UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 27, 2019June 26, 2020
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                                    to                                     
Commission File Number 001-02217
ko-20200626_g1.jpg
COCA COLA CO
(Exact name of Registrant as specified in its charter)
Delaware58-0628465
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
One Coca-Cola Plaza
AtlantaGeorgia30313
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (404) (404) 676-2121
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.25 Par ValueKONew York Stock Exchange
0.000% Notes Due 2021KO21BNew York Stock Exchange
Floating Rate Notes Due 2021KO21CNew York Stock Exchange
1.125% Notes Due 2022KO22New York Stock Exchange
0.125% Notes Due 2022KO22BNew York Stock Exchange
0.75% Notes Due 2023KO23BNew York Stock Exchange
0.500% Notes Due 2024KO24New York Stock Exchange
1.875% Notes Due 2026KO26New York Stock Exchange
0.750% Notes Due 2026KO26CNew York Stock Exchange
1.125% Notes Due 2027KO27New York Stock Exchange
1.250% Notes Due 2031KO31New York Stock Exchange
1.625% Notes Due 2035KO35New York Stock Exchange
1.100% Notes Due 2036KO36New 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 ☒    No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒    No ☐




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.
Large accelerated filer☒☒Accelerated filer ☐
Non-accelerated filer☐☐Smaller reporting company☐
Emerging growth company☐☐
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) 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 ☐    No ☒
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 20, 2020
$0.25 Par Value4,295,438,919
Class of Common Stock Shares Outstanding as of October 21, 2019
$0.25 Par Value4,284,491,377





THE COCA-COLA COMPANY AND SUBSIDIARIES
Table of Contents
Page
1
Page
Forward-Looking Statements
1
Part I. Financial Information
Item 1.
2
Three and NineSix Months Ended September 27,June 26, 2020 and June 28, 2019 and September 28, 2018
2
Three and NineSix Months Ended September 27,June 26, 2020 and June 28, 2019 and September 28, 2018
3
    June 26, 2020 and December 31, 20182019
4
    Six Months Ended September 27,June 26, 2020 and June 28, 2019 and September 28, 2018
5
6
Item 2.
4232
Item 3.
6350
Item 4.
6350
Part II. Other Information
Item 1.
6350
Item 1A.
6451
Item 2.
6553
Item 6.
6553
6857





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. 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 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, 2018,2019, and those described from time to time in our future reports filed with the Securities and Exchange Commission.

1

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 Nine Months Ended
 September 27,
2019
September 28,
2018
 September 27,
2019
September 28,
2018
Net Operating Revenues$9,507
$8,775
 $28,198
$26,494
Cost of goods sold3,767
3,346
 11,053
9,965
Gross Profit5,740
5,429
 17,145
16,529
Selling, general and administrative expenses3,116
2,660
 8,879
8,286
Other operating charges125
155
 344
916
Operating Income2,499
2,614
 7,922
7,327
Interest income153
171
 428
510
Interest expense230
214
 711
697
Equity income (loss) — net346
348
 808
813
Other income (loss) — net324
(546) (81)(693)
Income Before Income Taxes3,092
2,373
 8,366
7,260
Income taxes503
555
 1,446
1,711
Consolidated Net Income2,589
1,818
 6,920
5,549
Less: Net income (loss) attributable to noncontrolling interests(4)(62) 42
(15)
Net Income Attributable to Shareowners
    of The Coca-Cola Company
$2,593
$1,880
 $6,878
$5,564
Basic Net Income Per Share1
$0.61
$0.44
 $1.61
$1.31
Diluted Net Income Per Share1
$0.60
$0.44
 $1.60
$1.29
Average Shares Outstanding4,280
4,255
 4,273
4,258
Effect of dilutive securities41
40
 38
39
Average Shares Outstanding Assuming Dilution4,321
4,295
 4,311
4,297

Three Months EndedSix Months Ended
June 26,
2020		June 28,
2019		June 26,
2020		June 28,
2019
Net Operating Revenues$7,150  $9,997  $15,751  $18,691  
Cost of goods sold3,013  3,921  6,384  7,286  
Gross Profit4,137  6,076  9,367  11,405  
Selling, general and administrative expenses1,983  2,996  4,631  5,763  
Other operating charges173  92  375  219  
Operating Income1,981  2,988  4,361  5,423  
Interest income100  142  212  275  
Interest expense274  236  467  481  
Equity income (loss) — net176  329  343  462  
Other income (loss) — net214  (174) 758  (405) 
Income Before Income Taxes2,197  3,049  5,207  5,274  
Income taxes438  421  653  943  
Consolidated Net Income1,759  2,628  4,554  4,331  
Less: Net income (loss) attributable to noncontrolling interests(20) 21  —  46  
Net Income Attributable to Shareowners of The Coca-Cola
Company		$1,779  $2,607  $4,554  $4,285  
Basic Net Income Per Share1
$0.41  $0.61  $1.06  $1.00  
Diluted Net Income Per Share1
$0.41  $0.61  $1.05  $1.00  
Average Shares Outstanding4,295  4,269  4,292  4,270  
Effect of dilutive securities21  36  29  35  
Average Shares Outstanding Assuming Dilution4,316  4,305  4,321  4,305  
1 Calculated based on net income attributable to shareowners of The Coca-Cola Company.
Refer to Notes to Condensed Consolidated Financial Statements.



2

THE COCA-COLA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(In millions)
Three Months EndedSix Months Ended
June 26,
2020		June 28,
2019		June 26,
2020		June 28,
2019
Consolidated Net Income$1,759  $2,628  $4,554  $4,331  
Other Comprehensive Income:  
Net foreign currency translation adjustments(714) (645) (3,335) 281  
Net gains (losses) on derivatives(26) (24) (10) (16) 
 Net change in unrealized gains (losses) on available-for-sale debt
securities		(11) 15  (19) 30  
Net change in pension and other benefit liabilities41  37  47  68  
Total Comprehensive Income1,049  2,011  1,237  4,694  
Less: Comprehensive income (loss) attributable to noncontrolling interests34  60  (401) 57  
Total Comprehensive Income Attributable to Shareowners
of The Coca-Cola Company		$1,015  $1,951  $1,638  $4,637  
 Three Months Ended Nine Months Ended
 September 27,
2019
September 28,
2018
 September 27,
2019
September 28,
2018
Consolidated Net Income$2,589
$1,818
 $6,920
$5,549
Other Comprehensive Income:     
Net foreign currency translation adjustments(960)(210) (679)(1,635)
Net gains (losses) on derivatives46
(30) 30
22
 Net change in unrealized gains (losses) on available-for-sale debt
   securities
16
10
 46
(91)
Net change in pension and other benefit liabilities32
56
 100
372
Total Comprehensive Income1,723
1,644
 6,417
4,217
Less: Comprehensive income (loss) attributable to noncontrolling interests(145)60
 (88)9
Total Comprehensive Income Attributable to Shareowners
    of The Coca-Cola Company
$1,868
$1,584
 $6,505
$4,208

Refer to Notes to Condensed Consolidated Financial Statements.




3

THE COCA-COLA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions except par value)
September 27,
2019
December 31,
2018
June 26,
2020		December 31,
2019
ASSETS  ASSETS
Current Assets  Current Assets 
Cash and cash equivalents$7,531
$9,077
Cash and cash equivalents$10,037  $6,480  
Short-term investments2,001
2,025
Short-term investments7,551  1,467  
Total Cash, Cash Equivalents and Short-Term Investments9,532
11,102
Total Cash, Cash Equivalents and Short-Term Investments17,588  7,947  
Marketable securities3,456
5,013
Marketable securities2,228  3,228  
Trade accounts receivable, less allowances of $525 and $501, respectively4,353
3,685
Trade accounts receivable, less allowances of $549 and $524, respectivelyTrade accounts receivable, less allowances of $549 and $524, respectively3,849  3,971  
Inventories3,266
3,071
Inventories3,501  3,379  
Prepaid expenses and other assets2,510
2,059
Prepaid expenses and other assets2,205  1,886  
Total Current Assets23,117
24,930
Total Current Assets29,371  20,411  
Equity method investments18,689
19,412
Equity method investments18,189  19,025  
Other investments878
867
Other investments746  854  
Other assets5,750
4,148
Other assets5,875  6,075  
Deferred income tax assets2,452
2,674
Deferred income tax assets2,366  2,412  
Property, plant and equipment, less accumulated depreciation of
$8,267 and $8,013, respectively
10,217
9,598
Property, plant and equipment, less accumulated depreciation of
$8,539 and $8,083, respectively
Property, plant and equipment, less accumulated depreciation of
$8,539 and $8,083, respectively
10,695  10,838  
Trademarks with indefinite lives9,167
6,682
Trademarks with indefinite lives10,172  9,266  
Bottlers' franchise rights with indefinite lives109
51
Bottlers' franchise rights with indefinite lives103  109  
Goodwill16,465
14,109
Goodwill16,617  16,764  
Other intangible assets589
745
Other intangible assets555  627  
Total Assets$87,433
$83,216
Total Assets$94,689  $86,381  
LIABILITIES AND EQUITY LIABILITIES AND EQUITY
Current Liabilities Current Liabilities 
Accounts payable and accrued expenses$12,727
$9,533
Accounts payable and accrued expenses$11,668  $11,312  
Loans and notes payable10,972
13,835
Loans and notes payable9,423  10,994  
Current maturities of long-term debt492
5,003
Current maturities of long-term debt5,181  4,253  
Accrued income taxes909
411
Accrued income taxes576  414  
Total Current Liabilities25,100
28,782
Total Current Liabilities26,848  26,973  
Long-term debt31,012
25,376
Long-term debt37,729  27,516  
Other liabilities8,057
7,646
Other liabilities8,954  8,510  
Deferred income tax liabilities2,581
2,354
Deferred income tax liabilities1,969  2,284  
The Coca-Cola Company Shareowners' Equity 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
Common stock, $0.25 par value; authorized — 11,200 shares; issued — 7,040 sharesCommon stock, $0.25 par value; authorized — 11,200 shares; issued — 7,040 shares1,760  1,760  
Capital surplus17,039
16,520
Capital surplus17,367  17,154  
Reinvested earnings65,481
63,234
Reinvested earnings66,888  65,855  
Accumulated other comprehensive income (loss)(13,706)(12,814)Accumulated other comprehensive income (loss)(16,460) (13,544) 
Treasury stock, at cost — 2,756 and 2,772 shares, respectively(51,861)(51,719)
Treasury stock, at cost — 2,745 and 2,760 shares, respectivelyTreasury stock, at cost — 2,745 and 2,760 shares, respectively(52,071) (52,244) 
Equity Attributable to Shareowners of The Coca-Cola Company18,713
16,981
Equity Attributable to Shareowners of The Coca-Cola Company17,484  18,981  
Equity attributable to noncontrolling interests1,970
2,077
Equity attributable to noncontrolling interests1,705  2,117  
Total Equity20,683
19,058
Total Equity19,189  21,098  
Total Liabilities and Equity$87,433
$83,216
Total Liabilities and Equity$94,689  $86,381  
Refer to Notes to Condensed Consolidated Financial Statements.

4

THE COCA-COLA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In millions)
Nine Months Ended Six Months Ended
September 27,
2019
September 28,
2018
 June 26,
2020		June 28,
2019
Operating Activities Operating Activities 
Consolidated net income$6,920
$5,549
Consolidated net income$4,554  $4,331  
Depreciation and amortization965
807
Depreciation and amortization748  602  
Stock-based compensation expense146
167
Stock-based compensation expense36  88  
Deferred income taxes(326)26
Deferred income taxes(39) (163) 
Equity (income) loss — net of dividends(336)(385)Equity (income) loss — net of dividends(212) (254) 
Foreign currency adjustments79
(169)Foreign currency adjustments(67) 37  
Significant (gains) losses — net(389)541
Significant (gains) losses — net(901) 247  
Other operating charges147
662
Other operating charges341  93  
Other items444
130
Other items52  180  
Net change in operating assets and liabilities121
(1,638)Net change in operating assets and liabilities(1,726) (660) 
Net Cash Provided by Operating Activities7,771
5,690
Net Cash Provided by Operating Activities2,786  4,501  
Investing Activities 
 
Investing Activities  
Purchases of investments(4,113)(6,809)Purchases of investments(8,294) (2,935) 
Proceeds from disposals of investments5,674
11,079
Proceeds from disposals of investments2,649  3,395  
Acquisitions of businesses, equity method investments and nonmarketable securities(5,376)(598)Acquisitions of businesses, equity method investments and nonmarketable securities(984) (5,353) 
Proceeds from disposals of businesses, equity method investments and nonmarketable securities266
1,354
Proceeds from disposals of businesses, equity method investments and nonmarketable securities46  265  
Purchases of property, plant and equipment(1,206)(1,048)Purchases of property, plant and equipment(536) (767) 
Proceeds from disposals of property, plant and equipment944
97
Proceeds from disposals of property, plant and equipment112  43  
Other investing activities(90)33
Other investing activities40  (10) 
Net Cash Provided by (Used in) Investing Activities(3,901)4,108
Net Cash Provided by (Used in) Investing Activities(6,967) (5,362) 
Financing Activities

 
Financing Activities 
Issuances of debt19,598
21,422
Issuances of debt19,775  14,518  
Payments of debt(21,716)(23,595)Payments of debt(10,304) (14,278) 
Issuances of stock923
891
Issuances of stock444  602  
Purchases of stock for treasury(690)(1,596)Purchases of stock for treasury(93) (689) 
Dividends(3,419)(3,321)Dividends(1,761) (1,709) 
Other financing activities(33)(184)Other financing activities(16) 124  
Net Cash Provided by (Used in) Financing Activities(5,337)(6,383)Net Cash Provided by (Used in) Financing Activities8,045  (1,432) 
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash
equivalents
(75)(249)
Effect of Exchange Rate Changes on Cash, Cash Equivalents, Restricted Cash and Restricted Cash EquivalentsEffect of Exchange Rate Changes on Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents(172) 2  
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents



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
(1,542)3,166
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents
during the period		3,692  (2,291) 
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period9,318
6,373
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period6,737  9,318  
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents at End of Period7,776
9,539
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents at End of Period10,429  7,027  
Less: Restricted cash and restricted cash equivalents at end of period245
318
Less: Restricted cash and restricted cash equivalents at end of period392  296  
Cash and Cash Equivalents at End of Period$7,531
$9,221
Cash and Cash Equivalents at End of Period$10,037  $6,731  
Refer to Notes to Condensed Consolidated Financial Statements.

5


THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1: 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, 2018.2019.
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 ninesix months ended September 27, 2019June 26, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.2020. Sales of our nonalcoholic ready-to-drink beverages are somewhat seasonal, with the second and third calendar quarters typically 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 thirdsecond quarter of 2020 and the second quarter of 2019 and the third quarter of 2018ended on September 27,June 26, 2020 and June 28, 2019, and September 28, 2018, 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.
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 second quarter of 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. Refer to Note 2 and Note 17.
As of September 27, 2019, our organizational structure consisted of the 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 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 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.
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 other facts and circumstances.


Lessee
We are the lessee in a lease contract when we obtain the right to control the asset. Operating leases are included in the line items other assets, accounts payable and accrued expenses, and other liabilities in our consolidated balance 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 recognized based on the 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 our consolidated balance sheet and are expensed on a straight-line basis over the 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 the 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 8 for further discussion.
Lessor
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 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 onin our consolidated balance sheet, and amounts classified in assets held for sale.sheet. 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.
6

The following table providestables provide 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):
September 27,
2019
December 31,
2018
June 26,
2020		December 31,
2019
Cash and cash equivalents$7,531
$9,077
Cash and cash equivalents$10,037  $6,480  
Cash and cash equivalents included in other assets1
245
241
Cash and cash equivalents included in other assets1
392  257  
Cash, cash equivalents, restricted cash and restricted cash equivalents$7,776
$9,318
Cash, cash equivalents, restricted cash and restricted cash equivalents$10,429  $6,737  
September 28,
2018
December 31, 2017
Cash and cash equivalents$9,221
$6,102
Cash and cash equivalents included in assets held for sale—
13
Cash and cash equivalents included in other assets1
318
258
Cash, cash equivalents, restricted cash and restricted cash equivalents$9,539
$6,373
1 Amounts 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.
June 28,
2019		December 31,
2018
Cash and cash equivalents$6,731  $9,077  
Cash and cash equivalents included in other assets1
296  241  
Cash, cash equivalents, restricted cash and restricted cash equivalents$7,027  $9,318  
1 Amounts 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.
Recently Issued Accounting Guidance
Recently Adopted Accounting Guidance
ASC 842 requires lessees to recognize 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 requires qualitative and quantitative disclosures designed to assess the amount, timing and uncertainty of cash flows arising from leases. 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 disclosure requirements, in the comparative period presented. In addition, we elected the package of practical expedients permitted under the transition guidance which permits us to carry forward the historical lease classification, among other things. As a result of the adoption, our operating lease ROU assets and operating lease liabilities were $1,310 million and $1,329 million, respectively, as of September 27, 2019. The adoption of this standard did not impact our consolidated statement of income or our consolidated statement of cash flows. Refer to Note 8 for further discussion.
In August 2017,December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-12, 2019-12,Targeted Improvements to Simplifying the Accounting for Hedging ActivitiesIncome Taxes, which eliminates certain exceptions related to the requirement to separately measureapproach for intraperiod tax allocation, the methodology for calculating taxes during the quarters and report hedge ineffectiveness and requires companies to recognize all elementsthe recognition 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 alternativesdeferred tax liabilities 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. We adopted ASU 2017-12 effective January 1, 2019 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 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 effectsoutside basis differences. This guidance also simplifies aspects of the Tax Cutsaccounting for franchise taxes and Jobs Act of 2017 (the "Tax Reform Act") on items within accumulated other comprehensive income (loss) ("AOCI") to reinvested earnings. These disproportionate income tax effect items are referred to as "stranded tax effects." 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 includedas well as clarifies the accounting for transactions that result in net income is not affected by this update. We adopteda step-up in the tax basis of goodwill. 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 2016-132019-12 is effective for the Company beginning January 1, 20202021 and is requiredwould require us to be applied prospectively. For our trade receivables, certain other receivables and certain other financial instruments, we will be requiredrecognize a cumulative effect adjustment to use a new forward-looking "expected" credit loss model based on historical loss rates that will replace the existing "incurred" credit loss model, which will generally result in earlier recognitionopening balance of allowances for credit losses.reinvested earnings, if applicable. We are currently evaluating the impact that ASU 2016-13 will2019-12 may have on our consolidated financial statements and do not expect it will have a material impact on our financial statements or disclosures.statements.
NOTE 2: 2: ACQUISITIONS AND DIVESTITURES
Acquisitions
During the ninesix months ended September 27,June 26, 2020, our Company's acquisitions of businesses, equity method investments and nonmarketable securities totaled $984 million, which primarily related to the acquisition of the remaining equity ownership interest in fairlife, LLC ("fairlife").
During the six months ended June 28, 2019, our Company's acquisitions of businesses, equity method investments and nonmarketable securities totaled $5,376$5,353 million, which primarily related to the acquisition of Costa andLimited ("Costa"), the remaining equity ownership interest in C.H.I. Limited ("CHI"), and controlling interests in bottling operations in Zambia.
fairlife, LLC
In January 2020, the Company acquired the remaining 57.5 percent interest in, and now owns 100 percent of, fairlife. fairlife offers a Nigerian producerbroad portfolio of products in the value-added dairy category across North America. A significant portion of fairlife's revenues was already reflected in our consolidated financial statements, as we have operated as the sales and juice beveragesdistribution organization for certain fairlife products. Upon consolidation, we recognized a gain of $902 million resulting from the remeasurement of our previously held equity interest in fairlife to fair value. The fair value of our previously held interest was determined using a discounted cash flow model based on Level 3 inputs. The gain was recorded in the line item other income (loss) — net in our condensed consolidated statement of income. We acquired the remaining interest in exchange for $979 million of cash, net of cash acquired, and iced tea.
effectively settled our $306 million note receivable from fairlife at the recorded amount. Under the terms of the agreement, we are subject to making future milestone payments which are contingent on fairlife achieving certain financial targets through 2024, and if achieved, are payable in 2021, 2023 and 2025. These milestone payments are based on agreed-upon formulas related to fairlife's operating results, the resulting value of which is not subject to a ceiling. Under the applicable accounting guidance, we recorded a $270 million liability representing our best estimate of the fair value of this contingent consideration. The fair value of this contingent consideration was determined using a Monte Carlo valuation model based on Level 3 inputs. We will be required to remeasure this liability to fair value quarterly with any changes in the fair value recorded in income until the final milestone payments are made. During the ninethree and six months ended September 28, 2018,June 26, 2020, we recorded charges of $18 million and $29 million, respectively, related to this remeasurement in the line item other operating charges in our Company's acquisitionscondensed consolidated statements of businesses, equity method investmentsincome. As of June 26, 2020, $1.3 billion of the purchase price was preliminarily allocated to the fairlife trademark and nonmarketable securities totaled $598 million, which included$0.8 billion was preliminarily allocated to goodwill. The goodwill
7

recognized as part of this acquisition is primarily related to synergistic value created from the acquisition of a minority interest in BA Sports Nutrition, LLC ("BodyArmor"). We accountopportunity for our minority interest in BodyArmoradditional expansion. It also includes certain other intangible assets that do not qualify for separate recognition, such as an equity method investment based on our equity ownership percentageassembled workforce. The goodwill is not tax deductible and our representation on their Management Committee. We obtained an optionhas been preliminarily assigned to acquire the remaining ownership interests in BodyArmor based on an agreed-upon formula, which becomes exercisable in 2021. Upon the expirationNorth America operating segment. The preliminary allocation of the Company's option, BodyArmor haspurchase price is subject to refinement when valuations are finalized. As of June 26, 2020, the option to sell their remaining interestsvaluations that have not been finalized primarily relate to the Company based ontrademark and other intangible assets; and operating lease right-of-use ("ROU") assets and operating lease liabilities. The final purchase price allocation will be completed no later than the same agreed-upon formula. The Company also acquired additional ownership interests in the Company's franchise bottlers in the United Arab Emirates and in Oman, bothfirst quarter 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.2021.
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 companybusiness with retail outlets in overmore than 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. AsUpon finalization of September 27, 2019,purchase accounting, $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, except for $108 million, which was allocatedhas been assigned to the Europe, Middle East and Africa operating segment. The preliminary allocation of the purchase price is subject to refinement when valuations are finalized. As of September 27, 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, a Nigerian producer of value-added dairy and juice beverages and iced tea, 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 during the six months ended June 28, 2019, 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 ninesix months ended September 27,June 26, 2020, proceeds from disposals of businesses, equity method investments and nonmarketable securities totaled $46 million, which primarily related to the sale of a portion of our ownership interest in one of our equity method investments. We recognized a net gain of $18 million as a result of the sale, which was recorded in the line item other income (loss) — net in our condensed consolidated statement of income.
During the six months ended June 28, 2019, proceeds from disposals of businesses, equity method investments and nonmarketable securities totaled $266$265 million, which primarily related to the sale of a portion of our equity method investment in Embotelladora Andina S.A. ("Andina"). We recognized a gain of $39 million as a result of the sale, which was recorded in the line item other income (loss) — net in our condensed consolidated statement of income. We continue to account for our remaining interest in Andina as an equity method investment as a result of our representation on Andina's Board of Directors and other governance rights.
During the nine months ended September 28, 2018, proceeds from disposals of businesses, equity method investments and nonmarketable securities totaled $1,354 million, which primarily related to the proceeds from the refranchising of our Canadian and Latin American bottling operations, as well as the sale of our equity ownership in Corporación Lindley S.A. ("Lindley").
Corporación Lindley S.A.
On September 26, 2018, we sold our equity ownership in Lindley to AC Bebidas, an equity method investee. We received net
cash proceeds of $507 million and recognized a net gain of $370 million during the three and nine months ended September 28, 2018, which was included in the line item other income (loss) — net in our condensed consolidated statements of income.
Refranchising of Latin American Bottling Operations
During the nine months ended September 28, 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 $289 million as a result of these sales and recognized net gains of $11 million and $47 million during the three and nine months ended September 28, 2018, respectively, which were included in the line item other income (loss) — net in our condensed consolidated statements of income.
North America Refranchising — United States
In conjunction with implementing a new beverage partnership model in North America, in 2018 the Company completed the refranchising of all of our bottling territories in the United States that were previously managed by Coca-Cola Refreshments
("CCR") to certain of our unconsolidated bottling partners. We recognized net gains of $19 million and $15 million during the three and nine months ended September 27, 2019, respectively, and net gains of $10 million and net charges of $94 million during the three and nine months ended September 28, 2018, respectively. These net gains and net charges were included in the line item other income (loss) — net in our condensed consolidated statements of income and were primarily related to post-closing adjustments as contemplated by the related agreements.
During the three months ended September 28, 2018, the Company recorded charges of $12 million 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 comprehensive beverage agreement ("CBA") with additional requirements. During the nine months ended September 27, 2019 and September 28, 2018, the Company recorded charges of $4 million and $33 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.
North America Refranchising — Canada
On September 28, 2018, the Company completed its North America refranchising with the sale of its Canadian bottling
operations. We received initial net cash proceeds of $518 million and recognized a net charge of $285 million during the three and nine months ended September 28, 2018. During the three and nine months ended September 27, 2019 we recognized an additional charge of $122 million primarily related to post-closing adjustments as contemplated by the related agreements. These charges were included in the line item other income (loss) — net in our condensed consolidated statements of 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 Coca-Cola Beverages Africa Proprietary Limited ("CCBA"), CCBA it 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. As CCBA met the criteria to be classified as held for sale, we were
required to record their assets and liabilities at the lower of carrying value or fair value less any costs to sell. As a result, during
the three and nine months ended September 28, 2018, we recorded an impairment charge of $554 million, reflecting management's view of the proceeds that were expected to be received upon the sale based on revised projections of future operating results and foreign currency exchange rate fluctuations. This charge was previously reflected in the line item income (loss) from discontinued operations in our condensed consolidated statements of income, and the corresponding reduction to assets was reflected as an allowance for reduction of assets held for sale — discontinued operations in our condensed consolidated balance sheet. Additionally, CCBA's property, plant and equipment was not depreciated and its definite-lived intangible assets were not amortized.
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 operationsoperations. The financial results for allprior periods presented.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, of
this change in presentation, the Company reflected the impairment charge in other income (loss) — net in our consolidated
statements of income and reallocated the allowance for reduction of assets held for sale — discontinued operations 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 period CCBA wasperiods 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 ninethree and
8

six months ended September 27,June 28, 2019. These additional adjustments were included in the line item other income (loss) — net in our condensed consolidated statementstatements of income.
NOTE 3: REVENUE RECOGNITION
Our Company markets, manufactures and 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 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 operations (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 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 and our Global Ventures operating segment.  
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 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 that are generally not one of the Company's bottling partners. These operations are generally included in one of our geographic operating 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.


