at cost. For these cost method investments, we recorded dividend income when applicable dividends were declared. Cost method investments were reported as other investments in our condensed consolidated balance sheets, and dividend income from cost method investments was reported in other income (loss) — net in our condensed consolidated statements of income. We reviewed all of our cost method investments quarterly to determine if impairment indicators were present; however, we were not required to determine the fair value of these investments unless impairment indicators existed. When impairment indicators did exist, we generally used discounted cash flow analyses to determine the fair value. We estimated that the fair values of our cost method investments approximated or exceeded their carrying values as of December 31, 2017. Our cost method investments had a carrying value of $143 million as of December 31, 2017.

~~As of June 29, 2018, the carrying values of our equity securities were included in the following line items in our condensed consolidated balance sheet (in millions):~~

Fair Value with Changes Recognized in Income
Measurement Alternative — No Readily Determinable Fair Value

Marketable securities $ 341
$ —
Other investments 924
91
Other assets 1,034
—
Total equity securities $ 2,299
$ 91

~~The calculation of net unrealized gains and losses for the period that relate to equity securities still held at June 29, 2018 is as follows (in millions):~~

Three Months Ended Six Months Ended
June 29, 2018 June 29, 2018
Net gains (losses) recognized during the period related to equity securities $ 38
$ (41 )
Less: Net gains (losses) recognized during the period related
to equity securities sold during the period (1 ) 4
Unrealized gains (losses) recognized during the period related to equity securities still held
at the end of the period
$ 39
$ (45 )

~~As of December 31, 2017, equity securities consisted of the following (in millions):~~

Gross Unrealized Estimated
Cost
Gains
Losses
Fair Value
Trading securities $ 324
$ 75
$ (4 ) $ 395
Available-for-sale securities 1,276
685
(66 ) 1,895
Total equity securities $ 1,600
$ 760
$ (70 ) $ 2,290

As of December 31, 2017, the Company had investments classified as available-for-sale in which our cost basis exceeded the fair value of our investment. Management assessed each of the available-for-sale securities that were in a gross unrealized loss position on an individual basis to determine if the decline in fair value was other than temporary. Management's assessment as to the nature of a decline in fair value is based on, among other things, the length of time and the extent to which the market value has been less than our cost basis; the financial condition and near-term prospects of the issuer; and our intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in market value. As a result of these assessments, management determined that the decline in fair value of these investments was not other than temporary and did not record any impairment charges.

~~As of December 31, 2017, the fair values of our equity securities were included in the following line items in our condensed consolidated balance sheet (in millions):~~

Trading Securities
Available-for-Sale Securities
Marketable securities $ 283
$ 52
Other investments —
953
Other assets 112
890
Total equity securities $ 395
$ 1,895

~~The sale and/or maturity of available-for-sale equity securities resulted in the following realized activity (in millions):~~

Three Months Ended Six Months Ended
June 30, 2017 June 30, 2017
Gross gains $ 13
$ 35
Gross losses (5 ) (8 )
Proceeds 58
140

~~Debt Securities~~

Our investments in debt securities are classified as trading, available-for-sale or held-to-maturity and carried at either amortized cost or fair value. The cost basis is determined by the specific identification method. Investments in debt securities that the Company has the positive intent and ability to hold to maturity are carried at amortized cost and classified as held-to-maturity. Investments in debt securities that are not classified as held-to-maturity are carried at fair value and classified as either trading or available-for-sale. ~~Both realized~~Realized and unrealized gains and losses on debt securities classified as trading securities are included in net income. For debt securities classified as available-for-sale, realized gains and losses are included in net income. Unrealized gains and losses, net of tax, on available-for-sale debt securities ~~classified~~are included in our consolidated balance sheet as ~~available-for-sale are recognized in~~a component of AOCI, ~~net of deferred taxes,~~ except for the change in fair value attributable to the currency risk being ~~hedged.~~hedged, if applicable, which is included in net income. Refer to Note 6 for additional information related to the Company's fair value hedges of available-for-sale debt securities.

Equity securities with readily determinable fair values that are not accounted for under the equity method and debt securities classified as trading are not assessed for impairment, since they are carried at fair value with the change in fair value included in net income. Equity method investments, equity securities without readily determinable fair values and debt securities classified as available-for-sale or held-to-maturity are reviewed each reporting period to determine whether a significant event or change in circumstances has occurred that may have an adverse effect on the fair value of each investment. When such events or changes occur, we evaluate the fair value compared to our cost basis in the investment. We also perform this evaluation every reporting period for each investment for which our cost basis has exceeded the fair value. The fair values of most of our Company's investments in publicly traded companies are often readily available based on quoted market prices. For investments in nonpublicly traded companies, management's assessment of fair value is based on valuation methodologies including discounted cash flows, estimates of sales proceeds and appraisals, as appropriate. We consider the assumptions that we believe a hypothetical marketplace participant would use in evaluating estimated future cash flows when employing the discounted cash flow or estimates of sales proceeds valuation methodologies. The ability to accurately predict future cash flows, especially in emerging and developing markets, may impact the determination of fair value. In the event the fair value of an investment declines below our cost basis, management is required to determine if the decline in fair value is other than temporary. If management determines the decline is other than temporary, an impairment charge is recorded. Management's assessment as to the nature of a decline in fair value is based on, among other things, the length of time and the extent to which the market value has been less than our cost basis; the financial condition and near-term prospects of the issuer; and our intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in market value.

Equity Securities

The carrying values of our equity securities were included in the following line items in our condensed consolidated balance sheets (in millions):



	Fair Value with Changes Recognized in Income		Measurement Alternative — No Readily Determinable Fair Value
June 28, 2019
Marketable securities	$	308	$	—
Other investments	811		83
Other assets	969		—
Total equity securities	$	2,088	$	83
December 31, 2018
Marketable securities	$	278	$	—
Other investments	787		80
Other assets	869		—
Total equity securities	$	1,934	$	80

The calculation of net unrealized gains and losses recognized during the period related to equity securities still held at the end of the period is as follows (in millions):



	Three Months Ended
	June 28, 2019			June 29, 2018
Net gains (losses) recognized during the period related to equity securities	$	(13	)	$	38
Less: Net gains (losses) recognized during the period related to equity securities sold during the period	1			(1		)
Net unrealized gains (losses) recognized during the period related to equity securities still held at the end of the period	$	(14	)	$	39



	Six Months Ended
	June 28, 2019		June 29, 2018
Net gains (losses) recognized during the period related to equity securities	$	134	$	(41	)
Less: Net gains (losses) recognized during the period related to equity securities sold during the period	13		4
Net unrealized gains (losses) recognized during the period related to equity securities still held at the end of the period	$	121	$	(45	)

Debt Securities

Our debt securities consisted of the following (in millions):



			Gross Unrealized					Estimated Fair Value
	Cost		Gains		Losses			Estimated Fair Value
June 28, 2019
Trading securities	$	43	$	1	$	—		$	44
Available-for-sale securities	3,879		131		(5		)	4,005
Total debt securities	$	3,922	$	132	$	(5	)	$	4,049
December 31, 2018
Trading securities	$	45	$	—	$	(1	)	$	44
Available-for-sale securities	4,901		119		(27		)	4,993
Total debt securities	$	4,946	$	119	$	(28	)	$	5,037

Gross Unrealized Estimated
Cost
Gains
Losses
Fair Value
June 29, 2018
Trading securities $ 38
$ —
$ —
$ 38
Available-for-sale securities 6,258
78
(63 ) 6,273
Total debt securities $ 6,296
$ 78
$ (63 ) $ 6,311
December 31, 2017
Trading securities $ 12
$ —
$ —
$ 12
Available-for-sale securities 5,782
157
(27 ) 5,912
Total debt securities $ 5,794
$ 157
$ (27 ) $ 5,924

The fair values of our debt securities were included in the following line items in our condensed consolidated balance sheets (in millions):



	June 28, 2019				December 31, 2018
	Trading Securities		Available-for-Sale Securities		Trading Securities		Available-for-Sale Securities
Cash and cash equivalents	$	—	$	7	$	—	$	—
Marketable securities	44		3,706		44		4,691
Other assets	—		292		—		302
Total debt securities	$	44	$	4,005	$	44	$	4,993

June 29, 2018 December 31, 2017
Trading Securities
Available-for-Sale Securities
Trading Securities
Available-for-Sale Securities
Cash and cash equivalents $ —
$ 829
$ —
$ 667
Marketable securities 38
5,157
12
4,970
Other assets —
287
—
275
Total debt securities $ 38
$ 6,273
$ 12
$ 5,912

The contractual maturities of these available-for-sale debt securities as of June ~~29, 2018~~28, 2019 were as follows (in millions):



	Cost		Estimated Fair Value
Within 1 year	$	851	$	850
After 1 year through 5 years	2,740		2,848
After 5 years through 10 years	72		84
After 10 years	216		223
Total	$	3,879	$	4,005

Cost
Estimated
Fair Value
Within 1 year $ 1,348
$ 1,345
After 1 year through 5 years 4,474
4,478
After 5 years through 10 years 121
136
After 10 years 315
314
Total $ 6,258
$ 6,273

The Company expects that actual maturities may differ from the contractual maturities above because borrowers have the right to call or prepay certain obligations.

The sale and/or maturity of available-for-sale debt securities resulted in the following realized activity (in millions):



	Three Months Ended						Six Months Ended
	June 28, 2019			June 29, 2018			June 28, 2019			June 29, 2018
Gross gains	$	23		$	8		$	28		$	8
Gross losses	(1		)	(8		)	(4		)	(13		)
Proceeds	1,068			3,236			1,790			6,323

Three Months Ended Six Months Ended
June 29, 2018
June 30, 2017
June 29, 2018
June 30, 2017
Gross gains $ 8
$ 1
$ 8
$ 5
Gross losses (8 ) (2 ) (13 ) (6 )
Proceeds 3,236
3,398
6,323
6,410

Captive Insurance Companies

In accordance with local insurance regulations, our captive insurance companies are required to meet and maintain minimum solvency capital requirements. The Company elected to invest a majority of its solvency capital in a portfolio of marketable equity and debt securities. These securities are included in the disclosures above. The Company uses one of its consolidated captive insurance companies to reinsure group annuity insurance contracts that cover the pension obligations of certain of our European and Canadian pension plans. This captive's solvency capital funds included equity and debt securities of ~~$1,205~~$1,133 million as of June ~~29, 2018~~28, 2019 and ~~$1,159~~$1,056 million as of December 31, ~~2017,~~2018, which are classified in the line item other assets in our condensed consolidated balance sheets because the assets are not available to satisfy our current obligations.

NOTE 5: INVENTORIES

Inventories consist primarily of raw materials and packaging (which include ingredients and supplies) and finished goods (which include concentrates and syrups in our concentrate operations and finished beverages in our finished product operations). Inventories are valued at the lower of cost or net realizable value. We determine cost on the basis of the average cost or first-in, first-out methods. Inventories consisted of the following (in millions):



	June 28, 2019		December 31, 2018
Raw materials and packaging	$	2,201	$	2,025
Finished goods	906		773
Other	346		273
Total inventories	$	3,453	$	3,071

June 29,
2018
December 31,
2017
Raw materials and packaging $ 1,915
$ 1,729
Finished goods 751
693
Other 215
233
Total inventories $ 2,881
$ 2,655

NOTE 6: HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS

The Company is directly and indirectly affected by changes in certain market conditions. These changes in market conditions may adversely impact the Company's financial performance and are referred to as "market risks." When deemed appropriate, our Company uses derivatives as a risk management tool to mitigate the potential impact of certain market risks. The primary market risks managed by the Company through the use of derivative and non-derivative financial instruments are foreign currency exchange rate risk, commodity price risk and interest rate risk.

The Company uses various types of derivative instruments including, but not limited to, forward contracts, commodity futures contracts, option contracts, collars and swaps. Forward contracts and commodity futures contracts are agreements to buy or sell a quantity of a currency or commodity at a predetermined future date and at a predetermined rate or price. An option contract is an agreement that conveys the purchaser the right, but not the obligation, to buy or sell a quantity of a currency or commodity at a predetermined rate or price during a period or at a time in the future. A collar is a strategy that uses a combination of options to limit the range of possible positive or negative returns on an underlying asset or liability to a specific range, or to protect expected future cash flows. To do this, an investor simultaneously buys a put option and sells (writes) a call option, or alternatively buys a call option and sells (writes) a put option. A swap agreement is a contract between two parties to exchange cash flows based on specified underlying notional amounts, assets and/or indices. We do not enter into derivative financial instruments for trading purposes. The Company may also designate certain non-derivative instruments, such as our ~~foreign-denominated~~foreign currency denominated debt, in hedging relationships.

All derivative instruments are carried at fair value in our condensed consolidated balance ~~sheets~~sheet, primarily in the following line items, as applicable: prepaid expenses and other assets; other assets; accounts payable and accrued expenses; and other liabilities. The carrying values of the derivatives reflect the impact of legally enforceable master netting agreements and cash collateral held or placed with the same counterparties, as applicable. These master netting agreements allow the Company to net settle positive and negative positions (assets and liabilities) arising from different transactions with the same counterparty.

The accounting for gains and losses that result from changes in the fair values of derivative instruments depends on whether the derivatives have been designated and qualify as hedging instruments and the type of hedging relationships. Derivatives can be designated as fair value hedges, cash flow hedges or hedges of net investments in foreign operations. The changes in the fair values of derivatives that have been designated and qualify for fair value hedge accounting are recorded in the same line item in our condensed consolidated ~~statements~~statement of income as the changes in the fair values of the hedged items attributable to the risk being hedged. The changes in the fair values of derivatives that have been designated and qualify as cash flow hedges or hedges of net investments in foreign operations are recorded in AOCI and are reclassified into the line item in our condensed consolidated ~~statements~~statement of income in which the hedged items are recorded in the same period the hedged items affect earnings. Due to the high degree of effectiveness between the hedging instruments and the underlying exposures being hedged, fluctuations in the values of the derivative instruments are generally offset by changes in the fair values or cash flows of the underlying exposures being hedged. The changes in the fair values of derivatives that were not designated and/or did not qualify as hedging instruments are immediately recognized into earnings.

For derivatives that will be accounted for as hedging instruments, the Company formally designates and documents, at inception, the financial instrument as a hedge of a specific underlying exposure, the risk management objective and the strategy for undertaking the hedge transaction. In addition, the Company formally assesses, both at the inception and at least quarterly thereafter, whether the financial instruments used in hedging transactions are effective at offsetting changes in either the fair values or cash flows of the related underlying exposures. ~~Any ineffective portion of a financial instrument's change in fair value is immediately recognized into earnings.~~

The Company determines the fair values of its derivatives based on quoted market prices or pricing models using current market rates. Refer to Note ~~15.~~16. The notional amounts of the derivative financial instruments do not necessarily represent

amounts exchanged by the parties and, therefore, are not a direct measure of our exposure to the financial risks described above. The amounts exchanged are calculated by reference to the notional amounts and by other terms of the derivatives, such as interest rates, foreign currency exchange rates, commodity rates or other financial indices. The Company does not view the fair values of its derivatives in isolation but rather in relation to the fair values or cash flows of the underlying hedged transactions or other exposures. Virtually all of our derivatives are straightforward over-the-counter instruments with liquid markets.

On January 1, 2019, we adopted ASU 2017-12. For highly effective cash flow hedges, this ASU requires the entire change in fair value of the hedging instrument included in the assessment of hedge effectiveness to be recorded in other comprehensive income. No components of the Company's hedging instruments were excluded from the assessment of hedge effectiveness. To reflect the adoption of the new hedging standard on our cash flow hedging relationships at January 1, 2019, we recorded a $6 million increase, net of taxes, to the opening balance of reinvested earnings and a corresponding decrease to AOCI. For fair value hedges of interest rate risk, this ASU allows entities to elect to use the benchmark interest rate component of the contractual coupon cash flows to calculate the change in fair value of the hedged item attributable to changes in the benchmark interest rate. As a result of applying the new hedging standard to our fair value hedges on January 1, 2019, we recorded a $24 million increase to our hedged long-term debt balances, with a corresponding decrease to the opening balance of reinvested earnings of $18 million, net of taxes.

The following table presents the fair values of the Company's derivative instruments that were designated and qualified as part of a hedging relationship (in millions):


		Fair Value^1,2					Fair Value^1,2
Derivatives Designated as Hedging Instruments	Balance Sheet Location¹	June 29, 2018		December 31, 2017		Balance Sheet Location¹	June 28, 2019		December 31, 2018
Assets:
Foreign currency contracts	Prepaid expenses and other assets	$	52	$	45	Prepaid expenses and other assets	$	31	$	43
Foreign currency contracts	Other assets	112		79		Other assets	97		114
Interest rate contracts	Other assets	45		52		Other assets	500		88
Total assets		$	209	$	176		$	628	$	245
Liabilities:
Foreign currency contracts	Accounts payable and accrued expenses	$	24	$	69	Accounts payable and accrued expenses	$	30	$	19
Foreign currency contracts	Other liabilities	5		9		Other liabilities	37		15
Foreign currency contracts	Liabilities held for sale — discontinued operations	—		8
Commodity contracts	Liabilities held for sale — discontinued operations	—		4		Accounts payable and accrued expenses	—		1
Interest rate contracts	Accounts payable and accrued expenses	—		30		Accounts payable and accrued expenses	17		—
Interest rate contracts	Other liabilities	51		39		Other liabilities	11		40
Total liabilities		$	80	$	159		$	95	$	75

¹All of the Company's derivative instruments are carried at fair value in our condensed consolidated balance sheets after considering the impact of legally enforceable master netting agreements and cash collateral held or placed with the same counterparties, as applicable. Current disclosure requirements mandate that derivatives must also be disclosed without reflecting the impact of master netting agreements and cash collateral. Refer to Note 1516 for the net presentation of the Company's derivative instruments.

²Refer to Note 1516 for additional information related to the estimated fair value.

The following table presents the fair values of the Company's derivative instruments that were not designated as hedging instruments (in millions):


		Fair Value^1,2					Fair Value^1,2
Derivatives Not Designated as Hedging Instruments	Balance Sheet Location¹	June 29, 2018		December 31, 2017		Balance Sheet Location¹	June 28, 2019		December 31, 2018
Assets:
Foreign currency contracts	Prepaid expenses and other assets	$	76	$	20	Prepaid expenses and other assets	$	24	$	61
Foreign currency contracts	Other assets	5		27
Commodity contracts	Prepaid expenses and other assets	16		25		Prepaid expenses and other assets	11		2
Commodity contracts	Other assets	—		1		Other assets	1		—
Other derivative instruments						Prepaid expenses and other assets	18		7
Other derivative instruments	Prepaid expenses and other assets	4		8		Other assets	1		—
Total assets		$	101	$	81		$	55	$	70
Liabilities:
Foreign currency contracts	Accounts payable and accrued expenses	$	23	$	69	Accounts payable and accrued expenses	$	86	$	101
Foreign currency contracts	Other liabilities	39		28		Other liabilities	1		—
Foreign currency contracts	Liabilities held for sale — discontinued operations	2		—
Commodity contracts	Accounts payable and accrued expenses	11		7		Accounts payable and accrued expenses	41		38
Commodity contracts	Other liabilities	1		—		Other liabilities	5		8
Other derivative instruments	Accounts payable and accrued expenses	7		1		Accounts payable and accrued expenses	—		13
Other derivative instruments	Other liabilities	1		1
Total liabilities		$	84	$	106		$	133	$	160

²Refer to Note 1516 for additional information related to the estimated fair value.

Credit Risk Associated with Derivatives

We have established strict counterparty credit guidelines and enter into transactions only with financial institutions of investment grade or better. We monitor counterparty exposures regularly and review any downgrade in credit rating immediately. If a downgrade in the credit rating of a counterparty were to occur, we have provisions requiring collateral for substantially all of our transactions. To mitigate presettlement risk, minimum credit standards become more stringent as the duration of the derivative financial instrument increases. In addition, the Company's master netting agreements reduce credit risk by permitting the Company to net settle for transactions with the same counterparty. To minimize the concentration of credit risk, we enter into derivative transactions with a portfolio of financial institutions. Based on these factors, we consider the risk of counterparty default to be minimal.

Cash Flow Hedging Strategy

The Company uses cash flow hedges to minimize the variability in cash flows of assets or liabilities or forecasted transactions caused by fluctuations in foreign currency exchange rates, commodity prices or interest rates. The changes in the fair values of derivatives designated as cash flow hedges are recorded in AOCI and are reclassified into the line item in our condensed consolidated ~~statements~~statement of income in which the hedged items are recorded in the same period the hedged items affect earnings. The changes in fair values of hedges that are determined to be ineffective are immediately reclassified from AOCI into earnings. The maximum length of time for which the Company hedges its exposure to future cash flows is typically ~~three~~3 years.

The Company maintains a foreign currency cash flow hedging program to reduce the risk that our eventual U.S. dollar net cash inflows from sales outside the United States and U.S. dollar net cash outflows from procurement activities will be adversely affected by fluctuations in foreign currency exchange rates. We enter into forward contracts and purchase foreign currency options (principally euros and Japanese yen) and collars to hedge certain portions of forecasted cash flows denominated in foreign currencies. When the U.S. dollar strengthens against the foreign currencies, the decline in the present value of future foreign currency cash flows is partially offset by gains in the fair value of the derivative instruments. Conversely, when the U.S. dollar weakens, the increase in the present value of future foreign currency cash flows is partially offset by losses in the fair value of the derivative instruments. The total notional values of derivatives that were designated and qualify for the Company's foreign currency cash flow hedging program were $~~3,570~~5,560 million and $~~4,068~~3,175 million as of June ~~29, 2018~~28, 2019 and December 31, ~~2017~~2018, respectively.

The Company uses cross-currency swaps to hedge the changes in cash flows of certain of its foreign currency denominated debt and other monetary assets or liabilities due to changes in foreign currency exchange rates. For this hedging program, the Company records the change in carrying value of these foreign currency denominated assets and liabilities due to changes in exchange rates into earnings each period. The changes in fair value of the cross-currency swap derivatives are recorded in AOCI with an immediate reclassification into earnings for the change in fair value attributable to fluctuations in foreign currency exchange rates. The total notional values of derivatives that have been designated as cash flow hedges for the Company's foreign currency denominated assets and liabilities were $3,028 million ~~and $1,851 million~~ as of June ~~29, 2018~~28, 2019 and December 31, ~~2017, respectively.~~2018.

The Company has entered into commodity futures contracts and other derivative instruments on various commodities to mitigate the price risk associated with forecasted purchases of materials used in our manufacturing process. These derivative instruments have been designated and qualify as part of the Company's commodity cash flow hedging program. The objective of this hedging program is to reduce the variability of cash flows associated with future purchases of certain commodities. The total notional values of derivatives that have been designated and qualify for this program were $4 million and $359 million as of June ~~29, 2018~~28, 2019 and December 31, ~~2017~~2018, respectively.

Our Company monitors our mix of short-term debt and long-term debt regularly. From time to time, we manage our risk to interest rate fluctuations through the use of derivative financial instruments. The Company has entered into interest rate swap agreements and has designated these instruments as part of the Company's interest rate cash flow hedging program. The objective of this hedging program is to mitigate the risk of adverse changes in benchmark interest rates on the Company's future interest payments. The total notional value of these interest rate swap agreements that were designated and qualified for the Company's interest rate cash flow hedging program was $500 million as of ~~December 31, 2017~~.June 28, 2019. During the six months ended June 29, 2018, we discontinued ~~the~~a cash flow hedge relationship related to these swaps. We reclassified a loss of $8 million into earnings as a result of the discontinuance. As of ~~June 29,~~December 31, 2018, we did not have any interest rate swaps designated as a cash flow hedge.