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 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, 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 work with our bottling partners to develop and implement an incidence-based concentrate pricing model. Under this model, the 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, the prices charged by the bottlers for such finished products, the channels in which they are sold and package mix. The amounts associated with the arrangements described above are defined as variable consideration under ASC 606, an estimate of which is included in the transaction price as a component of net operating revenues in our 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 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 nine months ended September 27, 2019 related to performance obligations satisfied in prior periods was immaterial.
The following tables 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 September 27, 2019





Concentrate operations$1,414
$4,026
$5,440
Finished product operations1,676
2,391
4,067
Total$3,090
$6,417
$9,507
Three Months Ended September 28, 2018





Concentrate operations$1,191
$4,039
$5,230
Finished product operations1,776
1,769
3,545
Total$2,967
$5,808
$8,775

United StatesInternationalTotal
Three Months Ended June 26, 2020
Concentrate operations$1,270  $2,945  $4,215  
Finished product operations1,313  1,622  2,935  
Total$2,583  $4,567  $7,150  
Three Months Ended June 28, 2019
Concentrate operations$1,415  $4,163  $5,578  
Finished product operations1,688  2,731  4,419  
Total$3,103  $6,894  $9,997  
 United States
International
Total
Nine Months Ended September 27, 2019





Concentrate operations$4,014
$11,782
$15,796
Finished product operations4,824
7,578
12,402
Total$8,838
$19,360
$28,198
Nine Months Ended September 28, 2018





Concentrate operations$3,563
$11,961
$15,524
Finished product operations5,035
5,935
10,970
Total$8,598
$17,896
$26,494

United StatesInternationalTotal
Six Months Ended June 26, 2020
Concentrate operations$2,594  $6,410  $9,004  
Finished product operations2,796  3,951  6,747  
Total$5,390  $10,361  $15,751  
Six Months Ended June 28, 2019
Concentrate operations$2,600  $7,756  $10,356  
Finished product operations3,148  5,187  8,335  
Total$5,748  $12,943  $18,691  
Refer to Note 1716 for additional revenue disclosures by operating segment and Corporate.


NOTE 4: 4: INVESTMENTS
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 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.
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. 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 are included in our consolidated balance sheet as a component of AOCI, except for the change in fair value attributable to the currency risk being 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 of the investment to determine whether or not an impairment exists. We also perform this evaluation every reporting period for each investment for which an impairment indicator exists. 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 IncomeMeasurement Alternative — No Readily Determinable Fair Value
June 26, 2020June 26, 2020
Fair Value with Changes Recognized in Income
Measurement Alternative — No Readily Determinable Fair Value
September 27, 2019 
Marketable securities$310
$—
Marketable securities$276  $—  
Other investments796
82
Other investments699  47  
Other assets989
—
Other assets998  —  
Total equity securities$2,095
$82
Total equity securities$1,973  $47  
December 31, 2018
December 31, 2019December 31, 2019
Marketable securities$278
$—
Marketable securities$329  $—  
Other investments787
80
Other investments772  82  
Other assets869
—
Other assets1,118  —  
Total equity securities$1,934
$80
Total equity securities$2,219  $82  
9



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
 September 27, 2019
September 28, 2018
Net gains (losses) recognized during the period related to equity securities$29
$62
Less: Net gains (losses) recognized during the period related to equity securities sold
during the period		—
5
Net unrealized gains (losses) recognized during the period related to equity securities
   still held at the end of the period
$29
$57

Three Months Ended
June 26, 2020June 28, 2019
Net gains (losses) recognized during the period related to equity securities$242  $(13) 
Less: Net gains (losses) recognized during the period related to equity securities sold
during the period		13  1  
Net unrealized gains (losses) recognized during the period related to equity securities
still held at the end of the period		$229  $(14) 
 Nine Months Ended
 September 27, 2019
September 28, 2018
Net gains (losses) recognized during the period related to equity securities$163
$21
Less: Net gains (losses) recognized during the period related to equity securities sold
during the period		16
13
Net unrealized gains (losses) recognized during the period related to equity securities
   still held at the end of the period
$147
$8

Six Months Ended
June 26, 2020June 28, 2019
Net gains (losses) recognized during the period related to equity securities$(154) $134  
Less: Net gains (losses) recognized during the period related to equity securities sold
during the period		(31) 13  
Net unrealized gains (losses) recognized during the period related to equity securities
still held at the end of the period		$(123) $121  
Debt Securities
Our debt securities consisted of the following (in millions):
  Gross UnrealizedEstimated Fair Value
 Cost
Gains
Losses
September 27, 2019    
Trading securities$45
$1
$—
$46
Available-for-sale securities3,445
150
(2)3,593
Total debt securities$3,490
$151
$(2)$3,639
December 31, 2018    
Trading securities$45
$—
$(1)$44
Available-for-sale securities4,901
119
(27)4,993
Total debt securities$4,946
$119
$(28)$5,037

Gross UnrealizedEstimated Fair Value
CostGainsLosses
June 26, 2020
Trading securities$34  $1  $(1) $34  
Available-for-sale securities2,176  79  (2) 2,253  
Total debt securities$2,210  $80  $(3) $2,287  
December 31, 2019
Trading securities$46  $1  $—  $47  
Available-for-sale securities3,172  113  (4) 3,281  
Total debt securities$3,218  $114  $(4) $3,328  
The faircarrying values of our debt securities were included in the following line items in our condensed consolidated balance sheets (in millions):
 September 27, 2019 December 31, 2018
 Trading Securities
Available-for-Sale Securities
 Trading Securities
Available-for-Sale Securities
Cash and cash equivalents$—
$155
 $—
$—
Marketable securities46
3,100
 44
4,691
Other assets—
338
 —
302
Total debt securities$46
$3,593
 $44
$4,993

June 26, 2020December 31, 2019
Trading SecuritiesAvailable-for-Sale SecuritiesTrading SecuritiesAvailable-for-Sale Securities
Cash and cash equivalents$—  $59  $—  $123  
Marketable securities34  1,918  47  2,852  
Other assets—  276  —  306  
Total debt securities$34  $2,253  $47  $3,281  
The contractual maturities of these available-for-sale debt securities as of September 27, 2019June 26, 2020 were as follows (in millions):
 Cost
Estimated
Fair Value
Within 1 year$2,145
$2,200
After 1 year through 5 years1,038
1,102
After 5 years through 10 years72
85
After 10 years190
206
Total$3,445
$3,593

CostEstimated
Fair Value
Within 1 year$1,242  $1,243  
After 1 year through 5 years713  759  
After 5 years through 10 years50  63  
After 10 years171  188  
Total$2,176  $2,253  
The Company expects that actual maturities may differ from the contractual maturities above because borrowers have the right to call or prepay certain obligations.

10


The sale and/or maturity of available-for-sale debt securities resulted in the following realized activity (in millions):
 Three Months Ended Nine Months Ended
 September 27, 2019
September 28, 2018
 September 27, 2019
September 28, 2018
Gross gains$9
$11
 $37
$19
Gross losses(1)(8) (5)(21)
Proceeds1,284
3,421
 3,074
9,744

Three Months EndedSix Months Ended
June 26, 2020June 28, 2019June 26, 2020June 28, 2019
Gross gains$9  $23  $17  $28  
Gross losses(6) (1) (8) (4) 
Proceeds280  1,068  1,186  1,790  
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 $1,197$1,123 million as of September 27, 2019June 26, 2020 and $1,056$1,266 million as of December 31, 2018,2019, 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: 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):
 September 27,
2019
December 31,
2018
Raw materials and packaging$2,044
$2,025
Finished goods881
773
Other341
273
Total inventories$3,266
$3,071

June 26,
2020		December 31,
2019
Raw materials and packaging$2,265  $2,180  
Finished goods794  851  
Other442  348  
Total inventories$3,501  $3,379  
NOTE 6: 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 currency denominated debt, in hedging relationships.
All derivative instruments are carried at fair value in our condensed consolidated balance 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 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 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.
The Company determines the fair values of its derivatives based on quoted market prices or pricing models using current market rates. Refer to Note 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 Value1,2
Derivatives Designated as Hedging Instruments
Balance Sheet Location1
June 26,
2020		December 31, 2019
Assets:   
Foreign currency contractsPrepaid expenses and other assets$66  $24  
Foreign currency contractsOther assets130  91  
Interest rate contractsPrepaid expenses and other assets10  10  
Interest rate contractsOther assets596  427  
Total assets $802  $552  
Liabilities:   
Foreign currency contractsAccounts payable and accrued expenses$50  $40  
Foreign currency contractsOther liabilities158  48  
Interest rate contractsOther liabilities17  21  
Total liabilities $225  $109  
  
Fair Value1,2
Derivatives Designated as Hedging Instruments
Balance Sheet Location1
September 27,
2019
December 31, 2018
Assets:   
Foreign currency contractsPrepaid expenses and other assets$80
$43
Foreign currency contractsOther assets103
114
Interest rate contractsOther assets695
88
Total assets $878
$245
Liabilities:   
Foreign currency contractsAccounts payable and accrued expenses$38
$19
Foreign currency contractsOther liabilities36
15
Commodity contractsAccounts payable and accrued expenses—
1
Interest rate contractsOther liabilities—
40
Total liabilities $74
$75
1 All 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 1615 for the net presentation of the Company's derivative instruments.
2 Refer to Note 1615 for additional information related to the estimated fair value.

11

The following table presents the fair values of the Company's derivative instruments that were not designated as hedging instruments (in millions):
 
Fair Value1,2
Derivatives Not Designated as Hedging Instruments
Balance Sheet Location1
June 26,
2020		December 31, 2019
Assets:   
Foreign currency contractsPrepaid expenses and other assets$44  $13  
Foreign currency contractsOther assets4  —  
Commodity contractsPrepaid expenses and other assets4  8  
Commodity contractsOther assets2  2  
Other derivative instrumentsPrepaid expenses and other assets—  12  
Other derivative instrumentsOther assets3  1  
Total assets $57  $36  
Liabilities:   
Foreign currency contractsAccounts payable and accrued expenses$72  $39  
Foreign currency contractsOther liabilities2  —  
Commodity contractsAccounts payable and accrued expenses57  13  
Commodity contractsOther liabilities18  1  
Other derivative instrumentsAccounts payable and accrued expenses11  —  
Total liabilities $160  $53  
  
Fair Value1,2
Derivatives Not Designated as Hedging Instruments
Balance Sheet Location1
September 27,
2019
December 31, 2018
Assets:   
Foreign currency contractsPrepaid expenses and other assets$52
$61
Commodity contractsPrepaid expenses and other assets1
2
Other derivative instrumentsPrepaid expenses and other assets10
7
Other derivative instrumentsOther assets2
—
Total assets $65
$70
Liabilities:   
Foreign currency contractsAccounts payable and accrued expenses$33
$101
Foreign currency contractsOther liabilities4
—
Commodity contractsAccounts payable and accrued expenses60
38
Commodity contractsOther liabilities4
8
Other derivative instrumentsAccounts payable and accrued expenses—
13
Total liabilities $101
$160
1 All 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 1615 for the net presentation of the Company's derivative instruments.
2 Refer to Note 1615 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 AOCIaccumulated other comprehensive income (loss) ("AOCI") and are reclassified into the line item in our condensed consolidated statement of income in which the hedged items are recorded in the same period the hedged items affect earnings. The changes in the 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 the variability in future cash flows is typically threefour 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 and collars (principally euroseuro, British pound sterling 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 $7,833$9,044 million and $3,175$6,957 million as of September 27, 2019June 26, 2020 and December 31, 20182019, respectively.
12
, 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 $2,700 million and $3,028 million as of September 27, 2019June 26, 2020 and December 31, 2018.2019, respectively.
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 $2$3 million and $9$2 million as of September 27, 2019June 26, 2020 and December 31, 2018,2019, 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 values of these interest rate swap agreements that were designated and qualified for the Company's interest rate cash flow hedging program were $550 million as of June 26, 2020. As of September 27, 2019 and December 31, 2018,2019, we did not have any interest rate swaps designated as a cash flow hedge. During the nine months ended September 28, 2018, we discontinued a cash flow hedge relationship related to these swaps. We reclassified a loss of $8 million into earnings as a result of the discontinuance.
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 September 27, 2019     
Foreign currency contracts$71
Net operating revenues$(5)$—
 
Foreign currency contracts3
Cost of goods sold2
—
 
Foreign currency contracts—
Interest expense(3)—
 
Foreign currency contracts(46)Other income (loss) — net(46)—
 
Interest rate contracts(30)Interest expense(10)—
 
Commodity contracts1
Cost of goods sold—
—
 
Total$(1)
$(62)$—
 
Three Months Ended September 28, 2018     
Foreign currency contracts$2
Net operating revenues$43
$—
3 
Foreign currency contracts3
Cost of goods sold4
—
3 
Foreign currency contracts—
Interest expense(2)—
 
Foreign currency contracts20
Other income (loss) — net23
2
 
Interest rate contracts—
Interest expense(9)—
 
Total$25
 $59
$2
 

Gain (Loss)
Recognized in OCI		Location of Gain (Loss) Recognized in IncomeGain (Loss) Reclassified from AOCI into Income
Three Months Ended June 26, 2020
Foreign currency contracts$(80) Net operating revenues$3  
Foreign currency contracts(1) Cost of goods sold4  
Foreign currency contracts—  Interest expense(2) 
Foreign currency contracts(11) Other income (loss) — net(44) 
Interest rate contracts4  Interest expense(10) 
Total$(88) $(49) 
Three Months Ended June 28, 2019
Foreign currency contracts$(25) Net operating revenues$1  
Foreign currency contracts(3) Cost of goods sold3  
Foreign currency contracts—  Interest expense(2) 
Foreign currency contracts(31) Other income (loss) — net(43) 
Interest rate contracts(17) Interest expense(10) 
Total$(76)  $(51) 

1 The 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 statement of income.
2 Effective 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.
3 Includes 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 
Nine Months Ended September 27, 2019     
Foreign currency contracts$44
Net operating revenues$2
$—
 
Foreign currency contracts1
Cost of goods sold9
—
 
Foreign currency contracts—
Interest expense(7)—
 
Foreign currency contracts(99)Other income (loss) — net(139)—
 
Interest rate contracts(47)Interest expense(30)—
 
Commodity contracts1
Cost of goods sold—
—
 
Total$(100) $(165)$—
 
Nine Months Ended September 28, 2018     
Foreign currency contracts$10
Net operating revenues$97
$1
 
Foreign currency contracts13
Cost of goods sold5
(3) 
Foreign currency contracts—
Interest expense(6)—
 
Foreign currency contracts46
Other income (loss) — net3
4
 
Interest rate contracts22
Interest expense(29)(8) 
Commodity contracts—
Cost of goods sold—
(5) 
Total$91
 $70
$(11) 

1 The 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 statement of income.
13
2 Effective 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.
Gain (Loss)
Recognized in OCI		Location of Gain (Loss) Recognized in IncomeGain (Loss) Reclassified from AOCI into Income
Six Months Ended June 26, 2020
Foreign currency contracts$23  Net operating revenues$(1) 
Foreign currency contracts10  Cost of goods sold5  
Foreign currency contracts—  Interest expense(4) 
Foreign currency contracts(101) Other income (loss) — net(29) 
Interest rate contracts12  Interest expense(21) 
Total$(56) $(50) 
Six Months Ended June 28, 2019
Foreign currency contracts$(27) Net operating revenues$7  
Foreign currency contracts(2) Cost of goods sold7  
Foreign currency contracts—  Interest expense(4) 
Foreign currency contracts(53) Other income (loss) — net(93) 
Interest rate contracts(17) Interest expense(20) 
Total$(99)  $(103) 
As of September 27, 2019,June 26, 2020, the Company estimates that it will reclassify into earnings during the next 12 months net losses of $16$73 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 the 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. 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 $12,655$12,420 million and $8,023$12,523 million as of September 27, 2019 and December 31, 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. As of September 27, 2019June 26, 2020 and December 31, 2018, we did not have any fair value hedges of this type.2019, respectively.


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 ItemsLocation of Gain (Loss) Recognized in Income
Gain (Loss)
Recognized in Income
Hedging Instruments and Hedged ItemsLocation of Gain (Loss) Recognized in IncomeGain (Loss)
Recognized in Income
Three Months EndedThree Months Ended
September 27,
2019
September 28,
2018
June 26,
2020		June 28,
2019
Interest rate contractsInterest expense$206
$(38)Interest rate contractsInterest expense$78  $229  
Fixed-rate debtInterest expense(200)41
Fixed-rate debtInterest expense(81) (227) 
Net impact to interest expense $6
$3
Net impact to interest expense $(3) $2  
Net impact of fair value hedging instruments $6
$3
Net impact of fair value hedging instruments$(3) $2  
Hedging Instruments and Hedged ItemsLocation of Gain (Loss) Recognized in IncomeGain (Loss)
Recognized in Income
Six Months Ended
June 26,
2020		June 28,
2019
Interest rate contractsInterest expense$190  $441  
Fixed-rate debtInterest expense(184) (437) 
Net impact to interest expense $6  $4  
Net impact of fair value hedging instruments$6  $4  
14

Hedging Instruments and Hedged ItemsLocation of Gain (Loss) Recognized in Income
Gain (Loss)
Recognized in Income
Nine Months Ended
September 27,
2019
September 28,
2018
Interest rate contractsInterest expense$647
$(57)
Fixed-rate debtInterest expense(637)50
Net impact to interest expense $10
$(7)
Foreign currency contractsOther income (loss) — net$—
$(6)
Available-for-sale securitiesOther income (loss) — net—
6
Net impact to other income (loss) — net $—
$—
Net impact of fair value hedging instruments $10
$(7)

The following table summarizes the amounts recorded in the condensed consolidated balance sheets related to hedged items in fair value hedging relationships (in millions):
Carrying Value of Hedged Items
Cumulative Amount of Fair Value Hedging Adjustments Included in Carrying Value of Hedged Items1
Balance Sheet Location of Hedged ItemsJune 26,
2020		December 31,
2019		June 26,
2020		December 31,
2019
Current maturities of long-term debt$1,004  $1,004  $5  $5  
Long-term debt12,286  12,087  619  448  
 Carrying Value of the Hedged Item 
Cumulative Amount of Fair Value
Hedging Adjustments Included in the
Carrying Value of the Hedged Item1
 September 27,
2019
December 31,
2018
 September 27,
2019
December 31,
2018
Long-term debt$13,091
$8,043
 $710
$62
1 Cumulative amount of 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 the fair values of the derivative instruments are recognized in net foreign currency translation 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 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 Nine Months Ended
 September 27,
2019
December 31, 2018
 September 27,
2019
September 28,
2018
 September 27,
2019
September 28,
2018
Foreign currency contracts$325
$—
 $13
$6
 $42
$6
Foreign currency denominated debt12,034
12,494
 476
53
 444
347
Total$12,359
$12,494
 $489
$59
 $486
$353

Notional AmountGain (Loss) Recognized in OCI
as ofThree Months EndedSix Months Ended
 June 26,
2020		December 31, 2019June 26,
2020		June 28,
2019		June 26,
2020		June 28,
2019
Foreign currency contracts$537  $—  $22  $7  $19  $29  
Foreign currency denominated debt12,341  12,334  (86) (163) (7) (32) 
Total$12,878  $12,334  $(64) $(156) $12  $(3) 
The Company did not reclassify any gains or losses related to net investment hedges from AOCI into earnings during the three and ninesix months ended September 27, 2019June 26, 2020 and SeptemberJune 28, 2018.2019. In addition, the Company did not have any ineffectiveness related to net investment hedges during the three and ninesix months ended September 27, 2019June 26, 2020 and SeptemberJune 28, 2018.2019. 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 statement of cash flows.
Economic (Nondesignated)(Non-Designated) 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 valuevalues of economic hedges are immediately recognized intoin 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 the fair valuevalues of economic hedges used to offset those monetary assets and liabilities are immediately recognized intoin earnings in the line item other income (loss) — net in our condensed consolidated 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, including those related to certain acquisition and divestiture activities. The changes in the fair values of economic hedges used to offset the variability in U.S. dollar net cash flows are recognized intoin earnings in the line items net operating revenues, cost of goods sold or other income (loss) — net in our condensed consolidated statement of income, as applicable. The total notional values of derivatives related to our foreign currency economic hedges were $4,655$4,693 million and $10,939$4,291 million as of September 27, 2019June 26, 2020 and December 31, 2018,2019, 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 the fair values of these economic hedges are immediately recognized intoin earnings in the line items net operating revenues, cost of goods sold, or selling, general and
15

administrative expenses in our condensed consolidated statement of income, as applicable. The total notional values of derivatives related to our economic hedges of this type were $552$441 million and $373$425 million as of September 27, 2019June 26, 2020 and December 31, 2018,2019, 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 InstrumentsLocation of Gain (Loss) Recognized in Income
Gain (Loss)
Recognized in Income
Derivatives Not Designated as Hedging InstrumentsLocation of Gain (Loss) Recognized in IncomeGain (Loss)
Recognized in Income
Three Months EndedThree Months Ended
September 27,
2019
September 28,
2018
June 26,
2020		June 28,
2019
Foreign currency contractsNet operating revenues$15
$8
Foreign currency contractsNet operating revenues$38  $(2) 
Foreign currency contractsCost of goods sold2
9
Foreign currency contractsCost of goods sold13  4  
Foreign currency contractsOther income (loss) — net(21)29
Foreign currency contractsOther income (loss) — net5  (46) 
Commodity contractsCost of goods sold(60)3
Commodity contractsCost of goods sold18  (18) 
Other derivative instrumentsSelling, general and administrative expenses4
18
Other derivative instrumentsSelling, general and administrative expenses24  11  
Other derivative instrumentsOther income (loss) — net5
—
Other derivative instrumentsOther income (loss) — net2  —  
Total $(55)$67
Total $100  $(51) 

Derivatives Not Designated as Hedging InstrumentsLocation of Gain (Loss) Recognized in IncomeGain (Loss)
Recognized in Income
Six Months Ended
June 26,
2020		June 28,
2019
Foreign currency contractsNet operating revenues$62  $(13) 
Foreign currency contractsCost of goods sold27  2  
Foreign currency contractsOther income (loss) — net(86) (25) 
Commodity contractsCost of goods sold(67) 2  
Other derivative instrumentsSelling, general and administrative expenses(32) 28  
Other derivative instrumentsOther income (loss) — net(55) 34  
Total $(151) $28  

Derivatives Not Designated as Hedging InstrumentsLocation of Gain (Loss) Recognized in Income
Gain (Loss)
Recognized in Income
Nine Months Ended
September 27,
2019
September 28,
2018
Foreign currency contractsNet operating revenues$2
$34
Foreign currency contractsCost of goods sold4
3
Foreign currency contractsOther income (loss) — net(46)(87)
Interest rate contractsInterest expense—
(1)
Commodity contractsCost of goods sold(58)15
Other derivative instrumentsSelling, general and administrative expenses32
11
Other derivative instrumentsOther income (loss) — net39
—
Total $(27)$(25)

NOTE 7: DEBT AND BORROWING ARRANGEMENTS
During the ninesix months ended September 27, 2019,June 26, 2020, the Company issued euro- and U.S. dollar-denominated debt of €3,500 million and $2,000 million, respectively.$11,500 million. The carrying value of this debt as of September 27, 2019June 26, 2020 was $5,793$11,396 million. The general terms of the notes issued are as follows:
€750•$1,000 million total principal amount of notes due March 8, 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 September 22, 2022,25, 2025, at a fixed interest rate of 0.1252.950 percent;
€1,000 million total principal amount of notes due September 22, 2026, at a fixed interest rate of 0.75 percent;
€750 million total principal amount of notes due March 8, 2031, at a fixed interest rate of 1.25 percent;
•$1,000 million total principal amount of notes due September 6, 2024,March 25, 2027, at a fixed interest rate of 1.753.375 percent; and
•$1,500 million total principal amount of notes due June 1, 2027, at a fixed interest rate of 1.450 percent;
•$1,250 million total principal amount of notes due March 25, 2030, at a fixed interest rate of 3.450 percent;
•$1,500 million total principal amount of notes due June 1, 2030, at a fixed interest rate of 1.650 percent;
•$500 million total principal amount of notes due March 25, 2040, at a fixed interest rate of 4.125 percent;
•$1,000 million total principal amount of notes due September 6, 2029,June 1, 2040, at a fixed interest rate of 2.125 percent.2.500 percent;
During the nine months ended September 27, 2019, the Company retired upon maturity:•$1,250 million total principal amount of notes due March 25, 2050, at a fixed interest rate of 4.200 percent;
€•$1,500 million total principal amount of notes due March 8, 2019,June 1, 2050, at a variablefixed interest rate equal to the three month EURIBOR plus 0.25of 2.600 percent; and
•$1,000 million total principal amount of notes due May 30, 2019,June 1, 2060, at a fixed interest rate of 1.375 percent; and2.750 percent.
€2,000During the six months ended June 26, 2020, the Company retired upon maturity:
•AUD450 million total principal amount of notes due SeptemberJune 9, 2019,2020, at a variablefixed interest rate equal to the three month EURIBOR plus 0.23 percent.
NOTE 8: LEASES
We have operating leases primarily for real estate, vehicles,of 2.600 percent; and manufacturing and other equipment.
Balance sheet information related to operating leases is as follows (in millions):
 September 27,
2019
Operating lease ROU assets1
$1,310
Current portion of operating lease liabilities2
$253
Noncurrent portion of operating lease liabilities3
1,076
Total operating lease liabilities$1,329
1 Operating lease ROU assets are recorded in the line item other assets in our condensed consolidated balance sheet.
2 •The current portion$171 million total principal amount of operating lease liabilities is recorded in the line item accounts payable and accrued expenses in our condensed0 coupon notes due June 20, 2020.
consolidated balance sheet.
16
3 The 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 $78 million and $236 million for the three and nine months ended September 27, 2019, respectively. Cash paid for amounts included in the measurement of operating lease liabilities was $257 million during the nine months ended September 27, 2019. Operating lease ROU assets obtained in exchange for operating lease obligations were $214 million during the nine months ended September 27, 2019.


Information associated with the measurement of our remaining operating lease obligations as of September 27, 2019 is as follows:
Weighted-average remaining lease term7 years
Weighted-average discount rate3%

The following table summarizes the maturity of our operating lease liabilities as of September 27, 2019 (in millions):
2019$72
2020272
2021236
2022201
2023163
Thereafter521
Total operating lease payments1,465
Less: Imputed interest136
Total operating lease liabilities$1,329

Our leases have remaining lease terms of 1 year to 25 years, inclusive of renewal or termination options that we are reasonably certain to exercise.
NOTE 9: 8: COMMITMENTS AND CONTINGENCIES
Guarantees
As of September 27, 2019,June 26, 2020, we were contingently liable for guarantees of indebtedness owed by third parties of $595$480 million, of which $244$135 million was related to variable interest entities. Our guarantees are primarily related to third-party customers, bottlers vendors and container manufacturing operationsvendors and have arisen through the normal course of business. These guarantees have various terms, and none of these guarantees is individually significant. 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 of 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, some of which the outcome is uncertain.have an uncertain outcome. 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. 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 15.


14.
On September 17, 2015, the Company received a Statutory Notice of Deficiency (the "Notice") from the Internal Revenue Service ("IRS") for the tax years 2007 through 2009 after a five-year audit. In the Notice, the IRS claimed that the Company's U.S. 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 certain foreign 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 (the "Closing Agreement") that applied back to 1987. The Closing Agreement provided prospective penalty protection conditioned on the Company's continued adherence to the prescribed methodology absent a change in material facts or circumstances or relevant federal tax law. Although the IRS subsequently asserted, without explanation, that material facts and circumstances and relevant federal tax law had changed, it has not asserted penalties. 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 Closing Agreement. The IRS designated the matter for litigation on October 15, 2015. Due to the fact that the matter remains designated, the Company is 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 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
17

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. The Company and the IRS filed and exchanged final post-trial briefs in April 2019. It is not known how much time will elapse thereafter prior to the issuance of the court's opinion. In the interim, or subsequent to the court's opinion, 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 court will rule in the Company's favor, and it is possible that all or some portion of the adjustment proposed by the Notice ultimately could be sustained. In that event, the Company may 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 Cuts and Jobs Act of 2017 ("Tax Reform Act.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 $308$276 million and $362$301 million as of September 27, 2019June 26, 2020 and December 31, 2018,2019, respectively.
18

NOTE 10: 9: OTHER COMPREHENSIVE INCOME
AOCI attributable to shareowners of The Coca-Cola Company is separately presented in our condensed consolidated balance sheetsheets 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 sheetsheets 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):
 September 27,
2019
 December 31, 2018
Foreign currency translation adjustments1
$(11,803) $(11,045)
Accumulated derivative net gains (losses)1, 2
(125) (126)
Unrealized net gains (losses) on available-for-sale debt securities1
103
 50
Adjustments to pension and other benefit liabilities1
(1,881) (1,693)
Accumulated other comprehensive income (loss)$(13,706) $(12,814)

1The change in the balance from December 31, 2018 includes a portion of a $513 million reclassification to reinvested earnings from AOCI
June 26,
2020		December 31, 2019
Foreign currency translation adjustments$(14,204) $(11,270) 
Accumulated derivative net gains (losses)(219) (209) 
Unrealized net gains (losses) on available-for-sale debt securities56  75  
Adjustments to pension and other benefit liabilities(2,093) (2,140) 
Accumulated other comprehensive income (loss)$(16,460) $(13,544) 
upon the adoption of ASU 2018-02. Refer to Note 1.
2 The 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 6.
The following table summarizes the allocation of total comprehensive income between shareowners of The Coca-Cola Company and noncontrolling interests (in millions):
Nine Months Ended September 27, 2019Six Months Ended June 26, 2020
Shareowners of
The Coca-Cola Company

Noncontrolling
Interests

Total
Shareowners of
The Coca-Cola Company		Noncontrolling
Interests		Total
Consolidated net income$6,878
$42
$6,920
Consolidated net income$4,554  $—  $4,554  
Other comprehensive income: Other comprehensive income: 
Net foreign currency translation adjustments(549)(130)(679)Net foreign currency translation adjustments(2,934) (401) (3,335) 
Net gains (losses) on derivatives1
30
—
30
Net gains (losses) on derivatives1
(10) —  (10) 
Net change in unrealized gains (losses) on available-for-sale debt
securities2
46
—
46
Net change in unrealized gains (losses) on available-for-sale debt
securities2
(19) —  (19) 
Net change in pension and other benefit liabilities100
—
100
Net change in pension and other benefit liabilities47  —  47  
Total comprehensive income$6,505
$(88)$6,417
Total comprehensive income (loss)Total comprehensive income (loss)$1,638  $(401) $1,237  
1 Refer to Note 6 for additional information related to the net gains or losses on derivative instruments.
2 Refer to Note 4 for additional information related to the net unrealized gains or losses on available-for-sale debt securities.

19



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 26, 2020Before-Tax AmountIncome TaxAfter-Tax Amount
Foreign currency translation adjustments:
Translation adjustments arising during the period$(894) $14  $(880) 
Reclassification adjustments recognized in net income—  —  —  
Gains (losses) on intra-entity transactions that are of a long-term investment nature160  —  160  
Gains (losses) on net investment hedges arising during the period1
(64) 16  (48) 
Net foreign currency translation adjustments$(798) $30  $(768) 
Derivatives:
Gains (losses) arising during the period$(88) $25  $(63) 
Reclassification adjustments recognized in net income49  (12) 37  
Net gains (losses) on derivatives1
$(39) $13  $(26) 
Available-for-sale debt securities:
Unrealized gains (losses) arising during the period$(14) $5  $(9) 
Reclassification adjustments recognized in net income(3) 1  (2) 
Net change in unrealized gains (losses) on available-for-sale debt securities2
$(17) $6  $(11) 
Pension and other benefit liabilities:
Net pension and other benefit liabilities arising during the period$1  $7  $8  
Reclassification adjustments recognized in net income43  (10) 33  
Net change in pension and other benefit liabilities$44  $(3) $41  
Other comprehensive income (loss) attributable to shareowners of The Coca-Cola
Company		$(810) $46  $(764) 
1Refer to Note 6 for additional information related to the net gains or losses on derivative instruments.
2Refer to Note 4 for additional information related to the net unrealized gains or losses on available-for-sale debt securities.
Six Months Ended June 26, 2020Before-Tax AmountIncome TaxAfter-Tax Amount
Foreign currency translation adjustments:
Translation adjustments arising during the period$(3,175) $226  $(2,949) 
Reclassification adjustments recognized in net income3  —  3  
Gains (losses) on intra-entity transactions that are of a long-term investment nature3  —  3  
Gains (losses) on net investment hedges arising during the period1
12  (3) 9  
Net foreign currency translation adjustments$(3,157) $223  $(2,934) 
Derivatives:
Gains (losses) arising during the period$(65) $17  $(48) 
Reclassification adjustments recognized in net income50  (12) 38  
Net gains (losses) on derivatives1
$(15) $5  $(10) 
Available-for-sale debt securities:
Unrealized gains (losses) arising during the period$(22) $10  $(12) 
Reclassification adjustments recognized in net income(9) 2  (7) 
Net change in unrealized gains (losses) on available-for-sale debt securities2
$(31) $12  $(19) 
Pension and other benefit liabilities:
Net pension and other benefit liabilities arising during the period$(24) $6  $(18) 
Reclassification adjustments recognized in net income86  (21) 65  
Net change in pension and other benefit liabilities$62  $(15) $47  
Other comprehensive income (loss) attributable to shareowners of The Coca-Cola
Company		$(3,141) $225  $(2,916) 
1Refer to Note 6 for additional information related to the net gains or losses on derivative instruments.
2Refer to Note 4 for additional information related to the net unrealized gains or losses on available-for-sale debt securities.

20

Three Months Ended September 27, 2019Before-Tax Amount
 Income Tax
 After-Tax Amount
Three Months Ended June 28, 2019Three Months Ended June 28, 2019Before-Tax AmountIncome TaxAfter-Tax Amount
Foreign currency translation adjustments:     Foreign currency translation adjustments:
Translation adjustments arising during the period$(256) $(6) $(262)Translation adjustments arising during the period$(882) $2  $(880) 
Gains (losses) on intra-entity transactions that are of a long-term investment nature(924) —
 (924)Gains (losses) on intra-entity transactions that are of a long-term investment nature323  —  323  
Gains (losses) on net investment hedges arising during the period1
489
 (122) 367
Gains (losses) on net investment hedges arising during the period1
(156) 29  (127) 
Net foreign currency translation adjustments$(691) $(128) $(819)Net foreign currency translation adjustments$(715) $31  $(684) 
Derivatives:
 
 
Derivatives:
Gains (losses) arising during the period$(2) $1
 $(1)Gains (losses) arising during the period$(81) $19  $(62) 
Reclassification adjustments recognized in net income62
 (15) 47
Reclassification adjustments recognized in net income51  (13) 38  
Net gains (losses) on derivatives1
$60
 $(14) $46
Net gains (losses) on derivatives1
$(30) $6  $(24) 
Available-for-sale debt securities:
 
 
Available-for-sale debt securities:
Unrealized gains (losses) arising during the period$29
 $(7) $22
Unrealized gains (losses) arising during the period$35  $(3) $32  
Reclassification adjustments recognized in net income(8) 2
 (6)Reclassification adjustments recognized in net income(22) 5  (17) 
Net change in unrealized gains (losses) on available-for-sale debt securities2
$21
 $(5) $16
Net change in unrealized gains (losses) on available-for-sale debt securities2
$13  $2  $15  
Pension and other benefit liabilities:
 
 
Pension and other benefit liabilities:
Net pension and other benefit liabilities arising during the period$4
 $—
 $4
Net pension and other benefit liabilities arising during the period$8  $1  $9  
Reclassification adjustments recognized in net income37
 (9) 28
Reclassification adjustments recognized in net income37  (9) 28  
Net change in pension and other benefit liabilities$41
 $(9) $32
Net change in pension and other benefit liabilities$45  $(8) $37  
Other comprehensive income (loss) attributable to shareowners of The Coca-Cola
Company
$(569) $(156) $(725)Other comprehensive income (loss) attributable to shareowners of The Coca-Cola
Company		$(687) $31  $(656) 
1
1Refer to Note 6 for additional information related to the net gains or losses on derivative instruments.
2Refer to Note 4 for additional information related to the net unrealized gains or losses on available-for-sale debt securities.
Six Months Ended June 28, 2019Before-Tax AmountIncome TaxAfter-Tax Amount
Foreign currency translation adjustments:
Translation adjustments arising during the period$115  $(71) $44  
Reclassification adjustments recognized in net income192  —  192  
Gains (losses) on intra-entity transactions that are of a long-term investment nature36  —  36  
Gains (losses) on net investment hedges arising during the period1
(3) 1  (2) 
Net foreign currency translation adjustments$340  $(70) $270  
Derivatives:
Gains (losses) arising during the period$(117) $23  $(94) 
Reclassification adjustments recognized in net income104  (26) 78  
Net gains (losses) on derivatives1
$(13) $(3) $(16) 
Available-for-sale debt securities:
Unrealized gains (losses) arising during the period$59  $(10) $49  
Reclassification adjustments recognized in net income(24) 5  (19) 
Net change in unrealized gains (losses) on available-for-sale debt securities2
$35  $(5) $30  
Pension and other benefit liabilities:
Net pension and other benefit liabilities arising during the period$7  $5  $12  
Reclassification adjustments recognized in net income74  (18) 56  
Net change in pension and other benefit liabilities$81  $(13) $68  
Other comprehensive income (loss) attributable to shareowners of The Coca-Cola
Company		$443  $(91) $352  
1Refer to Note 6 for additional information related to the net gains or losses on derivative instruments.
2Refer to Note 4 for additional information related to the net unrealized gains or losses on available-for-sale debt securities.



Refer to Note 6 for additional information related to the net gains or losses on derivative instruments.
2
Refer to Note 4 for additional information related to the net unrealized gains or losses on available-for-sale debt securities.
21

Nine Months Ended September 27, 2019Before-Tax Amount
 Income Tax
 After-Tax Amount
Foreign currency translation adjustments:     
Translation adjustments arising during the period$(141) $(77) $(218)
Reclassification adjustments recognized in net income192
 —
 192
Gains (losses) on intra-entity transactions that are of a long-term investment nature(888) —
 (888)
Gains (losses) on net investment hedges arising during the period1
486
 (121) 365
Net foreign currency translation adjustments$(351) $(198) $(549)
Derivatives:     
Gains (losses) arising during the period$(119) $24
 $(95)
Reclassification adjustments recognized in net income166
 (41) 125
Net gains (losses) on derivatives1
$47
 $(17) $30
Available-for-sale debt securities:     
Unrealized gains (losses) arising during the period$88
 $(17) $71
Reclassification adjustments recognized in net income(32) 7
 (25)
Net change in unrealized gains (losses) on available-for-sale debt securities2
$56
 $(10) $46
Pension and other benefit liabilities:     
Net pension and other benefit liabilities arising during the period$11
 $5
 $16
Reclassification adjustments recognized in net income111
 (27) 84
Net change in pension and other benefit liabilities$122
 $(22) $100
Other comprehensive income (loss) attributable to shareowners of The Coca-Cola
   Company
$(126) $(247) $(373)
1
Refer to Note 6 for additional information related to the net gains or losses on derivative instruments.
2
Refer to Note 4 for additional information related to the net unrealized gains or losses on available-for-sale debt securities.


Three Months Ended September 28, 2018Before-Tax Amount
 Income Tax
 After-Tax Amount
Foreign currency translation adjustments:     
Translation adjustments arising during the period$(446) $19
 $(427)
Reclassification adjustments recognized in net income170
 —
 170
Gains (losses) on intra-entity transactions that are of a long-term investment nature
(119) —
 (119)
Gains (losses) on net investment hedges arising during the period1
59
 (15) 44
Net foreign currency translation adjustments$(336)
$4

$(332)
Derivatives:     
Gains (losses) arising during the period$19
 $(7) $12
Reclassification adjustments recognized in net income(58) 16
 (42)
Net gains (losses) on derivatives1
$(39) $9
 $(30)
Available-for-sale debt securities:     
Unrealized gains (losses) arising during the period$(13) $24
 $11
Reclassification adjustments recognized in net income(3) 2
 (1)
Net change in unrealized gains (losses) on available-for-sale debt securities2
$(16) $26
 $10
Pension and other benefit liabilities:     
Net pension and other benefit liabilities arising during the period$7
 $—
 $7
Reclassification adjustments recognized in net income65
 (16) 49
Net change in pension and other benefit liabilities$72
 $(16) $56
Other comprehensive income (loss) attributable to shareowners of The Coca-Cola
Company		$(319)
$23

$(296)
1
Refer to Note 6 for additional information related to the net gains or losses on derivative instruments.
2
Refer to Note 4 for additional information related to the net unrealized gains or losses on available-for-sale debt securities.
Nine Months Ended September 28, 2018Before-Tax Amount
 Income Tax
 After-Tax Amount
Foreign currency translation adjustments:     
Translation adjustments arising during the period$(1,431) $(66) $(1,497)
Reclassification adjustments recognized in net income268
 —
 268
Gains (losses) on intra-entity transactions that are of a long-term investment nature
(695) —
 (695)
Gains (losses) on net investment hedges arising during the period1
353
 (88) 265
Net foreign currency translation adjustments$(1,505)
$(154)
$(1,659)
Derivatives:     
Gains (losses) arising during the period$84
 $(21) $63
Reclassification adjustments recognized in net income(56) 15
 (41)
Net gains (losses) on derivatives1
$28
 $(6) $22
Available-for-sale debt securities:     
Unrealized gains (losses) arising during the period$(139) $45
 $(94)
Reclassification adjustments recognized in net income2
 1
 3
Net change in unrealized gains (losses) on available-for-sale debt securities2
$(137) $46
 $(91)
Pension and other benefit liabilities:     
Net pension and other benefit liabilities arising during the period$278
 $(62) $216
Reclassification adjustments recognized in net income209
 (53) 156
Net change in pension and other benefit liabilities$487
 $(115) $372
Other comprehensive income (loss) attributable to shareowners of The Coca-Cola
Company		$(1,127) $(229) $(1,356)
1
Refer to Note 6 for additional information related to the net gains or losses on derivative instruments.
2
Refer to Note 4 for additional information related to the net unrealized gains or losses on available-for-sale debt securities.




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 ComponentFinancial Statement Line ItemThree Months Ended June 26, 2020Six Months Ended June 26, 2020
Foreign currency translation adjustments:
Divestitures, deconsolidations and other1
Other income (loss) — net$—  $3  
Income before income taxes—  3  
Income taxes—  —  
Consolidated net income$—  $3  
Derivatives:
Foreign currency contractsNet operating revenues$(3) $1  
Foreign currency contractsCost of goods sold(4) (5) 
Foreign currency contractsOther income (loss) — net44  29  
Foreign currency and interest rate contractsInterest expense12  25  
Income before income taxes49  50  
Income taxes(12) (12) 
Consolidated net income$37  $38  
Available-for-sale debt securities:
Sale of debt securitiesOther income (loss) — net$(3) $(9) 
Income before income taxes(3) (9) 
Income taxes1  2  
Consolidated net income$(2) $(7) 
Pension and other benefit liabilities:
Recognized net actuarial lossOther income (loss) — net$43  $87  
Recognized prior service cost (credit)Other income (loss) — net—  (1) 
Income before income taxes43  86  
Income taxes(10) (21) 
Consolidated net income$33  $65  
1Related to the sale of a portion of our ownership interest in one of our equity method investments. Refer to Note 2.
  
Amount Reclassified from AOCI
into Income
 
Description of AOCI ComponentFinancial Statement Line ItemThree Months Ended September 27, 2019
 Nine Months Ended September 27, 2019
 
Foreign currency translation adjustments:     
Divestitures, deconsolidations and other1
Other income (loss) — net$—
 $192
 
 Income before income taxes—
 192
 
 Income taxes—
 —
 
 Consolidated net income$—
 $192
 
Derivatives:     
Foreign currency contractsNet operating revenues$5
 $(2) 
Foreign currency contractsCost of goods sold(2) (9) 
Foreign currency contractsOther income (loss) — net46
 139
 
Divestitures, deconsolidations and otherOther income (loss) — net—
 1
 
Foreign currency and interest rate contractsInterest expense13
 37
 
 Income before income taxes62
 166
 
 Income taxes(15) (41) 
 Consolidated net income$47
 $125
 
Available-for-sale debt securities:     
Sale of debt securitiesOther income (loss) — net$(8) $(32) 
 Income before income taxes(8) (32) 
 Income taxes2
 7
 
 Consolidated net income$(6) $(25) 
Pension and other benefit liabilities:     
Recognized net actuarial lossOther income (loss) — net$39
 $116
 
Recognized prior service cost (credit)Other income (loss) — net(2) (5) 
 Income before income taxes37
 111
 
 Income taxes(9) (27) 
 Consolidated net income$28
 $84
 
1
Primarily related to our previously held equity ownership interest in CHI and the sale of a portion of our equity ownership interest in Andina. Refer to Note 2.


NOTE 11: 10: CHANGES IN EQUITY
The following 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  
 
Three Months Ended June 26, 2020Common Shares OutstandingTotalReinvested
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Common
Stock		Capital
Surplus		Treasury
Stock		Non-
controlling
Interests
March 27, 20204,294  $19,834  $66,870  $(15,696) $1,760  $17,312  $(52,088) $1,676  
Comprehensive income (loss)—  1,049  1,779  (764) —  —  —  34  
Dividends paid/payable to
shareowners of The Coca-Cola
Company ($0.41 per share)		—  (1,761) (1,761) —  —  —  —  —  
Dividends paid to noncontrolling
  interests
—  (5) —  —  —  —  —  (5) 
Impact related to stock-based
compensation plans		1  72  —  —  —  55  17  —  
June 26, 20204,295  $19,189  $66,888  $(16,460) $1,760  $17,367  $(52,071) $1,705  
22

   
Shareowners of The Coca-Cola Company  
 
Three Months Ended September 27, 2019Common Shares Outstanding
Total
Reinvested
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Common
Stock

Capital
Surplus

Treasury
Stock

Non-
controlling
Interests

June 28, 20194,275
$20,295
$64,602
$(12,981)$1,760
$16,833
$(52,033)$2,114
Comprehensive income (loss)—
1,723
2,593
(725)—
—
—
(145)
Dividends paid/payable to
  shareowners of The Coca-Cola
  Company ($0.40 per share)
—
(1,714)(1,714)—
—
—
—
—
Dividends paid to noncontrolling
   interests
—
(7)—
—
—
—
—
(7)
Business combinations including
   purchase accounting adjustments
—
8
—
—
—
—
—
8
Impact related to stock-based
   compensation plans
9
378
—
—
—
206
172
—
September 27, 20194,284
$20,683
$65,481
$(13,706)$1,760
$17,039
$(51,861)$1,970
 
Shareowners of The Coca-Cola Company  
 
Six Months Ended June 26, 2020Common Shares OutstandingTotalReinvested
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Common
Stock		Capital
Surplus		Treasury
Stock		Non-
controlling
Interests
December 31, 20194,280  $21,098  $65,855  $(13,544) $1,760  $17,154  $(52,244) $2,117  
Comprehensive income (loss)—  1,237  4,554  (2,916) —  —  —  (401) 
Dividends paid/payable to
shareowners of The Coca-Cola
Company ($0.82 per share)		—  (3,521) (3,521) —  —  —  —  —  
Dividends paid to noncontrolling
interests		—  (11) —  —  —  —  —  (11) 
Impact related to stock-based
compensation plans		15  386  —  —  —  213  173  —  
June 26, 20204,295  $19,189  $66,888  $(16,460) $1,760  $17,367  $(52,071) $1,705  
 
Shareowners of The Coca-Cola Company  
 
Three Months Ended June 28, 2019Common Shares OutstandingTotalReinvested
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Common
Stock		Capital
Surplus		Treasury
Stock		Non-
controlling
Interests
March 29, 20194,268  $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, 20194,275  $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, 2019Common Shares OutstandingTotalReinvested
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Common
Stock		Capital
Surplus		Treasury
Stock		Non-
controlling
Interests
December 31, 20184,268  $19,058  $63,234  $(12,814) $1,760  $16,520  $(51,719) $2,077  
Adoption of accounting standards—  (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, 20194,275  $20,295  $64,602  $(12,981) $1,760  $16,833  $(52,033) $2,114  
23
   
Shareowners of The Coca-Cola Company  
 
Nine Months Ended September 27, 2019Common Shares Outstanding
Total
Reinvested
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Common
Stock

Capital
Surplus

Treasury
Stock

Non-
controlling
Interests

December 31, 20184,268
$19,058
$63,234
$(12,814)$1,760
$16,520
$(51,719)$2,077
Adoption of accounting standards1
—
(18)501
(519)—
—
—
—
Comprehensive income (loss)—
6,417
6,878
(373)—
—
—
(88)
Dividends paid/payable to
   shareowners of The Coca-Cola
   Company ($1.20 per share)
—
(5,132)(5,132)—
—
—
—
—
Dividends paid to noncontrolling
   interests
—
(27)—
—
—
—
—
(27)
Business combinations including
   purchase accounting adjustments
—
8
—
—
—
—
—
8
Purchases of treasury stock(14)(635)—
—
—
—
(635)—
Impact related to stock-based
   compensation plans
30
1,012
—
—
—
519
493
—
September 27, 20194,284
$20,683
$65,481
$(13,706)$1,760
$17,039
$(51,861)$1,970
1Refer to Note 1 and Note 6.



   Shareowners of The Coca-Cola Company   
Three Months Ended September 28, 2018Common Shares Outstanding
Total
Reinvested
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Common
Stock
Capital
Surplus
Treasury
Stock
Non-controlling
Interests
June 29, 20184,253
$20,176
$63,808
$(11,774)$1,760
$16,117
$(51,588)$1,853
Comprehensive income (loss)—
1,644
1,880
(296)—
—
—
60
Dividends paid/payable to
shareowners of The Coca-Cola
Company ($0.39 per share)		—
(1,660)(1,660)—
—
—
—
—
Dividends paid to noncontrolling
  interests
—
(6)—
—
—
—
—
(6)
Purchases of treasury stock(6)(241)—
—
—
—
(241)—
Impact related to stock-based
   compensation plans
9
258
—
—
—
149
109
—
Other activities—
7
—
—
—
—
—
7
September 28, 20184,256
$20,178
$64,028
$(12,070)$1,760
$16,266
$(51,720)$1,914
   Shareowners of The Coca-Cola Company   
Nine Months Ended September 28, 2018Common Shares Outstanding
Total
Reinvested
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Common
Stock
Capital
Surplus
Treasury
Stock
Non-controlling
Interests
December 31, 20174,259
$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)—
4,217
5,564
(1,356)—
—
—
9
Dividends paid/payable to
  shareowners of The Coca-Cola
  Company ($1.17 per share)
—
(4,980)(4,980)—
—
—
—
—
Dividends paid to noncontrolling
  interests
—
(19)—
—
—
—
—
(19)
Business combinations—
13
—
—
—
—
—
13
Purchases of treasury stock(33)(1,451)—
—
—
—
(1,451)—
Impact related to stock-based
   compensation plans
30
810
—
—
—
402
408
—
Other activities—
6
—
—
—
—
—
6
September 28, 20184,256
$20,178
$64,028
$(12,070)$1,760
$16,266
$(51,720)$1,914
1 Refer to Note 1, Note 3 and Note 4.