The following tables present the pretax impact that changes in the fair values of derivatives designated as cash flow hedges had on other comprehensive income ("OCI"), AOCI and earnings (in millions):



	Gain (Loss) Recognized in OCI			Location of Gain (Loss) Recognized in Income¹	Gain (Loss) Reclassified from AOCI into Income (Effective Portion)²			Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)²
Three Months Ended June 28, 2019
Foreign currency contracts	$	(25	)	Net operating revenues	$	1		$	—
Foreign currency contracts	(3		)	Cost of goods sold	3			—
Foreign currency contracts	—			Interest expense	(2		)	—
Foreign currency contracts	(31		)	Other income (loss) — net	(43		)	—
Interest rate contracts	(17		)	Interest expense	(10		)	—
Total	$	(76	)		$	(51	)	$	—
Three Months Ended June 29, 2018
Foreign currency contracts	$	65		Net operating revenues	$	39		$	1
Foreign currency contracts	14			Cost of goods sold	2			—			³
Foreign currency contracts	—			Interest expense	(2		)	—
Foreign currency contracts	(79		)	Other income (loss) — net	(87		)	(3		)
Interest rate contracts	—			Interest expense	(10		)	—
Total	$	—			$	(58	)	$	(2	)

Gain (Loss) Recognized
in OCI

Location of Gain (Loss)
Recognized in Income¹
Gain (Loss)
Reclassified from
AOCI into Income
(Effective Portion)

Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)

Three Months Ended June 29, 2018
Foreign currency contracts $ 65
Net operating revenues $ 39
$ 1

Foreign currency contracts 14
Cost of goods sold 2
—
²
Foreign currency contracts —
Interest expense (2 ) —

Foreign currency contracts (79 ) Other income (loss) — net (87 ) (3 )
Interest rate contracts —
Interest expense (10 ) —

Total $ —
$ (58 ) $ (2 )
Three Months Ended June 30, 2017
Foreign currency contracts $ (94 ) Net operating revenues $ 116
$ (1 )
Foreign currency contracts (5 ) Cost of goods sold 2
—
²
Foreign currency contracts —
Interest expense (3 ) —

Foreign currency contracts (2 ) Other income (loss) — net 25
8

Interest rate contracts (25 ) Interest expense (9 ) 2

Total $ (126 ) $ 131
$ 9

¹The Company records gains and losses reclassified from AOCI into income for the effective portion and the ineffective portion, if any, to the same line items in our condensed consolidated ~~statements~~statement of income.

²Effective January 1, 2019, ASU 2017-12 eliminated the requirement to separately measure and report hedge ineffectiveness for cash flow hedges. No components of the Company’s hedging instruments were excluded from the assessment of hedge effectiveness.

³Includes a de minimis amount of ineffectiveness in the hedging relationship.



	Gain (Loss) Recognized in OCI			Location of Gain (Loss) Recognized in Income¹	Gain (Loss) Reclassified from AOCI into Income (Effective Portion)²			Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)²
Six Months Ended June 28, 2019
Foreign currency contracts	$	(27	)	Net operating revenues	$	7		$	—
Foreign currency contracts	(2		)	Cost of goods sold	7			—
Foreign currency contracts	—			Interest expense	(4		)	—
Foreign currency contracts	(53		)	Other income (loss) — net	(93		)	—
Interest rate contracts	(17		)	Interest expense	(20		)	—
Total	$	(99	)		$	(103	)	$	—
Six Months Ended June 29, 2018
Foreign currency contracts	$	8		Net operating revenues	$	54		$	1
Foreign currency contracts	10			Cost of goods sold	1			(3		)
Foreign currency contracts	—			Interest expense	(4		)	—
Foreign currency contracts	26			Other income (loss) — net	(20		)	2
Interest rate contracts	22			Interest expense	(20		)	(8		)
Commodity contracts	—			Cost of goods sold	—			(5		)
Total	$	66			$	11		$	(13	)

Gain (Loss) Recognized
in OCI

Location of Gain (Loss)
Recognized in Income¹
Gain (Loss)
Reclassified from
AOCI into Income
(Effective Portion)

Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)

Six Months Ended June 29, 2018
Foreign currency contracts $ 8
Net operating revenues $ 54
$ 1

Foreign currency contracts 10
Cost of goods sold 1
—
²
Foreign currency contracts —
Interest expense (4 ) —

Foreign currency contracts 26
Other income (loss) — net (20 ) 2

Foreign currency contracts —
Income from discontinued operations —
(3 )
Interest rate contracts 22
Interest expense (20 ) (8 )
Commodity contracts —
Income from discontinued operations —
(5 )
Total $ 66
$ 11
$ (13 )
Six Months Ended June 30, 2017
Foreign currency contracts $ (181 ) Net operating revenues $ 223
$ (1 )
Foreign currency contracts (16 ) Cost of goods sold 5
—
²
Foreign currency contracts —
Interest expense (5 ) —

Foreign currency contracts 13
Other income (loss) — net 52
—
²
Interest rate contracts (24 ) Interest expense (17 ) 2

Commodity contracts (1 ) Cost of goods sold 1
—

Total $ (209 ) $ 259
$ 1

²~~Includes a de minimis amount~~Effective January 1, 2019, ASU 2017-12 eliminated the requirement to separately measure and report hedge ineffectiveness for cash flow hedges. No components of ~~ineffectiveness in~~ the Company’s hedging ~~relationship.~~instruments were excluded from the assessment of hedge effectiveness.

As of June ~~29, 2018~~,28, 2019, the Company estimates that it will reclassify into earnings during the next 12 months ~~$56 million~~net losses of ~~gains~~$36 million from the pretax amount recorded in AOCI as the anticipated cash flows occur.

Fair Value Hedging Strategy

The Company uses interest rate swap agreements designated as fair value hedges to minimize exposure to changes in the fair value of fixed-rate debt that results from fluctuations in benchmark interest rates. The Company also uses cross-currency

interest rate swaps to hedge the changes in the fair value of foreign currency denominated debt relating to changes in foreign currency exchange rates and benchmark interest rates. The changes in fair values of derivatives designated as fair value hedges and the offsetting changes in fair values of the hedged items are recognized in earnings. The ineffective portions of these hedges are immediately recognized in earnings. ~~As of~~ ~~June 29, 2018, such adjustments had cumulatively decreased the carrying value of our long-term debt by $5 million~~. When a derivative is no longer designated as a fair value hedge for any reason, including termination and maturity, the remaining unamortized difference between the carrying value of the hedged item at that time and the face value of the hedged item is amortized to earnings over the remaining life of the hedged item, or immediately if the hedged item has matured. The total notional values of derivatives related to our fair value hedges of this type were $~~8,131~~12,696 million and ~~$8,121~~$8,023 million as of June ~~29, 2018~~28, 2019 and December 31, ~~2017~~2018, respectively.

The Company also uses fair value hedges to minimize exposure to changes in the fair value of certain available-for-sale securities from fluctuations in foreign currency exchange rates. The changes in fair values of derivatives designated as fair value hedges and the offsetting changes in fair values of the hedged items due to changes in foreign currency exchange rates are recognized in earnings. As a result, any difference is reflected in earnings as ineffectiveness. ~~The total notional value of derivatives related to fair value hedges of this type was $311 million as of December 31, 2017.~~ As of June ~~29,~~28, 2019 and December 31, 2018, we did not have any fair value hedges of this type.

The following tables summarize the pretax impact that changes in the fair values of derivatives designated as fair value hedges had on earnings (in millions):



Hedging Instruments and Hedged Items	Location of Gain (Loss) Recognized in Income	Gain (Loss) Recognized in Income
		Three Months Ended
		June 28, 2019			June 29, 2018
Interest rate contracts	Interest expense	$	229		$	(3	)
Fixed-rate debt	Interest expense	(227		)	(5		)
Net impact to interest expense		$	2		$	(8	)
Net impact of fair value hedging instruments		$	2		$	(8	)


Hedging Instruments and Hedged Items	Location of Gain (Loss) Recognized in Income	Gain (Loss) Recognized in Income¹						Location of Gain (Loss) Recognized in Income	Gain (Loss) Recognized in Income
		Three Months Ended							Six Months Ended
		June 29, 2018			June 30, 2017				June 28, 2019			June 29, 2018
Interest rate contracts	Interest expense	$	(3	)	$	(23	)	Interest expense	$	441		$	(19	)
Fixed-rate debt	Interest expense	(5		)	24			Interest expense	(437		)	9
Net impact to interest expense		$	(8	)	$	1			$	4		$	(10	)
Foreign currency contracts	Other income (loss) — net	$	—		$	(24	)	Other income (loss) — net	$	—		$	(6	)
Available-for-sale securities	Other income (loss) — net	—			24			Other income (loss) — net	—			6
Net impact to other income (loss) — net		$	—		$	—			$	—		$	—
Net impact of fair value hedging instruments		$	(8	)	$	1			$	4		$	(10	)

The following table summarizes the amounts recorded in the condensed consolidated balance sheets related to hedged items in fair value hedging relationships (in millions):

Hedging Instruments and Hedged Items
Location of Gain (Loss)
Recognized in Income
Gain (Loss)
Recognized in Income¹
Six Months Ended
June 29,
2018
June 30,
2017
Interest rate contracts Interest expense $ (19 ) $ (65 )
Fixed-rate debt Interest expense 9
57
Net impact to interest expense $ (10 ) $ (8 )
Foreign currency contracts Other income (loss) — net $ (6 ) $ (43 )
Available-for-sale securities Other income (loss) — net 6
46
Net impact to other income (loss) — net $ —
$ 3
Net impact of fair value hedging instruments $ (10 ) $ (5 )



	Carrying Value of the Hedged Item				Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Value of the Hedged Item¹
	June 28, 2019		December 31, 2018		June 28, 2019		December 31, 2018
Long-term debt	$	13,310	$	8,043	$	526	$	62

¹~~The net impacts represent the ineffective portions~~Cumulative amount of ~~the hedge relationships and the amounts excluded from the assessment of hedge effectiveness.~~fair value hedging adjustments does not include changes due to foreign currency exchange rates.

Hedges of Net Investments in Foreign Operations Strategy

The Company uses forward contracts and a portion of its foreign currency denominated debt, a non-derivative financial instrument, to protect the value of our net investments in a number of foreign operations. For derivative instruments that are designated and qualify as hedges of net investments in foreign operations, the changes in fair values of the derivative instruments are recognized in net foreign currency translation ~~adjustment,~~adjustments, a component of AOCI, to offset the changes in the values of the net investments being hedged. For non-derivative financial instruments that are designated and qualify as hedges of net investments in foreign operations, the change in the carrying value of the designated portion of the non-derivative financial instrument due to changes in foreign currency exchange rates is recorded in net foreign currency translation

~~adjustment.~~ adjustments. Any ineffective ~~portions of~~ net investment hedges are reclassified from AOCI into earnings during the period of change.

The following table summarizes the notional values and pretax impact of changes in the fair values of instruments designated as net investment hedges (in millions):



	Notional Amount				Gain (Loss) Recognized in OCI
	as of				Three Months Ended					Six Months Ended
	June 28, 2019		December 31, 2018		June 28, 2019			June 29, 2018		June 28, 2019			June 29, 2018
Foreign currency contracts	$	—	$	—	$	7		$	—	$	29		$	—
Foreign currency denominated debt	12,510		12,494		(163		)	705		(32		)	294
Total	$	12,510	$	12,494	$	(156	)	$	705	$	(3	)	$	294

Notional Amount Gain (Loss) Recognized in OCI
as of Three Months Ended Six Months Ended
June 29,
2018
December 31, 2017
June 29,
2018
June 30,
2017
June 29,
2018
June 30,
2017
Foreign currency contracts $ 50
$ —
$ —
$ (2 ) $ —
$ (15 )
Foreign currency denominated debt 12,852
13,147
705
(928 ) 294
(926 )
Total $ 12,902
$ 13,147
$ 705
$ (930 ) $ 294
$ (941 )

The Company did not reclassify any gains or losses related to net investment hedges from AOCI into earnings during the three and six months ended June ~~29, 2018~~28, 2019 and June ~~30, 2017.~~29, 2018. In addition, the Company did not have any ineffectiveness related to net investment hedges during the three and six months ended June ~~29, 2018~~28, 2019 and June ~~30, 2017.~~29, 2018. The cash inflows and outflows associated with the Company's derivative contracts designated as net investment hedges are classified in the line item other investing activities in our condensed consolidated ~~statements~~statement of cash flows.

Economic (Nondesignated) Hedging Strategy

In addition to derivative instruments that are designated and qualify for hedge accounting, the Company also uses certain derivatives as economic hedges of foreign currency, interest rate and commodity exposure. Although these derivatives were not designated and/or did not qualify for hedge accounting, they are effective economic hedges. The changes in the fair value of economic hedges are immediately recognized into earnings.

The Company uses foreign currency economic hedges to offset the earnings impact that fluctuations in foreign currency exchange rates have on certain monetary assets and liabilities denominated in nonfunctional currencies. The changes in fair value of economic hedges used to offset those monetary assets and liabilities are immediately recognized into earnings in the line item other income (loss) — net in our condensed consolidated ~~statements~~statement of income. In addition, we use foreign currency economic hedges to minimize the variability in cash flows associated with fluctuations in foreign currency exchange ~~rates.~~rates, including those related to certain acquisition and divestiture activities. The changes in fair values of economic hedges used to offset the variability in U.S. dollar net cash flows are recognized into earnings in the line items net operating revenues, or cost of goods sold or other income (loss) — net in our condensed consolidated ~~statements~~statement of income, as applicable. The total notional values of derivatives related to our foreign currency economic hedges were $~~5,907~~6,188 million and $~~6,827~~10,939 million as of June ~~29, 2018~~28, 2019 and December 31, ~~2017~~2018, respectively.

The Company also uses certain derivatives as economic hedges to mitigate the price risk associated with the purchase of materials used in the manufacturing process and for vehicle fuel. The changes in fair values of these economic hedges are immediately recognized into earnings in the line items net operating revenues, cost of goods sold, ~~and~~or selling, general and administrative expenses in our condensed consolidated ~~statements~~statement of income, as applicable. The total notional values of derivatives related to our economic hedges of this type were $~~263~~718 million and $~~357~~373 million as of June ~~29, 2018~~28, 2019 and December 31, ~~2017~~2018, respectively.

The following tables present the pretax impact that changes in the fair values of derivatives not designated as hedging instruments had on earnings (in millions):


Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income	Gain (Loss) Recognized in Income						Location of Gain (Loss) Recognized in Income	Gain (Loss) Recognized in Income
		Three Months Ended
		June 29, 2018			June 30, 2017				June 28, 2019			June 29, 2018
Foreign currency contracts	Net operating revenues	$	33		$	(8	)		Net operating revenues	$	(2	)	$	33
Foreign currency contracts	Other income (loss) — net	(73		)	66			Cost of goods sold	4			1
Foreign currency contracts	Income from discontinued operations	1			—			Other income (loss) — net	(46		)	(73		)
Interest rate contracts	Interest expense	1			—			Interest expense	—			1
Commodity contracts	Net operating revenues	—			(2		)	Cost of goods sold	(18		)	(2		)
Commodity contracts	Cost of goods sold	(6		)	(3		)
Commodity contracts	Selling, general and administrative expenses	—			(2		)
Commodity contracts	Income from discontinued operations	4			—
Other derivative instruments	Selling, general and administrative expenses	(1		)	13			Selling, general and administrative expenses	11			(1		)
Other derivative instruments	Other income (loss) — net	1			1			Other income (loss) — net	—			1
Total		$	(40	)	$	65			$	(51	)	$	(40	)



Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income	Gain (Loss) Recognized in Income
		Six Months Ended
		June 28, 2019			June 29, 2018
Foreign currency contracts	Net operating revenues	$	(13	)	$	26
Foreign currency contracts	Cost of goods sold	2			(6		)
Foreign currency contracts	Other income (loss) — net	(25		)	(116		)
Interest rate contracts	Interest expense	—			(1		)
Commodity contracts	Cost of goods sold	2			12
Other derivative instruments	Selling, general and administrative expenses	28			(7		)
Other derivative instruments	Other income (loss) — net	34			—
Total		$	28		$	(92	)

Derivatives Not Designated
as Hedging Instruments Location of Gain (Loss)
Recognized in Income
Gain (Loss)
Recognized in Income
Six Months Ended
June 29,
2018
June 30,
2017
Foreign currency contracts Net operating revenues $ 26
$ (18 )
Foreign currency contracts Cost of goods sold (1 ) —
Foreign currency contracts Other income (loss) — net (116 ) 102
Foreign currency contracts Income from discontinued operations (5 ) —
Interest rate contracts Interest expense (1 ) —
Commodity contracts Net operating revenues —
(5 )
Commodity contracts Cost of goods sold 7
28
Commodity contracts Selling, general and administrative expenses —
(3 )
Commodity contracts Income from discontinued operations 5
—
Other derivative instruments Selling, general and administrative expenses (7 ) 25
Other derivative instruments Other income (loss) — net —
1
Total $ (92 ) $ 130

NOTE 7: DEBT AND BORROWING ARRANGEMENTS

During the six months ended June ~~29, 2018,~~28, 2019, the Company ~~retired upon maturity $2,026 million total principal amount~~issued euro-denominated debt totaling €3,500 million. The carrying value of ~~notes.~~this debt as of June 28, 2019 was $3,956 million. The general terms of the notes ~~retired~~issued are as follows:

~~$1,250 million total principal amount of notes due April 1, 2018, at a fixed interest rate of 1.15 percent;~~

$€750 million total principal amount of notes due ~~March 14, 2018,~~2021, at a variable interest rate equal to the three month Euro Interbank Offered Rate ("EURIBOR") plus 0.20 percent;

€1,000 million total principal amount of notes due 2022, at a fixed interest rate of ~~1.65~~0.125 percent; ~~and~~

~~$26~~€1,000 million total principal amount of ~~debentures~~notes due ~~January 29, 2018,~~2026, at a fixed interest rate of ~~9.66~~0.75 percent; and

€750 million total principal amount of notes due 2031, at a fixed interest rate of 1.25 percent.

During the six months ended June 28, 2019, the Company retired upon maturity $1,000 million total principal amount of notes due May 30, 2019, at a fixed interest rate of 1.375 percent and €1,500 million total principal amount of notes due March 8, 2019, at a variable interest rate equal to the three month EURIBOR plus 0.25 percent.

NOTE 8: LEASES

We have operating leases primarily for real estate, vehicles, and manufacturing and other equipment.

Balance sheet information related to operating leases is as follows (in millions):



	June 28, 2019
Operating lease ROU assets¹	$	1,330
Current portion of operating lease liabilities²	$	282
Noncurrent portion of operating lease liabilities³	1,071
Total operating lease liabilities	$	1,353

¹Operating lease ROU assets are recorded in the line item other assets in our condensed consolidated balance sheet.

²The current portion of operating lease liabilities is recorded in the line item accounts payable and accrued expenses in our condensed

consolidated balance sheet.

³The noncurrent portion of operating lease liabilities is recorded in the line item other liabilities in our condensed consolidated balance sheet.

We had operating lease costs of $85 million and $158 million for the three and six months ended June 28, 2019, respectively. Cash paid for amounts included in the measurement of operating lease liabilities was $172 million during the six months ended June 28, 2019. Operating lease ROU assets obtained in exchange for operating lease obligations were $93 million during the six months ended June 28, 2019.

Information associated with the measurement of our remaining operating lease obligations as of June 28, 2019 is as follows:



Weighted-average remaining lease term	7 years
Weighted-average discount rate	3	%

The following table summarizes the maturity of our operating lease liabilities as of June 28, 2019 (in millions):



2019	$	144
2020	261
2021	223
2022	189
2023	156
Thereafter	465
Total operating lease payments	1,438
Less: Imputed interest	85
Total operating lease liabilities	$	1,353

Our leases have remaining lease terms of 1 year to 20 years, inclusive of renewal or termination options that we are reasonably certain to exercise.

NOTE 89: COMMITMENTS AND CONTINGENCIES

Guarantees

As of June ~~29, 2018,~~28, 2019, we were contingently liable for guarantees of indebtedness owed by third parties of ~~$627~~$634 million, of which ~~$253~~$252 million was related to variable interest entities. Our guarantees are primarily related to third-party customers, bottlers, vendors and container manufacturing operations and have arisen through the normal course of business. These guarantees have various terms, and none of these guarantees ~~was~~is individually significant. ~~The amount represents~~These amounts represent the maximum

potential future payments that we could be required to make under the guarantees; however, we do not consider it probable that we will be required to satisfy these guarantees.

We believe our exposure to concentrations of credit risk is limited due to the diverse geographic areas covered by our operations.

Legal Contingencies

The Company is involved in various legal proceedings. We establish reserves for specific legal proceedings when we determine that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated. Management has also identified certain other legal matters where we believe an unfavorable outcome is reasonably possible and/or for which no estimate of possible losses can be made. Management believes that the total liabilities toof the Company that may arise as a result of currently pending legal proceedings will not have a material adverse effect on the Company taken as a whole.

Tax Audits

The Company is involved in various tax matters, with respect to some of which the outcome is uncertain. We establish reserves to remove some or all of the tax benefit of any of our tax positions at the time we determine that it becomes uncertain based upon one of the following conditions: (1) the tax position is not "more likely than not" to be sustained; (2) the tax position is "more likely than not" to be sustained, but for a lesser amount; or (3) the tax position is "more likely than not" to be sustained, but not in the financial period in which the tax position was originally taken. For purposes of evaluating whether or not a tax position is uncertain, (1) we presume the tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information; (2) the technical merits of a tax position are derived from authorities such as legislation and statutes, legislative intent, regulations, rulings and case law and their applicability to the facts and circumstances of the tax position; and (3) each tax position is evaluated without consideration of the possibility of offset or aggregation with other tax positions taken. A number of years may elapse before a particular uncertain tax position is audited and finally ~~resolved or when a tax assessment is raised.~~resolved. The number of years subject to tax audits or tax assessments varies depending on the tax jurisdiction. The tax benefit that has been previously reserved because of a failure to meet the "more likely than not" recognition threshold would be recognized in our income tax expense in the first interim period when the uncertainty disappears under any one of the following conditions: (1) the tax position is "more likely than not" to be sustained; (2) the tax position, amount, and/or timing is ultimately settled through negotiation or litigation; or (3) the statute of limitations for the tax position has expired. Refer to Note ~~14.~~15.

On September 17, 2015, the Company received a Statutory Notice of Deficiency ("Notice") from the Internal Revenue Service ("IRS") for the tax years 2007 through 2009, after a five-year audit. In the Notice, the IRS ~~claims~~claimed that the Company's United States taxable income should be increased by an amount that creates a potential additional federal income tax liability of approximately $3.3 billion for the period, plus interest. No penalties were asserted in the Notice. The disputed amounts largely relate to a transfer pricing matter involving the appropriate amount of taxable income the Company should report in the United States in connection with its licensing of intangible property to certain related foreign licensees regarding the manufacturing, distribution, sale, marketing and promotion of products in overseas markets.

During the 2007-2009 audit period, the Company followed the same transfer pricing methodology for these licenses that had consistently been followed since the methodology was agreed with the IRS in a 1996 closing agreement that applied back to 1987. The closing agreement provided prospective penalty protection ~~as long as~~conditioned on the ~~Company followed~~Company's continued adherence to the prescribed methodology ~~and~~absent a change in material facts ~~and~~or circumstances ~~and~~or relevant federal tax ~~law have not changed. On February 11, 2016,~~law. Although the IRS ~~notified the Company,~~subsequently asserted, without ~~further~~ explanation, ~~that the IRS had determined~~ that material facts and circumstances and relevant federal tax law had changed, ~~permitting~~ it ~~to assert~~has not asserted penalties. ~~The Company does not agree with this determination.~~ The Company's compliance with the closing agreement was audited and confirmed by the IRS in five successive audit cycles covering the subsequent 11 years through 2006, with the last audit concluding as recently as 2009.

The Notice represents a repudiation of the methodology previously adopted in the 1996 closing agreement. The IRS designated the matter for litigation on October 15, 2015. To the extent the matter remains designated, the Company will be prevented from pursuing any administrative settlement at IRS Appeals or under the IRS Advance Pricing and Mutual Agreement Program.