NOTE 12: 11: SIGNIFICANT OPERATING AND NONOPERATING ITEMS
Other Operating Charges
During the three months ended September 27, 2019,June 26, 2020, the Company recorded other operating charges of $125$173 million. These charges included an impairment charge of $55 million related to a trademark in North America, which was primarily consisteddriven by the impact of the COVID-19 pandemic, revised projections of future operating results and a change in brand focus in the Company's portfolio. Also included were charges of $35 million related to discontinuing the Odwalla juice business and an impairment charge of $8 million related to the Odwalla trademark. Other operating charges also included $22 million related to the Company's productivity and reinvestment program, $18 million related to the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition and $12 million related to the restructuring of our water manufacturing operations in the United States. Refer to Note 2 for additional information on the fairlife acquisition. Refer to Note 12 for additional information on the Company's productivity and reinvestment program. Refer to Note 15 for additional information on the impairment charges. Refer to Note 16 for the impact these charges had on our operating segments and Corporate.
During the six months ended June 26, 2020, the Company recorded other operating charges of $375 million. These charges included an impairment charge of $160 million related to the Odwalla trademark and charges of $35 million related to discontinuing the Odwalla juice business. These charges also included an impairment charge of $55 million related to a trademark in North America, which was primarily driven by the impact of the COVID-19 pandemic, revised projections of future operating results and a change in brand focus in the Company's portfolio. Other operating charges also included $61 million related to the Company's productivity and reinvestment program, and $42$29 million related to the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition and $12 million related to the restructuring of our water manufacturing operations in the United States. Refer to Note 2 for additional information on the fairlife acquisition. Refer to Note 12 for additional information on the Company's productivity and reinvestment program. Refer to Note 15 for additional information on the impairment charges. Refer to Note 16 for the impact these charges had on our operating segments and Corporate.
During the three months ended June 28, 2019, the Company recorded other operating charges of a trademark in Asia Pacific.$92 million. These charges primarily consisted of $55 million related to the Company's productivity and reinvestment program. In addition, other operating charges included $21$29 million 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 1312 for additional information on the Company's productivity and reinvestment program. Refer to Note 16 for information on how the Company determined the trademark impairment charge. Refer to Note 17 for the impact these charges had on our operating segments and Corporate.
During the ninesix months ended September 27,June 28, 2019, the Company recorded other operating charges of $344$219 million. These charges primarily consisted of $184$123 million related to the Company's productivity and reinvestment program and $42 million related to the impairment of a trademark in Asia Pacific.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 $61$40 million for costs incurred to refranchise certain of our North America bottling operations. Refer to Note 2 for additional information on the acquisition of Costa. Refer to Note 13 for additional information on the Company's productivity and reinvestment program. Refer to Note 16 for information on how the Company determined the trademark impairment charge. Refer to Note 17 for the impact these charges had on our operating segments and Corporate.
During the three months ended September 28, 2018, the Company recorded other operating charges of $155 million. These charges primarily consisted of $107 million related to the Company's productivity and reinvestment program. In addition, other operating charges included $38 million related to costs incurred to refranchise certain of our North America bottling operations. Other operating charges also included $4$2 million related to tax litigation expense. Refer to Note 2 for additional information on the refranchisingacquisition of our bottling operations.Costa. Refer to Note 98 for additional information related to the tax litigation. Refer to Note 1312 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 nine months ended September 28, 2018, the Company recorded other operating charges of $916 million. These charges primarily consisted of $450 million of CCR asset impairments and $313 million related to the Company's productivity and reinvestment program. In addition, other operating charges included $117 million related to costs incurred to refranchise certain of our North America bottling operations. Other operating charges also included $31 million related to tax litigation expense. Refer to Note 2 for additional information on the refranchising of our bottling operations. 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 16 for information on how the Company determined the asset impairment charges. Refer to Note 17 for the impact these charges had on our operating segments and Corporate.
Other Nonoperating Items
Equity Income (Loss) — Net
During the three and ninesix months ended September 27,June 26, 2020, the Company recorded net charges of $63 million and $101 million, respectively. During the three and six months ended June 28, 2019, the Company recorded net charges of $39$26 million and $107 million, respectively. During the three and nine months ended September 28, 2018, the Company recorded a net gain of $19 million and a net charge of $65$68 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 1716 for the impact these items had on our operating segments and Corporate.
24










Other Income (Loss) — Net
During the three months ended September 27, 2019,June 26, 2020, the Company recognized a gain of $739 million on the sale of a retail and office building in New York City. The Company also recognized a net gain of $38$247 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. In addition, theThe Company also recorded an other-than-temporary impairment charge of $120$38 million related to one of our equity method investees in Latin America and a charge of $19 million related to asset write-offs associated with the restructuring of our water manufacturing operations in the United States. Refer to Note 4 for additional information on equity and debt securities. Refer to Note 15 for additional information on the impairment charge. Refer to Note 16 for the impact these items had on our operating segments and Corporate.
During the six months ended June 26, 2020, the Company recognized a gain of $902 million in conjunction with the fairlife acquisition, which resulted from the remeasurement of our previously held equity interest in fairlife to fair value, and a gain of $18 million related to the sale of a portion of our ownership interest in one of our equity method investments. These gains were partially offset by an other-than-temporary impairment charge of $38 million related to one of our equity method investees in Latin America, a charge of $19 million related to asset write-offs associated with the restructuring of our water manufacturing operations in the United States, a net loss of $144 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 net loss of $55 million related to economic hedging activities. Refer to Note 2 for additional information on the fairlife acquisition. Refer to Note 4 for additional information on equity and debt securities. Refer to Note 6 for additional information on our economic hedging activities. Refer to Note 15 for additional information on the impairment charge. Refer to Note 16 for the impact these items had on our operating segments and Corporate.
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 15 for information on the impairment charge. Refer to Note 16 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, and other-than-temporary impairment charges of $255$57 million related to certainone of our equity method investees in the Middle East.North America, and $49 million related to one of our other equity method investees. The Company also recorded net chargesan adjustment to reduce the carrying amount of $103CCBA's fixed assets and definite-lived intangible assets by $160 million primarily related to post-closing adjustments as contemplated by the related agreements associated with the refranchising of certain bottling territories in North America. Refer to Note 2 for additional information on refranchising activities. Refer to Note 4 for additional information on equity and debt securities. Refer to Note 16 for information on how the Company determined the impairment charges. Refer to Note 17 for the impact these items had on our operating segments and Corporate.
During the nine months ended September 27, 2019, the Company recognized a gain$121 million loss in conjunction with our acquisition of $739 million on the sale of a retail and office buildingremaining equity ownership interest in New York City. The Company also recognizedCHI. These charges were partially offset by a net gain of $197$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. These gains were partially offset by other-than-temporary impairment charges of $406 million related to CCBJHI, an equity method investee, $57 million related to one of our equity method investees in North America, $255 million related to certain equity method investees in the Middle East and $49 million related to one of our equity method investees in Latin America. 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 $107 million primarily related to post-closing adjustments as contemplated by the related agreements associated with 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. 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 1615 for additional information on how the Company determined the adjustment to CCBA's assets, impairment charges and the loss recognized in conjunction with our acquisition of the remaining equity ownership interest in CHI. Refer to Note 1716 for the impact these items had on our operating segments and Corporate.
During the three months ended September 28, 2018, the Company recorded an impairment charge of $554 million related to assets held by CCBA, net charges of $275 million due to the refranchising of certain bottling territories in North America and an other-than-temporary impairment charge of $205 million related to our equity method investee in Indonesia. The Company also recorded charges of $35 million related to pension settlements and charges of $12 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 $370 million related to the sale of our equity ownership in Lindley and a net gain of $11 million related to the refranchising of our Latin American bottling operations. The Company also recognized a net gain of $41 million related to economic hedging activity associated with certain acquisition and divestiture activities, and a net gain of $64 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 impairment, refranchising activities, North America conversion payments and the sale of our equity ownership in Lindley. Refer to Note 4 for additional information on equity and debt securities. Refer to Note 6 for additional information on our hedging activities. Refer to Note 16 for information on how the Company determined the impairment charges. Refer to Note 17 for the impact these items had on our operating segments and Corporate.
During the nine months ended September 28, 2018, the Company recorded an impairment charge of $554 million related to assets held by CCBA, net charges of $379 million due to the refranchising of certain bottling territories in North America and other-than-temporary impairment charges of $257 million related to two of our equity method investees. The Company also recorded charges of $121 million related to pension settlements, charges 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 $33 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 $370 million related to the sale of our equity ownership in Lindley and a net gain of $47 million related to the refranchising of our Latin American bottling operations. The Company also recognized a net gain of $41 million related to economic hedging activity associated with certain acquisition and divestiture activities, and a net gain of $15 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 impairment, refranchising activities, North America conversion payments and the sale of our equity ownership in Lindley. Refer to Note 4 for additional


information on equity and debt securities. Refer to Note 6 for additional information on our hedging activities. Refer to Note 16 for information on how the Company determined the impairment charges. Refer to Note 17 for the impact these items had on our operating segments and Corporate.
NOTE 13: 12: 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‑ColaCoca-Cola Enterprises Inc.'s former North 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 focusesfocused 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;
25

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 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. Certain productivity initiatives included in this program, primarily related to our enabling services organization, will continue beyond 2019.until the initiatives have been completed.
The Company has incurred total pretax expenses of $3,750$3,891 million related to 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 1716 for the impact these charges had on our operating segments and Corporate. Outside services reported in the tables below primarily relate to expenses in connection with legal, outplacement and consulting activities. Other direct costs reported in the 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 summarizestables summarize 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 and six months ended September 27, 2019June 26, 2020 (in millions):
 Accrued Balance
June 28, 2019
Costs Incurred
Three Months Ended
September 27, 2019

Payments
Noncash
and
Exchange
Accrued Balance
September 27, 2019

Severance pay and benefits$49
$6
$(10)$—
$45
Outside services8
23
(26)—
5
Other direct costs8
32
(26)(6)8
Total$65
$61
$(62)$(6)$58

Accrued Balance
March 27, 2020		Costs
Incurred		PaymentsNoncash
and
Exchange		Accrued Balance
June 26, 2020
Severance pay and benefits$50  $—  $(6) $2  $46  
Outside services1  10  (11) —  —  
Other direct costs3  12  (13) (1) 1  
Total$54  $22  $(30) $1  $47  


Accrued Balance
December 31, 2019		Costs
Incurred		PaymentsNoncash
and
Exchange		Accrued Balance
June 26, 2020
Severance pay and benefits$58  $1  $(13) $—  $46  
Outside services1  37  (38) —  —  
Other direct costs7  23  (24) (5) 1  
Total$66  $61  $(75) $(5) $47  

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 nine months ended September 27, 2019 (in millions):
 
Accrued Balance
December 31, 2018

Costs Incurred
Nine Months Ended
September 27, 2019

Payments
Noncash
and
Exchange
Accrued Balance
September 27, 2019

Severance pay and benefits$76
$18
$(50)$1
$45
Outside services10
73
(78)—
5
Other direct costs4
93
(66)(23)8
Total$90
$184
$(194)$(22)$58



NOTE 14: 13: 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 Benefit PlansOther Postretirement
Benefit Plans  
Three Months Ended
June 26,
2020		June 28,
2019		June 26,
2020		June 28,
2019
Service cost$28  $26  $3  $3  
Interest cost59  73  5  6  
Expected return on plan assets1
(145) (138) (4) (4) 
Amortization of prior service credit—  (1) —  —  
Amortization of net actuarial loss42  38  1  —  
Net periodic benefit cost (income)$(16) $(2) $5  $5  
 Pension Benefits   Other Benefits  
 Three Months Ended
 September 27,
2019
September 28,
2018
 September 27,
2019
September 28,
2018
Service cost$26
$30
 $2
$3
Interest cost73
75
 7
6
Expected return on plan assets1
(138)(160) (3)(3)
Amortization of prior service credit(1)(1) (1)(4)
Amortization of net actuarial loss38
29
 1
1
Net periodic benefit cost (income)(2)(27) 6
3
Curtailment charges2
—
5
 —
—
Settlement charges2
—
35
 —
—
Special termination benefits2
—
8
 —
—
Total cost (income) recognized in condensed consolidated statements
    of income
$(2)$21
 $6
$3
1 The weighted-average expected long-term rates of return on plan assets used in computing 20192020 net periodic benefit cost (income) are 7.77.50 percent for pension benefit plans and 4.64.50 percent for other postretirement benefit plans.
26

Pension Benefit PlansOther Postretirement
Benefit Plans  
Six Months Ended
June 26,
2020		June 28,
2019		June 26,
2020		June 28,
2019
Service cost$56  $52  $6  $5  
Interest cost118  145  11  13  
Expected return on plan assets1
(292) (276) (8) (7) 
Amortization of prior service credit—  (2) (1) (1) 
Amortization of net actuarial loss85  76  2  1  
Net periodic benefit cost (income)$(33) $(5) $10  $11  
21 The curtailment charges, settlement charges and special termination benefits in 2018 were related to North America refranchising and the Company's productivity and reinvestment program.
 Pension Benefits   Other Benefits  
 Nine Months Ended
 September 27,
2019
September 28,
2018
 September 27,
2019
September 28,
2018
Service cost$78
$93
 $7
$8
Interest cost218
221
 20
18
Expected return on plan assets1
(414)(490) (10)(10)
Amortization of prior service cost (credit)(3)3
 (2)(11)
Amortization of net actuarial loss114
92
 2
3
Net periodic benefit cost (income)(7)(81) 17
8
Curtailment charges2
—
5
 —
—
Settlement charges2
—
121
 —
—
Special termination benefits2
—
8
 —
—
Total cost (income) recognized in condensed consolidated statements
    of income
$(7)$53
 $17
$8
1The weighted-average expected long-term rates of return on plan assets used in computing 20192020 net periodic benefit cost (income) are
7.7 7.50 percent for pension benefit plans and 4.64.50 percent for other postretirement benefit plans.
2The curtailment charges, settlement charges and special termination benefits 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 ninesix months ended September 27, 2019,June 26, 2020, the Company contributed $29$8 million to our pension trusts. We do nottrusts, and we anticipate making additional contributions forof approximately $18 million during the remainder of 2019.2020. The Company contributed $98$22 million to our pension trusts during the ninesix months ended SeptemberJune 28, 2018.2019.
NOTE 15: 14: INCOME TAXES
The Company recorded income taxes of $503$438 million (16.3(19.9 percent effective tax rate) and $555$421 million (23.4(13.8 percent effective tax rate) during the three months ended September 27,June 26, 2020 and June 28, 2019, and September 28, 2018, respectively. The Company recorded income taxes of $1,446$653 million (17.3(12.5 percent effective tax rate) and $1,711$943 million (23.6(17.9 percent effective tax rate) during the ninesix months ended September 27,June 26, 2020 and June 28, 2019, and September 28, 2018, respectively.


The Company's effective tax rates for the three and ninesix months ended September 27,June 26, 2020 and June 28, 2019 and September 28, 2018 vary from the statutory U.S. federal income tax rate of 21.0 percent primarily due to the tax impact of significant operating and nonoperating items, along with the tax benefits of having significant operations outside the United States and significant earnings generated in investments accounted for under the equity method, both of which are generally taxed at rates lower than the statutory U.S. rate.
The Company's effective tax rate for the six months ended June 26, 2020 included the favorable impact of a $40 million tax benefit associated with the gain recorded upon the acquisition of the remaining interest in fairlife and also included the net tax benefit of various discrete tax items. Refer to Note 2 for additional information on the fairlife acquisition.
The Company's effective tax rates for the three and ninesix months ended September 27,June 28, 2019 included $213 million and $245 million, respectively, of net tax benefit recorded, primarily associated with return to provision adjustments. Also included are excess tax benefits associated with the Company's stock-based compensation arrangements and net tax charges for changes to our uncertain tax positions, including interest and penalties, as well as for agreed-upon tax matters. The Company's effective tax rate for the nine months ended September 27, 2019 also included $199 million of tax benefit recorded as a result of CCBA no longer qualifying as a discontinued operation.
The Company's effective tax rates for the three and nine months ended September 28, 2018 included $125 million of tax benefit and $9 million of tax expense, respectively, Refer to adjust our provisional tax estimate recorded as of December 31, 2017 related to the Tax Reform Act signed into law on December 22, 2017.Note 2.
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. The Company contested the proposed adjustments in U.S. Tax Court and is currently awaiting a decision. Refer to Note 9.8.

27

NOTE 16: 15: 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:
Level 1 — Quoted prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than quoted prices included in Level 1. We value assets and liabilities included in this level using dealer and broker quotations, certain pricing models, bid prices, quoted prices for similar assets and liabilities in active markets, or other inputs that are observable or can be corroborated by observable market data.
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
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 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):
September 27, 2019Level 1
Level 2
Level 3
 
Other3

Netting
Adjustment

4 
Fair Value
Measurements

 
June 26, 2020June 26, 2020Level 1Level 2Level 3
Other3
Netting
Adjustment
4
Fair Value
Measurements
Assets:       Assets:   
Equity securities with readily determinable values1
$1,815
$210
$11
 $59
$—
 $2,095
 
Equity securities with readily determinable values1
$1,685  $183  $11  $94  $—  $1,973  
Debt securities1
—
3,620
19

—
—
 3,639
 
Debt securities1
—  2,242  45  

—  —  2,287  
Derivatives2
6
937
—
 —
(537)
5 
406
7 
Derivatives2
3  856  —  —  (582) 
6
277  
8
Total assets$1,821
$4,767
$30
 $59
$(537) $6,140
 Total assets$1,688  $3,281  $56  $94  $(582) $4,537  
Liabilities:       Liabilities:   
Contingent consideration liabilityContingent consideration liability$—  $—  $(299) 
5
$—  $—  $(299) 
Derivatives2
$(38)$(137)$—
 $—
$147
6 
$(28)
7 
Derivatives2
(8) (377) —  —  317  
7
(68) 
8
Total liabilities$(38)$(137)$—
 $—
$147
 $(28) Total liabilities$(8) $(377) $(299) $—  $317  $(367) 
1Refer to Note 4 for additional information related to the composition of our equity securities with readily determinable values and debt securities.
2 Refer to Note 6 for additional information related to the composition of our derivative portfolio.
3 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.
4 Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle net positive and negative positions and also cash collateral held or placed with the same counterparties. There are no amounts subject to legally enforceable master netting agreements that management has chosen not to offset or that do not meet the offsetting requirements. Refer to Note 6.
5
The Company is obligated to return $430 million in cash collateral it has netted against its derivative position.
6
The Company has the right to reclaim $4 million in cash collateral it has netted against its derivative position.
7
The Company's derivative financial instruments are recorded at fair value in our condensed consolidated balance sheet as follows: $406 million in the line item other assets and $28 million in the line item other liabilities. Refer to Note 6 for additional information related to the composition of our derivative portfolio.


December 31, 2018Level 1
Level 2
Level 3
 
Other3

Netting
Adjustment

4 
Fair Value
Measurements

 
Assets:         
Equity securities with readily determinable values1
$1,681
$186
$6
 $61
$—
 $1,934
 
Debt securities1
—
5,018
19
 —
—
 5,037
 
Derivatives2
2
313
—
 —
(261)
5 
54
7 
Total assets$1,683
$5,517
$25
 $61
$(261) $7,025
 
Liabilities: 
 
 
   
  
 
Derivatives2
$(14)$(221)$—
 $—
$182
6 
$(53)
7 
Total liabilities$(14)$(221)$—
 $—
$182
 $(53) 
1
Refer to Note 4 for additional information related to the composition of our equity securities with readily determinable values and debt securities.
2 Refer to Note 6 for additional information related to the composition of our derivative portfolio.
3
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.
4 Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle net positive and negative positions and also cash collateral held or placed with the same counterparties. There are no amounts subject to legally enforceable master netting agreements that management has chosen not to offset or that do not meet the offsetting requirements. Refer to Note 6.
5 Refer to Note 2 for additional information related to the contingent consideration liability resulting from the fairlife acquisition.
6The Company is obligated to return $96$289 million in cash collateral it has netted against its derivative position.
6
7  The Company has the right to reclaim $18 million in cash collateral it has netted against its derivative position.
8 The Company's derivative financial instruments are recorded at fair value in our condensed consolidated balance sheet as follows:
$277 million in the line item other assets and $68 million in the line item other liabilities. Refer to Note 6 for additional information related
to the composition of our derivative portfolio.
December 31, 2019Level 1Level 2Level 3
Other3
Netting
Adjustment
4
Fair Value
Measurements
Assets: 
 
   
Equity securities with readily determinable values1
$1,877  $219  $14  $109  $—  $2,219  
Debt securities1
—  3,291  37  —  —  3,328  
Derivatives2
9  579  —  —  (392) 
5
196  
6
Total assets$1,886  $4,089  $51  $109  $(392) $5,743  
Liabilities:     
Derivatives2
$—  $(162) $—  $—  $130  $(32) 
6
Total liabilities$—  $(162) $—  $—  $130  $(32) 
1 Refer to Note 4 for additional information related to the composition of our equity securities with readily determinable values and debt securities.
2 Refer to Note 6 for additional information related to the composition of our derivative portfolio.
3 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.
4 Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle net positive and negative positions and also cash collateral held or placed with the same counterparties. There are no amounts subject to legally enforceable master netting agreements that management has chosen not to offset or that do not meet the offsetting requirements. Refer to Note 6.
5 The Company is obligated to return $261 million in cash collateral it has netted against its derivative position.
6 The Company's derivative financial instruments are recorded at fair value in our condensed consolidated balance sheet as follows: $196 million in the line item other assets and $32 million in the line item other liabilities. Refer to Note 6 for additional information related to the composition of our derivative portfolio.
28

The Company has the right to reclaim $4 million in cash collateral it has netted against its derivative position.
7
The Company's derivative financial instruments are recorded at fair value in our condensed consolidated balance sheet as follows: $54 million in the line item other assets; $3 million in the line item accounts payable and accrued expenses and $50 million in the line item other liabilities. Refer to Note 6 for additional information related to the composition of our derivative portfolio.
Gross realized and unrealized gains and losses on Level 3 assets and liabilities were not significant for the three and ninesix months ended September 27, 2019June 26, 2020 and SeptemberJune 28, 2018.2019.
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 ninesix months ended September 27, 2019June 26, 2020 and SeptemberJune 28, 2018.2019.
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 Nine Months Ended
  
 September 27,
2019
 September 28,
2018
 September 27,
2019
 September 28,
2018
  
Other-than-temporary impairment charges$(375)
1 
$(205)
1 
$(767)
1 
$(257)
1 
CCBA asset adjustments—
 (554)
3 
(160)
3 
(554)
3 
Investment in former equity method investee—
 —
 (121)
4 
—
 
Other long-lived asset impairment charges—
 —
 —
 (312)
5 
Intangible asset impairment charges(42)
2 
—
 (42)
2 
(138)
5 
Total$(417) $(759) $(1,090) $(1,261) 

Gains (Losses)  
 
Three Months EndedSix Months Ended
 
June 26,
2020		 June 28,
2019		June 26,
2020		 June 28,
2019
 
Impairment of intangible assets$(63) 
1
$—  $(215) 
1
$—  
Other-than-temporary impairment charges(38) 
2
(49) 
2
(38) 
2
(392) 
2
Impairment of equity investment without a readily
determinable fair value		—  —  (26) 
4
—  
CCBA asset adjustments—  (160) 
3
—  (160) 
3
Total$(101)  $(209)  $(279) $(552) 
1 DuringThe Company recorded impairment charges of $8 million and $160 million during the three and ninesix months ended September 27, 2019,June 26, 2020, respectively, related to its Odwalla trademark in North America, as the Company decided in June 2020 to discontinue its Odwalla juice business. The Company recorded an impairment charge of $55 million during the three and six months ended June 26, 2020 related to a trademark in North America, which was primarily driven by the impact of the COVID-19 pandemic, revised projections of future operating results and a change in brand focus in the Company's portfolio. The fair value of this trademark was derived using discounted cash flow analyses based on Level 3 inputs.
2 The Company recognized other-than-temporary impairment charges of $120$38 million during the three and $406six months ended June 26, 2020 and $49 million respectively,during the three and six months ended June 28, 2019 related to certain of our equity method investees in Latin America, primarily driven by revised projections of future operating results. The fair values of these investments were 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 charge of $286 million related to our investment in CCBJHI, an equity method investee. Based on the length of time and the extent to which the market value of our investment in CCBJHI hashad been less than our carrying value andas 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. TheseThis impairment charges werecharge was determined using the quoted market pricesprice (a Level 1 measurement) of CCBJHI. During the three and ninesix months ended September 27,June 28, 2019, wethe Company also recorded other-than-temporary impairment charges of $255 million related to certain equity method investees in the Middle East. These impairment charges were derived using Level 3 inputs and were primarily driven by revised projections of future operating results largely related to instability in the region and recent changes in local excise taxes. During the nine months ended September 27, 2019, we recordedrecognized 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. During the nine months ended September 27, 2019, we also recorded an other-than-temporary impairment charge of $49 million related to one of our equity method investees in Latin America. This impairment charge was primarily driven by revised projections of future operating results based on Level 3 inputs. During the three and nine months ended September 28, 2018, we recognized an other-than-temporary impairment charge of $205 million related to our equity method investee in Indonesia. This impairment was primarily driven by revised projections of future operating results reflecting unfavorable macroeconomic conditions and foreign currency exchange rate fluctuations. This impairment charge was derived using discounted cash flow analyses based on Level 3 inputs. During the nine months ended September 28, 2018, we recognized an other-than-temporary impairment charge of $52 million related to one of our equity method investees in Latin America. This impairment was primarily driven by revised projections of future operating results. This impairment charge was derived using discounted cash flow analyses based on Level 3 inputs.
2 During the three and nine months ended September 27, 2019, the Company recorded an impairment charge of $42 million related to a trademark in Asia Pacific, which was primarily driven by revised projections of future operating results for the trademark. The fair value of this trademark was derived using discounted cash flow analyses based on Level 3 inputs.
3 During the three and nine months ended September 28, 2018, the Company recorded an impairment charge of $554 million related to assets held by CCBA. This charge was incurred primarily as a result of management's view of the proceeds that were expected to be received upon the sale of CCBA based on revised projections of future operating results and foreign currency exchange rate fluctuations. The fair value of these assets was derived using discounted cash flow analyses based on Level 3 inputs. As a result of CCBA no longer being classified as held for sale, during the nine months ended September 27, 2019, 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, we reduced the carrying value of CCBA's property, plant and equipment and definite-lived intangible assets by $34 million and $126 million, respectively, based on Level 3 inputs. Refer to Note 2.
4 During the nine months ended September 27, 2019, theThe Company recognizedrecorded an impairment charge of $26 million related to an investment in an equity security without a loss of $121 million in conjunction with our acquisition of the remaining equity ownership interest in CHI,readily determinable fair value. This impairment charge was derived using Level 3 inputs and was primarily driven by foreign currency exchange rate fluctuations. The fair valuerevised projections of this investment was derived using discounted cash flow analyses based on Level 3 inputs. Refer to Note 2.
5 The Company recorded charges of $312 million and $138 million related to CCR's property, plant and equipment and intangible assets, respectively, during the nine months ended September 28, 2018. These charges were a result of management's revised estimate of the proceeds that were expected to be received for the remaining bottling territories upon their refranchising. These charges were determined by comparing the fair value of the reporting unit, based on Level 3 inputs, to its carrying value.future operating results.
Other Fair Value Disclosures
The carrying amounts of cash and cash equivalents; short-term investments; trade accounts receivable; accounts payable and accrued expenses; and loans and notes payable approximate their fair values because of the relatively short-term maturities of these financial instruments. The 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 and market-based expectations for interest rates, credit risk and the contractual terms of the debt instruments. As of September 27,June 26, 2020, the carrying amount and fair value of our long-term debt, including the current portion, were $42,910 million and $45,465 million, respectively. As of December 31, 2019, the carrying amount and fair value of our long-term debt, including the current portion, were $31,504$31,769 million and $32,436 million, respectively. As of December 31, 2018, the carrying amount and fair value of our long-term debt, including the current portion, were $30,379 million and $30,456$32,725 million, respectively.
29

NOTE 17: 16: 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, in the second quarter of 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 operations by operating segment and Corporate is as follows (in millions):
Europe, Middle East & AfricaLatin
America		North
America		Asia PacificGlobal VenturesBottling
Investments		CorporateEliminationsConsolidated
As of and for the Three Months Ended June 26, 2020        
Net operating revenues:        
Third party$1,135  $755  $2,647  $1,068  $295  $1,262  $(12) $—  $7,150  
Intersegment75  —  1  115  —  1  —  (192) —  
Total net operating revenues1,210  755  2,648  1,183  295  1,263  (12) (192) 7,150  
Operating income (loss)715  504  489  652  (102) 12  (289) —  1,981  
Income (loss) before income taxes736  444  483  661  (103) 166  (190) —  2,197  
Identifiable operating assets8,065  
1
1,643  20,320  2,131  
2
6,983  9,817  
1,2
26,795  —  75,754  
Investments3
534  573  356  226  5  13,199  4,042  —  18,935  
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  
Intersegment126  —  4  190  —  2  —  (322) —  
Total net operating revenues1,930  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 taxes1,062  540  729  738  75  393  (488) —  3,049  
Identifiable operating assets8,511  
1
2,008  18,512  2,266  7,236  10,727  
1
20,424  —  69,684  
Investments3
731  728  364  223  16  14,420  3,830  —  20,312  
As of December 31, 2019        
Identifiable operating assets$8,143  
1
$1,801  $17,687  $2,060  $7,265  $11,170  
1
$18,376  $—  $66,502  
Investments3
543  716  358  224  14  14,093  3,931  —  19,879  
 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 September 27, 2019         
Net operating revenues:         
Third party$1,672
$1,045
$3,137
$1,319
$629
$1,681
$24
$—
$9,507
Intersegment156
—
1
143
—
3
—
(303)—
Total net operating revenues1,828
1,045
3,138
1,462
629
1,684
24
(303)9,507
Operating income (loss)886
603
641
594
77
7
(309)—
2,499
Income (loss) before income taxes651
605
658
603
80
55
440
—
3,092
Identifiable operating assets8,363
1,895
17,895
2,118
6,935
10,456
20,204
—
67,866
Noncurrent investments483
719
365
223
14
13,892
3,871
—
19,567
As of and for the Three Months Ended September 28, 2018         
Net operating revenues:         
Third party$1,702
$1,001
$2,972
$1,348
$183
$1,552
$17
$—
$8,775
Intersegment124
1
119
72
—
13
—
(329)—
Total net operating revenues1,826
1,002
3,091
1,420
183
1,565
17
(329)8,775
Operating income (loss)933
640
663
614
44
24
(304)—
2,614
Income (loss) before income taxes943
636
662
628
47
(152)(391)—
2,373
Identifiable operating assets7,884
1,685
17,693
2,254
969
8,647
25,790
—
64,922
Noncurrent investments1,158
760
404
220
—
15,703
3,710
—
21,955
As of December 31, 2018         
Identifiable operating assets$7,414
$1,715
$17,519
$1,996
$968
$10,525
$22,800
$—
$62,937
Noncurrent investments789
784
400
216
—
14,372
3,718
—
20,279
1 Property, plant and equipment — net in South Africa represented 14 percent, 14 percent and 16 percent of consolidated property, plant and equipment — net as of June 26, 2020, June 28, 2019 and December 31, 2019, respectively.
2
Property, plant and equipment — net in the Philippines represented 10 percent of consolidated property, plant and equipment — net as of June 26, 2020.
3 Principally equity method investments and other investments in bottling companies.
During the three months ended September 27, 2019,June 26, 2020, the results of our operating segments and Corporate were impacted by the following items:
•Operating income (loss) and income (loss) before income taxes were reduced by $12$55 million for North America $1related to the impairment of a trademark, which was primarily driven by the impact of the COVID-19 pandemic, revised projections of future operating results and a change in brand focus in the Company's portfolio.
•Operating income (loss) and income (loss) before income taxes were reduced by $39 million for Europe, Middle EastNorth America for charges related to the cost of discontinuing the Odwalla juice business and Africa$8 million related to the impairment of the Odwalla trademark.
•Operating income (loss) and $48income (loss) before income taxes were reduced by $25 million and $44 million, respectively, for North America related to the restructuring of our water manufacturing operations in the United States.
•Operating income (loss) and income (loss) before income taxes were reduced by $22 million for Corporate due to the Company's productivity and reinvestment program. Refer to Note 13.12.
•Operating income (loss) and income (loss) before income taxes were reduced by $42$18 million for Asia Pacific due to an impairment chargeCorporate related to a trademark.the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition. Refer to Note 16.2.
Operating income (loss) and income
30

•Income (loss) before income taxes were reducedwas increased by $21$247 million for Bottling Investments dueCorporate related to costs incurredrealized 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 refranchise certain of our North America bottling operations.Note 4.
•Income (loss) before income taxes was reduced by $255$28 million for Europe, Middle East and Africa due to other-than-temporary impairment charges related to certain of our equity method investees in the Middle East. Refer to Note 16.
Income (loss) before income taxes was reduced by $120Latin America, $1 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 $103 million for Bottling Investments due to the refranchising of certain bottling territories in North America. Refer to Note 12.
Income (loss) before income taxes was reduced by $39America and $34 million for Bottling Investments 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 increasedreduced by $739$38 million for Corporate as a resultLatin America due to an other-than-temporary impairment charge related to one of the sale of a retail and office building in New York City.


our equity method investees.
During the three months ended SeptemberJune 28, 2018,2019, the results of our operating segments and Corporate were impacted by the following items:
•Operating income (loss) and income (loss) before income taxes were reduced by $39 million for North America, $10$29 million for Bottling Investments and $65 million for Corporate due to the Company's productivity and reinvestment program. Operating income (loss) and income (loss) before income taxes were increased by $4 million for Europe, Middle East and Africa, $1 million for Latin America, and $2 million for Asia Pacific due to the refinement of previously established accruals related to the Company's productivity and reinvestment program. In addition, income (loss) before income taxes was reduced by $35 million for Corporate duecosts incurred to pension settlements related to the Company's productivity and reinvestment program.refranchise certain of our North America bottling operations. Refer to Note 13 and Note 14.11.
•Operating income (loss) and income (loss) before income taxes were reduced by $38$13 million for North America, $1 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) before income taxes were reduced by $4$41 million for Corporate due to tax litigation expense.the Company's productivity and reinvestment program. Refer to Note 12.
•Income (loss) before income taxes was reduced by $554$160 million for Corporate as a result of an impairment charge related to assets held by CCBA.CCBA asset adjustments. Refer to Note 16.2.
•Income (loss) before income taxes was reduced by $275$49 million for Bottling InvestmentsLatin America due to the refranchisingan other-than-temporary impairment charge related to one of certain bottling territories in North America. Refer to Note 2.our equity method investees.
•Income (loss) before income taxes was reduced by $205$24 million for Bottling Investments due to an other-than-temporary impairment charge related to our equity method investee in Indonesia. Refer to Note 16.
Income (loss) before income taxes was reduced by $12 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) before income taxes was increased by $370 million for Corporate related to the sale of our equity ownership in Lindley. Refer to Note 2.
Income (loss) before income taxes was increased by $27 million for Corporate related to a net gain on the extinguishment of long-term debt.
Income (loss) before income taxes was increased by $21 million for Bottling Investments and reduced by $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.
Europe, Middle East & AfricaLatin
America		North
America		Asia PacificGlobal VenturesBottling
Investments		CorporateEliminationsConsolidated
Six Months Ended June 26, 2020        
Net operating revenues:        
Third party$2,708  $1,685  $5,496  $2,057  $868  $2,918  $19  $—  $15,751  
Intersegment227  —  2  254  —  3  —  (486) —  
Total net operating revenues2,935  1,685  5,498  2,311  868  2,921  19  (486) 15,751  
Operating income (loss)1,675  1,043  876  1,163  (83) 75  (388) —  4,361  
Income (loss) before income taxes1,707  979  885  1,174  (85) 364  183  —  5,207  
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  
Intersegment264  —  6  317  2  4  —  (593) —  
Total net operating revenues3,702  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 taxes2,050  1,031  1,266  1,288  143  293  (797) —  5,274  
During the six months ended June 26, 2020, the results of our operating segments and Corporate were impacted by the following items:
•Operating income (loss) and income (loss) before income taxes were reduced by $160 million for North America related to the impairment of the Odwalla trademark and $39 million related to the cost of discontinuing the Odwalla juice business.
•Operating income (loss) and income (loss) before income taxes were reduced by $61 million for Corporate due to the Company's productivity and reinvestment program. Refer to Note 12.
•Operating income (loss) and income (loss) before income taxes were reduced by $55 million for North America related to the impairment of a trademark, which was primarily driven by the impact of the COVID-19 pandemic, revised projections of future operating results and a change in brand focus in the Company's portfolio.
•Operating income (loss) and income (loss) before income taxes were reduced by $25 million and $44 million,
31

respectively, for North America related to the restructuring of our water manufacturing operations in the United States.
•Operating income (loss) and income (loss) before income taxes were reduced by $29 million for Corporate related to the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition. Refer to Note 2.
•Income (loss) before income taxes was increased by $11$902 million for Corporate in conjunction with our fairlife acquisition, which resulted from the remeasurement of our previously held equity interest in fairlife to fair value. Refer to Note 2.
•Income (loss) before income taxes was increased by $18 million for Corporate related to the refranchisingsale of a portion of our Latin American bottling operations.ownership interest in one of our equity method investments.
•Income (loss) before income taxes was reduced by $144 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 2.
 Europe, Middle East & Africa
Latin
America
North
America
Asia Pacific
Global Ventures
Bottling
Investments
Corporate
Eliminations
Consolidated
Nine Months Ended September 27, 2019         
Net operating revenues:         
Third party$5,110
$2,944
$8,976
$3,729
$1,847
$5,513
$79
$—
$28,198
Intersegment420
—
7
460
2
7
—
(896)—
Total net operating revenues5,530
2,944
8,983
4,189
1,849
5,520
79
(896)28,198
Operating income (loss)2,902
1,687
1,938
1,867
216
226
(914)—
7,922
Income (loss) before income taxes2,701
1,636
1,924
1,891
223
348
(357)—
8,366
Nine Months Ended September 28, 2018         
Net operating revenues:         
Third party$5,123
$2,990
$8,580
$3,853
$586
$5,277
$85
$—
$26,494
Intersegment397
39
243
296
2
17
—
(994)—
Total net operating revenues5,520
3,029
8,823
4,149
588
5,294
85
(994)26,494
Operating income (loss)2,940
1,804
1,814
1,879
110
(318)(902)—
7,327
Income (loss) before income taxes2,984
1,742
1,822
1,909
119
(274)(1,042)—
7,260

4.

•Income (loss) before income taxes was reduced by $28 million for Latin America, $1 million for North America and $72 million for Bottling Investments 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 reduced by $38 million for Latin America due to an other-than-temporary impairment charge related to one of our equity method investees.
During the ninesix months ended September 27,June 28, 2019, the results of our operating segments and Corporate were impacted by the following items:
•Operating income (loss) and income (loss) before income taxes were reduced by $2$1 million for Europe, Middle East and Africa, $42$30 million for North America, $3 million for Bottling Investments and $137$89 million for Corporate due to the Company's productivity and reinvestment program. Refer to Note 13.12.
Operating income (loss) and income (loss) before income taxes were reduced by $61 million for Bottling Investments due to costs incurred to refranchise certain of our North America bottling operations. Refer to Note 2.
•Operating income (loss) and income (loss) before income taxes were reduced by $46 million for Corporate related to transaction costs associated with the purchase of Costa, which we acquired in January 2019. Refer to Note 2.
•Operating income (loss) and income (loss) before income taxes were reduced by $42$40 million for Asia Pacific due to an impairment chargeBottling Investments related to a trademark.costs incurred to refranchise certain of our North America bottling operations. Refer to Note 16.11.
•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.
•Income (loss) before income taxes was reduced by $406$286 million for Bottling Investments due to an other-than-temporary impairment chargescharge related to CCBJHI, an equity method investee. Refer to Note 16.15.
Income (loss) before income taxes was reduced by $255 million for Europe, Middle East and Africa due to other-than-temporary impairment charges related to certain of our equity method investees in the Middle East. Refer to Note 16.
•Income (loss) before income taxes was reduced by $160 million for Corporate as a result of CCBA asset adjustments. Refer to Note 2.
•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 $105$66 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.
Income (loss) before income taxes was reduced by $107 million for Bottling Investments due to the refranchising of certain bottling territories in North America. 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 $49 million for Latin 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 increased by $739 million for Corporate as a result of the sale of a retail and office building in New York City.
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 2.
During the nine months ended September 28, 2018, the results of our operating segments and Corporate were impacted by the following items:
32
Operating income (loss) and income (loss) before income taxes were reduced by $2 million for Latin America, $138 million for North America, $32 million for Bottling Investments and $144 million for Corporate due to the Company's productivity and reinvestment program. Operating income (loss) and income (loss) before income taxes were increased by $2 million for Europe, Middle East and Africa and $1 million for Asia Pacific due to the refinement of previously established accruals related to the Company's productivity and reinvestment program. In addition, income (loss) before income taxes was reduced by $74 million for Corporate due to pension settlements related to the Company's productivity and reinvestment program. Refer to Note 13 and Note 14.

Operating income (loss) and income (loss) before income taxes were reduced by $450 million for Bottling Investments due to asset impairment charges. Refer to Note 16.
Operating income (loss) and income (loss) before income taxes were reduced by $117 million for Bottling Investments due to costs incurred to refranchise certain of our bottling operations. Refer to Note 12.
Operating income (loss) and income (loss) before income taxes were reduced by $31 million for Corporate due to tax litigation expense.
Income (loss) before income taxes was reduced by $554 million for Corporate as a result of an impairment charge related to assets held by CCBA. Refer to Note 16.


Income (loss) before income taxes was reduced by $379 million for Bottling Investments due to the refranchising of certain bottling territories in North America. Refer to Note 2.
Income (loss) before income taxes was reduced by $205 million for Bottling Investments due to an other-than-temporary impairment charge related to our equity method investee in Indonesia. Refer to Note 16.
Income (loss) before income taxes was reduced by $78 million for Bottling Investments and was increased by $13 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 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 16.
Income (loss) before income taxes was reduced by $47 million for Bottling Investments due to pension settlements related to the refranchising of North America bottling operations. Refer to Note 14.
Income (loss) 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.
Income (loss) before income taxes was reduced by $33 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) before income taxes was increased by $370 million for Corporate related to the sale of our equity ownership in Lindley. Refer to Note 2.
Income (loss) before income taxes was increased by $47 million for Corporate related to the refranchising of our Latin American bottling operations. Refer to Note 2.
Income (loss) before income taxes was increased by $27 million for Corporate related to a net gain on the extinguishment of long-term debt.
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 establishedDuring the six months ended June 26, 2020, the effects of a new operating segment, Global Ventures, which includes the resultsnovel strain of Costa Limitedcoronavirus ("Costa"COVID-19"), which we acquired in January 2019, pandemic and the resultsrelated actions by governments around the world to attempt to contain the spread of the virus have impacted our business globally. In particular, the outbreak and preventive measures taken to contain COVID-19 negatively impacted our unit case volume and our price, product and geographic mix in all of our innocentoperating segments, primarily due to unfavorable channel and doğadan businessesproduct mix as wellconsumer demand has shifted to more at-home consumption versus away from home.
In response to the COVID-19 outbreak and business disruption, we have five priorities:
•To ensure the health and safety of Coca-Cola system employees
• To support and make a difference in the communities we serve
• To keep our brands in supply and to maintain the quality and safety of our products
• To best serve our customers across all channels as fees earned pursuantthey adapt to distribution coordination agreements between the Company and Monster Beverage Corporation ("Monster"). Additionally,shifting demands of consumers during the second quartercrisis
•To best position ourselves to emerge stronger when this crisis ends
We have deployed global and regional teams to monitor the rapidly evolving situation in each of 2019,our local markets and recommend risk mitigation actions; we have implemented travel restrictions; and we are following social distancing practices. Around the Company updated its plans for Coca-Cola Beverages Africa Proprietary Limited ("CCBA")world, we are endeavoring to follow guidance from authorities and now intendshealth officials including, but not limited to, maintain its majority stakechecking the temperature of associates when entering our facilities, requiring associates to wear masks and other protective clothing as appropriate, and implementing additional cleaning and sanitization routines at system facilities. In addition, nearly all office-based employees around the world are required to work remotely.
We are grateful to the people throughout the world who are providing essential services, keeping communities safe and ensuring access to food, medicine and many other essential goods. We have made contributions of money, product and materials to support relief efforts in CCBA forimpacted local communities across the foreseeable future.globe.
During times of crisis, business continuity and adapting to the needs of our customers is critical. We have developed systemwide knowledge-sharing routines and processes which include the management of any supply chain challenges. As a result,of the Company now presents the financial resultsdate 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 hereinthis filing, there has been adjustedno material impact and we do not foresee a material impact on our and our bottling partners' ability to reflect these changes.manufacture or distribute our products. We are moving with speed to best serve our customers impacted by COVID-19. In partnership with our bottlers and retail customers, we are working to ensure adequate inventory levels in key channels while prioritizing core brands, key packages and consumer affordability. We are increasing investments in e-commerce to support retailer and meal delivery services, shifting toward package sizes that are fit-for-purpose for online sales, and shifting consumer and trade promotion to digital.
Although we are experiencing a time of crisis, we are not losing sight of long-term opportunities for our business. We believe that we will come out of this situation a better and stronger company. We are leveraging the crisis as a catalyst to accelerate our strategy by focusing on the following: prioritizing stronger global brands across various consumer needs while, at the same time, doing a better job of nurturing and growing regional and scaled local brands; establishing a more disciplined innovation framework and increasing marketing effectiveness and efficiency; strengthening our revenue growth management capabilities; enhancing our system collaboration and capturing supply chain efficiencies; and investing in new capabilities and evolving our organization to support the accelerated strategy. Evolving our organization will require a reallocation of resources and could result in some resource reductions.
33

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, 2018.2019. 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.
Factors that management must estimate include, among others, the economic lives of the assets, sales volume, pricing, cost of raw materials, delivery costs, inflation, cost of capital, marketing spending, foreign currency exchange rates, tax rates, capital spending, proceeds from the sale of assets and customers' financial condition. These factors are even more difficult to estimate as a result of uncertainties associated with the duration of the various shelter-in-place orders and reopening plans across the globe related to the COVID-19 pandemic and the post-pandemic economic recovery. The estimates we use when assessing the recoverability of assets are consistent with those we use in our internal planning. When performing impairment tests, we estimate the fair values of the assets using management's best assumptions, which we believe would be consistent with what a market participant would use. The variability of these factors depends on a number of conditions, including uncertainty associated with COVID-19, and thus our accounting estimates may change from period to period. Our current estimates reflect our belief that the second quarter of 2020 will be the most severely impacted quarter for the full year 2020; however, we still estimate that the various shelter-in-place orders, reopening plans and social distancing practices across the globe will have a negative impact on our business in the second half of 2020. We also anticipate that many smaller customers throughout the world may permanently close. The Company has certain intangible and other long-lived assets that are more dependent on cash flows generated in the away-from-home channels and/or that generate cash flows in geographic areas that are more heavily impacted by the COVID-19 pandemic and are therefore more susceptible to impairment. In addition, intangible and other long-lived assets we acquired in recent transactions are naturally more susceptible to impairment, because they are recorded at fair value based on recent operating plans and macroeconomic conditions at the time of acquisition. We also have certain intangible assets and other longed-lived assets that generate cash flows in a small number of local markets. As we shift our focus toward prioritizing brands with broad consumer reach, we may choose to reduce or eliminate support for, or discontinue selling, certain brands, which could result in future impairment charges. If we had used other assumptions and estimates when tests of these assets were performed, impairment charges could have resulted. Furthermore, if management uses different assumptions or if different conditions exist in future periods, future impairment charges could result. Also, if a customer which has received advanced funding from the Company permanently closes, we may be required to write off the unamortized balance of the funding. The total future impairment charges and other asset write-offs we may be required to record could be material. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for a discussion of recent acquisitions. Refer to Note 11 of Notes to Condensed Consolidated Financial Statements for the discussion of impairment charges.
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.
As of June 26, 2020, the carrying value of our investment in Coca-Cola Bottlers Japan Holdings Inc. ("CCBJHI") exceeded its fair value by $114 million, or 18 percent, and the carrying value of our investment in Coca-Cola European Partners plc ("CCEP") exceeded its fair value by $365 million, or 11 percent. Based on the length of time and the extent to which the fair values have been less than our carrying values and our intent and ability to retain the investments for a period of time sufficient to allow for any anticipated recovery in market value, management determined that the declines in fair values were temporary in nature. Therefore, we did not record an impairment charge related to either investment.
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 charge may be impacted by items such as basis differences, deferred taxes and deferred gains.


Investments in Equity and Debt Securities
During the three and nine months ended September 27, 2019, the Company recorded other-than-temporary impairment charges of $120 million and $406 million, respectively, related to Coca-Cola Bottlers Japan Holdings Inc. ("CCBJHI"), an equity method investee. Based on the extent to which the market value of our investment in CCBJHI has been less than our carrying value and the financial condition and near-term prospects of the issuer, management determined that the decline in fair value was other than temporary in nature. During the three and nine months ended September 27, 2019, we also recorded other-than-temporary impairment charges of $255 million related to certain equity method investees in the Middle East. These impairment charges were primarily driven by revised projections of future operating results largely related to instability in the region and recent changes in local excise taxes.
During the nine months ended September 27, 2019, we recorded an other-than-temporary impairment charge of $57 million related to one of our equity method investees in North America. This charge was primarily driven by revised projections of future operating results. During the nine months ended September 27, 2019, we also recorded an other-than-temporary impairment charge of $49 million related to one of our equity method investees in Latin America. This impairment charge was primarily driven by revised projections of future operating results.
During the three and nine months ended September 28, 2018, the Company recorded other-than-temporary impairment charges of $205 million and $257 million, respectively, related to certain of our equity method investees, primarily driven by revised projections of future operating results. Refer to Note 16 of Notes to Condensed Consolidated Financial Statements.
The following table presents the difference between calculated fair values, based on quoted closing prices of publicly traded shares, and our Company's carrying value in investments in publicly traded companies accounted for under the equity method (in millions):
September 27, 2019
Fair
Value

Carrying
Value

Difference
Monster Beverage Corporation$5,904
$3,736
$2,168
Coca-Cola European Partners plc4,841
3,519
1,322
Coca-Cola FEMSA, S.A.B. de C.V.3,500
1,798
1,702
Coca-Cola HBC AG2,768
1,056
1,712
Coca-Cola Amatil Limited1,625
575
1,050
Coca-Cola Bottlers Japan Holdings Inc.788
788
—
Coca-Cola Consolidated, Inc.748
144
604
Coca-Cola İçecek A.Ş.303
203
100
Embotelladora Andina S.A.202
118
84
Total$20,679
$11,937
$8,742
As of September 27, 2019, gross unrealized gains and losses on available-for-sale debt securities were $150 million and $2 million, respectively. Management assessed each of the available-for-sale debt securities that was 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.
Property, Plant and Equipment
During the nine months ended September 27, 2019, the Company was required to measure CCBA's property, plant and equipment at the lower of 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, we reduced the carrying value of CCBA's property, plant and equipment by $34 million. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements.
During the nine months ended September 28, 2018, the Company recorded impairment charges of $312 million related to Coca-Cola Refreshments' ("CCR") property, plant and equipment as a result of 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 statement of income and were determined by comparing the fair value of the assets to their carrying value. Refer to Note 16 of Notes to Condensed Consolidated Financial Statements.




Goodwill, Trademarks and Other Intangible Assets
During the three and nine months ended September 27, 2019, the Company recorded an impairment charge of $42 million related to a trademark in Asia Pacific, which was primarily driven by revised projections of future operating results for the trademark.
During the nine months ended September 27, 2019, the Company was required to measure CCBA's 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 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, we reduced the carrying value of CCBA's definite-lived intangible assets by $126 million. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements.
During the nine months ended September 28, 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 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.
OPERATIONS REVIEW
Sales of our nonalcoholic ready-to-drink beverages are somewhat seasonal, with the second and third calendar quarters typically accounting for the highest sales volumes. The volume of sales in the beverage business may be affected by weather conditions.
34

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 and their related operations 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 or consumers 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)case equivalents) sold by, or used in finished products sold by, the Company to its bottling partners or other customers. For Costa Limited ("Costa") non-ready-to-drink beverage products, concentrate sales volume represents the amount of coffee beans and finished beverages (in all instances expressed in unit case equivalents) sold by the Company to customers or consumers. 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 revenue growth rates,revenues we generally consider the following four factors: (1) volume growth (concentrate sales volume or unit case volume, as applicable); (2) changes in price, product and geographic mix; (3) foreign currency fluctuations; and (4) acquisitions and divestitures (including structural changes defined below), as applicable. 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. 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 controlling interests in bottling operations in Zambia and Eswatini. The impact of these acquisitions has been included in structural changes in our analysis of net operating revenues on a consolidated basis as well as for the Bottling Investments operating segment.
In 2018, the Company acquired a controlling interest in the Philippine bottling operations, which was previously accounted for as an equity method investee. The impact of this acquisition has been included in structural changes in our analysis of net operating revenues on a consolidated basis as well as for the Bottling Investments and Asia Pacific operating segments. The Company also acquired a controlling interest in the franchise bottler in Oman. 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 acquired controlling interests in bottling operations in Zambia and Botswana. The impact of these acquisitions has been included in structural changes 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 operations. The impact of these refranchising activities has been included in structural changes 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 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 2019 versus 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.
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 typically report unit case volume when finished products manufactured from the concentrates or syrups are sold to a third party or independent customer regardless of our ownership interest in the bottling partner.
We generally refer to acquisitions and divestitures of bottling operations as structural changes, which are a component of acquisitions and 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, 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 related to these brands is incremental to prior year volume. We generally do not consider the acquisition of a brand to be a structural change.
"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 the products are 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 a license agreement is entered into, the unit case volume and concentrate sales volume related to the brand is incremental to prior year volume. We generally do not consider the licensing of a brand to be a structural change.
In 2020, the Company acquired the remaining interest in fairlife, LLC ("fairlife"). The impact on revenues for fairlife products not previously sold by the Company has been included in acquisitions and divestitures in our analysis of net operating revenues on a consolidated basis as well as for the North America operating segment.
In 2019, the Company acquired the remaining 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. Other acquisitions by the Company in 2019 included controlling interests in
35

bottling operations in Zambia, Kenya and Eswatini. The impact of these acquisitions 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 Europe, Middle East and Africa operating segments.
Also in 2019, the Company refranchised certain of its bottling operations in India. 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 the Bottling Investments and Asia Pacific operating segments.
Beverage Volume
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);, with the exception of unit case equivalents for Costa non-ready-to-drink beverage products which are primarily measured in number of transactions; 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.customers or consumers. 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)case equivalents) sold by, or used in finished beverages sold by, the Company to its bottling partners or other customers. For Costa non-ready-to-drink beverage products, concentrate sales volume represents the amount of coffee beans and finished beverages (in all instances expressed in unit case equivalents) sold by the Company to customers or consumers. 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 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.