The Company firmly believes that the IRS' claims are without merit and ~~plans~~is pursuing, and will continue to pursue, all available administrative and judicial remedies necessary to vigorously defend its position. To that end, the Company filed a petition in the U.S. Tax Court on December 14, 2015, and the IRS filed its answer on February 12, 2016. On October 4, 2017, the IRS filed an amended answer to the Company's petition in which it increased its transfer pricing adjustment by $385 million resulting in an additional tax adjustment of $135 million.

On June 20, 2017, the Company filed a motion for summary judgment on the portion of the IRS' adjustments related to our licensee in Mexico. On December 14, 2017, the U.S. Tax Court issued a decision on the summary judgment motion in favor of the Company. This decision effectively reduced the IRS' potential tax adjustment by approximately $138 million.

The U.S. Tax Court trial was held from March 8, 2018 through May 11, ~~2018, and the~~2018. The Company and the IRS ~~are required to file~~filed and ~~exchange~~exchanged final post-trial briefs ~~by February~~in April 2019. It is not known how much time will elapse ~~before~~thereafter prior to the ~~U.S. Tax Court issues its~~issuance of the court's decision. In the interim, or subsequent to the court's decision, the IRS may propose similar adjustments for years subsequent to the 2007-2009 litigation period. While the Company continues to strongly disagree with the IRS' position, there is no assurance that the ~~U.S. Tax Court~~court will rule in the Company's favor, and it is possible that all or some portion of the adjustment proposed by the IRS Notice ultimately could be sustained. In that event, ~~or if the IRS proposes similar adjustments for years subsequent to the 2007-2009 litigation period,~~ the Company will be subject to significant additional liabilities for the years at issue and potentially also for subsequent periods, which could have a material adverse impact on the Company's financial position, results of operations and cash flows.

The Company regularly assesses the likelihood of adverse outcomes resulting from tax disputes such as this and other examinations for all open years to determine the adequacy of its tax reserves. Any such adjustments related to years prior to 2018, either in the litigation period or later, may have an impact on the transition tax payable as part of the Tax Reform Act.

Risk Management Programs

The Company has numerous global insurance programs in place to help protect the Company from the risk of loss. In general, we are self-insured for large portions of many different types of claims; however, we do use commercial insurance above our self-insured retentions to reduce the Company's risk of catastrophic loss. Our reserves for the Company's self-insured losses are estimated using actuarial methods and assumptions of the insurance industry, adjusted for our specific expectations based on our claim history. Our self-insurance reserves totaled ~~$430~~$324 million and ~~$480~~$362 million as of June ~~29, 2018~~28, 2019 and December 31, ~~2017,~~2018, respectively.

NOTE 910: OTHER COMPREHENSIVE INCOME

AOCI attributable to shareowners of The Coca-Cola Company is separately presented in our condensed consolidated balance ~~sheets~~sheet as a component of The Coca-Cola Company's shareowners' equity, which also includes our proportionate share of equity method investees' AOCI. OCI attributable to noncontrolling interests is allocated to, and included in, our condensed consolidated balance ~~sheets~~sheet as part of the line item equity attributable to noncontrolling interests.

AOCI attributable to shareowners of The Coca-Cola Company consisted of the following, net of tax (in millions):



	June 28, 2019			December 31, 2018
Foreign currency translation adjustments¹	$	(10,984	)	$	(11,045	)
Accumulated derivative net gains (losses)^{1, 2}	(171		)	(126		)
Unrealized net gains (losses) on available-for-sale debt securities¹	87			50
Adjustments to pension and other benefit liabilities¹	(1,913		)	(1,693		)
Accumulated other comprehensive income (loss)	$	(12,981	)	$	(12,814	)

June 29,
2018
December 31, 2017
Foreign currency translation adjustments $ (10,284 ) $ (8,957 )
Accumulated derivative net gains (losses) (67 ) (119 )
Unrealized net gains (losses) on available-for-sale securities¹
(17 ) 493
Adjustments to pension and other benefit liabilities (1,406 ) (1,722 )
Accumulated other comprehensive income (loss) $ (11,774 ) $ (10,305 )

¹The change in the balance from December 31, ~~2017~~2018 includes ~~the $409~~a portion of a $513 million reclassification to ~~retained~~reinvested earnings from AOCI

upon the adoption of ASU 2018-02. Refer to Note 1.

~~2016-01.~~²The change in the balance from December 31, 2018 includes a $6 million reclassification to reinvested earnings from AOCI upon the

adoption of ASU 2017-12. Refer to Note 1 and Note 4.6.

The following table summarizes the allocation of total comprehensive income between shareowners of The Coca-Cola Company and noncontrolling interests (in millions):


	Six Months Ended June 29, 2018									Six Months Ended June 28, 2019
	Shareowners of The Coca-Cola Company			Noncontrolling Interests			Total			Shareowners of The Coca-Cola Company			Noncontrolling Interests		Total
Consolidated net income	$	3,684		$	47		$	3,731		$	4,285		$	46	$	4,331
Other comprehensive income:
Net foreign currency translation adjustments	(1,327		)	(98		)	(1,425		)	270			11		281
Net gain (loss) on derivatives¹	52			—			52
Net change in unrealized gain (loss) on available-for-sale debt securities²	(101		)	—			(101		)
Net gains (losses) on derivatives¹										(16		)	—		(16		)
Net change in unrealized gains (losses) on available-for-sale debt securities²										30			—		30
Net change in pension and other benefit liabilities³	316			—			316			68			—		68
Total comprehensive income	$	2,624		$	(51	)	$	2,573		$	4,637		$	57	$	4,694

¹Refer to Note 6 for additional information related to the net ~~gain~~gains or ~~loss~~losses on derivative ~~instruments designated and qualifying as cash flow hedging~~ instruments.

²Refer to Note 4 for additional information related to the net unrealized ~~gain~~gains or ~~loss~~losses on available-for-sale debt securities.

³Refer to Note 1314 for additional information related to the Company's pension and other postretirement benefit liabilities.

The following tables present OCI attributable to shareowners of The Coca-Cola Company, including our proportionate share of equity method investees' OCI (in millions):


Three Months Ended June 29, 2018	Before-Tax Amount			Income Tax			After-Tax Amount
Three Months Ended June 28, 2019										Before-Tax Amount			Income Tax			After-Tax Amount
Foreign currency translation adjustments:
Translation adjustments arising during the period	$	(1,152	)	$	(17	)	$	(1,169	)	$	(882	)	$	2		$	(880	)
Reclassification adjustments recognized in net income	42			—			42
Gains (losses) on intra-entity transactions that are of a long-term investment nature	(1,372		)	—			(1,372		)	323			—			323
Gains (losses) on net investment hedges arising during the period¹	705			(202		)	503			(156		)	29			(127		)
Net foreign currency translation adjustments	$	(1,777	)	$	(219	)	$	(1,996	)	$	(715	)	$	31		$	(684	)
Derivatives:
Gains (losses) arising during the period	$	(1	)	$	24		$	23		$	(81	)	$	19		$	(62	)
Reclassification adjustments recognized in net income	60			(15		)	45			51			(13		)	38
Net gains (losses) on derivatives¹	$	59		$	9		$	68		$	(30	)	$	6		$	(24	)
Available-for-sale debt securities:
Unrealized gains (losses) arising during the period	$	(113	)	$	23		$	(90	)	$	35		$	(3	)	$	32
Net change in unrealized gain (loss) on available-for-sale debt securities²	$	(113	)	$	23		$	(90	)
Reclassification adjustments recognized in net income										(22		)	5			(17		)
Net change in unrealized gains (losses) on available-for-sale debt securities²										$	13		$	2		$	15
Pension and other benefit liabilities:
Net pension and other benefit liabilities arising during the period	$	261		$	(61	)	$	200		$	8		$	1		$	9
Reclassification adjustments recognized in net income	111			(29		)	82			37			(9		)	28
Net change in pension and other benefit liabilities³	$	372		$	(90	)	$	282		$	45		$	(8	)	$	37
Other comprehensive income (loss) attributable to shareowners of The Coca-Cola Company	$	(1,459	)	$	(277	)	$	(1,736	)	$	(687	)	$	31		$	(656	)

Net change in unrealized gains (losses) on available-for-sale debt securities²

The following table presents the amounts and line items in our condensed consolidated statements of income where adjustments reclassified from AOCI into income were recorded (in millions):

Amount Reclassified from
AOCI into Income

Description of AOCI Component Financial Statement Line Item Three Months Ended June 29, 2018 Six Months Ended June 29, 2018
Foreign currency translation
   adjustments:

Divestitures, deconsolidations and
   other^1,2
Other income (loss) — net $ 42
$ 98

Income from continuing operations before
   income taxes
42
98

Consolidated net income $ 42
$ 98

Derivatives:
Foreign currency contracts Net operating revenues $ (40 ) $ (55 )
Foreign currency contracts Cost of goods sold (2 ) (1 )
Foreign currency contracts Other income (loss) — net 90
18

Foreign currency and commodity
   contracts
Income from discontinued operations —
8

Foreign currency and interest rate
   contracts
Interest expense 12
32

Income from continuing operations before
   income taxes
60
2

Income taxes from continuing operations (15 ) (1 )
Consolidated net income $ 45
$ 1

Available-for-sale securities:
Sale of securities Other income (loss) — net $ —
$ 5

Income from continuing operations before
   income taxes
—
5

Income taxes from continuing operations —
(1 )
Consolidated net income $ —
$ 4

Pension and other benefit liabilities:
Settlement charges Other income (loss) — net $ 86
$ 86

Recognized net actuarial loss Other income (loss) — net 30
65

Recognized prior service costs
   (credits)
Other income (loss) — net (1 ) (3 )
Divestitures, deconsolidations and
   other²
Other income (loss) — net (4 ) (4 )

Income from continuing operations before
   income taxes
111
144

Income taxes from continuing operations (29 ) (37 )
Consolidated net income $ 82
$ 107



		Amount Reclassified from AOCI into Income
Description of AOCI Component	Financial Statement Line Item	Three Months Ended June 28, 2019			Six Months Ended June 28, 2019
Foreign currency translation adjustments:
Divestitures, deconsolidations and other¹	Other income (loss) — net	$	—		$	192
	Income before income taxes	—			192
	Consolidated net income	$	—		$	192
Derivatives:
Foreign currency contracts	Net operating revenues	$	(1	)	$	(7	)
Foreign currency contracts	Cost of goods sold	(3		)	(7		)
Foreign currency contracts	Other income (loss) — net	43			93
Divestitures, deconsolidations and other	Other income (loss) — net	—			1
Foreign currency and interest rate contracts	Interest expense	12			24
	Income before income taxes	51			104
	Income taxes	(13		)	(26		)
	Consolidated net income	$	38		$	78
Available-for-sale debt securities:
Sale of debt securities	Other income (loss) — net	$	(22	)	$	(24	)
	Income before income taxes	(22		)	(24		)
	Income taxes	5			5
	Consolidated net income	$	(17	)	$	(19	)
Pension and other benefit liabilities:
Recognized net actuarial loss	Other income (loss) — net	$	38		$	77
Recognized prior service cost (credit)	Other income (loss) — net	(1		)	(3		)
	Income before income taxes	37			74
	Income taxes	(9		)	(18		)
	Consolidated net income	$	28		$	56

NOTE 1011: CHANGES IN EQUITY

The following ~~table provides~~tables provide a reconciliation of the beginning and ending carrying amounts of total equity, equity attributable to shareowners of The Coca-Cola Company and equity attributable to noncontrolling interests (in millions):

Shareowners of The Coca-Cola Company

Common Shares Outstanding
Total
Reinvested
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Common
Stock

Capital
Surplus

Treasury
Stock

Non-
controlling
Interests

December 31, 2017 4,259
$ 18,977
$ 60,430
$ (10,305 ) $ 1,760
$ 15,864
$ (50,677 ) $ 1,905
Adoption of accounting standards¹
—
2,605
3,014
(409 ) —
—
—
—
Comprehensive income (loss) —
2,573
3,684
(1,060 ) —
—
—
(51 )
Dividends paid/payable to
   shareowners of The Coca-Cola
   Company
—
(3,320 ) (3,320 ) —
—
—
—
—
Dividends paid to noncontrolling
   interests
—
(13 ) —
—
—
—
—
(13 )
Business combinations including
   purchase accounting adjustments
—
13
—
—
—
—
—
13
Purchases of treasury stock (27 ) (1,210 ) —
—
—
—
(1,210 ) —
Impact related to stock
   compensation plans
21
552
—
—
—
253
299
—
Other activities —
(1 ) —
—
—
—
—
(1 )
June 29, 2018 4,253
$ 20,176
$ 63,808
$ (11,774 ) $ 1,760
$ 16,117
$ (51,588 ) $ 1,853



						Shareowners of The Coca-Cola Company
Three Months Ended June 28, 2019	Common Shares Outstanding		Total			Reinvested Earnings			Accumulated Other Comprehensive Income (Loss)			Common Stock		Capital Surplus		Treasury Stock			Non- controlling Interests
March 29, 2019	4,268		$	19,804		$	63,704		$	(12,325	)	$	1,760	$	16,577	$	(51,981	)	$	2,069
Comprehensive income (loss)	—		2,011			2,607			(656		)	—		—		—			60
Dividends paid/payable to shareowners of The Coca-Cola Company ($0.40 per share)	—		(1,709		)	(1,709		)	—			—		—		—			—
Dividends paid to noncontrolling interests	—		(15		)	—			—			—		—		—			(15		)
Purchases of treasury stock	(5	)	(237		)	—			—			—		—		(237		)	—
Impact related to stock-based compensation plans	12		441			—			—			—		256		185			—
June 28, 2019	4,275		$	20,295		$	64,602		$	(12,981	)	$	1,760	$	16,833	$	(52,033	)	$	2,114



						Shareowners of The Coca-Cola Company
Six Months Ended June 28, 2019	Common Shares Outstanding		Total			Reinvested Earnings			Accumulated Other Comprehensive Income (Loss)			Common Stock		Capital Surplus		Treasury Stock			Non- controlling Interests
December 31, 2018	4,268		$	19,058		$	63,234		$	(12,814	)	$	1,760	$	16,520	$	(51,719	)	$	2,077
Adoption of accounting standards¹	—		(18		)	501			(519		)	—		—		—			—
Comprehensive income (loss)	—		4,694			4,285			352			—		—		—			57
Dividends paid/payable to shareowners of The Coca-Cola Company ($0.80 per share)	—		(3,418		)	(3,418		)	—			—		—		—			—
Dividends paid to noncontrolling interests	—		(20		)	—			—			—		—		—			(20		)
Purchases of treasury stock	(14	)	(635		)	—			—			—		—		(635		)	—
Impact related to stock-based compensation plans	21		634			—			—			—		313		321			—
June 28, 2019	4,275		$	20,295		$	64,602		$	(12,981	)	$	1,760	$	16,833	$	(52,033	)	$	2,114

¹Refer to Note 1 and Note 6.



						Shareowners of The Coca-Cola Company
Three Months Ended June 29, 2018	Common Shares Outstanding		Total			Reinvested Earnings			Accumulated Other Comprehensive Income (Loss)			Common Stock		Capital Surplus		Treasury Stock			Non-controlling Interests
March 30, 2018	4,259		$	21,617		$	63,150		$	(10,038	)	$	1,760	$	16,006	$	(51,268	)	$	2,007
Comprehensive income (loss)	—		438			2,316			(1,736		)	—		—		—			(142		)
Dividends paid/payable to shareowners of The Coca-Cola Company ($0.39 per share)	—		(1,658		)	(1,658		)	—			—		—		—			—
Dividends paid to noncontrolling interests	—		(13		)	—			—			—		—		—			(13		)
Purchases of treasury stock	(9	)	(388		)	—			—			—		—		(388		)	—
Impact related to stock-based compensation plans	3		179			—			—			—		111		68			—
Other activities	—		1			—			—			—		—		—			1
June 29, 2018	4,253		$	20,176		$	63,808		$	(11,774	)	$	1,760	$	16,117	$	(51,588	)	$	1,853



						Shareowners of The Coca-Cola Company
Six Months Ended June 29, 2018	Common Shares Outstanding		Total			Reinvested Earnings			Accumulated Other Comprehensive Income (Loss)			Common Stock		Capital Surplus		Treasury Stock			Non-controlling Interests
December 31, 2017	4,259		$	18,977		$	60,430		$	(10,305	)	$	1,760	$	15,864	$	(50,677	)	$	1,905
Adoption of accounting standards¹	—		2,605			3,014			(409		)	—		—		—			—
Comprehensive income (loss)	—		2,573			3,684			(1,060		)	—		—		—			(51		)
Dividends paid/payable to shareowners of The Coca-Cola Company ($0.78 per share)	—		(3,320		)	(3,320		)	—			—		—		—			—
Dividends paid to noncontrolling interests	—		(13		)	—			—			—		—		—			(13		)
Business combinations	—		13			—			—			—		—		—			13
Purchases of treasury stock	(27	)	(1,210		)	—			—			—		—		(1,210		)	—
Impact related to stock-based compensation plans	21		552			—			—			—		253		299			—
Other activities	—		(1		)	—			—			—		—		—			(1		)
June 29, 2018	4,253		$	20,176		$	63,808		$	(11,774	)	$	1,760	$	16,117	$	(51,588	)	$	1,853

¹Refer to Note 1, Note 3 ~~Note 4~~ and Note ~~14.~~4.

NOTE 1112: SIGNIFICANT OPERATING AND NONOPERATING ITEMS

Other Operating Charges

During the three months ended June ~~29, 2018,~~28, 2019, the Company recorded other operating charges of ~~$225~~$92 million. These charges primarily consisted of ~~$111~~$55 million related to the Company's productivity and reinvestment program. In addition, other operating charges included ~~$60~~$29 million ~~of CCR asset impairments and $34 million related to~~for costs incurred to refranchise certain of our North America bottling operations. Costs related to refranchising include, among other items, internal and external costs for individuals directly working on the refranchising efforts, severance, and costs associated with the implementation of information technology systems to facilitate consistent data standards and availability throughout our North America bottling system. Refer to Note 13 for additional information on the Company's productivity and reinvestment program. Refer to Note 17 for the impact these charges had on our operating segments and Corporate.

During the six months ended June 28, 2019, the Company recorded other operating charges of $219 million. These charges primarily consisted of $123 million related to the Company's productivity and reinvestment program. In addition, other operating charges included $46 million of transaction costs associated with the purchase of Costa, which we acquired in January 2019, and $40 million for costs incurred to refranchise certain of our North America bottling operations. Other operating charges also included $2 million related to tax litigation expense. Refer to Note 2 for additional information on the acquisition of Costa. Refer to Note 9 for additional information related to the tax litigation. Refer to Note 13 for additional information on the Company's productivity and reinvestment program. Refer to Note 17 for the impact these charges had on our operating segments and Corporate.

During the three months ended June 29, 2018, the Company recorded other operating charges of $225 million. These charges primarily consisted of $111 million related to the Company's productivity and reinvestment program and $60 million of CCR asset impairments. In addition, other operating charges included $34 million related to costs incurred to refranchise certain of our North America bottling operations. Other operating charges also included $22 million related to tax litigation expense. Refer to Note 89 for additional information related to the tax litigation. Refer to Note 1213 for additional information on the Company's productivity and reinvestment program. Refer to Note 1516 for information on how the Company determined the asset impairment charges. Refer to Note 1617 for the impact these charges had on our operating ~~segments.~~segments and Corporate.

During the six months ended June 29, 2018, the Company recorded other operating charges of $761 million. These charges primarily consisted of $450 million of CCR asset impairments and $206 million related to the Company's productivity and reinvestment program. In addition, other operating charges included $79 million related to costs incurred to refranchise certain of our North America bottling operations. Costs related to refranchising include, among other items, internal and external costs for individuals directly working on the refranchising efforts, severance, and costs associated with the implementation of information technology systems to facilitate consistent data standards and availability throughout our North America bottling system. Other operating charges also included $27 million related to tax litigation expense. Refer to Note 89 for additional information related to the tax litigation. Refer to Note 12 for additional information on the Company's productivity and reinvestment program. Refer to Note 15 for information on how the Company determined the asset impairment charges. Refer to Note 16 for the impact these charges had on our operating segments.

During the three months ended June 30, 2017, the Company recorded other operating charges of $826 million. These charges primarily consisted of $653 million of CCR asset impairments and $87 million related to the Company's productivity and reinvestment program. In addition, other operating charges included $47 million related to costs incurred to refranchise certain of our bottling operations. Costs related to refranchising include, among other items, internal and external costs for individuals directly working on the refranchising efforts, severance and costs associated with the implementation of information technology systems to facilitate consistent data standards and availability throughout our North America bottling system. Other operating charges also included $14 million related to the impairment of a Venezuelan intangible asset and $19 million related

to tax litigation expense. Refer to Note 1 for additional information about the Venezuelan intangible asset and Note 15 for information on how the Company determined the asset impairment charges. Refer to Note 8 for additional information related to the tax litigation. Refer to Note 1213 for additional information on the Company's productivity and reinvestment program. Refer to Note 16 for ~~the impact these charges had on our operating segments.~~

During the six months ended ended June 30, 2017, the Company recorded other operating charges of $1,116 million. These charges primarily consisted of $737 million of CCR asset impairments and $226 million related to the Company's productivity and reinvestment program. In addition, other operating charges included $86 million related to costs incurred to refranchise certain of our bottling operations, $34 million related to impairments of Venezuelan intangible assets and $25 million related to tax litigation expense. Refer to Note 1 for additional information about the Venezuelan intangible assets and Note 15 for information on how the Company determined the asset impairment charges. Refer to Note ~~8 for additional information related to the tax litigation. Refer to Note 12 for additional information on the Company's productivity and reinvestment program. Refer to Note 16~~17 for the impact these charges had on our operating ~~segments.~~segments and Corporate.

Other Nonoperating Items

~~Interest Expense~~Equity Income (Loss) — Net

During the three and six months ended June ~~30, 2017,~~28, 2019, the Company recorded a net ~~charge~~charges of ~~$38~~$26 million ~~related to the extinguishment of long-term debt.~~

~~Equity Income (Loss) — Net~~

and $68 million, respectively. During the three and six months ended June 29, 2018, the Company recorded net charges of $33 million and $84 ~~million, respectively. During the three and six months ended June 30, 2017, the Company recorded a net gain of $37 million and a net charge of $21~~ million, respectively. These amounts represent the Company's proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees. Refer to Note 1617 for the impact these items had on our operating ~~segments.~~segments and Corporate.

Other Income (Loss) — Net

During the three months ended June 28, 2019, the Company recorded an adjustment to reduce the carrying amount of CCBA's fixed assets and definite-lived intangible assets by $160 million. The Company also recorded an other-than-temporary impairment charge of $49 million related to one of our equity method investees in Latin America and a net gain of $10 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities. Refer to Note 2 for additional information on the CCBA asset adjustment. Refer to Note 4 for additional information on equity and debt securities. Refer to Note 16 for information on how the Company determined the adjustment to CCBA's assets and impairment charge. Refer to Note 17 for the impact these items had on our operating segments and Corporate.

During the six months ended June 28, 2019, the Company recognized other-than-temporary impairment charges of $286 million related to Coca-Cola Bottlers Japan Holdings Inc. ("CCBJHI"), an equity method investee, $57 million related to one of our equity method investees in North America, and $49 million related to one of our other equity method investees. The Company also recorded an adjustment to reduce the carrying amount of CCBA's fixed assets and definite-lived intangible assets by $160 million and recognized a $121 million loss in conjunction with our acquisition of the remaining equity ownership interest in CHI. Additionally, the Company recognized net charges of $4 million due to the refranchising of certain bottling territories in North America and charges of $4 million primarily related to payments made to convert the bottling agreements for certain North America bottling partners' territories to a single form of CBA with additional requirements. These charges were partially offset by a net gain of $159 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities and a gain of $39 million related to the sale of a portion of our equity ownership interest in Andina. Refer to Note 2 for additional information on the CCBA asset adjustment, refranchising activities, the North America conversion payments, the acquisition of the remaining equity ownership interest in CHI and the sale of a portion of our equity ownership interest in Andina. Refer to Note 4 for additional information on equity and debt securities. Refer to Note 16 for information on how the Company determined the adjustment to CCBA's assets and impairment charges and the loss recognized in conjunction with our acquisition of the remaining equity ownership interest in CHI. Refer to Note 17 for the impact these items had on our operating segments and Corporate.