36

Information about our volume growth worldwide and by operating segment is as follows:
Percent Change 2020 versus 2019
Three Months Ended
June 26, 2020		Six Months Ended
June 26, 2020
Unit Cases1,2,3
Concentrate
Sales4
Unit Cases1,2,3
Concentrate
Sales4
Worldwide(16)%(22)%(9)%(12)%
Europe, Middle East & Africa(17)%(26)%(10)%(15)%
Latin America(9) (18) (5) (7) 
North America(16) (17) 
6
(7) (8) 
Asia Pacific(18) (22) 
7
(13) (12) 
7
Global Ventures(31) (34) (17) (20) 
Bottling Investments(36) 
5
     N/A(22) 
5
   N/A
 Percent Change 2019 versus 2018 
 Three Months Ended September 27, 2019 Nine Months Ended September 27, 2019 
 
Unit Cases1,2,3
 
Concentrate
Sales4

 
Unit Cases1,2,3

 
Concentrate
Sales4

 
Worldwide2% (1)%
6 
2% 2%
6 
Europe, Middle East & Africa1% 1 % 2% 3 %
10 
Latin America1
 (8) —
 (2) 
North America1
 (2)
7 
—
 (2) 
Asia Pacific4
 2
8 
6
 4
8 
Global Ventures15
 18
9 
7
 7
 
Bottling Investments24
5 
N/A
 23
5 
N/A
 
1 Bottling Investments operating segment data reflects unit case volume growth for consolidated bottlers only.
2 Geographic and Global Ventures operating segment data reflects unit case volume growth for all bottlers, both consolidated and unconsolidated, and distributors in the applicable geographic areas.
3 Unit case volume percent change is based on average daily sales. Unit case volume growth based on average daily sales is computed by comparing the average daily sales in each of the corresponding periods. Average daily sales are the unit cases sold during the period divided by the number of days in the period.
4 Concentrate sales volume represents the amount of concentrates, syrups, beverage bases, source waters and powders/minerals (in all instances expressed in equivalent unit cases)case equivalents) sold by, or used in finished beverages sold by, the Company to its bottling partners or other customers and is not based on average daily sales. For Costa non-ready-to-drink products, concentrate sales volume represents the amount of coffee beans and finished beverages (in all instances expressed in unit case equivalents) sold by the Company to customers or consumers and is not based on average daily sales. 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. As a result, the first quarter of 20192020 had one less day when compared to the first quarter of 2018,2019, and the fourth quarter of 20192020 will have onetwo additional daydays when compared to the fourth quarter of 2018.2019.
5
After considering the impact of acquisitions and divestitures, unit case volume for Bottling Investments grew 7 percent and 9 percent for the three and nine months endedSeptember 27, 2019, respectively.
6
After considering the impact of acquisitions and divestitures, worldwide concentrate sales volume declined 2 percent and grew 1 percent for the three and nine months ended September 27, 2019, respectively.
7 After considering the impact of acquisitionsstructural changes, unit case volume for Bottling Investments declined 33 percent and divestitures,19 percent for the three and six months ended June 26, 2020, respectively.
6After considering the impact of structural changes, concentrate sales volume for North America declined 118 percent for the three months ended September 27, 2019.June 26, 2020.
87After considering the impact of acquisitions and divestitures,structural changes, concentrate sales volume for Asia Pacific grew 3declined 21 percent and 513 percent for the three and ninesix months ended September 27, 2019,June 26, 2020, respectively.
9
After considering the impact of acquisitions and divestitures, concentrate sales volume for Global Ventures grew 17 percent for the three months endedSeptember 27, 2019.
10 Due to uncertainties related to the United Kingdom's impending withdrawal from the European Union ("Brexit"), our bottling partners in certain European markets increased their concentrate inventory levels above their normal optimal levels. We estimate that approximately 1 percent of Europe, Middle East and Africa's concentrate sales volume growth for the nine months ended September 27, 2019 was a result of this activity. While the Brexit situation remains uncertain, we currently expect the timing difference resulting from the additional concentrate sales to reverse by the end of 2019.
Unit Case Volume
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 reflects the impact of the transfer of distribution rights with respect to non-Company-owned brands that were previously licensed to us in our Canadian bottling territories that have since been refranchised. The Company eliminated the unit case volume related to this structural 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 September 27, 2019 June 26, 2020 versus Three Months Ended September June 28, 20182019
Unit case volume in Europe, Middle East and Africa grew 1declined 17 percent, which included growth of 1a 14 percent decline in sparkling soft drinks, and 2a 34 percent decline in water, enhanced water and sports drinks, partially offset by a 524 percent decline in juice, dairy and plant-based beverages and a 238 percent decline in tea and coffee. Growth in sparkling soft drinks was primarily driven by 3 percent growth in Trademark Coca-Cola. The group reported increases in unit case volume in the South & East Africa; West Africa; and Middle East & North Africa business units. The increases in these business units were partially offset by decreases in the


Western Europe and Central & Eastern Europe business units. The Turkey, Caucasus & Central Asia business unit's volume performance was even.
In Latin America, unit case volume grew 1 percent, which included growth of 8 percent in water, enhanced water and sports drinks and 4 percent in tea and coffee, with even performance in both sparkling soft drinks and juice, dairy and plant-based beverages. The group's volume reflected growth of 3 percent in the Brazil business unit, 1 percent in the Mexico business unit and 9 percent in the Latin Center business unit, partially offset by a 5 percent decline in the South Latin business unit.
Unit case volume in North America grew 1 percent, which included growth of 1 percent in sparkling soft drinks, 2 percent in juice, dairy and plant-based beverages, 1 percent in water, enhanced water and sports drinks, and even performance for tea and coffee. The group's sparkling soft drinks volume reflected growtha decline of 211 percent in Trademark Coca-Cola.
In Asia Pacific, The group reported declines in unit case volume grew 4across all of the business units.
In Latin America, unit case volume declined 9 percent, reflectingwhich included a 7 percent growthdecline in sparkling soft drinks, 4a 14 percent growth in both juice, dairy and plant-based beverages and tea and coffee, and a decline of 3 percent in water, enhanced water and sports drinks. Growth in sparkling soft drinks, volume included 11a 16 percent growth in Trademark Coca‑Cola, 5 percent growth in Trademark Fanta and 4 percent growth in Trademark Sprite. The group's volume reflects growth of 10 percent in both the India & South West Asia and ASEAN business units and 3 percent in the Greater China & Korea business unit. The growth in these business units was partially offset by a decline of 2 percent in the Japan business unit. The South Pacific business unit's volume performance was even.
Unit case volume for Global Ventures grew 15 percent, which included growth of 45 percent in tea, 5 percent in juice, dairy and plant-based beverages and growth in energy drinks.
Unit case volume for Bottling Investments grew 24 percent. This increase primarily reflects the impact of the acquisition of a controlling interest in the Philippine bottling operations as well as growth in India and South Africa.
Nine Months Ended September 27, 2019 versus Nine Months Ended September 28, 2018
Unit case volume in Europe, Middle East and Africa grew 2 percent, which included growth of 2 percent in sparkling soft drinks, 4 percent in water, enhanced water and sports drinks and 2 percent in tea and coffee, partially offset by a 36 percent decline in juice, dairy and plant-based beverages. Growth in sparkling soft drinks was primarily driven by 3 percent growth in 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 5 percent in water, enhanced water and sports drinks and 1 percent in tea and coffee. The group reported an increasedeclines in unit case volume of 4 percent in the Brazil business unit, 16 percent in the Mexico business unit, and 27 percent in both the Brazil and Latin Center business unit. The growth in these business units was partially offset by a decline of 6and 23 percent in the South Latin business unit.
Unit case volume in North America was even, with even performancedeclined 16 percent, which included a decline of 19 percent in sparkling soft drinks;water, enhanced water and sports drinks, a 12 percent decline in juice, dairy and plant-based beverages and water, enhanced watera 28 percent decline in tea and sports drinks. Tea and coffeecoffee. The group's sparkling soft drinks volume declined 1 percent.15 percent, which included an 11 percent decline in Trademark Coca-Cola.
In Asia Pacific, unit case volume grew 6declined 18 percent, reflecting 8which included a 13 percent growthdecline in sparkling soft drinks, 2a 28 percent growthdecline in water, enhanced water and sports drinks, 4a 31 percent growthdecline in juice, dairy and plant-based beverages and 3a 15 percent growthdecline in tea and coffee. Growth in sparklingSparkling soft drinks volume included 10a 1 percent growthdecline in Trademark Coca‑Cola, 8Coca-Cola. The group reported declines in unit case volume of 14 percent growth in Trademark Fantathe Japan business unit, 16 percent in the South Pacific business
37

unit, 18 percent in the ASEAN business unit and 6 percent growth in Trademark Sprite. The group's volume reflects growth of 1357 percent in the India & South West Asia business unit. The declines in these business units were partially offset by a 1 percent increase in unit 12 percent in the ASEAN business unit and 4 percentcase volume in the Greater China & Korea business unit. The growth in these business units was partially offset by a decline of 3 percent in the Japan business unit. The South Pacific business unit's volume performance was even.
Unit case volume for Global Ventures grew 7declined 31 percent, which included growth of 9driven by a 53 percent decrease in tea and coffee, a 10 percent decrease in juice, dairy and plant-based beverages and growtha decrease in energy drinks, partially offset by a 5 percent decline in tea.drinks.
Unit case volume for Bottling Investments grew 23declined 36 percent. This increaseThe declines in unit case volume in all of our consolidated bottling operations were primarily reflectsthe result of the impact of the acquisitionCOVID-19 pandemic.
Six Months Ended June 26, 2020 versus Six Months Ended June 28, 2019
Unit case volume in Europe, Middle East and Africa declined 10 percent, which included a 7 percent decline in sparkling soft drinks, a 17 percent decline in both water, enhanced water and sports drinks and in juice, dairy and plant-based beverages, and a 25 percent decline in tea and coffee. The group's sparkling soft drinks volume reflected a decline of 5 percent in Trademark Coca-Cola. The group reported declines in all business units with the exception of the Middle East & North Africa business unit, which was even.
In Latin America, unit case volume declined 5 percent, which included a controlling interest5 percent decline in sparkling soft drinks, a 9 percent decline in juice, dairy and plant-based beverages, a 3 percent decline in water, enhanced water and sports drinks and a 5 percent decline in tea and coffee. The group reported declines in unit case volume of 4 percent in the PhilippineMexico business unit, 5 percent in the Brazil business unit and 12 percent in the South Latin business unit. The declines in these business units were partially offset by a 2 percent increase in unit case volume in the Latin Center business unit.
Unit case volume in North America declined 7 percent, which included a 17 percent decline in tea and coffee, a 4 percent decline in water, enhanced water and sports drinks, and a 5 percent decline in juice, dairy and plant-based beverages. The group's sparkling soft drinks volume declined 8 percent, which included a 5 percent decline in Trademark Coca-Cola.
In Asia Pacific, unit case volume declined 13 percent, which included a 9 percent decline in sparkling soft drinks, a 21 percent decline in water, enhanced water and sports drinks, a 24 percent decline in juice, dairy and plant-based beverages, and a 10 percent decline in tea and coffee. Trademark Coca-Cola unit case volume was even. The group reported a 38 percent decline in unit case volume in the India & South West Asia business unit, a 6 percent decline in the Greater China & Korea business unit, a 9 percent decline in both the Japan and ASEAN business units, and an 8 percent decline in the South Pacific business unit.
Unit case volume for Global Ventures declined 17 percent, driven by a 32 percent decrease in tea and coffee and a 1 percent decrease in juice, dairy and plant-based beverages, partially offset by growth in energy drinks.
Unit case volume for Bottling Investments declined 22 percent. The declines in unit case volume in all of our consolidated bottling operations were primarily the result of the impact of the COVID-19 pandemic.
The ultimate impact that the COVID-19 pandemic will have on third quarter and full year 2020 unit case volume is unknown at this time, as it will depend heavily on the duration of the shelter-in-place orders and the timing, pace and success of reopening plans, as well as growththe substance and pace of the post-pandemic recovery. While we currently believe the second quarter of 2020 will be the most severely impacted quarter for the full year, we believe the third quarter will continue to be negatively impacted by the COVID-19 pandemic. Since the beginning of July, global unit case volume has declined mid single digits, which is an improvement versus unit case volume performance in India and South Africa.the second quarter of 2020.
Concentrate Sales Volume
During the three months ended September 27, 2019,June 26, 2020, worldwide unit case volume grew 2 percent and concentrate sales volume declined 122 percent and unit case volume declined 16 percent compared to the three months ended SeptemberJune 28, 2018.2019. During the ninesix months ended September 27, 2019,June 26, 2020, worldwide concentrate sales volume declined 12 percent and unit case volume and concentrate sales volume both grew 2declined 9 percent compared to the ninesix months ended SeptemberJune 28, 2018.2019. 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 20192020 had one less


day when compared to the first quarter of 2018,2019, which contributed to the differences between unit caseconcentrate sales volume and concentrateunit case sales volume growth rates on a consolidated basis and for the individual operating segments during the ninesix months ended September 27, 2019.
June 26, 2020. In addition, the differences between concentrate sales volume and unit case volume growth rates on a consolidated basis and for the Europe, Middle East and Africa operating segment during the six months ended June 26, 2020 were impacted by the timing of concentrate shipments related to Brexit in the prior year. The differences between unit caseconcentrate sales volume and concentrate salesunit case volume growth rates during the three and nine months ended September 27, 2019June 26, 2020 were impacted by a reduction in inventory resulting from higher shipments in the first quarter of 2020 as bottlers built inventory due to acquisitions, divestituresCOVID-19 uncertainty and 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 and nine months ended September 27, 2019 were impactedalso by the timing of concentrate shipments in Brazil in the prior year and the differences during the nine months ended September 27, 2019 were impacted by the timing of concentrate shipments resulting from uncertainties due to Brexit. We expect the Brexit timing difference to reverse by the end of 2019.year.
38

Net Operating Revenues
Three Months Ended September 27, 2019 June 26, 2020 versus Three Months Ended September June 28, 20182019
During the three months ended September 27, 2019,June 26, 2020, net operating revenues were $9,507$7,150 million compared to $8,775$9,997 million during the three months ended SeptemberJune 28, 2018, an increase2019, a decrease of $732$2,847 million, or 828 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:
Percent Change 2019 versus 2018Percent Change 2020 versus 2019
Volume1

Price, Product & Geographic Mix
Foreign Currency Fluctuations
Acquisitions & Divestitures2 

Total
Volume1
Price, Product & Geographic MixForeign Currency Fluctuations
Acquisitions & Divestitures2
Total
Consolidated(2)%6%(3)%6%8%Consolidated(22)%(4)%(3)%— %(28)%
Europe, Middle East & Africa1 %3%(7)%3%—
Europe, Middle East & Africa(26)%(9)%(3)%— %(37)%
Latin America(8)20
(8)—
4
Latin America(18) 5  (11) —  (25) 
North America(1)3
—
(1)2
North America(18) —  —  1  (16) 
Asia Pacific3
—
1
—
3
Asia Pacific(21) (1) (1) —  (23) 
Global Ventures17
(3)(14)243
243
Global Ventures(34) (17) (2) —  (53) 
Bottling Investments7
2
(3)2
8
Bottling Investments(33) 3  (5) (3) (38) 
Note: Certain rows may not add due to rounding.
1 Represents the percent change in net operating revenues attributable to the increase (decrease) in concentrate sales volume for our geographic operating segments and our Global Ventures operating segment (excluding Costa non-ready-to-drink products) (expressed in equivalent unit cases)case equivalents) after considering the impact of acquisitions and divestitures. For our Bottling Investments operating segment, this represents the percent change in net operating revenues attributable to the increase (decrease) in unit case volume computed by comparing the total sales (rather than the average daily sales) in each of the corresponding periods after considering the impact of structural changes. Our Bottling Investments operating segment data reflects unit case volume growth for consolidated bottlers only after considering the impact of structural changes. Refer to the heading "Beverage Volume" above.
2 Includes structural changes. Refer to the heading "Structural Changes, Acquired Brands and Newly Licensed Brands" above.
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" 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. The impact of price, product and geographic mix is calculated by subtracting the change in net operating revenues resulting from volume increases or decreases, changes in foreign currency exchange rates, and acquisitions and divestitures from the total change in net operating revenues. Management believes that providing investors with price, product and geographic mix enhances their understanding about the combined impact that the following items had on the Company's net operating revenues: (1) pricing actions taken by the Company and, where applicable, our bottling partners; (2) changes in the mix of products and packages sold; and (3) changes in the mix of channels and geographic territories where products were sold. Management uses this measure in making financial, operating and planning decisions and in evaluating the Company's performance.
Price, product and geographic mix had a 64 percent favorableunfavorable 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:
•Europe, Middle East and Africa — favorable price mix across a majority of the business unitsunfavorable channel, package and favorable geographic mix;
•Latin America — favorable price mixpricing initiatives in all business units, the timing of concentrate shipments in Brazil in the prior yearMexico and the impact of inflationary environments in certain markets, partially offset by unfavorable geographicchannel and package mix;
•North America — favorable price and product mix drivenoffset by revenue growth management initiatives across the beverage categories;unfavorable channel and package mix;
•Asia Pacific — favorable priceunfavorable channel and package mix in allacross a majority of the business units, partially offset by unfavorablefavorable geographic mix;
•Global Ventures — unfavorable product mix; and channel mix primarily due to the impact of the temporary closures of nearly all of the Costa retail stores in Western Europe as a result of the impact of the COVID-19 pandemic; and
•Bottling Investments — favorable price productand geographic mix, partially offset by unfavorable channel and package mix in certain bottling operations and favorable geographic mix.


Fluctuations in foreign currency exchange rates decreased our consolidated net operating revenues by 3 percent. This unfavorable impact was primarily due to a stronger U.S. dollar compared to certain foreign currencies, including the euro,
39

British pound sterling, 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. The unfavorable impact of a stronger U.S. dollar compared to the currencies listed above was partially offset by the impact of a weaker U.S. dollar compared to certain other foreign currencies, including the Japanese yen, which had a favorable impact on our Asia Pacific operating segment. Refer to the heading "Liquidity, Capital Resources and Financial Position — Foreign Exchange" below.
"Acquisitions and divestitures" refers to acquisitions and divestitures of brands andor businesses, some of which the Company considers to be structural changes. The impact of acquisitions and divestitures is the difference between the change in net operating revenues and the change in what our net operating revenues would have been if we removed the net operating revenues associated with an acquisition or divestiture from either the current year or the prior year, as applicable. Management believes that quantifying the impact that acquisitions and divestitures had on the Company's net operating revenues provides investors with useful information to enhance their understanding of the Company's net operating revenue performance by improving their ability to compare our period-to-period results. Management considers the impact of acquisitions and divestitures when evaluating the Company's performance. Refer to the heading "Structural Changes, Acquired Brands and Newly Licensed Brands" above for additional information related to acquisitions and divestitures.
NineSix Months Ended September 27, 2019 versus NineJune 26, 2020versusSix Months Ended SeptemberJune 28, 20182019
During the ninesix months ended September 27, 2019,June 26, 2020, net operating revenues were $28,198$15,751 million, compared to $26,494$18,691 million during the ninesix months ended SeptemberJune 28, 2018, an increase2019, a decrease of $1,704$2,940 million, or 616 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:
Percent Change 2019 versus 2018Percent Change 2020 versus 2019
Volume1

Price, Product & Geographic Mix
Foreign Currency Fluctuations
Acquisitions & Divestitures2 

Total
Volume1
Price, Product & Geographic MixForeign Currency Fluctuations
Acquisitions & Divestitures2
Total
Consolidated1%4%(5)%6%6%Consolidated(12)%(2)%(2)%— %(16)%
Europe, Middle East & Africa3%4%(10)%3%—%Europe, Middle East & Africa(15)%(4)%(3)%1 %(21)%
Latin America(2)11
(11)—
(3)Latin America(7) 7  (11) —  (11) 
North America(2)4
—
—
2
North America(8) 1  —  2  (6) 
Asia Pacific5
(2)(2)(1)1
Asia Pacific(13) (2) (1) 1  (15) 
Global Ventures7
(1)(18)227
214
Global Ventures(20) (8) (1) —  (29) 
Bottling Investments9
3
(6)(1)4
Bottling Investments(19) 1  (3) (2) (24) 
Note: Certain rows may not add due to rounding.
1 Represents the percent change in net operating revenues attributable to the increase (decrease) in concentrate sales volume for our geographic operating segments and our Global Ventures operating segment (excluding Costa non-ready-to-drink products) (expressed in equivalent unit cases)case equivalents) after considering the impact of acquisitions and divestitures. For our Bottling Investments operating segment, this represents the percent change in net operating revenues attributable to the increase (decrease) in unit case volume computed by comparing the total sales (rather than the average daily sales) in each of the corresponding periods after considering the impact of structural changes. Our Bottling Investments operating segment data reflects unit case volume growth for consolidated bottlers only after considering the impact of structural changes. Refer to the heading "Beverage Volume" above.
2 Includes structural changes. Refer to the heading "Structural Changes, Acquired Brands and Newly Licensed Brands" above.
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 42 percent favorableunfavorable 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:
•Europe, Middle East and Africa — favorable priceunfavorable channel, package and geographic mix, across a majorityincluding the impact of the business units andBrexit inventory build in the timing of concentrate shipments as a result of certain bottlers increasing their concentrate inventories due to uncertainties related to Brexit;prior year;
•Latin America — favorable price mix across all business unitspricing initiatives in Mexico and the impact of inflationary environments in certain markets, partially offset by unfavorable geographicchannel and package mix;
•North America — favorable price and product mix, drivenpartially offset by revenue growth management initiatives across the beverage categories;unfavorable channel and package mix;
•Asia Pacific — unfavorable channel and package mix, partially offset by favorable geographic mix;
•Global Ventures — unfavorable product and channel mix primarily due to the impact of the temporary closures of nearly all of the Costa retail stores as a result of the COVID-19 pandemic; and
40

•Bottling Investments — favorable geographic mix, partially offset by favorable price mix in all business units;unfavorable channel and package mix.
Global Ventures —The unfavorable product mix; and
Bottling Investments — favorable price, productchannel and package mix for both the three and six months ended June 26, 2020 in certain bottling operations, partially offset by unfavorable geographic mix.
all operating segments was primarily a result of the shift in consumer demand due to the impact of the COVID-19 pandemic. Consumers are purchasing more products in the at-home channels and less in the away-from-home channels. We estimate that net operating revenues recognized on incremental concentrate shipments relatedexpect any shift in consumer demand back to Brexit were approximately $100 millionthe away-from-home channels during the nine months ended September 27, 2019.second half of 2020 to be closely correlated with the easing of the shelter-in-place orders around the world.
Fluctuations in foreign currency exchange rates decreased our consolidated net operating revenues by 52 percent. This unfavorable impact was primarily due to a stronger U.S. dollar compared to certain foreign currencies, including the euro,


British pound sterling, 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. The unfavorable impact of a stronger U.S. dollar compared to the currencies listed above was partially offset by the impact of a weaker U.S. dollar compared to certain other foreign currencies, including the Japanese yen, which had a favorable impact on our Asia Pacific operating segment. Refer to the heading "Liquidity, Capital Resources and Financial Position — Foreign Exchange" below.
Net operating revenue growth rates are impacted by sales volume; price, product and geographic mix; foreign currency fluctuations; and acquisitions and divestitures. Based on current spot rates and our hedging coverage in place, we expect foreign currency fluctuations will have an unfavorable impact on net operating revenues through the end of the year. The size and timing of acquisitions and divestitures are not consistent from period to period. The Company currently expects acquisitionsBased on current spot rates and divestitures toour hedging coverage in place, we expect foreign currencies will have a favorablean unfavorable impact of 7 percent on 2019our full year 2020 net operating revenues.
Gross Profit Margin
Gross profit margin is a ratio calculated by dividing gross profit by net operating revenues. Management believes gross profit margin provides investors with useful information related to the profitability of our business prior to considering all of the operating costs incurred. Management uses this measure in making financial, operating and planning decisions and in evaluating the Company's performance.
Our gross profit margin decreased to 60.457.9 percent for the three months ended September 27, 2019,June 26, 2020, compared to 61.960.8 percent for the three months ended SeptemberJune 28, 2018.2019. Our gross profit margin decreased to 60.859.5 percent for the ninesix months ended September 27, 2019,June 26, 2020, compared to 62.461.0 percent for the ninesix months ended SeptemberJune 28, 2018.2019. These decreases were primarily duerelated to volume declines in our more capital-intensive finished goods businesses, unfavorable channel and package mix, and unfavorable manufacturing overhead absorption, partially offset by the impact of structural changes as well as the unfavorable impact of foreign currency exchange rate fluctuations. Generally, finished product operations generate higher net operating revenues but lower gross profit margins than concentrate operations. acquisitions and divestitures. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information related to acquisitions and divestitures.
Selling, General and Administrative Expenses
The following table sets forth the components of selling, general and administrative expenses (in millions):
Three Months EndedSix Months Ended
Three Months Ended Nine Months EndedJune 26,
2020		June 28,
2019		June 26,
2020		June 28,
2019
September 27,
2019
September 28,
2018
 September 27,
2019
September 28,
2018
Stock-based compensation expense$58
$46
 $146
$167
Stock-based compensation expense (income)Stock-based compensation expense (income)$41  $48  $36  $88  
Advertising expenses1,201
1,108
 3,319
3,275
Advertising expenses370  1,165  1,272  2,118  
Selling and distribution expenses733
604
 2,121
1,839
Selling and distribution expenses569  713  1,267  1,388  
Other operating expenses1,124
902
 3,293
3,005
Other operating expenses1,003  1,070  2,056  2,169  
Selling, general and administrative expenses$3,116
$2,660
 $8,879
$8,286
Selling, general and administrative expenses$1,983  $2,996  $4,631  $5,763  
During the three and ninesix months ended September 27, 2019,June 26, 2020, selling, general and administrative expenses increased $456decreased $1,013 million, or 1734 percent, and $593decreased $1,132 million, or 720 percent, respectively, versus the prior year comparable periods. These increasesperiod. The decreases were primarily thedue to effective cost management and a reduction in marketing spending as a result of acquisitionsuncertainties related to the impact of the COVID-19 pandemic, the impact of savings from our productivity initiatives and divestitures, partially offset by a foreign currency exchange rate impact duringof 2 percent. The six months ended June 26, 2020 also included a reduction in stock-based compensation expense resulting from a change in estimated payout.
The decrease in advertising expenses for the three and ninesix months ended September 27, 2019June 26, 2020 included the impact of 2 percent and 4 percent, respectively.
Duringa reduction in our estimate of full year advertising expenses that benefit multiple interim periods. Based on our interim accounting policy for advertising costs, a change in estimate of full year advertising expense is recognized in the three and nine months ended September 27, 2019,interim period in which the change in estimate occurs. The foreign currency exchange rate fluctuations decreasedimpact on advertising expenses by 2 percent and 4 percent, respectively.
Duringwas nominal for the three and nine months ended September 27, 2019,June 26, 2020 and was a decrease of 1 percent for the increasesix months ended June 26, 2020.
The decrease in selling and distribution expenses during the three months ended June 26, 2020 was primarily due to effective cost management as a result of uncertainties related to the impact of structural changes, partially offset by the impact of foreign currency exchange rate fluctuations.COVID-19 pandemic. The decrease in selling and distribution
The increase in other operating
41

expenses during the three and ninesix months ended September 27, 2019June 26, 2020 was primarily due to effective cost management as a result of uncertainties related to the impact of acquisitions and divestitures,COVID-19 pandemic, partially offset by savings from our productivity initiatives.amortization and depreciation expense in the current year for Coca-Cola Beverages Africa Proprietary Limited ("CCBA"). During the three months ended March 29, 2019, CCBA was classified as held for sale, and therefore amortization and depreciation expense were not recorded.
As of September 27, 2019,June 26, 2020, we had $312$326 million of total unrecognized compensation cost related to nonvested stock-based compensation awards granted under our plans, which we expect to recognize over a weighted-average period of 2.2 years as stock-based compensation expense. This expected cost does not include the impact of any future stock-based compensation awards granted.
Other Operating Charges


Other operating charges incurred by operating segment and Corporate were as follows (in millions):
Three Months EndedSix Months Ended
June 26,
2020		June 28,
2019		June 26,
2020		June 28,
2019
Europe, Middle East & Africa$—  $—  $—  $1  
Latin America10  —  10  —  
North America110  13  262  30  
Asia Pacific—  —  —  —  
Global Ventures—  —  —  —  
Bottling Investments13  30  13  43  
Corporate40  49  90  145  
Total$173  $92  $375  $219  
 Three Months Ended Nine Months Ended
 September 27,
2019
September 28,
2018
 September 27,
2019
September 28,
2018
Europe, Middle East & Africa$1
$(4) $2
$(2)
Latin America—
(1) —
2
North America12
39
 42
138
Asia Pacific42
(2) 42
(1)
Global Ventures—
—
 —
—
Bottling Investments21
47
 64
594
Corporate49
76
 194
185
Total$125
$155
 $344
$916
During the three months ended September 27, 2019,June 26, 2020, the Company recorded other operating charges of $125$173 million. These charges included an impairment charge of $55 million related to a trademark in North America, which was primarily consisteddriven by the impact of the COVID-19 pandemic, revised projections of future operating results and a change in brand focus in the Company's portfolio. Also included were chargesof $35 million related to discontinuing the Odwalla juice business and an impairment charge of $8 million related to the Odwalla trademark. Other operating charges also included $22 million related to the Company's productivity and reinvestment program, $18 million related to the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition and $12 million related to the restructuring of our water manufacturing operations in the United States. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information on the fairlife acquisition. Refer to Note 12 of Notes to Condensed Consolidated Financial Statements for additional information on the Company's productivity and reinvestment program. Refer to Note 15 of Notes to Condensed Consolidated Financial Statements for additional information on the impairment charges. Refer to Note 16 of Notes to Condensed Consolidated Financial Statements for the impact these charges had on our operating segments and Corporate.
During the six months ended June 26, 2020, the Company recorded other operating charges of $375 million. These charges included an impairment charge of $160 million related to the Odwalla trademark and charges of $35 million related to discontinuing the Odwalla juice business. These charges also included an impairment charge of $55 million related to a trademark in North America, which was primarily driven by the impact of the COVID-19 pandemic, revised projections of future operating results and a change in brand focus in the Company's portfolio. Other operating charges also included $61 million related to the Company's productivity and reinvestment program, and $42$29 million related to the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition and $12 million related to the restructuring of our water manufacturing operations in the United States. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information on the fairlife acquisition. Refer to Note 12 of Notes to Condensed Consolidated Financial Statements for additional information on the Company's productivity and reinvestment program. Refer to Note 15 of Notes to Condensed Consolidated Financial Statements for additional information on the impairment charges. Refer to Note 16 of a trademark in Asia Pacific.Notes to Condensed Consolidated Financial Statements for the impact these charges had on our operating segments and Corporate.
During the three months ended June 28, 2019, the Company recorded other operating charges of $92 million. These charges primarily consisted of $55 million related to the Company's productivity and reinvestment program. In addition, other operating charges included $21$29 million 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 1312 of Notes to Condensed Consolidated Financial Statements for additional information on the Company's productivity and reinvestment program. Refer to Note 16 of
42

Notes to Condensed Consolidated Financial Statements 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 of Notes to Condensed Consolidated Financial Statements for additional information on the acquisition of Costa. Refer to Note 8 of Notes to Condensed Consolidated Financial Statements for additional information related to the tax litigation. Refer to Note 12 of Notes to Condensed Consolidated Financial Statements for additional information on the Company's productivity and reinvestment program. Refer to Note 16 of Notes to Condensed Consolidated Financial Statements for information on how the Company determined the trademark impairment charge. Refer to Note 17 of Notes to Condensed Consolidated Financial Statements for the impact these charges had on our operating segments and Corporate.
During the nine months ended September 27, 2019, the Company recorded other operating charges of $344 million. These charges primarily consisted of $184 million related to the Company's productivity and reinvestment program and $42 million related to the impairment of a trademark in Asia Pacific. In addition, other operating charges included $46 million of transaction costs associated with the purchase of Costa, which we acquired in January 2019, and $61 million for costs incurred to refranchise certain of our North America bottling operations. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information on the acquisition of Costa. Refer to Note 13 of Notes to Condensed Consolidated Financial Statements for additional information on the Company's productivity and reinvestment program. Refer to Note 16 of Notes to Condensed Consolidated Financial Statements for information on how the Company determined the trademark impairment charge. Refer to Note 17 of Notes to Condensed Consolidated Financial Statements for the impact these charges had on our operating segments and Corporate.
During the three months ended September 28, 2018, the Company recorded other operating charges of $155 million. These charges primarily consisted of $107 million related to the Company's productivity and reinvestment program. In addition, other operating charges included $38 million related to costs incurred to refranchise certain of our North America bottling operations. Other operating charges also included $4 million related to tax litigation expense. Refer to Note 9 of Notes to Condensed Consolidated Financial Statements for additional information related to the tax litigation. Refer to Note 13 of Notes to Condensed Consolidated Financial Statements for additional information on the Company's productivity and reinvestment program. Refer to Note 17 of Notes to Condensed Consolidated Financial Statements for the impact these charges had on our operating segments and Corporate.
During the nine months ended September 28, 2018, the Company recorded other operating charges of $916 million. These charges primarily consisted of $450 million of CCR asset impairments and $313 million related to the Company's productivity and reinvestment program. In addition, other operating charges included $117 million related to costs incurred to refranchise certain of our North America bottling operations. Other operating charges also included $31 million related to tax litigation expense. Refer to Note 9 of Notes to Condensed Consolidated Financial Statements for additional information related to the tax litigation. Refer to Note 13 of Notes to Condensed Consolidated Financial Statements for additional information on the Company's productivity and reinvestment program. Refer to Note 16 of Notes to Condensed Consolidated Financial Statements for information on how the Company determined the asset impairment charges. Refer to Note 17 of Notes to Condensed Consolidated Financial Statements for the impact these charges had on our operating segments and Corporate.