During the three months ended June 29, 2018, the Company recorded ~~charges~~a net loss of $86 million related to pension settlements and net charges of $102 million due to the refranchising of certain bottling territories in North America. The Company also recorded an other-than-temporary impairment charge of $52 million related to one of our equity method investees. These charges were partially offset by a net gain of $36 million related to the refranchising of our Latin American bottling operations, and a net gain of $36 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities. Refer to Note ~~1 and~~2 for additional information on refranchising activities. Refer to Note 4 for additional information on equity and debt securities. Refer to Note ~~2 for additional information on refranchising activities. Refer to Note 16~~17 for the impact these items had on our operating segments.

During the six months ended June 29, 2018, the Company recorded charges of $86 million related to pension settlements and net charges of $104 million due to the refranchising of certain bottling territories in North America. The Company also recorded an other-than-temporary impairment charge of $52 million related to one of our equity method investees and a net loss of $49 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities. Additionally, the Company recognized a net loss of $33 million primarily related to the reversal of the cumulative translation adjustments resulting from the substantial liquidation of the Company's former Russian juice operations, and charges of $21 million primarily related to payments made to convert the bottling agreements for certain North America bottling partners' territories to a single form of CBA with additional requirements. These charges were partially offset by a net gain of $36 million related to the refranchising of our Latin American bottling operations. Refer to Note ~~1 and Note~~ 4 for additional information on equity and debt securities. Refer to Note 2 for additional information on refranchising activities and North America conversion payments. Refer to Note ~~16 for the impact these items had on our operating segments.~~

During the three months ended June 30, 2017, the Company recognized a gain of $445 million related to the integration of Coca‑Cola West Co., Ltd. ("CCW") and Coca-Cola East Japan Co., Ltd. ("CCEJ") to establish Coca-Cola Bottlers Japan Inc.,

~~now known as Coca-Cola Bottlers Japan Holdings Inc. ("CCBJHI"). In exchange for our previously existing equity interests in CCW and CCEJ, we received an approximate~~ 17 percent equity interest in CCBJHI with a fair market value of $1,112 million as of April 1, 2017. The Company accounts for its 17 percent interest in CCBJHI as an equity method investment based on our equity ownership percentage, our representation on CCBJHI's Board of Directors, material intercompany transactions and other governance rights. The Company also recognized a $25 million gain as a result of Coca‑Cola FEMSA, an equity method investee, issuing additional shares of its stock during the period at a per share amount greater than the carrying value of the Company's per share investment and a gain of $9 million related to refranchising a substantial portion of our China bottling operations. These gains were partially offset by a net charge of $214 million due to the refranchising of certain bottling

territories in North America and charges of $109 million primarily related to payments made to convert the bottling agreements for certain North America bottling partners' territories to a single form of CBA with additional requirements. The Company also incurred a charge of $26 million related to our former German bottling operations. Refer to Note 2 for additional information on refranchising activities and the conversion payments. Refer to Note 16 for the impact these items had on our operating segments.

During the six months ended June 30, 2017, the Company recognized net charges of $711 million due to the refranchising of certain bottling territories in North America and charges of $215 million primarily related to payments made to convert the bottling agreements for certain North America bottling partners' territories to a single form of CBA with additional requirements. The Company also incurred a charge of $26 million related to our former German bottling operations and net charges of $15 million resulting from special termination benefits and curtailment credits related to refranchising certain of our North America bottling operations. These charges were partially offset by a gain of $445 million related to the integration of CCW and CCEJ to establish CCBJHI. In exchange for our previously existing equity interests in CCW and CCEJ, we received an approximate 17 percent equity interest in CCBJHI. The Company also recognized a $25 million gain as a result of Coca‑Cola FEMSA, an equity method investee, issuing additional shares of its stock during the period at a per share amount greater than the carrying value of the Company's per share investment and a gain of $9 million related to refranchising a substantial portion of our China bottling operations. Refer to Note 2 for additional information on refranchising activities and the conversion payments. Refer to Note 13 for additional information on the special termination benefit charges and curtailment credits. Refer to Note 16 for the impact these items had on our operating segments.

NOTE 1213: PRODUCTIVITY AND REINVESTMENT PROGRAM

In February 2012, the Company announced a productivity and reinvestment program designed to further enable our efforts to strengthen our brands and reinvest our resources to drive long-term profitable growth. This program is focused on the following initiatives: global supply chain optimization; global marketing and innovation effectiveness; operating expense leverage and operational excellence; data and information technology systems standardization; and the integration of ~~Coca-Cola~~Coca‑Cola Enterprises Inc.'s former North ~~American bottling operations.~~America business.

In February 2014, the Company announced the expansion of our productivity and reinvestment program to drive incremental productivity that will primarily be redirected into increased media investments. Our incremental productivity goal consists of two relatively equal components. First, we will expand savings through global supply chain optimization, data and information technology systems standardization, and resource and cost reallocation. Second, we will increase the effectiveness of our marketing investments by transforming our marketing and commercial model to redeploy resources into more consumer-facing marketing investments to accelerate growth.

In October 2014, the Company announced that we were further expanding our productivity and reinvestment program and extending it through 2019. The expansion of the productivity initiatives ~~will focus~~focuses on four key areas: restructuring the Company's global supply chain; implementing zero-based work, an evolution of zero-based budget principles, across the organization; streamlining and simplifying the Company's operating model; and further driving increased discipline and efficiency in direct marketing investments.

In April 2017, the Company announced ~~its plans to transition~~another expansion of our productivity and reinvestment program. This expansion is focused on achieving additional efficiencies in both our supply chain and our marketing expenditures as well as transitioning to a new, more agile operating model to enable growth. Under this operating model, our business units will be supported by an expanded enabling services organization and a corporate center focused on a few strategic initiatives, policy and governance. The expanded enabling services organization will focus on both simplifying and standardizing key transactional processes and providing support to business units through global centers of excellence.

The Company has incurred total pretax expenses of ~~$3,303~~$3,689 million related to ~~this~~our productivity and reinvestment program since it commenced. These expenses were recorded in the line items other operating charges and other income (loss) — net in our condensed consolidated statements of income. Refer to Note 1617 for the impact these charges had on our operating ~~segments.~~segments and Corporate. Outside services reported in the ~~table~~tables below primarily relate to expenses in connection with legal, outplacement and consulting activities. Other direct costs reported in the ~~table~~tables below include, among other items, internal and external costs associated with the development, communication, administration and implementation of these initiatives; accelerated depreciation on certain fixed assets; contract termination fees; and relocation costs.

The following table summarizes the balance of accrued expenses related to these productivity and reinvestment initiatives and the changes in the accrued amounts as of and for the three months ended June ~~29, 2018~~28, 2019 (in millions):


	Accrued Balance March 30, 2018		Costs Incurred Three Months Ended June 29, 2018		Payments			Noncash and Exchange			Accrued Balance June 29, 2018		Accrued Balance March 29, 2019		Costs Incurred Three Months Ended June 28, 2019		Payments			Noncash and Exchange			Accrued Balance June 28, 2019
Severance pay and benefits	$	142	$	48	$	(70	)	$	(41	)	$	79	$	51	$	1	$	(3	)	$	—		$	49
Outside services	8		20		(22		)	—			6		13		23		(28		)	—			8
Other direct costs	11		82		(79		)	(1		)	13		10		31		(28		)	(5		)	8
Total	$	161	$	150	$	(171	)	$	(42	)	$	98	$	74	$	55	$	(59	)	$	(5	)	$	65

The following table summarizes the balance of accrued expenses related to these productivity and reinvestment initiatives and the changes in the accrued amounts as of and for the six months ended June ~~29, 2018~~28, 2019 (in millions):



	Accrued Balance December 31, 2018		Costs Incurred Six Months Ended June 28, 2019		Payments			Noncash and Exchange			Accrued Balance June 28, 2019
Severance pay and benefits	$	76	$	12	$	(40	)	$	1		$	49
Outside services	10		50		(52		)	—			8
Other direct costs	4		61		(40		)	(17		)	8
Total	$	90	$	123	$	(132	)	$	(16	)	$	65

Accrued
Balance
December 31, 2017

Costs
Incurred
Six Months Ended
June 29, 2018

Payments
Noncash
and
Exchange

Accrued
Balance
June 29, 2018

Severance pay and benefits $ 190
$ 81
$ (154 ) $ (38 ) $ 79
Outside services 1
38
(33 ) —
6
Other direct costs 15
126
(128 ) —
13
Total $ 206
$ 245
$ (315 ) $ (38 ) $ 98

NOTE 1314: PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

Net periodic benefit cost (income) for our pension and other postretirement benefit plans consisted of the following (in millions):


	Pension Benefits						Other Benefits						Pension Benefits						Other Benefits
	Three Months Ended												Three Months Ended
	June 29, 2018			June 30, 2017			June 29, 2018			June��30, 2017			June 28, 2019			June 29, 2018			June 28, 2019			June 29, 2018
Service cost	$	31		$	50		$	2		$	4		$	26		$	31		$	3		$	2
Interest cost	73			78			6			7			73			73			6			6
Expected return on plan assets¹	(162		)	(163		)	(4		)	(3		)	(138		)	(162		)	(4		)	(4		)
Amortization of prior service cost (credit)	2			—			(3		)	(4		)	(1		)	2			—			(3		)
Amortization of net actuarial loss	29			45			1			2			38			29			—			1
Net periodic benefit cost (income)	(27		)	10			2			6			(2		)	(27		)	5			2
Curtailment credits²	—			—			—			(42		)
Settlement charges²	86			—			—			—			—			86			—			—
Special termination benefits²	—			39			—			—
Total cost (income) recognized in condensed consolidated statements of income	$	59		$	49		$	2		$	(36	)	$	(2	)	$	59		$	5		$	2

¹The weighted-average expected long-term rates of return on plan assets used in computing ~~2018~~2019 net periodic benefit cost (income) are ~~8.0~~

7.7 percent for pension benefit plans and ~~4.5~~4.6 percent for other benefit plans.

²The settlement charges in 2018 were related to North America refranchising and the Company's productivity and reinvestment program.

¹The weighted-average expected long-term rates of return on plan assets used in computing ~~2018~~2019 net periodic benefit cost (income) are ~~8.0~~

7.7 percent for pension benefit plans and ~~4.5~~4.6 percent for other benefit plans.

²The settlement charges in 2018 were related to North America refranchising and the Company's productivity and reinvestment program.

All of the amounts in the tables above, other than service cost, were recorded in the line item other income (loss) — net in our condensed consolidated statements of income. During the six months ended June ~~29, 2018,~~28, 2019, the Company contributed ~~$34~~$22 million to our pension ~~plans,~~trusts, and we anticipate making additional contributions of approximately ~~$63~~$4 million during the remainder of ~~2018.~~2019. The Company contributed ~~$55~~$34 million to our pension ~~plans~~trusts during the six months ended June ~~30, 2017.~~29, 2018.

NOTE 1415: INCOME TAXES

~~At the end~~The Company recorded income taxes of ~~each interim period, we make our best estimate of the~~$421 million (13.8 percent effective tax ~~rate expected to be applicable for~~rate) and $611 million (20.7 percent effective tax rate) during the ~~full fiscal year. This estimate reflects, among other items, our best estimate~~three months ended June 28, 2019 and June 29, 2018, respectively. The Company recorded income taxes of ~~operating results~~$943 million (17.9 percent effective tax rate) and ~~foreign currency exchange rates. Based on current~~$1,156 million (23.6 percent effective tax ~~laws,~~rate) during the six months ended June 28, 2019 and June 29, 2018, respectively.

The Company's effective tax rates for the three and six months ended June 28, 2019 and June 29, 2018 vary from the statutory U.S. federal income tax rate ~~in 2018 is expected to be~~of 21.0 percent ~~before considering~~primarily due to the ~~potential~~tax impact of ~~further clarification~~significant operating and nonoperating items, along with the tax benefits of ~~certain matters~~having significant operations outside the United States and significant earnings generated in investments accounted for under the equity method of accounting, both of which are generally taxed at rates lower than the statutory U.S. rate.

The Company's effective tax rates for the three and six months ended June 28, 2019 included $199 million of tax benefit recorded as result of CCBA no longer qualifying as a discontinued operation.

The Company's effective tax rates for the three and six months ended June 29, 2018 included $42 million of tax benefit and $134 million of tax expense, respectively, to adjust our provisional tax estimate recorded as of December 31, 2017, related to the Tax Reform Act ~~and any unusual or special items that may affect our effective tax rate.~~signed into law on December 22, 2017.

On September 17, 2015, the Company received a Statutory Notice of Deficiency from the IRS for the tax years 2007 through 2009, after a five-year audit. Refer to Note 8.

The Company recorded income tax expense on income from continuing operations of $594 million (20.6 percent effective tax rate) and $1,252 million (47.7 percent effective tax rate) during the three months ended June 29, 2018 and June 30, 2017, respectively. The Company recorded income tax expense on income from continuing operations of $1,100 million (23.3 percent effective tax rate) and $1,575 million (38.1 percent effective tax rate) during the six months ended June 29, 2018 and June 30, 2017, respectively. During the three and six months ended June 29, 2018, the Company recorded income tax expense on income from discontinued operations of $16 million (27.7 percent effective tax rate) and $56 million (32.7 percent effective tax rate), respectively.

~~The following table illustrates the income tax expense (benefit) associated with significant operating and nonoperating items for the interim periods presented (in millions):~~

Three Months Ended Six Months Ended
June 29,
2018
June 30,
2017
June 29,
2018
June 30,
2017

Asset impairments $ (16 )
¹
$ (164 )
⁹
$ (116 )
¹
$ (164 )
⁹
Productivity and reinvestment program (34 )
²
(31 )
¹⁰
(57 )
²
(83 )
¹⁰
Transaction gains and losses (16 )
³
707
¹¹
(33 )
⁴
533
¹²
Certain tax matters (37 )
⁵
(40 )
¹³
89
⁶
(70 )
¹³
Other — net 3
⁷
(12 )
¹⁴
(15 )
⁸
(29 )
¹⁵

~~Related to charges of $152 million, which included pretax charges of $47 million related to pension settlements~~, charges of $34 million related to costs incurred to refranchise certain of our bottling operations, charges of $2 million related to payments made to convert the bottling agreements for certain North America bottling partners' territories to a single form of CBA with additional requirements and net charges of $102 million as a result of the refranchising of certain bottling territories in North America, partially offset by a net gain of $36 million related to the refranchising of our Latin American bottling operations. Refer to Note 2, Note 11 and Note 13.

In October 2016, the FASB issued ASU 2016-16, which requires the Company to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 was effective for the Company beginning January 1, 2018 and was adopted using a modified retrospective basis. We recorded a $2.9 billion cumulative effect adjustment to increase the opening balance of reinvested earnings with the majority of the offset being recorded as a deferred tax asset. This amount is primarily related to trademarks and other intangible assets and was recorded as a deferred tax asset in the line item deferred income tax assets in our condensed consolidated balance sheet.

The Company evaluates the recoverability of our deferred tax assets in accordance with U.S. GAAP. We perform our recoverability tests on a quarterly basis, or more frequently, to determine whether it is more likely than not that any of our deferred tax assets will not be realized within their life cycle based on the available evidence. The Company's deferred tax asset valuation allowances are primarily the result of uncertainties regarding the future realization of recorded tax benefits on tax loss carryforwards from operations in various jurisdictions.

The Tax Reform Act was signed into law on December 22, 2017. Among other things, the Tax Reform Act reduces the U.S. federal corporate tax rate from 35.0 percent to 21.0 percent effective for tax years beginning after December 31, 2017, transitions the U.S. method of taxation from a worldwide tax system to a modified territorial system and requires companies to pay a one-time transition tax over a period of eight years on the mandatory deemed repatriation of prescribed foreign earnings as of December 31, 2017. We are applying the guidance in the U.S. Securities and Exchange Commission ("SEC") Staff Accounting Bulletin No. 118 ("SAB 118") when accounting for the enactment date effects of the Tax Reform Act. As of June 29, 2018, we have not completed our accounting for the tax effects of the Tax Reform Act; however, in certain cases, we have made a reasonable estimate of the effects of the Tax Reform Act. In other cases, we have not been able to make a reasonable estimate and continue to account for those items under ASC 740, ~~Income Taxes~~, and the provisions of the tax laws that were in effect immediately prior to enactment of the Tax Reform Act. In all cases, we will continue to make and refine our calculations as additional analysis is completed. Our estimates may also be affected as we gain a more thorough understanding of the Tax Reform Act. These changes could be material to income tax expense.

The one-time transition tax is based on our total accumulated post-1986 prescribed foreign earnings and profits ("E&P") estimated to be approximately $42 billion, the majority of which was previously considered to be indefinitely reinvested and, accordingly, no U.S. federal and state income taxes had been provided. We have not made any adjustments as of June 29, 2018 to either our reasonable estimate of $4.6 billion originally recorded as a provisional tax amount for our one-time transition tax liability or the reasonable estimate of $0.6 billion provisional deferred tax for the related withholding taxes and state income taxes. Because of the complexities of the Tax Reform Act, we are still finalizing our calculation of the total accumulated post-1986 prescribed E&P for the applicable foreign entities. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. This amount may change when we finalize the calculation of post-1986 prescribed foreign E&P and finalize the amounts held in cash or other specified assets. No additional income taxes have been provided for any additional outside basis differences inherent in these entities, as these amounts, as of June 29, 2018, continue to be provisionally indefinitely reinvested. Determining the amount of unrecognized deferred tax liability related to any additional outside basis differences in these entities (i.e., basis differences in excess of that subject to the one-time transition tax) is not practicable.

balance was a tax benefit of $1.6 billion. Upon further analyses of certain aspects of the Tax Reform Act and refinement of our calculations during the three months ended June 29, 2018, we reduced our provisional amount by $42 million (a 1.5 percentage point decrease to our effective tax rate), which resulted in a net increase in our provisional amount of $134 million (a 2.8 percentage point increase to our effective tax rate) during the six months ended June 29, 2018. These adjustments are included as a component of income taxes from continuing operations. We do not consider the accounting for the enactment-date remeasurement of deferred tax assets and liabilities to be complete.

The Global Intangible Low-Taxed Income ("GILTI") provisions of the Tax Reform Act require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary's tangible assets. As of June 29, 2018, because we are still evaluating the GILTI provisions and our analysis of future taxable income that is subject to GILTI, we have included GILTI related to current year operations only in our estimated annual effective tax rate and have not provided additional GILTI on deferred items. The Company has not yet elected an accounting policy related to how it will account for GILTI and therefore has not provided any deferred tax impacts of GILTI in its condensed consolidated financial statements for the three and six months ended June 29, 2018.9.

NOTE 1516: FAIR VALUE MEASUREMENTS

U.S. GAAP 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 at the measurement date. Additionally, the inputs used to measure fair value are prioritized based on a three-level hierarchy. 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:

Recurring Fair Value Measurements

In accordance with U.S. GAAP, certain assets and liabilities are required to be recorded at fair value on a recurring basis. For our Company, the only assets and liabilities that are adjusted to fair value on a recurring basis are investments in equity securities with readily determinable fair values, debt securities classified as trading or available-for-sale and derivative financial instruments. Additionally, the Company adjusts the carrying value of certain long-term debt as a result of the Company's fair value hedging strategy.

Investments in Debt and Equity Securities

The fair values of our investments in debt and equity securities using quoted market prices from daily exchange traded markets are based on the closing price as of the balance sheet date and are classified as Level 1. The fair values of our investments in debt and equity securities classified as Level 2 are priced using quoted market prices for similar instruments or ~~non-binding~~nonbinding market prices that are corroborated by observable market data. Inputs into these valuation techniques include actual trade data, benchmark yields, broker/dealer quotes and other similar data. These inputs are obtained from quoted market prices, independent pricing vendors or other sources.

Derivative Financial Instruments

The fair values of our futures contracts are primarily determined using quoted contract prices on futures exchange markets. The fair values of these instruments are based on the closing contract price as of the balance sheet date and are classified as Level 1.

The fair values of our derivative instruments other than futures are determined using standard valuation models. The significant inputs used in these models are readily available in public markets, or can be derived from observable market transactions, and therefore have been classified as Level 2. Inputs used in these standard valuation models for derivative instruments other than futures include the applicable exchange rates, forward rates, interest rates, discount rates and commodity prices. The standard valuation model for options also uses implied volatility as an additional input. The discount rates are based on the historical U.S. Deposit or U.S. Treasury rates, and the implied volatility specific to options is based on quoted rates from financial institutions.

Included in the fair values of derivative instruments is an adjustment for nonperformance risk. The adjustment is based on current credit default swap ("CDS") rates applied to each contract, by counterparty. We use our counterparty's CDS rate when

we are in an asset position and our own CDS rate when we are in a liability position. The adjustment for nonperformance risk did not have a significant impact on the fair values of our derivative instruments.

The following tables summarize those assets and liabilities measured at fair value on a recurring basis (in millions):

Equity securities with readily determinable values¹

³~~Primarily related to debt securities that mature in 2018.~~

Gross realized and unrealized gains and losses on Level 3 assets and liabilities were not significant for the three and six months ended June ~~29, 2018~~28, 2019 and June ~~30, 2017.~~

The Company recognizes transfers between levels within the hierarchy as of the beginning of the reporting period. Gross transfers between levels within the hierarchy were not significant for the three and six months ended June ~~29, 2018~~28, 2019 and June ~~30, 2017.~~29, 2018.

Nonrecurring Fair Value Measurements

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company records assets and liabilities at fair value on a nonrecurring basis as required by U.S. GAAP. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges, or as a result of observable changes in equity securities using the measurement alternative. Refer to Note 4.

The gains and losses on assets measured at fair value on a nonrecurring basis are summarized in the table below (in millions):



	Gains (Losses)
	Three Months Ended								Six Months Ended
	June 28, 2019				June 29, 2018				June 28, 2019				June 29, 2018
Other-than-temporary impairment charges	$	(49	)	¹	$	(52	)	¹	$	(392	)	¹	$	(52	)	¹
Investment in former equity method investee	—				—				(121		)	⁴	—
CCBA asset adjustments	(160		)	²	—				(160		)	²	—
Other long-lived asset impairment charges	—				(60		)	³	—				(312		)	³
Intangible asset impairment charges	—				—				—				(138		)	³
Total	$	(209	)		$	(112	)		$	(673	)		$	(502	)

¹The Company recognized ~~losses~~an other-than-temporary impairment charge of ~~$60~~$49 million during the three and ~~$450~~six months ended June 28, 2019 and $52 million during the three and six months ended June 29, 2018 ~~respectively, due~~related to one of our equity method investees in Latin America, primarily driven by revised projections of future operating results. The fair value of this investment was derived using discounted cash flow analyses based on Level 3 inputs. During the six months ended June 28, 2019, the Company recognized an other-than-temporary impairment ~~charges~~charge of $286 million related to our investment in CCBJHI, an equity method investee. Based on ~~certain CCR~~the length of time and the extent to which the market value of our investment in CCBJHI had been less than our carrying value as well as the financial condition and near-term prospects of the issuer, management determined that the decline in fair value was other than temporary in nature. This impairment charge was determined using the quoted market price (a Level 1 measurement) of CCBJHI. During the six months ended June 28, 2019, the Company also recognized an other-than-temporary impairment charge of $57 million related to one of our equity method investees in North America. This impairment charge was derived using Level 3 inputs and was primarily driven by revised projections of future operating results.

³The Company recognized losses of $310 million during the three and six months ended June 30, 2017 due to impairment charges on certain CCR fixed assets and $19 million during the three and six months ended June 30, 2017 related to CCR other assets as a result of refranchising activities in North America. These charges were determined by comparing the expected future cash flows (undiscounted and without interest charges) to the related carrying amounts.

⁵The Company is required to record assets and liabilities that are held for sale at the lower of carrying value or fair value less any costs to sell based on the agreed-upon sale price. These losses related to refranchising activities in North America, which were calculated based on Level 3 inputs. Refer to Note 2.

Other Fair Value Disclosures

The carrying amounts of cash and cash equivalents; short-term investments; trade accounts ~~receivables;~~receivable; accounts payable and accrued expenses; and loans and notes payable approximate their fair values because of the short-term maturities of these financial instruments.

~~The~~ As of June 28, 2019, the carrying amount and fair value of our long-term debt, ~~is estimated using Level 2 inputs based on quoted prices for those instruments. Where quoted prices are not available, fair value is estimated using discounted cash flows~~including the current portion, were $32,045 million and ~~market-based expectations for interest rates, credit risk and the contractual terms of the debt instruments.~~$32,934 million, respectively. As of ~~June 29,~~December 31, 2018, the carrying amount and fair value of our long-term debt, including the current portion, were ~~$32,086~~$30,379 million and ~~$32,208~~$30,456 million, respectively. ~~As of December 31, 2017, the carrying amount and fair value of our long-term debt, including the current portion, were $34,480 million and $35,169 million, respectively.~~

NOTE 1617: OPERATING SEGMENTS

Effective January 1, 2019, we established a new operating segment, Global Ventures, which includes the results of Costa, which we acquired in January 2019, and the results of our innocent and doğadan businesses as well as fees earned pursuant to distribution coordination agreements between the Company and Monster. Additionally, during the three months ended June 28, 2019, the Company updated its plans for CCBA and now intends to maintain its majority stake in CCBA for the foreseeable future. As a result, the Company now presents the financial results of CCBA within its results from continuing operations and includes the results of CCBA in the Bottling Investments operating segment. Accordingly, all prior period operating segment and Corporate information presented herein has been adjusted to reflect these changes.

Information about our Company's ~~continuing~~ operations by operating segment and Corporate is as follows (in millions):



	Europe, Middle East & Africa		Latin America		North America		Asia Pacific		Global Ventures		Bottling Investments			Corporate			Eliminations			Consolidated
As of and for the Three Months Ended June 28, 2019
Net operating revenues:
Third party	$	1,804	$	1,003	$	3,158	$	1,350	$	635	$	2,024		$	23		$	—		$	9,997
Intersegment	126		—		4		190		—		2			—			(322		)	—
Total net operating revenues	1,930		1,003		3,162		1,540		635		2,026			23			(322		)	9,997
Operating income (loss)	1,038		588		711		731		73		119			(272		)	—			2,988
Income (loss) before income taxes	1,062		540		729		738		75		393			(488		)	—			3,049
Identifiable operating assets	8,511		2,008		18,512		2,266		7,236		10,727			20,424			—			69,684
Noncurrent investments	731		728		364		223		16		14,420			3,830			—			20,312
As of and for the Three Months Ended June 29, 2018
Net operating revenues:
Third party	$	1,884	$	1,011	$	3,010	$	1,396	$	210	$	1,853		$	57		$	—		$	9,421
Intersegment	124		19		70		118		1		2			—			(334		)	—
Total net operating revenues	2,008		1,030		3,080		1,514		211		1,855			57			(334		)	9,421
Operating income (loss)	1,093		593		648		703		37		(17		)	(291		)	—			2,766
Income (loss) before income taxes	1,114		541		660		710		40		131			(254		)	—			2,942
Identifiable operating assets	8,240		1,847		17,951		2,427		995		10,198			26,310			—			67,968
Noncurrent investments	1,172		777		105		200		—		15,706			3,665			—			21,625
As of December 31, 2018
Identifiable operating assets	$	7,414	$	1,715	$	17,519	$	1,996	$	968	$	10,525		$	22,800		$	—		$	62,937
Noncurrent investments	789		784		400		216		—		14,372			3,718			—			20,279

Europe, Middle East & Africa
Latin
America
North
America
Asia Pacific
Bottling
Investments
Corporate
Eliminations
Consolidated

As of and for the three months ended June 29, 2018
Net operating revenues:
Third party $ 2,046
$ 1,012
$ 3,046
$ 1,399
$ 1,235
$ 65
$ —
$ 8,803

Intersegment 124
19
71
118
—
—
(208 ) 124
¹
Total net operating revenues 2,170
1,031
3,117
1,517
1,235
65
(208 ) 8,927

Operating income (loss) 1,095
593
684
705
(56 ) (294 ) —
2,727

Income (loss) from continuing
operations before income taxes
1,117
541
699
712
91
(277 ) —
2,883

Identifiable operating assets 8,838
1,847
18,346
2,429
3,696
26,137
—
61,293
²
Noncurrent investments 1,172
777
105
200
15,700
3,665
—
21,619

As of and for the three months ended June 30, 2017
Net operating revenues:³

Third party $ 2,037
$ 935
$ 2,326
$ 1,384
$ 2,975
$ 45
$ —
$ 9,702

Intersegment —
15
577
123
23
—
(738 ) —

Total net operating revenues 2,037
950
2,903
1,507
2,998
45
(738 ) 9,702

Operating income (loss)^3,4
1,076
559
755
709
(651 ) (411 ) —
2,037

Income (loss) from continuing
operations before income taxes³
1,111
559
659
716
(519 ) 98
—
2,624

Identifiable operating assets 5,409
1,787
17,423
2,340
8,157
34,027
—
69,143

Noncurrent investments 1,330
880
110
168
16,035
3,480
—
22,003

As of December 31, 2017
Identifiable operating assets $ 5,475
$ 1,896
$ 17,619
$ 2,072
$ 4,493
$ 27,060
$ —
$ 58,615
⁵
Noncurrent investments 1,238
891
112
177
15,998
3,536
—
21,952

During the three months ended June 28, 2019, the results of our operating segments and Corporate were impacted by the following items:

¹ ~~Intersegment revenues do not eliminate on a consolidated basis in the table above~~Operating income (loss) and income (loss) before income taxes were reduced by $13 million for North America, $1 million for Bottling Investments and $41 million for Corporate due to ~~intercompany sales to our discontinued operations~~.

² ~~Identifiable operating assets excludes $6,681 million of assets held for sale~~ — ~~discontinued operations.~~

³ ~~Amounts have been adjusted to reflect~~ the ~~reclassification of certain revenue streams from the Bottling Investments operating segment to the North America operating segment effective January 1, 2018.~~

⁴ ~~Amounts have been adjusted to reflect the adoption of ASU 2017-07.~~Company's productivity and reinvestment program. Refer to Note 1. 13.

⁵ ~~Identifiable~~Operating income (loss) and income (loss) before income taxes were reduced by $29 million for Bottling Investments related to costs incurred to refranchise certain of our North America bottling operations. Refer to Note 12.

Income (loss) before income taxes was reduced by $160 million for Corporate as result of CCBA asset adjustments. Refer to Note 2.

Income (loss) before income taxes was reduced by $24 million for Bottling Investments and $2 million for Corporate due to the Company's proportionate share of significant operating ~~assets excludes $7,329~~and nonoperating items recorded by certain of our equity method investees.

Income (loss) before income taxes was reduced by $49 million for Latin America due to an other-than-temporary impairment charge related to one of ~~assets held for sale~~ — ~~discontinued operations.~~our equity method investees. Refer to Note 16.

During the three months ended June 29, 2018, the results of our operating segments and Corporate were impacted by the following items:

Operating income (loss) and income (loss) ~~from continuing operations~~ before income taxes were reduced by $1 million for Latin America, $47 million for North America, $1 million for Asia Pacific, $16 million for Bottling Investments and $46 million for Corporate due to the Company's productivity and reinvestment program. Refer to Note ~~12.~~13.

Operating income (loss) and income (loss) ~~from continuing operations~~ before income taxes were reduced by $60 million for Bottling Investments due to asset impairment charges. Refer to Note ~~11 and Note 15.~~16.

Operating income (loss) and income (loss) ~~from continuing operations~~ before income taxes were reduced by $34 million for Bottling Investments due to costs incurred to refranchise certain of our bottling operations. Refer to Note ~~11.~~12.

Operating income (loss) and income (loss) ~~from continuing operations~~ before income taxes were reduced by $22 million for Corporate due to tax litigation expense. ~~Refer to Note 11.~~

Income (loss) ~~from continuing operations~~ before income taxes was reduced by $102 million for Bottling Investments due to the refranchising of certain bottling territories in North America. Refer to Note ~~2 and Note 11.~~2.

Income (loss) ~~from continuing operations~~ before income taxes was reduced by $52 million for Latin America due to an other-than-temporary impairment charge related to one of our equity method investees. Refer to Note ~~11 and Note 15.~~16.

Income (loss) ~~from continuing operations~~ before income taxes was reduced by $47 million for Bottling Investments and $39 million for Corporate due to pension settlements. Refer to Note ~~11 and Note 13.~~

14.

Income (loss) ~~from continuing operations~~ before income taxes was reduced by $31 million for Bottling Investments ~~and$2~~and $2 million for Corporate due to the Company's proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees. ~~Refer to Note 11.~~

Income (loss) from continuing operations before income taxes was increased by $36 million for Corporate related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities. Refer to Note 4 and Note 11.

~~Income (loss) from continuing operations~~ before income taxes was increased by $36 million for Corporate related to the refranchising of our Latin American bottling operations. Refer to Note 2.



	Europe, Middle East & Africa		Latin America		North America		Asia Pacific		Global Ventures		Bottling Investments			Corporate			Eliminations			Consolidated
Six Months Ended June 28, 2019
Net operating revenues:
Third party	$	3,438	$	1,899	$	5,839	$	2,410	$	1,218	$	3,832		$	55		$	—		$	18,691
Intersegment	264		—		6		317		2		4			—			(593		)	—
Total net operating revenues	3,702		1,899		5,845		2,727		1,220		3,836			55			(593		)	18,691
Operating income (loss)	2,016		1,084		1,297		1,273		139		219			(605		)	—			5,423
Income (loss) before income taxes	2,050		1,031		1,266		1,288		143		293			(797		)	—			5,274
Six Months Ended June 29, 2018
Net operating revenues:
Third party	$	3,421	$	1,989	$	5,608	$	2,505	$	403	$	3,725		$	68		$	—		$	17,719
Intersegment	273		38		124		224		2		4			—			(665		)	—
Total net operating revenues	3,694		2,027		5,732		2,729		405		3,729			68			(665		)	17,719
Operating income (loss)	2,007		1,164		1,151		1,265		66		(342		)	(598		)	—			4,713
Income (loss) before income taxes	2,041		1,106		1,160		1,281		72		(122		)	(651		)	—			4,887

During the ~~three~~six months ended June ~~30, 2017,~~28, 2019, the results of our operating segments and Corporate were impacted by the following items:

Operating income (loss) and income (loss) ~~from continuing operations~~ before income taxes were reduced by $1 million for ~~Latin America, $49~~Europe, Middle East and Africa, $30 million for North America, ~~$2 million for Asia Pacific, $10~~$3 million for Bottling Investments and ~~$31~~$89 million for Corporate due to the Company's productivity and reinvestment program. Refer to Note 13.

Operating income (loss) and income (loss) ~~from continuing operations~~ before income taxes were ~~increased~~reduced by $6$46 million for ~~Europe, Middle East and Africa due to the refinement of previously established accruals~~Corporate related to transaction costs associated with the ~~Company's productivity and reinvestment program. Refer to Note 12.~~

Operating income (loss) was reduced by $47 million and income (loss) from continuing operations before income taxes was reduced by $44 million for Bottling Investments due to costs incurred to refranchise certainpurchase of ~~our bottling operations.~~Costa, which we acquired in January 2019. Refer to Note 2.

Operating income (loss) and income (loss) ~~from continuing operations~~ before income taxes were reduced by ~~$653~~$40 million for Bottling Investments related to costs incurred to refranchise certain of our North America bottling operations. Refer to Note 12.

Income (loss) before income taxes was reduced by $286 million for Bottling Investments due to an other-than-temporary impairment charge related to CCBJHI, an equity method investee. Refer to Note 16.

Income (loss) before income taxes was reduced by $121 million for Corporate resulting from a loss in conjunction with our acquisition of the remaining equity ownership interest in CHI. Refer to Note 2.

Income (loss) before income taxes was reduced by $57 million for North America due to an other-than-temporary impairment charge related to one of our equity method investees. Refer to Note 16.

Income (loss) before income taxes was reduced by $66 million for Bottling Investments and ~~$14 million for Corporate due to asset impairment charges. Refer to Note 1, Note 11 and Note 15.~~

~~Income (loss) from continuing operations before income taxes was increased by $38 million for Bottling Investments and reduced by $1~~$2 million for Corporate due to the Company's proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees.

Income (loss) before income taxes was increased by $39 million for Corporate related to the sale of a portion of our equity ownership interest in Andina. Refer to Note ~~11.~~2.

Income (loss) ~~from continuing operations~~ before income taxes was reduced by ~~$109~~$160 million for ~~North America primarily related to payments made to convert the bottling agreements for certain North America bottling partners' territories to a single form~~Corporate as result of ~~CBA with additional requirements.~~CCBA asset adjustments. Refer to Note 2.

Income (loss) ~~from continuing operations~~ before income taxes was reduced by ~~$214~~$49 million for ~~Bottling Investments~~Latin America due to ~~the refranchising~~an other-than-temporary impairment charge related to one of ~~certain bottling territories in North America.~~our equity method investees. Refer to Note ~~2 and Note 11.~~

~~Income (loss) from continuing operations before income taxes was increased by $445 million for Corporate due to a gain recognized resulting from the merger of CCW and CCEJ. Refer to Note 11.~~

Income (loss) from continuing operations before income taxes was increased by $9 million for Corporate due to a gain recognized upon refranchising a substantial portion of our China bottling operations. Refer to Note 2.

Income (loss) from continuing operations before income taxes was increased by $25 million for Corporate due to Coca‑Cola FEMSA, an equity method investee, issuing additional shares of its stock during the period at a per share amount greater than the carrying value of the Company's per share investment.

~~Income (loss) from continuing operations before income taxes was reduced by $26 million for Corporate due to charges related to our former German bottling operations.~~

~~Income (loss) from continuing operations before income taxes was reduced by $38 million for Corporate due to the early extinguishment of long-term debt.~~

Europe, Middle East & Africa
Latin
America
North
America
Asia Pacific
Bottling
Investments
Corporate
Eliminations
Consolidated

Six months ended June 29, 2018
Net operating revenues:
Third party $ 3,738
$ 1,991
$ 5,671
$ 2,511
$ 2,286
$ 83
$ —
$ 16,280

Intersegment 273
38
126
224
—
—
(388 ) 273
¹
Total net operating revenues 4,011
2,029
5,797
2,735
2,286
83
(388 ) 16,553

Operating income (loss) 2,009
1,165
1,215
1,270
(517 ) (604 ) —
4,538

Income (loss) from continuing
operations before income taxes
2,044
1,107
1,230
1,286
(297 ) (654 ) —
4,716

Six months ended June 30, 2017
Net operating revenues:²

Third party $ 3,669
$ 1,848
$ 3,979
$ 2,462
$ 6,788
$ 74
$ —
$ 18,820

Intersegment —
28
1,341
253
46
—
(1,668 ) —

Total net operating revenues 3,669
1,876
5,320
2,715
6,834
74
(1,668 ) 18,820

Operating income (loss)^2,3
1,936
1,064
1,329
1,250
(740 ) (839 ) —
4,000

Income (loss) from continuing
operations before income taxes²
1,996
1,066
1,136
1,265
(1,065 ) (267 ) —
4,131

¹ ~~Intersegment revenues do not eliminate on a consolidated basis in the table above due to intercompany sales to our discontinued operations~~.

² ~~Amounts have been adjusted to reflect the reclassification of certain revenue streams from the Bottling Investments operating segment to the North America operating segment effective January 1, 2018.~~

³ ~~Amounts have been adjusted to reflect the adoption of ASU 2017-07. Refer to Note 1.~~ 16.

During the six months ended June 29, 2018, the results of our operating segments and Corporate were impacted by the following items:

Operating income (loss) and income (loss) ~~from continuing operations~~ before income taxes were reduced by $2 million for Europe, Middle East and Africa, $3 million for Latin America, $99 million for North America, $1 million for Asia Pacific, $22 million for Bottling Investments and $79 million for Corporate due to the Company's productivity and reinvestment program. Refer to Note ~~12.~~13.

Operating income (loss) and income (loss) ~~from continuing operations~~ before income taxes were reduced by $450 million for Bottling Investments due to asset impairment charges. Refer to Note ~~11 and Note 15.~~16.

Operating income (loss) and income (loss) ~~from continuing operations~~ before income taxes were reduced by $79 million for Bottling Investments due to costs incurred to refranchise certain of our bottling operations. Refer to Note ~~11.~~12.

Operating income (loss) and income (loss) ~~from continuing operations~~ before income taxes were reduced by $27 million for Corporate due to tax litigation expense. ~~Refer to Note 11.~~

Income (loss) ~~from continuing operations~~ before income taxes was reduced by $104 million for Bottling Investments due to the refranchising of certain bottling territories in North America. Refer to Note ~~2 and Note 11.~~2.

Income (loss) ~~from continuing operations~~ before income taxes was reduced by $99 million for Bottling Investments and was increased by $15 million for Corporate due to the Company's proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees. ~~Refer to Note 11.~~

Income (loss) from continuing operations before income taxes was reduced by $49 million for Corporate related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities. Refer to Note 4 and Note 11.

~~Income (loss) from continuing operations~~ before income taxes was reduced by $47 million for Bottling Investments and $39 million for Corporate due to pension settlements. Refer to Note ~~11 and Note~~ 13.

Income (loss) ~~from continuing operations~~ before income taxes was reduced by $33 million for Bottling Investments primarily due to the reversal of the cumulative translation adjustments resulting from the substantial liquidation of the Company's former Russian juice operations. ~~Refer to Note 11.~~

Income (loss) ~~from continuing operations~~ before income taxes was reduced by $21 million for North America primarily related to payments made to convert the bottling agreements for certain North America bottling partners' territories to a single form of CBA with additional requirements. Refer to Note 2.

Income (loss) ~~from continuing operations~~ before income taxes was increased by $36 million for Corporate related to the refranchising of our Latin American bottling operations. Refer to Note 2.

~~During the six months ended June 30, 2017, the results of our operating segments were impacted by the following items:~~

Operating income (loss) and income (loss) from continuing operations before income taxes were reduced by $1 million for Latin America, $84 million for North America, $3 million for Asia Pacific, $24 million for Bottling Investments and$118 million for Corporate due to the Company's productivity and reinvestment program. Operating income (loss) and income (loss) from continuing operations before income taxes were increased by $4 million for Europe, Middle East and Africa due to the refinement of previously established accruals related to the Company's productivity and reinvestment program. Refer to Note 12.

Operating income (loss) was reduced by $86 million and income (loss) from continuing operations before income taxes was reduced by $101 million for Bottling Investments due to costs incurred to refranchise certain of our bottling operations. Refer to Note 2.

Operating income (loss) and income (loss) from continuing operations before income taxes were reduced by $737 million for Bottling Investments and $34 million for Corporate due to asset impairment charges. Refer to Note 1 and Note 11.

Income (loss) from continuing operations before income taxes was reduced by $4 million for Europe, Middle East and Africa, $15 million for Bottling Investments and $2 million for Corporate due to the Company's proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees. Refer to Note 11.

Income (loss) from continuing operations before income taxes was reduced by $215 million for North America primarily related to payments made to convert the bottling agreements for certain North America bottling partners' territories to a single form of CBA with additional requirements. Refer to Note 2.

Income (loss) from continuing operations before income taxes was reduced by $711 million for Bottling Investments due to the refranchising of certain bottling territories in North America. Refer to Note 2 and Note 11.

~~Income (loss) from continuing operations before income taxes was increased by $445 million for Corporate due to a gain recognized resulting from the merger of CCW and CCEJ. Refer to Note 11.~~

~~Income (loss) from continuing operations before income taxes was reduced by $26 million for Corporate due to charges related to our former German bottling operations.~~

~~Income (loss) from continuing operations before income taxes was reduced by $38 million for Corporate due to the early extinguishment of long-term debt.~~

~~NOTE 17: SUBSEQUENT EVENT~~

In July 2018, our Canadian bottling operations met the criteria to be classified as held for sale. Therefore, we were required to record the related assets and liabilities at the lower of carrying value or fair value less any costs to sell based on the estimated selling price. We expect to refranchise our Canadian bottling operations in the third quarter of 2018.

The following table presents information related to the major classes of assets and liabilities related to these bottling operations, which were included in the Bottling Investments operating segment (in millions):

Cash, cash equivalents and short-term investments $ 1
Trade accounts receivable, less allowances 191
Inventories 132
Prepaid expenses and other assets 34
Other investments 3
Other assets 240
Property, plant and equipment — net 188
Assets held for sale $ 789
Accounts payable and accrued expenses $ 239
Other liabilities 2
Liabilities held for sale $ 241

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

When used in this report, the terms "The Coca-Cola Company," "Company," "we," "us" and "our" mean The Coca-Cola Company and all entities included in our condensed consolidated financial statements.

Effective January 1, 2019, we established a new operating segment, Global Ventures, which includes the results of Costa Limited ("Costa"), which we acquired in January 2019, and the results of our innocent and doğadan businesses as well as fees earned pursuant to distribution coordination agreements between the Company and Monster Beverage Corporation ("Monster"). Additionally, during the three months ended June 28, 2019, the Company updated its plans for Coca-Cola Beverages Africa Proprietary Limited ("CCBA") and now intends to maintain its majority stake in CCBA for the foreseeable future. As a result, the Company now presents the financial results of CCBA within its results from continuing operations and includes the results of CCBA in the Bottling Investments operating segment. Accordingly, all prior period operating segment and Corporate information presented herein has been adjusted to reflect these changes.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Recoverability of Current and Noncurrent Assets

Our Company faces many uncertainties and risks related to various economic, political and regulatory environments in the countries in which we operate, particularly in developing and emerging markets. Refer to the heading "Item 1A. Risk Factors" in Part I and "Our Business — Challenges and Risks" in Part II of our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018. As a result, management must make numerous assumptions which involve a significant amount of judgment when completing recoverability and impairment tests of current and noncurrent assets in various regions around the world.

We perform recoverability and impairment tests of current and noncurrent assets in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). For certain assets, recoverability and/or impairment tests are required only when conditions exist that indicate the carrying value may not be recoverable. For other assets, impairment tests are required at least annually, or more frequently if events or circumstances indicate that an asset may be impaired.

Our equity method investees also perform such recoverability and/or impairment tests. If an impairment charge is recorded by one of our equity method investees, the Company records its proportionate share of such charge as a reduction of equity income (loss) — net in our condensed consolidated statement of income. However, the actual amount we record with respect to our proportionate share of such ~~charges~~charge may be impacted by items such as basis differences, deferred taxes and deferred gains.