Operating Income and Operating Margin
Information about our operating income contribution by operating segment and Corporate on a percentage basis is as follows:
Three Months EndedSix Months Ended
June 26,
2020		June 28,
2019		June 26,
2020		June 28,
2019
Europe, Middle East & Africa36.1%  34.7%  38.4%  37.2%  
Latin America25.4  19.7  23.9  20.0  
North America24.7  23.8  20.1  23.9  
Asia Pacific32.9  24.5  26.7  23.5  
Global Ventures(5.1) 2.4  (1.9) 2.6  
Bottling Investments0.6  4.0  1.7  4.0  
Corporate(14.6) (9.1) (8.9) (11.2) 
Total100.0%  100.0%  100.0%  100.0%  
 Three Months Ended Nine Months Ended
 September 27,
2019
September 28,
2018
 September 27,
2019
September 28,
2018
Europe, Middle East & Africa35.4%35.7% 36.6%40.1%
Latin America24.1
24.5
 21.3
24.6
North America25.6
25.3
 24.4
24.8
Asia Pacific23.8
23.5
 23.6
25.6
Global Ventures3.1
1.7
 2.7
1.5
Bottling Investments0.3
0.9
 2.9
(4.3)
Corporate(12.3)(11.6) (11.5)(12.3)
Total100.0%100.0% 100.0%100.0%
Operating margin is a ratio calculated by dividing operating income by net operating revenues. Management believes operating margin provides investors with useful information related to the profitability of our business after considering all of the operating costs incurred. Management uses this measure in making financial, operating and planning decisions and in evaluating the Company's performance.
Information about our operating margin on a consolidated basis and by operating segment and Corporate is as follows:
Three Months Ended Nine Months EndedThree Months EndedSix Months Ended
September 27,
2019
September 28,
2018
 September 27,
2019
September 28,
2018
June 26,
2020		June 28,
2019		June 26,
2020		June 28,
2019
Consolidated26.3%29.8% 28.1%27.7%Consolidated27.7%  29.9%  27.7%  29.0%  
Europe, Middle East & Africa53.0%54.8% 56.8%57.4%Europe, Middle East & Africa63.0%  57.5%  61.8%  58.6%  
Latin America57.7
64.0
 57.3
60.3
Latin America66.8  58.6  61.9  57.1  
North America20.4
22.3
 21.6
21.1
North America18.5  22.5  15.9  22.2  
Asia Pacific45.0
45.6
 50.1
48.8
Asia Pacific61.1  54.1  56.5  52.8  
Global Ventures12.2
24.1
 11.7
18.8
Global Ventures(34.5) 11.5  (9.5) 11.4  
Bottling Investments0.4
1.6
 4.1
(6.0)Bottling Investments1.0  5.9  2.6  5.7  
Corporate*
*
 *
*
Corporate**
* Calculation is not meaningful.
Three Months Ended September 27, 2019 June 26, 2020 versus Three Months Ended September June 28, 20182019
During the three months ended September 27, 2019,June 26, 2020, operating income was $2,499$1,981 million, compared to $2,614$2,988 million during the three months ended SeptemberJune 28, 2018,2019, a decrease of $115$1,007 million, or 434 percent. The decrease in operating income for the three months ended September 27, 2019 was primarily driven by a decline in net operating revenues due to the impact of the COVID-19 pandemic, an unfavorable foreign currency exchange rate impact and the timing of concentrate shipments,higher other operating charges, partially offset by the benefit from acquisitionslower selling, general and divestitures and the impact of lower other operating charges.administrative expenses.
During the three months ended September 27, 2019,June 26, 2020, fluctuations in foreign currency exchange rates unfavorably impacted consolidated operating income by 65 percent due to a stronger U.S. dollar compared to certain foreign currencies, including the
43

euro, British pound sterling, Mexican peso, Brazilian real and Australian dollar, which had an unfavorable impact on all of our operating segments, except for North America. The unfavorable impact of a stronger U.S. dollar compared to the currencies listed above was partially offset by the impact of a weaker U.S. dollar compared to certain other foreign currencies, including the Japanese yen, which had a favorable impact on our Asia Pacific operating segment.
Operating income for all operating segments and Corporate was impacted by a decline in net operating revenues due to the impact of the COVID-19 pandemic. Operating income was also impacted by lower selling, general and administrative expenses. In addition, operating income for each operating segment and Corporate was impacted by the following:
•Europe, Middle East and Africa — an unfavorable foreign currency exchange rate impact of 4 percent;
•Latin America — an unfavorable foreign currency exchange rate impact of 18 percent;
•North America — higher other operating charges;
•Asia Pacific — an unfavorable foreign currency exchange rate impact of 2 percent;
•Global Ventures — the temporary closures of nearly all of the Costa retail stores in Western Europe;
•Bottling Investments — a favorable foreign currency exchange rate impact of 16 percent and lower other operating charges; and
•Corporate — operating loss in 2020 increased primarily as a result of unfavorable manufacturing overhead variances due to lower volume, the impact of mark-to-market adjustments of certain economic hedges and a loss on the disposal of certain assets, partially offset by lower stock-based compensation expense, lower annual incentive expense, lower other operating charges and savings from productivity initiatives.
Six Months Ended June 26, 2020 versus Six Months Ended June 28, 2019
During the six months ended June 26, 2020, operating income was $4,361 million, compared to $5,423 million during the six months ended June 28, 2019, a decrease of $1,062 million, or 20 percent. The decrease in operating income was primarily driven by an unfavorable foreign currency exchange rate impact and higher other operating charges, partially offset by lower selling, general and administrative expenses.
During the six months ended June 26, 2020, fluctuations in foreign currency exchange rates unfavorably impacted consolidated operating income by 4 percent due to a stronger U.S. dollar compared to certain foreign currencies, including the euro, British pound sterling, 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. The unfavorable impact of a stronger U.S. dollar compared to the currencies listed above was partially offset by the impact of a weaker U.S. dollar compared to certain other foreign currencies, including the Japanese yen, which had a favorable impact on our Asia Pacific operating segment.
The Company's Operating income for all operating segments and Corporate was impacted by a decline in net operating revenues due to the impact of the COVID-19 pandemic. Operating income was also impacted by lower selling, general and administrative expenses. In addition, operating income for each operating segment and Corporate was impacted by the following:
•Europe, Middle East and Africa segment reported operating income of $886 million and $933 million for the three months ended September 27, 2019 and September 28, 2018, respectively. The decrease in operating income was driven by an unfavorable foreign currency exchange rate impact of 11 percent, partially offset by concentrate sales volume growth of 1 percent and favorable price mix.
Latin America reported operating income of $603 million and $640 million for the three months ended September 27, 2019 and September 28, 2018, respectively. The decrease in operating income was driven by an unfavorable foreign currency exchange rate impact of 11 percent and the timing of concentrate shipments in Brazil in the prior year. These unfavorable impacts were partially offset by favorable price mix.
Operating income for North America for the three months ended September 27, 2019 and September 28, 2018 was $641 million and $663 million, respectively. The decrease in operating income was primarily driven by the impact of prior year


structural changes, partially offset by lower other operating charges related to the refranchising of North America bottling operations.
Asia Pacific's operating income for the three months ended September 27, 2019 and September 28, 2018 was $594 million and $614 million, respectively. The decrease in operating income was primarily driven by unfavorable geographic mix and an impairment of a trademark, partially offset by concentrate sales volume growth of 2 percent.
Global Ventures' operating income for the three months ended September 27, 2019 and September 28, 2018 was $77 million and $44 million, respectively. The increase in operating income was primarily due to the acquisition of Costa, partially offset by— an unfavorable foreign currency exchange rate impact of 4 percent.percent;
Bottling Investments' operating income for the three months ended September 27, 2019 was $7 million and $24 million, respectively. The decrease in operating income was driven by•Latin America — an unfavorable foreign currency exchange rate impact of 46 percent, partially offset by the favorable16 percent;
•North America — higher other operating charges;
•Asia Pacific — an unfavorable foreign currency exchange rate impact of 1 percent;
•Global Ventures — the acquisitiontemporary closures of nearly all of the Costa retail stores;
•Bottling Investments — a controlling interest in the Philippine bottling operations.favorable foreign currency exchange rate impact of 13 percent and lower other operating charges; and
Corporate's operating loss for the three months ended September 27, 2019 and September 28, 2018 was $309 million and $304 million, respectively.•Corporate — Operating loss in 2019 increased,2020 decreased primarily as a result of the timing of operating expenses, partially offset bylower stock-based compensation expense, lower annual incentive expense, lower other operating charges and savings from our productivity initiatives.initiatives, partially offset by unfavorable manufacturing overhead variances due to lower volume and a loss on the disposal of certain assets.
Based on current spot rates and our hedging coverage in place, we expect foreign currency fluctuations will have an unfavorable impact on operating income through the end of the year.
Nine Months Ended September 27, 2019 versus Nine Months Ended September 28, 2018
During the nine months ended September 27, 2019, operating income was $7,922 million, compared to $7,327 million during the nine months ended September 28, 2018, an increase of $595 million, or 8 percent. The increase in operating income for the nine months ended September 27, 2019 was driven by concentrate sales volume growth of 2 percent, favorable price, product and geographic mix, lower other operating charges and the benefit from acquisitions and divestitures. These favorable impacts were partially offset by the unfavorable impact of foreign currency exchange rate fluctuations.
During the nine months ended September 27, 2019, fluctuations in foreign currency exchange rates unfavorably impacted consolidated operating income by 9 percent due to a stronger U.S. dollar compared to certain foreign currencies, including the euro, British pound sterling, 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. The unfavorable impact of a stronger U.S. dollar compared to the currencies listed above was partially offset by the impact of a weaker U.S. dollar compared to certain other foreign currencies, including the Japanese yen, which had a favorable impact on our Asia Pacific operating segment.
The Company's Europe, Middle East and Africa segment reported operating income of $2,902 million and $2,940 million for the nine months ended September 27, 2019 and September 28, 2018, respectively. The decrease in operating income for the segment reflects an unfavorable foreign currency exchange rate impact of 13 percent, partially offset by concentrate sales volume growth of 3 percent, which included additional concentrate shipments resulting from certain of our European bottling partners increasing concentrate inventory levels due to uncertainties related to Brexit, and favorable price, product and geographic mix.
Latin America reported operating income of $1,687 million and $1,804 million for the nine months ended September 27, 2019 and September 28, 2018, respectively. The decrease in operating income was driven by an unfavorable foreign currency exchange rate impact of 15 percent, partially offset by favorable price mix.
Operating income for North America for the nine months ended September 27, 2019 and September 28, 2018 was $1,938 million and $1,814 million, respectively. The increase in operating income was primarily driven by favorable price mix, lower other operating charges and the impact of prior year structural changes. These favorable impacts were partially offset by a decline in concentrate sales volume of 2 percent and the timing of operating expenses.
Asia Pacific's operating income for the nine months ended September 27, 2019 and September 28, 2018 was $1,867 million and $1,879 million, respectively. The decrease in operating income was driven by unfavorable geographic mix, an impairment of a trademark and an unfavorable foreign currency exchange rate impact of 1 percent, partially offset by concentrate sales volume growth of 4 percent.
Global Ventures' operating income for the nine months ended September 27, 2019 and September 28, 2018 was $216 million and $110 million, respectively. The increase in operating income was primarily due to the acquisition of Costa, partially offset by an unfavorable foreign currency exchange rate impact of 5 percent.
Operating income for our Bottling Investments segment for the nine months ended September 27, 2019 was $226 million compared to an operating loss of $318 million for the nine months ended September 28, 2018. Operating income in 2019 was impacted by lower other operating charges, strong performance in India and the favorable impact of the acquisition of a


controlling interest in the Philippine bottling operations, partially offset by an unfavorable foreign currency exchange rate impact.
Corporate's operating loss for the nine months ended September 27, 2019 and September 28, 2018 was $914 million and $902 million, respectively. Operating loss in 2019 was unfavorably impacted by higher other operating charges, partially offset by savings from our productivity initiatives.
Based on current spot rates and our hedging coverage in place, we expect foreign currency fluctuations will have an unfavorable impact on operating income through the end of the year.        
Interest Income
During the three months ended September 27, 2019,June 26, 2020, interest income was $153$100 million, compared to $171$142 million during the three months ended SeptemberJune 28, 2018,2019, a decrease of $18$42 million, or 1029 percent. During the ninesix months ended September 27, 2019,June 26, 2020, interest income was $428$212 million, compared to $510$275 million during the ninesix months ended SeptemberJune 28, 2018,2019, a decrease of $82$63 million, or 16
44

23 percent. These decreases were primarily driven by lower investment balances due to liquidating a portionand lower returns in certain of our short-term investmentsinternational locations, as well as the unfavorable impact of fluctuations in connection withforeign currency exchange rates.
Interest Expense
During the acquisitionthree months ended June 26, 2020, interest expense was $274 million, compared to $236 million during the three months ended June 28, 2019, an increase of Costa,$38 million, or 16 percent. This increase was primarily driven by our 2020 long-term debt issuances of $11.5 billion, partially offset by higher cashlower short-term U.S. interest rates. During the six months ended June 26, 2020, interest expense was $467 million, compared to $481 million during the six months ended June 28, 2019, a decrease of $14 million, or 3 percent. This decrease was primarily due to the impact of lower short-term U.S. interest rates and lower debt balances in certain of our international locations. Refer to Note 2locations, partially offset by the impact of Notes to Condensed Consolidated Financial Statements for additional information.long-term debt issued in the third quarter of 2019 and the first half of 2020.
Interest Expense
Equity Income (Loss) — Net
Three Months Ended June 26, 2020 versus Three Months Ended June 28, 2019
During the three months ended September 27, 2019, interest expenseJune 26, 2020, equity income was $230$176 million, compared to $214equity income of $329 million during the three months ended SeptemberJune 28, 2018, an increase2019, a decrease of $16$153 million, or 846 percent. During the nine months ended September 27, 2019, interest expense was $711 million, compared to $697 million during the nine months ended September 28, 2018, an increase of $14 million, or 2 percent. These increases were primarily due toThis decrease reflects the impact of higher short-term U.S. interest rates, partially offsetthe COVID-19 pandemic on operating results reported by maturities of long-term debt with higher interest rates and the impact of prior year hedge accounting activities. In addition, prior year interest expense included a net gain of $27 million related to the extinguishment of long-term debt.
Equity Income (Loss) — Net
Three Months Ended September 27, 2019 versus Three Months Ended September 28, 2018
During the three months ended September 27, 2019, equity income was $346 million, compared to equity income of $348 million during the three months ended September 28, 2018, a decrease of $2 million. This decrease reflects, among other things, the sale of our equity ownership interest in Corporación Lindley S.A. ("Lindley"), the sale of a portion of our equity ownership interest in Embotelladora Andina S.A. ("Andina")method investees and the acquisition of a controlling interest in the Philippine bottling operations, which was previously accounted for as an equity method investee, as well as the unfavorable impact of foreign currency exchange rate fluctuations. These unfavorable impacts were partially offset by the impact of more favorable operating results reported by several of our equity method investees. In addition, the Company recorded net charges of $39$63 million and a net gain of $19$26 million in the line item equity income (loss) — net during the three months ended September 27,June 26, 2020 and June 28, 2019, and September 28, 2018, respectively. These amounts represent the Company's proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees.
NineSix Months Ended September 27, 2019 June 26, 2020 versus NineSix Months Ended September June 28, 20182019
During the ninesix months ended September 27, 2019,June 26, 2020, equity income was $808$343 million, compared to equity income of $813$462 million during the ninesix months ended SeptemberJune 28, 2018,2019, a decrease of $5$119 million, or 126 percent. This decrease reflects among other things, the saleimpact of the COVID-19 pandemic on operating results reported by our equity ownership interest in Lindley, the sale of a portion of our equity ownership interest in Andina,method investees and the acquisition of a controlling interest in the Philippine bottling operations, which was previously accounted for as an equity method investee, as well as the unfavorable impact of foreign currency exchange rate fluctuations. These unfavorable impacts were partially offset by the impact of more favorable operating results reported by several of our equity method investees. In addition, the Company recorded net charges of $107$101 million and $65$68 million in the line item equity income (loss) — net during the ninesix months ended September 27,June 26, 2020 and June 28, 2019, and September 28, 2018, respectively. These amounts represent the Company's proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees.
Other Income (Loss) — Net
Three Months Ended September 27, 2019 June 26, 2020 versus Three Months Ended September June 28, 20182019
Other income (loss) — net includes, among other things, dividend income; rental income; gains and losses related to the disposal of property, plant and equipment; gains and losses related to acquisitions and divestitures; non-service cost components of net periodic benefit cost for pension and other postretirement benefit plans; other benefit plan charges and credits;


credits related to pension and other postretirement benefit plans; realized and unrealized gains and losses on equity securities and trading debt securities; realized gains and losses on available-for-sale debt securities; and the impact of foreign currency exchange gains and losses. The foreign currency exchange gains and losses are primarily the result of the remeasurement of monetary assets and liabilities from certain currencies into functional currencies. The effects of the remeasurement of these assets and liabilities are partially offset by the impact of our economic hedging program for certain exposures on our condensed consolidated balance sheet. Refer to Note 6 of Notes to Condensed Consolidated Financial Statements.
During the three months ended September 27, 2019,June 26, 2020, other income (loss) — net was income of $324$214 million. The Company recognized a gain of $739 million on the sale of a retail and office building in New York City and a net gain of $38$247 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. In addition, theThe Company also recorded an other-than-temporary impairment charge of $120$38 million related to CCBJHI, an equity method investee, and other-than-temporary impairment chargesone of $255 million related to certainour equity method investees in the Middle East. The Company also recorded net chargesLatin America and a charge of $103$19 million primarily related to post-closing adjustments as contemplated by the related agreementsasset write-offs associated with the refranchisingrestructuring of certain bottling territoriesour water manufacturing operations in North America.the United States. Other income (loss) — net also included income of $24$42 million related to the non-service cost components of net periodic benefit cost, and $11$35 million of dividend income partially offset by aand net foreign currency exchange losslosses of $15$49 million. None of the other items included in other income (loss) — net during the three months ended September 27, 2019June 26, 2020 was individually significant. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information on refranchising activities. Refer to Note 4 of Notes to Condensed Consolidated Financial Statements for additional information on equity and debt securities. Refer to Note 1615 of Notes to Condensed Consolidated Financial Statements for additional information on how the Company determined the impairment charges.charge and the charge for accelerated depreciation on fixed assets. Refer to Note 1716 of Notes to Condensed Consolidated Financial Statements for the impact these items had on our operating segments and Corporate.
During the three months ended SeptemberJune 28, 2018,2019, other income (loss) — net was a loss of $546$174 million. The Company recorded an impairment chargeadjustment to reduce the carrying amount of $554 million related toCCBA's fixed assets heldand definite-lived intangible assets by CCBA, net charges of $275 million due to the refranchising of certain bottling territories in North America and$160 million. The Company also recorded an other-than-temporary impairment charge of $205$49 million related to our equity method investee in Indonesia. The Company also recorded charges of $35 million related to pension settlements and charges of $12 million primarily related to payments made to convert the bottling agreements for certain North America bottling partners' territories to a single form of comprehensive beverage agreement ("CBA") with additional requirements. These charges were partially offset by a net gain of $370 million related to the saleone of our equity ownershipmethod
45

investees in LindleyLatin America and a net gain of $11 million related to the refranchising of our Latin American bottling operations. The Company also recognized a net gain of $41 million related to economic hedging activity associated with certain acquisition and divestiture activities, and a net gain of $64$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. Other income (loss) — net also included income of $57$26 million related to the non-service cost components of net periodic benefit cost, $12$29 million of dividend income and a net foreign currency exchange gainlosses of $6$39 million. None of the other items included in other income (loss) — net during the three months ended SeptemberJune 28, 20182019 was individually significant. Refer to Note 2 for additional information on the CCBA asset adjustment. Refer to Note 4 of Notes to Condensed Consolidated Financial Statements for additional information on equity and debt securities. Refer to Note 15 of Notes to Condensed Consolidated Financial Statements for information on the impairment charge. Refer to Note 16 of Notes to Condensed Consolidated Financial Statements for the impact these items had on our operating segments and Corporate.
Six Months Ended June 26, 2020 versus Six Months Ended June 28, 2019
During the six months ended June 26, 2020, other income (loss) — net was income of $758 million. The Company recognized a gain of $902 million in conjunction with the fairlife acquisition, which resulted from the remeasurement of our previously held equity interest in fairlife to fair value, and a gain of $18 million related to the sale of a portion of our ownership interest in one of our equity method investments. These gains were partially offset by an other-than-temporary impairment charge of $38 million related to one of our equity method investees in Latin America, a charge of $19 million related to asset write-offs associated with the restructuring of our water manufacturing operations in the United States, a net loss of $144 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 net loss of $55 million related to economic hedging activities. Other income (loss) — net also included income of $85 million related to the non-service cost components of net periodic benefit cost, dividend income of $42 million and net foreign currency exchange losses of $33 million. None of the other items included in other income (loss) — net during the six months ended June 26, 2020 was individually significant. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information on the CCBA asset impairment, refranchising activities, North America conversion payments and the sale of our equity ownership in Lindley.fairlife acquisition. Refer to Note 4 of Notes to Condensed Consolidated Financial Statements for additional information on equity and debt securities. Refer to Note 6 of Notes to Condensed Consolidated Financial Statements for additional information on our economic hedging activities. Refer to Note 1615 of Notes to Condensed Consolidated Financial Statements for additional information on how the Company determined the impairment charges.charge. Refer to Note 1716 of Notes to Condensed Consolidated Financial Statements for the impact these items had on our operating segments and Corporate.



Nine Months Ended September 27, 2019 versus Nine Months Ended September 28, 2018
During the ninesix months ended September 27,June 28, 2019, other income (loss) — net was a loss of $81$405 million. During the nine months ended September 27, 2019, the Company recognized a gain of $739 million on the sale of a retail and office building in New York City. The Company also recognized a net gain of $197 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. These gains were partially offset by other-than-temporary impairment charges of $406$286 million related to CCBJHI, an equity method investee, $255 million related to certain equity method investees in the Middle East, $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 in Latin America. 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 recognizedThese charges were partially offset by a net chargesgain of $107$159 million duerelated 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 refranchisingsale of certain bottling territoriesa portion of our equity ownership interest 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.Embotelladora Andina S.A. ("Andina"). Other income (loss) — net also included income of $75$51 million related to the non-service cost components of net periodic benefit cost, and $51$40 million of dividend income partially offset by aand net foreign currency exchange losslosses of $76$61 million. None of the other items included in other income (loss) — net during the ninesix months ended September 27,June 28, 2019 was individually significant. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements 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 of Notes to Condensed Consolidated Financial Statements for additional information on equity and debt securities. Refer to Note 1615 of Notes to Condensed Consolidated Financial Statements for additional information on how the Company determined the impairment charges and the loss recognized in conjunction with our acquisition of the remaining equity ownership interest in CHI. Refer to Note 1716 of Notes to Condensed Consolidated Financial Statements for the impact these items had on our operating segments and Corporate.
During the nine months ended September 28, 2018, other income (loss) — net was a loss of $693 million. During the nine months ended September 28, 2018, the Company recorded an impairment charge of $554 million related to assets held by CCBA, net charges of $379 million due to the refranchising of certain bottling territories in North America and other-than-temporary impairment charges of $257 million related to two of our equity method investees. The Company also recorded charges of $121 million related to pension settlements, charges 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 $33 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 $370 million related to the sale of our equity ownership in Lindley and a net gain of $47 million related to the refranchising of our Latin American bottling operations. The Company also recognized a net gain of $41 million related to economic hedging activity associated with certain acquisition and divestiture activities, and a net gain of $15 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. Other income (loss) — net also included income of $174 million related to the non-service cost components of net periodic benefit cost and $58 million of dividend income, partially offset by a net foreign currency exchange loss of $35 million. None of the other items included in other income (loss) — net during the nine months ended September 28, 2018 was individually significant. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information on the CCBA asset impairment, refranchising activities, North America conversion payments and the sale of our equity ownership in Lindley. Refer to Note 4 of Notes to Condensed Consolidated Financial Statements for additional information on equity and debt securities. Refer to Note 6 of Notes to Condensed Consolidated Financial Statements for additional information on our hedging activities. Refer to Note 16 of Notes to Condensed Consolidated Financial Statements for information on how the Company determined the impairment charges. Refer to Note 17 of Notes to Condensed Consolidated Financial Statements for the impact these items had on our operating segments and Corporate.
Income Taxes
The Company recorded income taxes of $503$438 million (16.3(19.9 percent effective tax rate) and $555$421 million (23.4(13.8 percent effective tax rate) during the three months ended September 27,June 26, 2020 and June 28, 2019, and September 28, 2018, respectively. The Company recorded income taxes of $1,446$653 million (17.3(12.5 percent effective tax rate) and $1,711$943 million (23.6(17.9 percent effective tax rate) during the ninesix months ended September 27,June 26, 2020 and June 28, 2019, and September 28, 2018, respectively.
The Company's effective tax rates for the three and ninesix months ended September 27,June 26, 2020 and June 28, 2019 and September 28, 2018 vary from the statutory U.S. federal income tax rate of 21.0 percent primarily due to the tax impact of significant operating and nonoperating items,
46

along with the tax benefits of having significant operations outside the United States and significant earnings generated in investments accounted for under the equity method, both of which are generally taxed at rates lower than the statutory U.S. rate.