Investments in Equity and Debt Securities

~~Investments classified as equity securities with readily determinable values are not assessed for~~During the three and six months ended June 28, 2019, the Company recorded an other-than-temporary impairment ~~since they are carried at fair value with the change in fair value included in net income. We review~~charge of $49 million related to one of our ~~investments in equity securities that are accounted for using the~~ equity method equity securities without readily determinable values and debt securities that are classified as available-for-sale or held-to-maturity each reporting period to determine whether a significant event or changeinvestees in ~~circumstances has occurred that may have~~Latin America. This impairment charge was primarily driven by revised projections of future operating results. During the six months ended June 28, 2019, the Company recognized an ~~adverse effect on the fair value~~other-than-temporary impairment charge of ~~each investment. When such events or changes occur, we evaluate the fair value compared~~$286 million related to our ~~cost basis~~investment in the investment. We also perform this evaluation every reporting period for each investment for which our cost basis has exceeded the fair value. The fair values of most of our Company's investments in publicly traded companies are often readily available basedCoca-Cola Bottlers Japan Holdings Inc. ("CCBJHI"), an equity method investee. Based on quoted market prices. For investments in nonpublicly traded companies, management's assessment of fair value is based on valuation methodologies including discounted cash flows, estimates of sales proceeds and appraisals, as appropriate. We consider the assumptions that we believe a hypothetical marketplace participant would use in evaluating estimated future cash flows when employing the discounted

cash flow or estimates of sales proceeds valuation methodologies. The ability to accurately predict future cash flows, especially in emerging and developing markets, may impact the determination of fair value.

In the event the fair value of an investment declines below our cost basis, management is required to determine if the decline in fair value is other than temporary. If management determines the decline is other than temporary, an impairment charge is recorded. Management's assessment as to the nature of a decline in fair value is based on, among other things, the length of time and the extent to which the market value ~~has~~of our investment in CCBJHI had been less than our ~~cost basis;~~carrying value as well as the financial condition and near-term prospects of the ~~issuer; and~~issuer, management determined that the decline in fair value was other than temporary in nature. During the six months ended June 28, 2019, the Company also recognized an other-than-temporary impairment charge of $57 million related to one of our ~~intent and ability to retain the investment for a period~~equity method investees in North America. This impairment charge was primarily driven by revised projections of ~~time sufficient to allow for any anticipated recovery in market value.~~future operating results.

During the three and six months ended June 29, 2018, the Company recorded an other-than-temporary impairment charge of $52 million related to one of our equity method investees in Latin America, primarily driven by revised projections of future operating results.

The following table presents the difference between calculated fair values, based on quoted closing prices of publicly traded shares, and our Company's cost basis in investments in publicly traded companies accounted for under the equity method (in millions):


June 29, 2018	Fair Value		Carrying Value		Difference
June 28, 2019								Fair Value		Carrying Value		Difference
Monster Beverage Corporation	$	5,852	$	3,483	$	2,369		$	6,518	$	3,679	$	2,839
Coca-Cola European Partners plc ¹	3,574		3,606		(32		)
Coca-Cola European Partners plc								4,969		3,587		1,382
Coca-Cola FEMSA, S.A.B. de C.V.	3,326		1,842		1,484			3,892		1,861		2,031
Coca-Cola HBC AG	2,855		1,230		1,625			3,216		1,296		1,920
Coca-Cola Amatil Limited	1,544		670		874			1,578		615		963
Coca-Cola Bottlers Japan Holdings Inc.	1,369		1,193		176
Coca-Cola Bottlers Japan Holdings Inc.¹								842		866		(24		)
Coca-Cola Consolidated, Inc.								743		141		602
Coca-Cola İçecek A.Ş.								252		178		74
Embotelladora Andina S.A.	537		300		237			213		124		89
Coca-Cola İçecek A.Ş.	376		191		185
Coca-Cola Bottling Co. Consolidated	335		136		199
Corporación Lindley S.A.	256		133		123
Total	$	20,024	$	12,784	$	7,240		$	22,223	$	12,347	$	9,876

As of June ~~29, 2018,~~28, 2019, gross unrealized gains and losses on available-for-sale debt securities were ~~$78~~$131 million and ~~$63~~$5 million, respectively. Management assessed each of the available-for-sale debt securities that were in a gross unrealized loss position on an individual basis to determine if the decline in fair value was other than temporary. As a result of these assessments, management determined that the decline in fair value of these investments was temporary and did not record any impairment

charges. We will continue to monitor these investments in future periods. Refer to Note 4 of Notes to Condensed Consolidated Financial Statements.

~~Our Company invests in infrastructure programs with our bottlers that are directed at strengthening our bottling system~~Property, Plant and increasing unit case volume. Additionally, our Company advances payments to certain customers for distribution rights as well as to fund future marketing activities intended to generate profitable volume, and we expense such payments over the periods benefited. Payments under these programs are generally capitalized and reported in the line items prepaid expenses and other assets or other assets, as appropriate, in our condensed consolidated balance sheets. When facts and circumstances indicate that the carrying value of these assets or asset groups may not be recoverable, management assesses the recoverability of the carrying value by preparing estimates of sales volume and the resulting gross profit and cash flows. These estimated future cash flows are consistent with those we use in our internal planning. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount, we recognize an impairment loss. The impairment loss recognized is the amount by which the carrying amount exceeds the fair value.Equipment

During the three and six months ended June ~~30, 2017,~~28, 2019, the Company ~~recorded an impairment charge~~was required to measure CCBA's property, plant and equipment at the lower of ~~$19 million related to Coca-Cola Refreshments' ("CCR") other noncurrent assets~~their current fair values or their carrying amounts before they were classified as held for sale, adjusted for depreciation expense that would have been recognized had the business been classified as held and used during the period that CCBA was classified as held for sale. As a result, of refranchising activities in North America and management's estimate of the proceeds that were expected to be received for the remaining bottling territories upon their refranchising. This charge was recorded in our Bottling Investments operating segment in the line item other operating charges

~~in our condensed consolidated statements of income and was determined by comparing the fair value of the asset to its carrying value.~~

~~Property, Plant and Equipment~~

~~As of June 29, 2018,~~we reduced the carrying value of ~~our~~CCBA's property, plant and equipment ~~net~~by $34 million. Refer to Note 2 of depreciation, was $7,688 million, or 9 percent of our total assets. Certain events or changes in circumstances may indicate that the recoverability of the carrying amount or remaining useful life of property, plant and equipment should be assessed, including, among others, the manner or length of time in which the Company intendsNotes to use the asset, a significant decrease in market value, a significant change in the business climate in a particular market, or a current period operating or cash flow loss combined with historical losses or projected future losses. When such events or changes in circumstances are present and an impairment review is performed, we estimate the future cash flows expected to result from the use of the asset or asset group and its eventual disposition. These estimated future cash flows are consistent with those we use in our internal planning. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount, we recognize an impairment loss. The impairment loss recognized is the amount by which the carrying amount exceeds the fair value. We use a variety of methodologies to determine the fair value of property, plant and equipment, including appraisals and discounted cash flow models, which are consistent with the assumptions we believe a hypothetical marketplace participant would use.Condensed Consolidated Financial Statements.

During the three and six months ended June 29, 2018, the Company recorded impairment charges of $60 million and $312 million, respectively, related to CCR's property, plant and equipment as a result of management's estimate of the proceeds that are expected to be received for the remaining bottling territories upon their refranchising. These charges were recorded in our Bottling Investments operating segment in the line item other operating charges in our condensed consolidated statements of income and were determined by comparing the fair value of the assets to their carrying value. Refer to Note 15 of Notes to Condensed Consolidated Financial Statements.

During the three and six months ended June 30, 2017, the Company recorded impairment charges of $310 million related to CCR's property, plant and equipment as a result of refranchising activities in North America and management's estimate of the proceeds that were expected to be received for the remaining bottling territories upon their refranchising. These charges were recorded in our Bottling Investments operating segment in the line item other operating charges in our condensed consolidated statements of income and were determined by comparing the fair value of the assets to their carrying value. Refer to Note 1516 of Notes to Condensed Consolidated Financial Statements.

~~Intangible assets are classified into one of~~During the three ~~categories: (1)~~and six months ended June 28, 2019, the Company was required to measure CCBA's definite-lived intangible assets with definite lives subject to amortization; (2) intangible assets with indefinite lives not subject to amortization; and (3) goodwill. For intangible assets with definite lives, tests for impairment must be performed if conditions exist that indicateat the carrying value may not be recoverable. For intangible assets with indefinite lives and goodwill, tests for impairment must be performed at least annually, or more frequently if events or circumstances indicate that an asset may be impaired.

~~The assessment~~lower of recoverability and the performance of impairment tests of intangible assets involve critical accounting estimates. These estimates require significant management judgment, include inherent uncertainties and are often interdependent; therefore, they do not change in isolation. Factors that management must estimate include, among others, the economic life of the asset, sales volume, pricing, cost of raw materials, delivery costs, inflation, cost of capital, marketing spending, foreign currency exchange rates, tax rates, capital spending and proceeds from the sale of assets. These factors are even more difficult to predict when global financial markets are highly volatile. The estimates we use when assessing the recoverability of intangible assets are consistent with those we use in our internal planning. When performing impairment tests, we estimate thetheir current fair values ofor their carrying amounts before they were classified as held for sale, adjusted for amortization expense that would have been recognized had the ~~assets using management's best assumptions, which we believe would be consistent with what a hypothetical marketplace participant would use. Estimates~~business been classified as held and ~~assumptions~~ used ~~in these tests are evaluated and updated~~during the period that CCBA was classified as appropriate. The variability of these factors depends on a number of conditions, including uncertainty about future events, and thus our accounting estimates may change from period to period. If other assumptions and estimates had been used when these tests were performed, impairment charges could have resulted. As mentioned above, these factors do not change in isolation and, therefore, we do not believe it is practicable or meaningful to present the impact of changing a single factor. Furthermore, if management uses different assumptions or if different conditions exist in future periods, future impairment charges could result. Refer to the heading "Operations Review" belowheld for additional information related to our present business environment. Certain factors discussed above are impacted by our current business environment and are discussed throughout this report, as appropriate.

Intangible assets acquired in recent transactions are naturally more susceptible to impairment, primarily due to the fact that they are recorded at fair value based on recent operating plans and macroeconomic conditions present at the time of acquisition. Consequently, if operating results and/or macroeconomic conditions deteriorate shortly after an acquisition, it could result in the impairment of the acquired assets. A deterioration of macroeconomic conditions may not only negatively impact the estimated operating cash flows used in our cash flow models but may also negatively impact other assumptions used in our

analyses, including, but not limited to, the estimated cost of capital and/or discount rates. Additionally, as discussed above, in accordance with U.S. GAAP, we are required to ensure that assumptions used to determine fair value in our analyses are consistent with the assumptions that we believe a hypothetical marketplace participant would use.sale. As a result, the cost of capital and/or discount rates used in our analyses may increase or decrease based on market conditions and trends, regardless of whether our Company's actual cost of capital has changed. Therefore, if the cost of capital and/or discount rates change, our Company may recognize an impairment of an intangible asset in spite of realizing actual cash flows that are approximately equal to, or greater than, our previously forecasted amounts.

We perform impairment tests of goodwill at our reporting unit level, which is one level below our operating segments. Our operating segments are primarily based on geographic responsibility, which is consistent with the way management runs our business. Our operating segments are subdivided into smaller geographic regions or territories that we sometimes refer to as "business units." These business units are also our reporting units. The Bottling Investments operating segment includes all Company-owned or consolidated bottling operations, regardless of geographic location. Generally, each Company-owned or consolidated bottling operation within our Bottling Investments operating segment is its own reporting unit. Goodwill is assigned to the reporting unit or units that benefit from the synergies arising from each business combination.

In order to test for goodwill impairment, the Company compares the fair value of the reporting unit to its carrying value, including goodwill. If the fair value of the reporting unit is lower than its carrying amount, goodwill is written down for the amount by which the carrying amount exceeds the reporting unit's fair value. However, the loss recognized cannot exceed the carrying amount of goodwill. We typically use discounted cash flow models to determine the fair value of a reporting unit. The assumptions used in these models are consistent with those we believe a hypothetical marketplace participant would use. The Company has the option to perform a qualitative assessment of goodwill in order to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company concludes that this is the case, it must perform the testing discussed above. Otherwise, the Company does not need to perform any further testing.

~~When facts and circumstances indicate that~~reduced the carrying value of CCBA's definite-lived intangible assets ~~may not be recoverable, management assesses the recoverability~~by $126 million. Refer to Note 2 of the carrying value by preparing estimates of sales volume and the resulting gross profit and cash flows. These estimated future cash flows are consistent with those we use in our internal planning. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset or asset group, we recognize an impairment loss. The impairment loss recognized is the amount by which the carrying amount exceeds the fair value. We use a variety of methodologiesNotes to ~~determine the fair value of these assets, including discounted cash flow models, which are consistent with the assumptions we believe a hypothetical marketplace participant would use.~~

We test indefinite-lived intangible assets, including trademarks, franchise rights and goodwill, for impairment annually, or more frequently if events or circumstances indicate that assets might be impaired. Our Company performs these annual impairment reviews as of the first day of our third fiscal quarter. We use a variety of methodologies in conducting impairment assessments of indefinite-lived intangible assets, including, but not limited to, discounted cash flow models, which are based on the assumptions we believe a hypothetical marketplace participant would use. For indefinite-lived intangible assets, other than goodwill, if the carrying amount exceeds the fair value, an impairment charge is recognized in an amount equal to that excess. The Company has the option to perform a qualitative assessment of indefinite-lived intangible assets, other than goodwill, rather than completing the impairment test. The Company must assess whether it is more likely than not that the fair value of the intangible asset is less than its carrying amount. If the Company concludes that this is the case, it must perform the testing described above. Otherwise, the Company does not need to perform any further assessment.Condensed Consolidated Financial Statements.

During the six months ended June 29, 2018, the Company recorded impairment charges of $138 million related to certain intangible assets. These charges included $100 million related to bottlers' franchise rights with indefinite lives and $38 million related to definite-lived intangible assets. These impairment charges were incurred as a result of management's revised estimate of the proceeds that ~~are~~were expected to be received for the remaining North America bottling territories upon their refranchising. These charges were recorded in our Bottling Investments operating segment in the line item other operating charges in our condensed consolidated statement of income.

During the three and six months ended June 30, 2017, the Company recorded impairment charges of $338 million and $442 million, respectively, related to certain intangible assets. During the three months ended June 30, 2017, these charges included $291 million related to goodwill and $33 million related to bottlers' franchise rights with indefinite lives. During the six months ended June 30, 2017, these charges included $375 million related to goodwill and $33 million related to bottlers' franchise rights with indefinite lives. The impairment charges related to goodwill were determined by comparing the fair value of the reporting unit, based on Level 3 inputs, to its carrying value. As a result of these charges, the carrying value of CCR's goodwill is zero. The impairment charge related to bottlers' franchise rights with indefinite lives was determined by comparing the fair value of the assets, based on Level 3 inputs, to the current carrying value. These impairment charges were incurred primarily as a result of refranchising activities in North America and management's estimate of the proceeds that were expected to be received for the remaining bottling territories upon their refranchising. These charges were recorded in our Bottling Investments operating segment in the line item other operating charges in our condensed consolidated statements of income.

Additionally, we recorded impairment charges related to Venezuelan intangible assets for the three and six months ended June 30, 2017, of $14 million and $34 million, respectively. The Venezuelan intangible assets were written down due to weaker sales and the volatility of foreign currency exchange rates resulting from continued political instability. These charges were recorded in Corporate in the line item other operating charges in our condensed consolidated statements of income and were determined by comparing the fair values of the assets, derived using discounted cash flow analyses, to the respective carrying values.

~~Revenue Recognition~~

~~Effective January 1, 2018, we adopted Accounting Standards Codification 606,~~ ~~Revenue from Contracts with Customers~~ ~~("ASC 606")~~. ~~Refer to Note 3 of Notes to Condensed Consolidated Financial Statements.~~Revenue is recognized when performance obligations under the terms of the contracts with our customers are satisfied. Our performance obligation generally consists of the promise to sell concentrates or finished products to our bottling partners, wholesalers, distributors or retailers. Control of the concentrates or finished products is transferred upon shipment to, or receipt at, our customers' locations, as determined by the specific terms of the contract. Once control is transferred to the customer, we have completed our performance obligation, and revenue is recognized. Our sales terms generally do not allow for a right of return except for matters related to any manufacturing defects on our part. After completion of our performance obligation, we have an unconditional right to consideration as outlined in the contract. Our receivables will generally be collected in less than six months, in accordance with the underlying payment terms. All of our performance obligations under the terms of contracts with our customers have an original duration of one year or less.

Our customers and bottling partners may be entitled to cash discounts, funds for promotional and marketing activities, volume‑based incentive programs, support for infrastructure programs and other similar programs. In some markets, in an effort to allow our Company and our bottling partners to grow together through shared value, aligned financial objectives and the flexibility necessary to meet consumers' always changing needs and tastes, we worked with our bottling partners to develop and implement an incidence-based concentrate pricing model. Under this model, the concentrate price we charge is impacted by a number of factors, including, but not limited to, bottler pricing, the channels in which the finished products produced from the concentrate are sold and package mix. The amounts associated with the arrangements described above are defined as variable consideration under ASC 606 and are included in the transaction price as a component of net operating revenues in our condensed consolidated statements of income upon completion of our performance obligations. The total revenue recorded, including any variable consideration, cannot exceed the amount for which it is probable that a significant reversal will not occur when uncertainties related to variability are resolved. As a result, we are recognizing revenue based on our faithful depiction of the consideration that we expect to receive. In making our estimates of variable consideration, we consider past results and make significant assumptions related to: (1) customer sales volumes; (2) customer ending inventories; (3) customer selling price per unit; (4) selling channels; and (5) discount rates, rebates and other pricing allowances, as applicable. In gathering data to estimate our variable consideration, we generally calculate our estimates using a portfolio approach at the country and product line level rather than at the individual contract level. The result of making these estimates will impact the line items trade accounts receivable and accounts payable and accrued expenses in our condensed consolidated balance sheet. The actual amounts ultimately paid and/or received may be different from our estimates.

Our annual effective tax rate is based on our income and the tax laws in the various jurisdictions in which we operate. Significant judgment is required in determining our annual tax expense and in evaluating our tax positions. We establish reserves to remove some or all of the tax benefit of any of our tax positions at the time we determine that the position becomes uncertain based upon one of the following: (1) the tax position is not "more likely than not" to be sustained, (2) the tax position is "more likely than not" to be sustained, but for a lesser amount, or (3) the tax position is "more likely than not" to be sustained, but not in the financial period in which the tax position was originally taken. For purposes of evaluating whether or not a tax position is uncertain, (1) we presume the tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information, (2) the technical merits of a tax position are derived from authorities such as legislation and statutes, legislative intent, regulations, rulings and case law and their applicability to the facts and circumstances of the tax position, and (3) each tax position is evaluated without considerations of the possibility of offset or aggregation with other tax positions taken. We adjust these reserves, including any impact on the related interest and penalties, in light of changing facts and circumstances, such as the progress of a tax audit. Refer to the heading "Operations Review — Income Taxes" below and Note 14 of Notes to Condensed Consolidated Financial Statements.

On September 17, 2015, the Company received a Statutory Notice of Deficiency ("Notice") from the Internal Revenue Service ("IRS") for the tax years 2007 through 2009, after a five-year audit. In the Notice, the IRS claims that the Company's United States taxable income should be increased by an amount that creates a potential additional federal income tax liability of approximately $3.3 billion for the period, plus interest. No penalties were asserted in the Notice. The disputed amounts largely relate to a transfer pricing matter involving the appropriate amount of taxable income the Company should report in the United States in connection with its licensing of intangible property to certain related foreign licensees regarding the

~~manufacturing, distribution, sale, marketing and promotion of products in overseas markets.~~

During the 2007-2009 audit period, the Company followed the same transfer pricing methodology for these licenses that had consistently been followed since the methodology was agreed with the IRS in a 1996 closing agreement that applied back to 1987. The closing agreement provided prospective penalty protection as long as the Company followed the prescribed methodology and material facts and circumstances and relevant federal tax law have not changed. On February 11, 2016, the IRS notified the Company, without further explanation, that the IRS had determined that material facts and circumstances and relevant federal tax law had changed permitting it to assert penalties. The Company does not agree with this determination. The Company's compliance with the closing agreement was audited and confirmed by the IRS in five successive audit cycles covering the subsequent 11 years through 2006, with the last audit concluding as recently as 2009.

The Company firmly believes that the IRS' claims are without merit and plans to pursue all available administrative and judicial remedies necessary to vigorously defend its position. To that end, the Company filed a petition in the U.S. Tax Court on December 14, 2015, and the IRS filed its answer on February 12, 2016. On October 4, 2017, the IRS filed an amended answer to the Company's petition in which it increased its transfer pricing adjustment by $385 million resulting in an additional tax adjustment of $135 million.

The U.S. Tax Court trial was held from March 8, 2018 through May 11, 2018, and the Company and the IRS are required to file and exchange final post-trial briefs by February 2019. It is not known how much time will elapse before the U.S. Tax Court issues its decision. While the Company continues to strongly disagree with the IRS' position, there is no assurance that the U.S. Tax Court will rule in the Company's favor, and it is possible that all or some portion of the adjustment proposed by the IRS Notice could be sustained. In that event, or if the IRS proposes similar adjustments for years subsequent to the 2007-2009 litigation period, the Company will be subject to significant additional liabilities which could have a material adverse impact on the Company's financial position, results of operations and cash flows.

~~The Company regularly assesses the likelihood of adverse outcomes resulting from tax disputes such as this and other examinations for all open years to determine the adequacy of its tax reserves.~~

A number of years may elapse before a particular matter for which we have established a reserve is audited and finally resolved. The number of years with open tax audits varies depending on the tax jurisdiction. The tax benefit that has been previously reserved because of a failure to meet the "more likely than not" recognition threshold would be recognized in our income tax expense in the first interim period when the uncertainty disappears under any one of the following conditions: (1) the tax position is "more likely than not" to be sustained, (2) the tax position, amount, and/or timing is ultimately settled through negotiation or litigation, or (3) the statute of limitations for the tax position has expired. Settlement of any particular issue would usually require the use of cash.

Tax law requires items to be included in the tax return at different times than when these items are reflected in the consolidated financial statements. As a result, the annual effective tax rate reflected in our consolidated financial statements is different from that reported in our tax return (our cash tax rate). Some of these differences are permanent, such as expenses that are not deductible in our tax return, and some differences reverse over time, such as depreciation expense. These timing differences create deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax bases of assets and liabilities. The tax rates used to determine deferred tax assets and liabilities are the enacted tax rates in effect for the year and manner in which the differences are expected to reverse. Based on the evaluation of all available information, the Company recognizes future tax benefits, such as net operating loss carryforwards, to the extent that realizing these benefits is considered more likely than not.

We evaluate our ability to realize the tax benefits associated with deferred tax assets by analyzing our forecasted taxable income using both historical and projected future operating results; the reversal of existing taxable temporary differences; taxable income in prior carryback years (if permitted); and the availability of tax planning strategies. A valuation allowance is required to be established unless management determines that it is more likely than not that the Company will ultimately realize the tax benefit associated with a deferred tax asset. As of June 29, 2018, the Company's valuation allowances on deferred tax assets were $448 million and were primarily related to uncertainties regarding the future realization of recorded tax benefits on tax loss carryforwards generated in various jurisdictions. Current evidence does not suggest we will realize sufficient taxable income of the appropriate character within the carryforward period to allow us to realize these deferred tax benefits. If we were to identify and implement tax planning strategies to recover these deferred tax assets or generate sufficient income of the

appropriate character in these jurisdictions in the future, it could lead to the reversal of these valuation allowances and a reduction of income tax expense. The Company believes it will generate sufficient future taxable income to realize the tax benefits related to the remaining net deferred tax assets in our condensed consolidated balance sheet.

The Company does not record a U.S. deferred tax liability for the excess of the book basis over the tax basis of its investments in foreign subsidiaries to the extent that the basis difference results from earnings that meet the indefinite reversal criteria. These criteria are met if the foreign subsidiary has invested, or will invest, the undistributed earnings indefinitely. The decision as to the amount of undistributed earnings that the Company intends to maintain in non-U.S. subsidiaries takes into account items including, but not limited to, forecasts and budgets of financial needs of cash for working capital, liquidity plans, capital improvement programs, merger and acquisition plans, and planned loans to other non-U.S. subsidiaries. The Company also evaluates its expected cash requirements in the United States. Other factors that can influence that determination are local restrictions on remittances (for example, in some countries a central bank application and approval are required in order for the Company's local country subsidiary to pay a dividend), economic stability and asset risk. Refer to Note 14 of Notes to Condensed Consolidated Financial Statements.

The Tax Cuts and Jobs Act ("Tax Reform Act") was signed into law on December 22, 2017. Among other things, the Tax Reform Act reduces the U.S. federal corporate tax rate from 35.0 percent to 21.0 percent effective for tax years beginning after December 31, 2017, transitions the U.S. method of taxation from a worldwide tax system to a modified territorial system and requires companies to pay a one-time transition tax over a period of eight years on the mandatory deemed repatriation of prescribed foreign earnings as of December 31, 2017. We are applying the guidance in the U.S. Securities and Exchange Commission ("SEC") Staff Accounting Bulletin No. 118 ("SAB 118") when accounting for the enactment date effects of the Tax Reform Act. As of June 29, 2018, we have not completed our accounting for the tax effects of the Tax Reform Act; however, in certain cases, we have made a reasonable estimate of the effects of the Tax Reform Act. In other cases, we have not been able to make a reasonable estimate and continue to account for those items under ASC 740, ~~Income Taxes~~, and the provisions of the tax laws that were in effect immediately prior to enactment of the Tax Reform Act. In all cases, we will continue to make and refine our calculations as additional analysis is completed. Our estimates may also be affected as we gain a more thorough understanding of the Tax Reform Act. These changes could be material to income tax expense.

The one-time transition tax is based on our total accumulated post-1986 prescribed foreign earnings and profits ("E&P") estimated to be approximately $42 billion, the majority of which was previously considered to be indefinitely reinvested and, accordingly, no U.S. federal and state income taxes had been provided. We have not made any adjustments as of June 29, 2018 to either our reasonable estimate of $4.6 billion originally recorded as a provisional tax amount for our one-time transition tax liability or the reasonable estimate of $0.6 billion provisional deferred tax for the related withholding taxes and state income taxes. Because of the complexities of the Tax Reform Act, we are still finalizing our calculation of the total accumulated post-1986 prescribed E&P for the applicable foreign entities. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. Therefore, the transition tax amount may change when we finalize the calculation of post-1986 prescribed foreign E&P and finalize the amounts held in cash and/or other specified assets. No additional income taxes have been provided for any additional outside basis differences inherent in these entities, as these amounts, as of June 29, 2018, continue to be provisionally indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any additional outside basis differences in these entities (i.e., basis differences in excess of that subject to the one-time transition tax) is not practicable.

We also remeasured and adjusted certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21.0 percent. However, as of June 29, 2018, we are still analyzing certain aspects of the Tax Reform Act and refining our calculations, which could affect the measurement of these balances or give rise to new deferred tax amounts. The provisional amount recorded related to the remeasurement and adjustments of our deferred tax balance was a tax benefit of $1.6 billion. Upon further analyses of certain aspects of the Tax Reform Act and refinement of our calculations during the three months ended June 29, 2018, we reduced our provisional amount by $42 million, which resulted in a net increase in our provisional amount of $134 million during the six months ended June 29, 2018. These adjustments are included as a component of income taxes from continuing operations. We do not consider the accounting for the enactment-date remeasurement of deferred tax assets and liabilities to be complete.

As of June 29, 2018, because we are still evaluating the GILTI provisions and our analysis of future taxable income that is subject to GILTI, we have included GILTI related to current year operations only in our estimated annual effective tax rate and have not provided additional GILTI on deferred items. The Company has not yet elected an accounting policy related to how it will account for GILTI and therefore has not provided any deferred tax impacts of GILTI in its condensed consolidated financial statements for the three and six months ended June 29, 2018.

At the end of each interim period, we make our best estimate of the effective tax rate expected to be applicable for the full fiscal year. This estimate reflects, among other items, our best estimate of operating results and foreign currency exchange

rates. Based on current tax laws, the Company's effective tax rate in 2018 is expected to be 21.0 percent before considering the potential impact of further clarification of certain matters related to the Tax Reform Act and any unusual or special items that may affect our effective tax rate.

Structural Changes, Acquired Brands and Newly Licensed Brands

In order to continually improve upon the Company's operating performance, from time to time, we engage in buying and selling ownership interests in bottling partners and other manufacturing operations. In addition, we also acquire brands or enter into license agreements for certain brands to supplement our beverage offerings. These items impact our operating results and certain key metrics used by management in assessing the Company's performance.

Unit case volume growth is a metric used by management to evaluate the Company's performance because it measures demand for our products at the consumer level. The Company's unit case volume represents the number of unit cases (or unit case equivalents) of Company beverage products directly or indirectly sold by the Company and its bottling partners to customers and, therefore, reflects unit case volume for both consolidated and unconsolidated bottlers. Refer to the heading "Beverage Volume" below.

Concentrate sales volume represents the amount of concentrates, syrups, beverage bases, source waters and powders/minerals (in all instances expressed in equivalent unit cases) sold by, or used in finished products sold by, the Company to its bottling partners or other customers. Refer to the heading "Beverage Volume" below.

Our Bottling Investments operating segment and our other finished product operations typically generate net operating revenues by selling sparkling soft drinks and a variety of other beverages, such as juices, juice drinks, sports drinks, waters, teas and coffees, to retailers or to distributors, wholesalers and bottling partners who distribute them to retailers. In addition, in the United States, we manufacture fountain syrups and sell them to fountain retailers such as restaurants and convenience stores who use the fountain syrups to produce beverages for immediate consumption, or to authorized fountain wholesalers or bottling partners who resell the fountain syrups to fountain retailers. For these consolidated finished product operations, we recognize the associated concentrate sales volume at the time the unit case or unit case equivalent is sold to the customer. Our concentrate operations typically generate net operating revenues by selling concentrates and syrups to authorized bottling operations. For these concentrate operations, we recognize concentrate revenue and concentrate sales volume when we sell concentrate and

syrups to the authorized unconsolidated bottling operations, and we typically report unit case volume when finished products manufactured from the concentrates and syrups are sold to the customer. When we analyze our net operating revenues we generally consider the following ~~five~~four factors: (1) volume growth (concentrate sales volume or unit case volume, as ~~appropriate)~~applicable); (2) acquisitions and divestitures (including structural changes defined below), as applicable; (3) changes in price, product and geographic mix; and (4) foreign currency ~~fluctuations; and (5) the impact of our adoption of the new revenue recognition accounting standard.~~fluctuations. Refer to the heading "Net Operating Revenues" below.

We generally refer to acquisitions and divestitures of bottling and distribution operations as structural changes, which are a component of acquisitions and ~~divestitures ("structural changes").~~divestitures. Typically, structural changes do not impact the Company's unit case volume or concentrate sales volume on a consolidated basis or at the geographic operating segment level. We recognize unit case volume for all sales of Company beverage products, with the exception of Costa non-ready-to-drink products, regardless of our ownership interest in the bottling partner, if any. However, the unit case volume reported by our Bottling Investments operating segment is generally impacted by structural changes because it only includes the unit case volume of our consolidated bottling operations. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information on the Company's acquisitions and divestitures.

"Acquired brands" refers to brands acquired during the past 12 months. Typically, the Company has not reported unit case volume or recognized concentrate sales volume related to acquired brands in periods prior to the closing of a transaction. Therefore, the unit case volume and concentrate sales volume from the sale of these brands is incremental to prior year volume. We do not generally consider acquired brands to be structural changes.

"Licensed brands" refers to brands not owned by the Company, but for which we hold certain rights, generally including, but not limited to, distribution rights, and from which we derive an economic benefit when these brands are ultimately sold. Typically, the Company has not reported unit case volume or recognized concentrate sales volume related to these brands in

periods prior to the beginning of the term of a license agreement. Therefore, in the year that the licenses are entered into, the unit case volume and concentrate sales volume from the sale of these brands is incremental to prior year volume. We do not generally consider newly licensed brands to be structural changes.

In 2019, the Company acquired Costa. The impact of this acquisition has been included in acquisitions and divestitures in our analysis of net operating revenues on a consolidated basis as well as for the Global Ventures operating segment. With the exception of ready-to-drink products, we do not report unit case volume or concentrate sales volume for Costa.

In 2019, the Company acquired the remaining equity ownership interest in C.H.I. Limited ("CHI"). The impact of this acquisition has been included in acquisitions and divestitures in our analysis of net operating revenues on a consolidated basis as well as for the Europe, Middle East and Africa operating segment.

In 2019, the Company acquired bottling operations in Zambia. The impact of this acquisition has been included in acquisitions and divestitures in our analysis of net operating revenues on a consolidated basis as well as for the Bottling Investments operating segment.

In 2018, the Company ~~refranchised our Latin American~~acquired a controlling interest in the Philippine bottling ~~operations.~~operations, which was previously accounted for as an equity method investee. The impact of ~~these refranchising activities~~this acquisition has been included as a structural change in our analysis of net operating revenues on a consolidated basis as well as for the Bottling Investments and ~~Latin America~~Asia Pacific operating segments.

~~In 2018, the~~ The Company also acquired a controlling interest in the franchise bottler in Oman. The impact of this acquisition has been included as a structural change in our analysis of net operating revenues on a consolidated basis as well as for the Bottling Investments operating segment.

In ~~2017,~~2018, the Company acquired bottling operations in Zambia and Botswana. The impact of these acquisitions has been included in acquisitions and divestitures in our analysis of net operating revenues on a consolidated basis as well as for the Bottling Investments operating segment.

In 2018, the Company refranchised our Canadian and Latin American bottling ~~territories in North America that were previously managed by CCR to certain of our unconsolidated bottling partners.~~operations. The impact of these refranchising activities has been included as a structural change in our analysis of net operating revenues on a consolidated basis as well as for our North America, Latin America and Bottling Investments operating segments. In addition, for non-Company-owned and licensed ~~beverage products~~brands sold in the Canadian refranchised territories for which the Company no longer reports unit case volume, we have eliminated the unit case volume from the base year when calculating ~~2018~~2019 versus ~~2017~~2018 volume growth rates on a consolidated basis as well as for the North America and Bottling Investments operating segments. Refer to the headings "Beverage Volume" and "Net Operating Revenues" below.

In 2017, the Company refranchised its bottling operations in China to the two local franchise bottlers. The impact of these refranchising activities has been included as a structural change in our analysis of net operating revenues on a consolidated basis as well as for our Asia Pacific and Bottling Investments operating segments.

In 2017, Anheuser-Busch InBev's ("ABI") controlling interest in Coca-Cola Beverages Africa Proprietary Limited ("CCBA") was transitioned to the Company, resulting in its consolidation. The results of CCBA have been recorded as discontinued operations. The impact of this transaction has been included as a structural change in our analysis of net operating revenues on a consolidated basis as well as for the Europe, Middle East and Africa operating segment.

The Company sells concentrates and syrups to both consolidated and unconsolidated bottling partners. The ownership structure of our bottling partners impacts the timing of recognizing concentrate revenue and concentrate sales volume. When we sell concentrates or syrups to our consolidated bottling partners, we are not able to recognize the concentrate revenue or concentrate sales volume until the bottling partner has sold finished products manufactured from the concentrates or syrups to a third party or independent customer. When we sell concentrates or syrups to our unconsolidated bottling partners, we recognize the concentrate revenue and concentrate sales volume when the concentrates or syrups are sold to the bottling partner. The

subsequent sale of the finished products manufactured from the concentrates or syrups to a third party or independent customer does not impact the timing of recognizing the concentrate revenue or concentrate sales volume. When we account for an unconsolidated bottling partner as an equity method investment, we eliminate the intercompany profit related to these transactions to the extent of our ownership interest until the equity method investee has sold finished products manufactured from the concentrates or syrups to a third party or independent customer.

We measure the volume of Company beverage products sold in two ways: (1) unit cases of finished products and (2) concentrate sales. As used in this report, "unit case" means a unit of measurement equal to 192 U.S. fluid ounces of finished beverage (24 eight-ounce servings); and "unit case volume" means the number of unit cases (or unit case equivalents) of Company beverage products directly or indirectly sold by the Company and its bottling partners to customers. Unit case volume primarily consists of beverage products bearing Company trademarks. Also included in unit case volume are certain products licensed to, or distributed by, our Company, and brands owned by Coca-Cola system bottlers for which our Company provides marketing support and from the sale of which we derive economic benefit. In addition, unit case volume includes sales by certain joint ventures in which the Company has an equity interest. We believe unit case volume is one of the measures of the underlying strength of the Coca-Cola system because it measures trends at the consumer level. The unit case volume numbers used in this report are derived based on estimates received by the Company from its bottling partners and distributors. Concentrate sales volume represents the amount of concentrates, syrups, beverage bases, source waters and powders/minerals (in all instances expressed in equivalent unit cases) sold by, or used in finished beverages sold by, the Company to its bottling partners or other customers. Unit case volume and concentrate sales volume growth rates are not necessarily equal during any given period. Factors such as seasonality, bottlers' inventory practices, supply point changes, timing of price increases, new product introductions and changes in product mix can impact unit case volume and concentrate sales volume and can create differences between unit case volume and concentrate sales volume growth rates. In addition to the items mentioned above, the impact of unit case volume from certain joint ventures in which the Company has an equity interest but to which the Company does not sell concentrates, syrups, beverage bases, source waters or powders/minerals may give rise to differences between unit case volume and concentrate sales volume growth rates. With the exception of ready-to-drink products, the Company does not report unit case volume or concentrate sales volume for Costa, a component of the Global Ventures operating segment.

Information about our volume growth worldwide and by operating segment is as follows:

After considering the impact of structural changes, concentrate sales volume for Asia Pacific ~~for the three months ended June 29, 2018~~ grew ~~6 percent.~~

Although a significant portion of our Company's revenues is not based directly on unit case volume, we believe unit case

volume is one of the measures of the underlying strength of the Coca-Cola system because it measures trends at the consumer level. The unit case volume for ~~2018~~2019 and ~~2017~~2018 reflects the impact of the transfer of distribution rights with respect to non-Company-owned brands that were previously licensed to us in ~~North America~~our Canadian bottling territories that have since been refranchised. The Company eliminated the unit case volume related to ~~these~~this structural ~~changes~~change from the base year when calculating the volume growth rates. Refer to the heading "Structural Changes, Acquired Brands and Newly Licensed Brands" above.

Three Months Ended June 28, 2019 versus Three Months Ended June 29, 2018 ~~versus Three Months Ended June 30, 2017~~

Unit case volume in Europe, Middle East and Africa grew 12 percent, which included growth of 12 percent in sparkling soft drinks and 52 percent in water, enhanced water and sports drinks. Growth in ~~these category clusters~~sparkling soft drinks was ~~partially offset~~primarily driven by ~~a 10 percent decline in tea and coffee.~~Trademark Coca-Cola. The group reported increases in unit case volume in the ~~Central & Eastern Europe, Middle East & North Africa,~~Western Europe; Turkey, Caucasus & Central ~~Asia,~~Asia; South & East Africa and West Africa business units. The increases in these business units were partially offset by ~~decreases~~a decrease in the ~~Western Europe and South~~Middle East & ~~East~~North Africa business ~~units.~~unit.

In Latin America, unit case volume ~~was even,~~grew 1 percent, which included growth of 4 percent in water, enhanced water and sports drinks and 1 percent in sparkling soft drinks, partially offset by a 2 percent decline in juice, dairy and plant-based ~~beverages,~~beverages.

The group's volume reflected growth of 5 percent in the Brazil business unit, 1 percent in the Mexico business unit and 2 percent in the Latin Center business unit, partially offset by a 4 percent decline in the South Latin business unit.

Unit case volume in North America declined 1 percent, with even performance in sparkling soft drinks, a decline of 1 percent in water, enhanced water and sports drinks and ~~a decline of 3 percent~~ in ~~tea~~juice, dairy and ~~coffee.~~plant-based beverages. The group's sparkling soft drinks volume reflected growth of 1 percent in ~~the Mexico business unit, offset by a 1 percent decline in the Brazil business unit and a 2 percent decline in the South Latin business unit.~~

Unit case volume in North America grew 1 percent, reflecting 5 percent growth in water, enhanced water and sports drinks and 1 percent growth in sparkling soft drinks. Volume within the water, enhanced water and sports drinks category included growth of 5 percent in packaged water and 7 percent in sports drinks. The group's sparkling soft drinks volume included growth of 12 percent for Coca-Cola Zero Sugar and 3 percent for both Trademark ~~Sprite and Trademark Fanta. Growth in these category clusters was partially offset by a 6 percent decline in juice, dairy and plant-based beverages.~~Coca-Cola.

In Asia Pacific, unit case volume grew 57 percent, reflecting 611 percent growth in sparkling soft drinks 8and 6 percent growth in water, enhanced water and sports drinks and 7 percent growth in tea and coffee. Growth in sparkling soft drinks volume included 9 percent growth in Trademark Sprite and 5 percent growth in Trademark Coca-Cola. The group's volume reflects growth of 10 percent in the India & South West Asia business unit, 9 percent in the Greater China & Korea business unit, and 1 percent for both the Japan and ASEAN business units. The growth in these business units was partially offset by a 3 percent decline in the South Pacific business unit.

Unit case volume for Bottling Investments declined 11 percent. This decrease primarily reflects refranchising activities. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information.

~~Six Months Ended June 29, 2018 versus Six Months Ended June 30, 2017~~

~~Unit case volume in Europe, Middle East and Africa grew 3 percent, which included growth of 2 percent in sparkling soft drinks, 4 percent in water, enhanced water and sports drinks, and 3 percent~~ in juice, dairy and plant-based beverages. Growth in sparkling soft drinks ~~was primarily driven by 2~~volume included 12 percent growth in Trademark ~~Coca-Cola and 5~~Coca‑Cola, 9 percent growth in Trademark ~~Fanta. The group reported increases in unit case volume in the Central & Eastern Europe, Turkey, Caucasus & Central Asia,~~ ~~Middle East & North Africa~~Fanta and ~~South & East Africa business units. The increases in these business units were partially offset by a decrease in the Western Europe business unit.~~

In Latin America, unit case volume was even, which included 1 percent growth in sparkling beverages and 5 percent growth in juice, dairy and plant-based beverages, offset by a 4 percent decline in tea and coffee and a 1 percent decline in water, enhanced water and sports drinks. The group's volume reflected growth of 3 percent in the Latin Center business unit, 1 percent in the Mexico business unit and even performance in the Brazil business unit. Growth in these business units was partially offset by a 2 percent decline in the South Latin business unit. The growth in Latin Center's volume was primarily driven by 4 percent growth in sparkling soft drinks.

Unit case volume in North America grew 2 percent. Sparkling soft drinks grew 2 percent, which included growth of 1 percent in Trademark Coca‑Cola, 4 percent in Trademark Sprite and 6 percent in Trademark Fanta. Unit case volume in water, enhanced water and sports drinks grew 3 percent, primarily driven by 4 percent growth in packaged water and 3 percent growth in sports drinks. Growth in these category clusters was partially offset by a 4 percent decline in juice, dairy and plant-based beverages.

In Asia Pacific, unit case volume grew 5 percent, reflecting 7 percent growth in sparkling soft drinks, 5 percent growth in water, enhanced water and sports drinks, and 6 percent growth in tea and coffee. Growth in sparkling soft drinks volume included 7 percent growth in Trademark Coca-Cola and 98 percent growth in Trademark Sprite. The group's volume reflects growth of ~~8 percent in the Greater China & Korea business unit, 11~~20 percent in the India & South West Asia business unit, 13 percent in the ASEAN business unit, 2 percent in the ~~Japan~~Greater China & Korea business unit and 14 percent in the South Pacific business unit. The growth in these business units was partially offset by a 1decline of 6 percent ~~decline~~ in the ~~ASEAN~~Japan business unit.

Unit case volume for Global Ventures grew 5 percent, which included growth of 13 percent in juice, dairy and plant-based beverages and growth in energy drinks, partially offset by a decline in tea.

Unit case volume for Bottling Investments grew 30 percent. This increase primarily reflects the impact of the recent acquisition of a controlling interest in the Philippine bottling operations as well as growth in India and South Africa.

Six Months Ended June 28, 2019 versus Six Months Ended June 29, 2018

Unit case volume in Europe, Middle East and Africa grew 2 percent, which included growth of 2 percent in sparkling soft drinks, 5 percent in water, enhanced water and sports drinks and 4 percent in tea and coffee. Growth in sparkling soft drinks was primarily driven by Trademark Coca-Cola. The group reported increases in unit case volume in the Western Europe; Central & Eastern Europe; Turkey, Caucasus & Central Asia; West Africa and South & East Africa business units. Growth in these business units was partially offset by a decline in the Middle East & North Africa business unit.

In Latin America, unit case volume was even, which included a 1 percent decline in sparkling soft drinks, offset by growth of 3 percent in water, enhanced water and sports drinks. The group reported an increase in unit case volume of 5 percent in the Brazil business unit and even performance in the Mexico business unit, which were offset by declines of 6 percent and 1 percent in the South Latin and Latin Center business units, respectively.

Unit case volume in North America declined 1 percent, reflecting a 1 percent decline in sparkling soft drinks. The group's sparkling soft drinks volume included even performance in Trademark Coca-Cola.

In Asia Pacific, unit case volume grew 7 percent, reflecting 9 percent growth in sparkling soft drinks, 5 percent growth in water, enhanced water and sports drinks and 4 percent growth in juice, dairy and plant-based beverages. Growth in sparkling soft drinks volume included 10 percent growth in Trademark Coca‑Cola, 9 percent growth in Trademark Fanta and 7 percent growth in Trademark Sprite. Volume within the water, enhanced water and sports drinks category cluster included growth of 7 percent in packaged water. The group's volume reflects growth of 15 percent in the India & South West Asia business unit, 14 percent in the ASEAN business unit, 5 percent in the Greater China & Korea business unit and even performance in the South Pacific business unit. The growth in these business units was partially offset by a decline of 3 percent in the Japan business unit.

Unit case volume for Global Ventures grew 3 percent, which included growth of 11 percent in juice, dairy and plant-based beverages and growth in energy drinks, partially offset by a decline in tea.

Unit case volume for Bottling Investments grew 23 percent. This ~~decrease~~increase primarily reflects ~~refranchising activities. Refer to Note 2~~the impact of ~~Notes to Condensed Consolidated Financial Statements for additional information.~~the recent acquisition of a controlling interest in the Philippine bottling operations as well as growth in India and South Africa.

Concentrate Sales Volume

During the three months ended June ~~29, 2018,~~28, 2019, worldwide unit case volume grew 3 percent and concentrate sales volume ~~both~~ grew 24 percent compared to the three months ended June ~~30, 2017.~~29, 2018. During the six months ended June ~~29, 2018,~~28, 2019, worldwide unit case volume grew 2 percent and concentrate sales volume ~~both~~ grew 3 percent compared to the six months ended June ~~30, 2017.~~29, 2018. Concentrate sales volume growth is calculated based on the amount of concentrate sold during the reporting periods, which is impacted by the number of days. Conversely, unit case volume growth is calculated based on average daily sales, which is not impacted by the number of days in the reporting periods. The first quarter of ~~2018~~2019 had one less day when compared to the first quarter of ~~2017,~~2018, which contributed to the differences between unit case volume and concentrate sales volume growth rates inon a consolidated basis and for the individual operating segments during the six months ended June ~~29, 2018. In addition, the~~28, 2019.

The differences between unit case volume and concentrate sales volume growth rates ~~in the individual operating segments~~ during the three and six months ended June ~~29, 2018~~28, 2019 were due to ~~the timing of concentrate shipments,~~ structural changes and the impact of unit case volume from certain joint ventures in which the Company has an equity interest but to which the Company does not sell concentrates, syrups, beverage bases, source waters or powders/minerals. In addition, the differences during the three months ended June 28, 2019 were impacted by the timing of concentrate shipments in Brazil and ~~powders/minerals.~~the differences during the six months ended June 28, 2019 were impacted by the timing of

concentrate shipments resulting from uncertainties due to Brexit. We expect these timing differences to reverse by the end of 2019.

Net Operating Revenues

Three Months Ended June 28, 2019 versus Three Months Ended June 29, 2018 ~~versus Three Months Ended~~

During the three months ended June ~~30, 2017~~

~~The Company's~~28, 2019, net operating revenues ~~decreased $775~~were $9,997 million compared to $9,421 million during the three months ended June 29, 2018, an increase of $576 million, or 86 percent.

The following table illustrates, on a percentage basis, the estimated impact of key factors resulting in the increase (decrease) in net operating revenues on a consolidated basis and for each of our operating segments:

Refer to the heading "Beverage Volume" above for additional information related to changes in our unit case and concentrate sales volumes.

"Acquisitions and divestitures" refers to acquisitions and divestitures of brands orand businesses, some of which the Company considers to be structural changes. Refer to the heading "Structural Changes, Acquired Brands and Newly Licensed Brands" above for additional information related to the structural changes.

~~"Accounting changes" refers to the impact of our adoption of the new revenue recognition accounting standard. Refer to Note 3 of Notes to Condensed Consolidated Financial Statements.~~

"Price, product and geographic mix" refers to the change in net operating revenues caused by factors such as price changes, the mix of products and packages sold, and the mix of channels and geographic territories where the sales occurred.

Price, product and geographic mix had a 2 percent favorable impact on our consolidated net operating revenues. Price, product and geographic mix was impacted by a variety of factors and events including, but not limited to, the following:

Fluctuations in foreign currency exchange rates increased our consolidated net operating revenues by 1 percent. This favorable impact was primarily due to a weaker U.S. dollar compared to certain foreign currencies, including the euro, U.K. pound sterling, Japanese yen, Australian dollar and South African rand, which had a favorable impact on our Europe, Middle East and Africa and Asia Pacific operating segments. The favorable impact of a weaker U.S dollar compared to the currencies listed above was partially offset by the impact of a stronger U.S. dollar compared to certain other foreign currencies, including the Mexican peso, Brazilian real and Argentine peso, which had an unfavorable impact on our Latin America operating segment. Refer to the heading "Liquidity, Capital Resources and Financial Position — Foreign Exchange" below.

~~Six Months Ended June 29, 2018 versus Six Months Ended June 30, 2017~~

~~The Company's net operating revenues decreased $2,267 million, or 12 percent.~~

Percent Change 2018 versus 2017

Volume¹

Acquisitions & Divestitures
Price, Product & Geographic Mix
Currency Fluctuations
Accounting Changes
Total
Consolidated 3 % (21 )% 2 % 1 % 2 % (12 )%
Europe, Middle East & Africa 5 % 1 % 2 % 4 % (3 )% 9 %
Latin America —
1
9
(3 ) 1
8
North America 2
(1 ) (2 ) —
11
9
Asia Pacific 5
(1 ) (1 ) 3
(6 ) 1
Bottling Investments 11
(82 ) 1
1
3
(67 )

~~Note: Certain rows may not add due to rounding.~~

¹Represents the percent change in net operating revenues attributable to the increase (decrease) in concentrate sales volume for our geographic operating segments (expressed in equivalent unit cases) after considering the impact of structural changes. For our Bottling Investments operating segment, this represents the percent change in net operating revenues attributable to the increase (decrease) in unit case volume after considering the impact of structural changes. Our Bottling Investments operating segment data reflects unit case volume growth for consolidated bottlers only. Refer to the heading "Beverage Volume" above.

~~Refer to the heading "Beverage Volume" above for additional information related to changes in our unit case and concentrate sales volumes.~~

"Acquisitions and divestitures" refers to acquisitions and divestitures of brands or businesses, some of which the Company considers to be structural changes. Refer to the heading "Structural Changes, Acquired Brands and Newly Licensed Brands" above for additional information related to the structural changes.

~~"Accounting changes" refers to the impact of our adoption of the new revenue recognition accounting standard. Refer to Note 3 of Notes to Condensed Consolidated Financial Statements.~~

Fluctuations in foreign currency exchange rates ~~increased~~decreased our consolidated net operating revenues by 16 percent. This ~~favorable~~unfavorable impact was primarily due to a ~~weaker~~stronger U.S. dollar compared to certain foreign currencies, including the euro, ~~U.K.~~British pound sterling, Japanese yen, ~~Australian dollar and~~Mexican peso, Brazilian real, South African rand and Australian dollar, which had an unfavorable impact on all of our operating segments, except for North America. Refer to the heading "Liquidity, Capital Resources and Financial Position — Foreign Exchange" below.

Six Months Ended June 28, 2019 versus Six Months Ended June 29, 2018

During the six months ended June 28, 2019, net operating revenues were $18,691 million, compared to $17,719 million during the six months ended June 29, 2018, an increase of $972 million, or 5 percent.



	Percent Change 2019 versus 2018
	Volume¹		Acquisitions & Divestitures		Price, Product & Geographic Mix		Currency Fluctuations		Total
Consolidated	3	%	6	%	3	%	(6	)%	5	%
Europe, Middle East & Africa	4	%	3	%	5	%	(11	)%	—	%
Latin America	—		—		7		(13	)	(6	)
North America	(2	)	—		4		—		2
Asia Pacific	7		(1	)	(2	)	(3	)	—
Global Ventures	1		220		—		(20	)	201
Bottling Investments	9		(2	)	3		(8	)	3

Refer to the heading "Beverage Volume" above for additional information related to changes in our unit case and concentrate sales volumes.

Price, product and geographic mix had a 3 percent favorable impact on our consolidated net operating revenues. Price, product and geographic mix was impacted by a variety of factors and events including, but not limited to, the following:

We estimate that net operating revenues recognized on incremental concentrate shipments related to Brexit were approximately $100 million during the six months ended June 28, 2019.

Fluctuations in foreign currency exchange rates decreased our consolidated net operating revenues by 6 percent. This unfavorable impact ofwas primarily due to a stronger U.S. dollar compared to certain ~~other~~ foreign currencies, including the euro, British pound sterling, Mexican peso, Brazilian real, South African rand and ~~Argentine peso,~~Australian dollar, which had an unfavorable impact on all of our ~~Latin America~~ operating ~~segment.~~segments, except for North America. Refer to the heading "Liquidity, Capital Resources and Financial Position — Foreign Exchange" below.

Net operating revenue growth rates are impacted by sales volume; acquisitions and divestitures; price, product and geographic mix; and foreign currency ~~fluctuations and accounting changes.~~fluctuations. The size and timing of acquisitions and divestitures are not consistent from period to period. The Company currently expects acquisitions and divestitures to have a 17favorable impact of 7 percent ~~unfavorable impact~~ on ~~2018~~2019 full year net operating revenues. Based on current spot rates and our hedging coverage in place, we expect currencies will have an unfavorable impact on net operating revenues through the end of the year.

As a result of our finished goods operations, which are primarily included in our North America and Bottling Investments operating segments, the following inputs represent a substantial portion of the Company's total cost of goods sold: (1) sweeteners, (2) metals, (3) juices and (4) polyethylene terephthalate ("PET"). The Company enters into hedging activities related to certain commodities in order to mitigate a portion of the price risk associated with forecasted purchases. Many of the derivative financial instruments used by the Company to mitigate the risk associated with these commodity exposures, including any related foreign currency exposure, do not qualify for hedge accounting. As a result, the changes in fair value of these derivative instruments have been, and will continue to be, included as a component of net income in each reporting period. During the three and six months ended June 29, 2018, the Company recorded a net loss of $6 million and a net gain of$6 million, respectively, in the line item cost of goods sold in our condensed consolidated statements of income related to the changes in the fair value of these derivative instruments. Refer to Note 6 of Notes to Condensed Consolidated Financial Statements.

Our gross profit margin ~~increased~~decreased to ~~63.6~~60.8 percent for the three months ended June 28, 2019, compared to 62.4 percent for the three months ended June 29, ~~2018, compared to 62.3 percent for the three months ended June 30, 2017.~~2018. Our gross profit margin ~~increased~~decreased to ~~63.8~~61.0 percent for the six months ended June 28, 2019, compared to 62.6 percent for the six months ended June 29, ~~2018, compared to 61.9 percent for the six months ended June 30, 2017.~~2018. These ~~increases~~decreases were primarily due to the impact of ~~acquisitions and divestitures, partially offset by~~structural changes as well as the unfavorable impact of ~~accounting changes.~~foreign currency exchange rate fluctuations. Generally, finished product operations generate higher net operating revenues but lower gross profit margins than concentrate operations. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information related to acquisitions and divestitures. ~~Refer to Note 3 of Notes to Condensed Consolidated Financial Statements for additional information related to our adoption of the new revenue recognition accounting standard.~~

Selling, General and Administrative Expenses

The following table sets forth the ~~significant~~ components of selling, general and administrative expenses (in millions):



	Three Months Ended June 29, 2018								Six Months Ended June 29, 2018
	As Reported		Balances without Adoption of ASC 606		Increase (Decrease) Due to Adoption				As Reported		Balances without Adoption of ASC 606		Increase (Decrease) Due to Adoption
Net operating revenues	$	8,927	$	8,767	$	160		¹	$	16,553	$	16,202	$	351		¹
Cost of goods sold	3,252		3,044		208				5,990		5,591		399
Gross profit	5,675		5,723		(48		)		10,563		10,611		(48		)
Selling, general and administrative expenses	2,723		2,724		(1		)		5,264		5,264		—
Operating income	2,727		2,774		(47		)		4,538		4,586		(48		)
Income from continuing operations before income taxes	2,883		2,930		(47		)		4,716		4,764		(48		)
Income taxes from continuing operations	594		575		19				1,100		1,081		19
Net income from continuing operations	2,289		2,317		(28		)		3,616		3,645		(29		)
Income from discontinued operations	42		43		(1		)		115		113		2
Consolidated net income	2,331		2,360		(29		)		3,731		3,758		(27		)
Net income attributable to shareowners of The Coca-Cola Company	2,316		2,345		(29		)		3,684		3,711		(27		)



			Gross Unrealized					Estimated
	Cost		Gains		Losses			Fair Value
Trading securities	$	324	$	75	$	(4	)	$	395
Available-for-sale securities	1,276		685		(66		)	1,895
Total equity securities	$	1,600	$	760	$	(70	)	$	2,290


¹	Refer to Note 6 for additional information related to the net ~~gain~~gains or ~~loss~~losses on derivative ~~instruments designated and qualifying as cash flow hedging~~ instruments.


²	~~Includes reclassification adjustments related to divestitures of certain available-for-sale debt securities.~~ Refer to Note 4 for additional information related to ~~these divestitures.~~the net unrealized gains or losses on available-for-sale debt securities.


³	Refer to Note 1314 for additional information related to the Company's pension and other postretirement benefit liabilities.


Three Months Ended June 30, 2017	Before-Tax Amount			Income Tax			After-Tax Amount
Three Months Ended June 29, 2018										Before-Tax Amount			Income Tax			After-Tax Amount
Foreign currency translation adjustments:
Translation adjustments arising during the period	$	(1,427	)	$	(15	)	$	(1,442	)	$	(1,152	)	$	(17	)	$	(1,169	)
Reclassification adjustments recognized in net income	120			(6		)	114			42			—			42
Gains (losses) on intra-entity transactions that are of a long-term investment nature	1,799			—			1,799			(1,372		)	—			(1,372		)
Gains (losses) on net investment hedges arising during the period¹	(930		)	356			(574		)	705			(202		)	503
Net foreign currency translation adjustments	$	(438	)	$	335		$	(103	)	$	(1,777	)	$	(219	)	$	(1,996	)
Derivatives:
Gains (losses) arising during the period	$	(135	)	$	43		$	(92	)	$	(1	)	$	24		$	23
Reclassification adjustments recognized in net income	(139		)	54			(85		)	60			(15		)	45
Net gains (losses) on derivatives¹	$	(274	)	$	97		$	(177	)	$	59		$	9		$	68
Available-for-sale securities:
Available-for-sale debt securities:
Unrealized gains (losses) arising during the period	$	87		$	(19	)	$	68		$	(113	)	$	23		$	(90	)
Reclassification adjustments recognized in net income	(94		)	31			(63		)
Net change in unrealized gain (loss) on available-for-sale securities²	$	(7	)	$	12		$	5
Net change in unrealized gains (losses) on available-for-sale debt securities²										$	(113	)	$	23		$	(90	)
Pension and other benefit liabilities:
Net pension and other benefit liabilities arising during the period	$	(37	)	$	5		$	(32	)	$	261		$	(61	)	$	200
Reclassification adjustments recognized in net income	32			(8		)	24			111			(29		)	82
Net change in pension and other benefit liabilities³	$	(5	)	$	(3	)	$	(8	)	$	372		$	(90	)	$	282
Other comprehensive income (loss) attributable to shareowners of The Coca-Cola Company	$	(724	)	$	441		$	(283	)	$	(1,459	)	$	(277	)	$	(1,736	)


Six Months Ended June 30, 2017	Before-Tax Amount			Income Tax			After-Tax Amount
Six Months Ended June 29, 2018										Before-Tax Amount			Income Tax			After-Tax Amount
Foreign currency translation adjustments:
Translation adjustments arising during the period	$	(955	)	$	32		$	(923	)	$	(985	)	$	(85	)	$	(1,070	)
Reclassification adjustments recognized in net income	120			(6		)	114			98			—			98
Gains (losses) on intra-entity transactions that are of a long-term investment nature	2,207			—			2,207			(576		)	—			(576		)
Gains (losses) on net investment hedges arising during the period¹	(941		)	360			(581		)	294			(73		)	221
Net foreign currency translation adjustments	$	431		$	386		$	817		$	(1,169	)	$	(158	)	$	(1,327	)
Derivatives:
Gains (losses) arising during the period	$	(213	)	$	75		$	(138	)	$	65		$	(14	)	$	51
Reclassification adjustments recognized in net income	(259		)	99			(160		)	2			(1		)	1
Net gains (losses) on derivatives¹	$	(472	)	$	174		$	(298	)	$	67		$	(15	)	$	52
Available-for-sale securities:
Available-for-sale debt securities:
Unrealized gains (losses) arising during the period	$	345		$	(106	)	$	239		$	(126	)	$	21		$	(105	)
Reclassification adjustments recognized in net income	(113		)	38			(75		)	5			(1		)	4
Net change in unrealized gain (loss) on available-for-sale securities²	$	232		$	(68	)	$	164
Net change in unrealized gains (losses) on available-for-sale debt securities²										$	(121	)	$	20		$	(101	)
Pension and other benefit liabilities:
Net pension and other benefit liabilities arising during the period	$	(41	)	$	24		$	(17	)	$	271		$	(62	)	$	209
Reclassification adjustments recognized in net income	73			(23		)	50			144			(37		)	107
Net change in pension and other benefit liabilities³	$	32		$	1		$	33		$	415		$	(99	)	$	316
Other comprehensive income (loss) attributable to shareowners of The Coca-Cola Company	$	223		$	493		$	716		$	(808	)	$	(252	)	$	(1,060	)


¹	Primarily related to our previously held equity ownership interest in CHI and the ~~reversal~~sale of ~~the cumulative translation adjustments resulting from the substantial liquidation of the Company's former Russian juice operations.~~


²	~~Primarily related to the refranchising~~a portion of our ~~Latin American bottling operations.~~equity ownership interest in Andina. Refer to Note 2.



	Accrued Balance December 31, 2017		Costs Incurred Six Months Ended June 29, 2018		Payments			Noncash and Exchange			Accrued Balance June 29, 2018
Severance pay and benefits	$	190	$	81	$	(154	)	$	(38	)	$	79
Outside services	1		38		(33		)	—			6
Other direct costs	15		126		(128		)	—			13
Total	$	206	$	245	$	(315	)	$	(38	)	$	98


²	The curtailment credits, settlement charges and special termination benefits were primarily related to North America refranchising and the Company's productivity and reinvestment program. Refer to Note 2 and Note 12.


² ²The settlement charges in 2018 were related to North America refranchising and the Company's productivity and reinvestment program.	The curtailment credits, settlement charges and special termination benefits were primarily related to North America refranchising and the Company's productivity and reinvestment program. Refer to Note 2 and Note 12.


¹	Related to charges of $112 million and $502 million during the three and six months ended June 29, 2018, respectively, due to impairments of certain of the Company's assets. Refer to Note 11 and Note 15.


²	Related to charges of $111 million and $206 million during the three and six months ended June 29, 2018, respectively, due to the Company's productivity and reinvestment program. Also related to pension settlement charges of $39 million during the three and six months ended June 29, 2018. Refer to Note 11, Note 12 and Note 13.


⁹	~~Related to charges of $667 million and $771 million during the three and six months ended June 30, 2017, respectively, due to the impairment of certain assets. Refer to Note 11 and Note 15.~~


¹⁰	Related to charges of $87 million and $226 million during the three and six months ended June 30, 2017, respectively. These charges were due to the Company's productivity and reinvestment program. Refer to Note 12.


¹⁴	Related to charges of $22 million, which primarily consisted of a $38 million net charge related to the extinguishment of long-term debt and $19 million due to tax litigation expense, partially offset by a $37 million net gain due to our proportionate share of unusual or infrequent items recorded by certain of our equity method investees. Refer to Note 11.


¹⁵	Related to charges of $86 million, which primarily consisted of a $38 million net charge related to the extinguishment of long-term debt, $25 million due to tax litigation expense and a $21 million net charge due to our proportionate share of unusual or infrequent items recorded by certain of our equity method investees. Refer to Note 11.


June 29, 2018	Level 1			Level 2			Level 3		Other³		Netting Adjustment			⁴	Fair Value Measurements
June 28, 2019																			Level 1			Level 2			Level 3		Other³		Netting Adjustment			⁴	Fair Value Measurements
Assets:
Equity securities with readily determinable values¹	$	2,041		$	188		$	3	$	67	$	—			$	2,299			$	1,810		$	208		$	10	$	60	$	—			$	2,088
Debt securities¹	—			6,292			19		—		—				6,311				—			4,030			19		—		—				4,049
Derivatives²	1			309			—		—		(194		)	⁵	116			⁷	16			667			—		—		(446		)	⁵	237			⁶
Total assets	$	2,042		$	6,789		$	22	$	67	$	(194	)		$	8,726			$	1,826		$	4,905		$	29	$	60	$	(446	)		$	6,374
Liabilities:
Derivatives²	$	(8	)	$	(156	)	$	—	$	—	$	117		⁶	$	(47	)	⁷	$	(18	)	$	(210	)	$	—	$	—	$	197			$	(31	)	⁶
Total liabilities	$	(8	)	$	(156	)	$	—	$	—	$	117			$	(47	)		$	(18	)	$	(210	)	$	—	$	—	$	197			$	(31	)


⁵	The Company is obligated to return ~~$86~~$258 million in cash collateral it has netted against its ~~net asset~~ derivative position.


⁶	~~The Company has the right to reclaim $1 million in cash collateral it has netted against its net liability derivative position.~~


¹	Refer to Note 4 for additional information related to the composition of our ~~trading~~equity securities with readily determinable values and ~~available-for-sale~~debt securities.


⁴³	Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy but are included to reconcile to the amounts presented in Note 4.


⁷⁶	The Company has the right to reclaim $2$4 million in cash collateral it has netted against its derivative position.


	Percent Change 2018 versus 2017										Percent Change 2019 versus 2018
	Three Months Ended June 29, 2018					Six Months Ended June 29, 2018					Three Months Ended June 28, 2019						Six Months Ended June 28, 2019
	Unit Cases^1,2,3		Concentrate Sales⁴			Unit Cases^1,2,3		Concentrate Sales⁴			Unit Cases^1,2,3			Concentrate Sales⁴			Unit Cases^1,2,3			Concentrate Sales⁴
Worldwide	2	%	2	%		3	%	3	%		3	%		4	%		2	%		3	%
Europe, Middle East & Africa	1	%	3	%		3	%	6	%	⁸	2	%		3	%		2	%		4	%	⁸
Latin America	—		—		⁵	—		—			1			3		⁶	—			—
North America	1		(1	)	⁶	2		(1	)	⁹	(1	)		—		⁷	(1	)		(1	)	⁷
Asia Pacific	5		4		⁷	5		4		¹⁰	7			8			7			5		⁹
Global Ventures											5			5			3			1
Bottling Investments	(11	)	N/A			(23	)	N/A			30		⁵	N/A			23		⁵	N/A


⁷⁹	After considering the impact of structural changes, concentrate sales volume for Asia Pacific ~~for the three months ended June 29, 2018~~ grew ~~6 percent.~~


⁸	~~After considering the impact of structural changes, concentrate sales volume for Europe, Middle East and Africa~~7 percent for the six months ended ~~June 29, 2018 grew 5 percent.~~


⁹	Related to charges of $667 million and $771 million during the three and six months ended June 30, 2017, respectively, due to the impairment of certain assets. Refer to Note 11 and Note 15 of Notes to Condensed Consolidated Financial Statements.


	June 29, 2018		December 31, 2017		Increase (Decrease)				Percent Change		June 28, 2019		December 31, 2018		Increase (Decrease)				Percent Change
Cash and cash equivalents	$	7,975	$	6,006	$	1,969			33	%	$	6,731	$	9,077	$	(2,346	)		(26	)%
Short-term investments	5,843		9,352		(3,509		)		(38	)	2,572		2,025		547				27
Marketable securities	5,536		5,317		219				4		4,058		5,013		(955		)		(19	)
Trade accounts receivable — net	4,565		3,667		898				24		4,888		3,685		1,203				33
Inventories	2,881		2,655		226				9		3,453		3,071		382				12
Prepaid expenses and other assets	2,543		2,000		543				27		2,658		2,059		599				29
Assets held for sale	—		219		(219		)		(100	)
Assets held for sale — discontinued operations	6,681		7,329		(648		)		(9	)
Equity method investments	20,604		20,856		(252		)		(1	)	19,418		19,412		6				—
Other investments	1,015		1,096		(81		)		(7	)	894		867		27				3
Other assets	4,401		4,230		171				4		5,596		4,148		1,448				35
Deferred income tax assets	2,999		330		2,669				809		2,559		2,674		(115		)		(4	)
Property, plant and equipment — net	7,688		8,203		(515		)		(6	)	10,254		9,598		656				7
Trademarks with indefinite lives	6,669		6,729		(60		)		(1	)	9,313		6,682		2,631				39
Bottlers' franchise rights with indefinite lives	38		138		(100		)		(72	)	110		51		59				116
Goodwill	9,863		9,401		462				5		16,840		14,109		2,731				19
Other intangible assets	292		368		(76		)		(21	)	652		745		(93		)		(12	)
Total assets	$	89,593	$	87,896	$	1,697			2	%	$	89,996	$	83,216	$	6,780			8	%
Accounts payable and accrued expenses	$	10,842	$	8,748	$	2,094			24	%	$	12,819	$	9,533	$	3,286			34	%
Loans and notes payable	14,715		13,205		1,510				11		13,030		13,835		(805		)		(6	)
Current maturities of long-term debt	4,023		3,298		725				22		2,749		5,003		(2,254		)		(45	)
Accrued income taxes	362		410		(48		)		(12	)	784		411		373				91
Liabilities held for sale	—		37		(37		)		(100	)
Liabilities held for sale — discontinued operations	1,456		1,496		(40		)		(3	)
Long-term debt	28,063		31,182		(3,119		)		(10	)	29,296		25,376		3,920				15
Other liabilities	7,367		8,021		(654		)		(8	)	8,336		7,646		690				9
Deferred income tax liabilities	2,589		2,522		67				3		2,687		2,354		333				14
Total liabilities	$	69,417	$	68,919	$	498			1	%	$	69,701	$	64,158	$	5,543			9	%
Net assets	$	20,176	$	18,977	$	1,199		¹	6	%	$	20,295	$	19,058	$	1,237		¹	6	%


•	Other assets increased primarily as a result of our adoption of Accounting Standards Codification 842, Leases ("ASC 842") and the acquisition of Costa, which required us to record $1,330 million of operating lease right-of-use ("ROU") assets.

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