The Company's effective tax rate for the six months ended June 26, 2020 included the favorable impact of a $40 million tax benefit associated with the gain recorded upon the acquisition of the remaining interest in fairlife and also included the net tax benefit of various discrete tax items. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information on the fairlife acquisition.
The Company's effective tax rates for the three and ninesix months ended September 27,June 28, 2019 included $213 million and $245 million, respectively, of net tax benefit recorded, primarily associated with return to provision adjustments. Also included are excess tax benefits associated with the Company's stock-based compensation arrangements and net tax charges for changes to our uncertain tax positions, including interest and penalties, as well as for agreed-upon tax matters. The Company's effective tax rate for the nine months ended September 27, 2019 also included $199 million of tax benefit recorded as a result of CCBA no longer qualifying as a discontinued operation.
The Company's effective tax rates for the three and nine months ended September 28, 2018 included $125 million Refer to Note 2 of tax benefit and $9 million of tax expense, respectively,Notes to adjust our provisional tax estimate recorded as of December 31, 2017, related to the Tax Cuts and Jobs Act of 2017 (the "Tax Reform Act") signed into law on December 22, 2017.Condensed Consolidated Financial Statements.
On September 17, 2015, the Company received a Statutory Notice of Deficiency from the Internal Revenue Service ("IRS") for the tax years 2007 through 2009, after a five-year audit. The Company contested the proposed adjustments in U.S. Tax Court and is currently awaiting a decision. Refer to Note 98 of Notes to Condensed Consolidated Financial Statements.
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 20192020 is expected to be 19.5 percent before considering the potential impact of any significant operating and nonoperating items that may affect our effective tax rate.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION
We believe our ability to generate cash flows from operating activities is oneAs a result of our fundamental financial strengths. Refer touncertainties in the heading "Cash Flows from Operating Activities" below. The near-term outlook for our business remains strong,caused by the COVID-19 pandemic, we are reevaluating all aspects of our spending. We recognize that marketing campaigns are often less effective at times like these; therefore, we have taken actions to adjust our marketing spending until we have more clarity and visibility into the impact of the pandemic on our business. We have reviewed all of our capital projects to ensure that we are only spending on projects that are deemed to be essential in the current environment. We have taken steps to limit spending on travel, third-party services and other operating expenses, and we expectcontinue to generate substantialfocus on cash flows fromflow generation. Our current capital allocation priorities are focused on investing wisely to support our business operations in 2019. As a result ofand continuing to prioritize our expected cash flows from operations,dividend payment. Currently, we have no intention of repurchasing shares during the year ending December 31, 2020, and we have no intention on changing our approach toward paying dividends. We also do not currently expect any significant flexibilitymergers and acquisitions activity to meetoccur during the remainder of this year. We will review and, when appropriate, adjust our financial commitments.overall approach to capital allocation as we know more about the length and severity of the COVID-19 pandemic and how the post-pandemic recovery will unfold. The Company does not typically raise capital through the issuance of stock. Instead, we use debt financing to lower our overall cost of capital and increase our return on shareowners' equity. Refer to the heading "Cash Flows from Financing Activities" below. We have a history of borrowing funds both domestically and internationally at reasonable interest rates, and we expect to be able to do so incontinue to borrow funds at reasonable rates over the future.long term. Our debt financing also includes the use of an extensive commercial paper program as part of our overall cash management strategy.program. While the COVID-19 pandemic initially caused a disruption in the commercial paper market, we currently still have the ability to borrow funds in this market and expect to continue to be able to do so in the future. The Company reviews its optimal mix of short-term and long-term debt regularly, and may replaceas a result of this review, during the three months ended June 26, 2020, we decided to issue additional long-term debt with certain amounts oftranches having a longer duration than other recent long-term debt issuances. While we intend to remain active in the commercial paper short-termmarket, we intend to use a portion of the proceeds from the long-term debt issuances to reduce our commercial paper balance.
On March 20, 2020 and current maturitiesApril 29, 2020, we issued $5.0 billion and $6.5 billion, respectively, of long-term debt with new issuances of long-term debt in the future.across various maturities. The Company's cash, cash equivalents, short-term investments and marketable securities totaled $13.0$19.8 billion as of September 27, 2019.June 26, 2020. In addition to these funds, our commercial paper program and our ability to issue long-term debt, we had $8.6$8.9 billion in unused lines of credit for general corporate purposes as of September 27, 2019.June 26, 2020. These backup lines of credit expire at various times from 20192020 through 2022.2025. On April 6, 2020, we entered into 364-day term loan agreements with a group of financial institutions that provided us with the ability, at our election prior to August 4, 2020, to borrow $3.0 billion in term loans. OnMay 11, 2020, we terminated these loan agreements.
Based on all of the aforementioned factors, the Company believes its current liquidity position is strong and will continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities for the foreseeable future.
47

Cash Flows from Operating Activities
As part of our continued efforts to improve our working capital efficiency, we have worked with our suppliers over the past several years to revisit terms and conditions, including the extension of payment terms. Our current payment terms with the majority of our suppliers are 120 days. Additionally, two global financial institutions offer a voluntary supply chain finance ("SCF") program which enables our suppliers, at their sole discretion, to sell their receivables from the Company to these financial institutions on a non-recourse basis at a rate that leverages our credit rating and thus might be more beneficial to them. The SCF program is available to suppliers of goods and services included in cost of goods sold as well as suppliers of goods and services included in selling, general and administrative expenses in our consolidated statement of income. The Company and our suppliers agree on commercial terms for the goods and services we procure, including prices, quantities and payment terms, regardless of whether the supplier elects to participate in the SCF program. The suppliers sell goods or services, as applicable, to the Company and they issue the associated invoices to the Company based on the agreed-upon contractual terms. Then, if they are participating in the SCF program, our suppliers, at their sole discretion, determine which invoices, if any, they want to sell to the financial institutions. Our suppliers’ voluntary inclusion of invoices in the SCF program has no bearing on our payment terms. No guarantees are provided by the Company or any of our subsidiaries under the SCF program. We have no economic interest in a supplier’s decision to participate in the SCF program, and we have no direct financial relationship with the financial institutions, as it relates to the SCF program. Accordingly, amounts due to our suppliers that elected to participate in the SCF program are included in the line item accounts payable and accrued expenses in our consolidated balance sheet. All activity related to amounts due to suppliers that elected to participate in the SCF program is reflected in cash flows from operating activities in our consolidated statement of cash flows. We have been informed by the financial institutions that as of June 26, 2020 and December 31, 2019, suppliers elected to sell $714 million and $784 million, respectively, of our outstanding payment obligations to the financial institutions. The amount settled through the SCF program was $1,375 million for the six months ended June 26, 2020.
Net cash provided by operating activities for the ninesix months ended September 27,June 26, 2020 and June 28, 2019 and September 28, 2018 was $7,771$2,786 million and $5,690$4,501 million, respectively, an increasea decrease of $2,081$1,715 million, or 3738 percent. This increasedecrease was primarily driven by the 20 percent decline in operating income, growth, the acquisitionextension of Costapayment terms with certain of our suppliers in January 2019, the efficient management of working capitalprior year, one less selling day in the current year and the timing of tax payments, partially offset by the unfavorable impact of foreign currency exchange rate fluctuations. Net cash provided by operating activities included benefits of approximately $682 million and $869 million for the six months ended June 28, 2019 and the year ended December 31, 2019, respectively, from the extension of payment terms with certain of our suppliers. We do not believe there is a risk that our payment terms will be shortened in the near future, and we do not currently expect our net cash provided by operating activities to be significantly impacted by additional extensions of payment terms in 2020.


Cash Flows from Investing Activities
Net cash used in investing activities for the ninesix months ended September 27,June 26, 2020 and June 28, 2019 was $3,901$6,967 million compared to net cash provided by investing activities of $4,108and $5,362 million, during the prior year comparable period.respectively.
Purchases of Investments and Proceeds from Disposals of Investments
During the ninesix months ended September 27, 2019,June 26, 2020, purchases of investments were $4,113$8,294 million and proceeds from disposals of investments were $5,674$2,649 million, resulting in a net cash outflow of $5,645 million. During the six months ended June 28, 2019, purchases of investments were $2,935 million and proceeds from disposals of investments were $3,395 million, resulting in a net cash inflow of $1,561 million. During the nine months ended September 28, 2018, purchases of investments were $6,809 million and proceeds from disposals of investments were $11,079 million, resulting in a net cash inflow of $4,270$460 million. This activity primarily represents the purchases of, and proceeds related to ourfrom the disposals of, investments in marketable securities and short-term investments that were made as part of the Company's overall cash management strategy as well as ourstrategy. Also included in this activity are purchases of, and proceeds from the disposals of, insurance captive investments. Refer to Note 4 of Notes to Condensed Consolidated Financial Statements for additional information.
Acquisitions of Businesses, Equity Method Investments and Nonmarketable Securities
During the ninesix months ended September 27, 2019,June 26, 2020, the Company's acquisitions of businesses, equity method investments and nonmarketable securities totaled $5,376$984 million, which primarily related to the acquisitionsacquisition of Costa and the remaining interest in CHI.fairlife. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information.
During the ninesix months ended SeptemberJune 28, 2018,2019, the Company's acquisitions of businesses, equity method investments and nonmarketable securities totaled $598$5,353 million, which primarily related to the acquisition of additional interests inCosta and the Company’s franchise bottlers in the United Arab Emirates and in Oman, both of which were equity method investees. As a result of the additionalremaining interest in the Oman bottler, we obtained a controlling interest, resulting in its consolidation.CHI. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information.
Proceeds from Disposals of Businesses, Equity Method Investments and Nonmarketable Securities
During the ninesix months ended September 27,June 26, 2020, proceeds from disposals of businesses, equity method investments and nonmarketable securities were $46 million, which primarily related to the sale of a portion of our ownership interest in one of our equity method investments.
48

During the six months ended June 28, 2019, proceeds from disposals of businesses, equity method investments and nonmarketable securities were $266$265 million, which primarily related to the proceeds from the sale of a portion of our equity ownership interest in Andina. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information.
During the nine months ended September 28, 2018, proceeds from disposals of businesses, equity method investments and nonmarketable securities were $1,354 million, which related to the proceeds from the refranchising of our Latin American bottling operations. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information.
Purchases of Property, Plant and Equipment
Purchases of property, plant and equipment for the ninesix months ended September 27,June 26, 2020 and June 28, 2019 and September 28, 2018 were $1,206$536 million and $1,048$767 million, respectively.
The Company currently expects our 2019 full year capital expenditures to be approximately $2.2 billion as we continue to make investments to enable growth in our business and further enhance our operational effectiveness.
Cash Flows from Financing Activities
OurNet cash provided by financing activities includeduring the six months ended June 26, 2020 was $8,045 million, and net borrowings, issuances of stock, share repurchases and dividends. Net cash used in financing activities during the ninesix months ended September 27,June 28, 2019 and September 28, 2018 was $5,337 million and $6,383 million, respectively, a decrease of $1,046$1,432 million.
Debt Financing
Issuances and payments of debt included both short-term and long-term financing activities. During the ninesix months ended September 27, 2019,June 26, 2020, the Company had issuances of debt of $19,598$19,775 million, which included $13,667$8,260 million of net issuances related to commercial paper and short-term debt with maturities greater than 90 days and long-term debt issuances of $5,931$11,515 million, net of related discounts and issuance costs.
The Company made payments of debt of $21,716$10,304 million during the ninesix months ended September 27, 2019,June 26, 2020, which included $13,210$7,948 million of payments of commercial paper and short-term debt with maturities greater than 90 days, $3,480$1,836 million of payments of commercial paper and short-term debt with maturities less thanof 90 days or less, and payments of long-term debt of $5,026$520 million.
During the ninesix months ended September 27, 2019,June 26, 2020, the Company issued euro- and U.S. dollar-denominated debt of €3,500 million and $2,000 million, respectively.$11,500 million. The carrying value of this debt as of September 27, 2019June 26, 2020 was $5,793$11,396 million. The general terms of the notes issued are as follows:


€750•$1,000 million total principal amount of notes due March 8, 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 September 22, 2022,25, 2025, at a fixed interest rate of 0.1252.950 percent;
€1,000 million total principal amount of notes due September 22, 2026, at a fixed interest rate of 0.75 percent;
€750 million total principal amount of notes due March 8, 2031, at a fixed interest rate of 1.25 percent;
•$1,000 million total principal amount of notes due September 6, 2024,March 25, 2027, at a fixed interest rate of 1.753.375 percent; and
•$1,500 million total principal amount of notes due June 1, 2027, at a fixed interest rate of 1.450 percent;
•$1,250 million total principal amount of notes due March 25, 2030, at a fixed interest rate of 3.450 percent;
•$1,500 million total principal amount of notes due June 1, 2030, at a fixed interest rate of 1.650 percent;
•$500 million total principal amount of notes due March 25, 2040, at a fixed interest rate of 4.125 percent;
•$1,000 million total principal amount of notes due September 6, 2029,June 1, 2040, at a fixed interest rate of 2.125 percent.2.500 percent;
During the nine months ended September 27, 2019, the Company retired upon maturity:•$1,250 million total principal amount of notes due March 25, 2050, at a fixed interest rate of 4.200 percent;
€•$1,500 million total principal amount of notes due March 8, 2019,June 1, 2050, at a variablefixed interest rate equal to the three month EURIBOR plus 0.25of 2.600 percent; and
•$1,000 million total principal amount of notes due May 30, 2019,June 1, 2060, at a fixed interest rate of 1.375 percent; and2.750 percent.
€2,000During the six months ended June 26, 2020, the Company retired upon maturity:
•AUD450 million total principal amount of notes due SeptemberJune 9, 2019,2020, at a variablefixed interest rate equal to the three month EURIBOR plus 0.23 percent.of 2.600 percent; and
As•$171 million total principal amount of September 27, 2019, the carrying value of the Company's long-term debt included $193 million of fair value adjustments related to the remaining debt assumed in connection with our acquisition of Coca‑Cola Enterprises Inc.'s former North America business. These fair value adjustments will be amortized over a weighted-average period of approximately 19 years, which is equal to the weighted-average maturity of the assumed debt to which these fair value adjustments relate. The amortization of these fair value adjustments will be a reduction of interest expense in future periods, which will typically result in our interest expense being less than the actual interest paid to service the debt.zero coupon notes due June 20, 2020.

49

Issuances of Stock
During the ninesix months ended September 27, 2019,June 26, 2020, the Company received cash proceeds from issuances of stock of $923$444 million, an increasea decrease of $32$158 million when compared to cash proceeds from issuances of stock of $891$602 million during the ninesix months ended SeptemberJune 28, 2018.2019.
Share Repurchases
During the ninesix months ended September 27, 2019,June 26, 2020, the Company repurchased 13.7 million shares ofdid not repurchase common stock under the share repurchase plan authorized by our Board of Directors. These shares were repurchased at an average cost of $46.40 per share, for a total cost of $635 million. However, due to the timing of settlements, the total cash outflow for treasury stock purchases was $690 million during the nine months ended September 27, 2019. The total cash outflow for treasury stock during the first nine months of 2019 includes treasury stock that was purchased and settled during the nine months ended September 27, 2019; however, it does not include treasury stock that was purchased but did not settle during the nine months ended September 27, 2019. In addition to shares repurchased, the Company's treasury stock activity also includes shares surrendered to the Company to pay the exercise price and/or to satisfy tax withholding obligations in connection with so-called stock swap exercises of employee stock options and/or the vesting of restricted stock issued to employees. The net impact of the Company's issuances oftreasury stock and share repurchasesactivity during the ninesix months ended September 27, 2019June 26, 2020 resulted in a net cash inflowoutflow of $233$93 million. In 2019, we expect to repurchase shares to offset dilution resulting from employee stock-based compensation plans.
Dividends
During the ninesix months ended September 27,June 26, 2020 and June 28, 2019, and September 28, 2018, the Company paid dividends of $3,419$1,761 million and $3,321$1,709 million, respectively. The Company paid the thirdsecond quarter dividend in both 20192020 and 20182019 during the first week of October.July.
Our Board of Directors approved the Company's regular quarterly dividend of $0.40$0.41 per share at its October 2019July 2020 meeting. This dividend is payable on December 16, 2019October 1, 2020 to shareowners of record as of December 2, 2019.September 15, 2020.
Foreign Exchange
Our international operations are subject to certain opportunities and risks, including currency fluctuations and governmental actions. We closely monitor our operations in each country and seek to adopt appropriate strategies that are responsive to changing economic and political environments as well as to fluctuations in foreign currencies.
Our Company conducts business in more than 200 countries and territories. Due to the geographic diversity of our operations, weakness in some foreign currencies may be offset by strength in others. Our foreign currency management program is designed to mitigate, over time, a portion of the potentially unfavorable impact of exchange rate changes on net income and


earnings per share. Taking into account the effects of our hedging activities, the impact of changes in foreign currency exchange rates decreased our operating income for the three and ninesix months ended September 27, 2019June 26, 2020 by 65 percent and 94 percent, respectively.
Based on current spot rates and our hedging coverage in place, we expect foreign currency fluctuations will have an unfavorable impact on operating income and cash flows from operations through the end of the year.


Overview of Financial Position
The following table illustrates the change in the individual line items of the Company's condensed consolidated balance sheet (in millions):
 September 27,
2019
December 31, 2018
Increase
(Decrease)

 
Percent
Change

Cash and cash equivalents$7,531
$9,077
$(1,546) (17)%
Short-term investments2,001
2,025
(24) (1)
Marketable securities3,456
5,013
(1,557) (31)
Trade accounts receivable — net4,353
3,685
668
 18
Inventories3,266
3,071
195
 6
Prepaid expenses and other assets2,510
2,059
451
 22
Equity method investments18,689
19,412
(723) (4)
Other investments878
867
11
 1
Other assets5,750
4,148
1,602
 39
Deferred income tax assets2,452
2,674
(222) (8)
Property, plant and equipment — net10,217
9,598
619
 6
Trademarks with indefinite lives9,167
6,682
2,485
 37
Bottlers' franchise rights with indefinite lives109
51
58
 114
Goodwill16,465
14,109
2,356
 17
Other intangible assets589
745
(156) (21)
Total assets$87,433
$83,216
$4,217
 5 %
Accounts payable and accrued expenses$12,727
$9,533
$3,194
 34 %
Loans and notes payable10,972
13,835
(2,863) (21)
Current maturities of long-term debt492
5,003
(4,511) (90)
Accrued income taxes909
411
498
 121
Long-term debt31,012
25,376
5,636
 22
Other liabilities8,057
7,646
411
 5
Deferred income tax liabilities2,581
2,354
227
 10
Total liabilities$66,750
$64,158
$2,592
 4 %
Net assets$20,683
$19,058
$1,625
1 
9 %
1 Includes a decrease in net assets of $679 million resulting from net foreign currency translation adjustments in various balance sheet line items.
The increases (decreases) in the table above include the impact of the following transactions and events:
Cash and cash equivalents and marketable securities decreased primarily due to funding the acquisition of Costa.
Trade accounts receivable — net increased primarily due to the impact of acquisitions.
•
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 $1,310 million of operating lease right-of-use assets.
Trademarks with indefinite lives and goodwill increased primarily due to $2.4 billion of trademarks and $2.5 billion of goodwill related to the preliminary allocation of the Costa purchase price.
•
Accounts payable and accrued expenses increased primarily due to the accrual of the Company's third quarter 2019 dividend of approximately $1.7 billion, which was paid during the first week of October. Additionally, accounts payable and accrued expenses increased due to our adoption of ASC 842, the impact of working capital initiatives and the acquisition of Costa, which required us to record $253 million related to the current portion of operating lease liabilities and the extension of payment terms.
Loans and notes payable decreased primarily due to net payments of commercial paper and short-term debt.
Current maturities of long-term debt decreased as a result of payments of long-term debt. Refer to the heading "Cash Flows from Financing Activities" above for additional information.
Long-term debt increased primarily due to the Company's issuances of debt. Refer to the heading "Cash Flows from Financing Activities" above for additional information.


•
Other liabilities increased primarily as a result of our adoption of ASC 842 and the acquisition of Costa, which required us to record $1,076 million related to the noncurrent portion of operating lease liabilities, partially offset by the reclassification of the current portion of the one-time transition tax required by the Tax Reform Act and other taxes to accrued income taxes.
Refer to Note 1 of Notes to Condensed Consolidated Financial Statements for additional information on our adoption of the new leases standard. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information on the acquisition of Costa.
Item 3.  Quantitative and Qualitative Disclosures About Market Risk
We have no material changes to the disclosures on this matter made in our Annual Report on Form 10-K for the year ended December 31, 2018.2019.
Item 4.  Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company, under the supervision and with the participation of its management, including the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company's "disclosure controls and procedures" (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Management has excluded from the scope of its evaluation of disclosure controls and procedures those disclosure controls and procedures related to the operations and related assets of Costa that are subsumed by internal control over financial reporting. The operations and related assets of Costa were included in the condensed consolidated financial statements of The Coca-Cola Company and subsidiaries beginning January 3, 2019 and constituted 7 percent of total assets and 1 percent of consolidated net income as of and for the quarter ended September 27, 2019. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of September 27, 2019.June 26, 2020.
Changes in Internal Control Over Financial Reporting
There have been no changes in the Company's internal control over financial reporting during the quarter ended September 27, 2019June 26, 2020 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
Additional Information
The Company is in the process of integrating the acquired Costa business into the Company's overall internal control over financial reporting process.
Part II. Other Information
Item 1.  Legal Proceedings
Information regarding reportable legal proceedings is contained in Part I, "Item 3. Legal Proceedings" in our Annual Report on Form 10-K for the year ended December 31, 2018, as updated in Part II, "Item 1. Legal Proceedings" in our Quarterly Report on Form 10-Q for the quarter ended March 29, 2019, and as further updated in Part II, "Item 1. Legal Proceedings" in our Quarterly Report on Form 10-Q for the quarter ended June 28, 2019. The following updates and restates the descriptions of the previously reported
50
U.S. Federal Income Tax Dispute and Environmental Matter legal proceedings.
U.S. Federal Income Tax Dispute
On September 17, 2015, the Company received a Statutory Notice of Deficiency (the "Notice") from the Internal Revenue Service ("IRS") for the tax years 2007 through 2009 after a five-year audit. In the Notice, the IRS claimed that the Company's U.S. 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 certain foreign 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 (the "Closing Agreement") that applied back to 1987. The Closing Agreement provided prospective penalty protection conditioned on the Company's continued adherence to the prescribed methodology absent a change in material facts or circumstances or relevant federal tax law. Although the IRS subsequently asserted, without explanation, that material facts and circumstances and relevant federal tax law had changed, it has not asserted penalties. 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 Closing Agreement. The IRS designated the matter for litigation on October 15, 2015. Due to the fact that the matter remains designated, the Company is 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 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. The Company and the IRS filed and exchanged final post-trial briefs in April 2019. It is not known how much time will elapse thereafter prior to the issuance of the Court's opinion. In the interim, or subsequent to the court's opinion, 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 court will rule in the Company's favor, and it is possible that all or some portion of the adjustment proposed by the Notice ultimately could be sustained. In that event, 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.
Environmental Matter
In April 2019, the Company received a Finding and Notice of Violation ("NOV") from the United States Environmental Protection Agency ("EPA") alleging that the Company violated the California Truck and Bus Regulation and the California Drayage Truck Regulation by failing to verify compliance with such regulations by certain diesel-fueled vehicles owned by third parties that the Company caused to be operated in California. In September 2019, the Company reached a settlement with the EPA regarding this matter under which it agreed to pay a civil penalty of $145,000. The settlement became effective on September 30, 2019.
Item 1A.  Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2018,2019, as updated and supplemented in Part II, "Item 1A. Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 27, 2020 and as further updated and supplemented below, which could materially affect our business, financial condition or future results. TheThese risks described in this report and in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.
The COVID-19 pandemic has had, and we expect will continue to have, certain negative impacts on our business, and such impacts have had, and may continue to have, a material adverse effect on our results of operations, financial condition and cash flows.
The public health crisis caused by the COVID-19 pandemic and the measures that have been taken or that may be taken in the future by governments, businesses, including us and our bottling partners, and the public at large to limit COVID-19's spread have had, and we expect will continue to have, certain negative impacts on our business including, without limitation, the following:
•We have experienced a decrease in sales of certain of our products in markets around the world that have been affected by the COVID-19 pandemic. In particular, sales of our products in the away-from-home channels have been significantly negatively affected by shelter-in-place regulations or recommendations, closings of restaurants and cancellations of major sporting and other events that were imposed as a result of the initial COVID-19 outbreak. While some of these restrictions have been lifted or eased in many jurisdictions as the rates of COVID-19 infections have decreased or stabilized, resurgence of the pandemic in some markets has slowed the reopening process. If COVID-19 infection trends continue to reverse and the pandemic intensifies and expands geographically, its negative impacts on our sales could be more prolonged and may become more severe. While we have initially experienced increased sales in the at-home channels from pantry loading as consumers have stocked up on certain of our products with the expectation of spending more time at home during the crisis, such increased sales levels have not, and we expect will not, fully offset the sales pressures we have experienced and we expect will continue to experience in the away-from-home channels while social distancing mandates or recommendations are in effect.
•In certain COVID-19 affected markets, consumer demand has shifted away from some of our more profitable beverages and away-from-home consumption to lower-margin products and at-home consumption, and this shift in consumer purchasing patterns is likely to continue while shelter-in-place and social distancing behaviors are mandated or encouraged.
•Deteriorating economic and political conditions in many of our major markets affected by the COVID-19 pandemic, such as increased unemployment, decreases in disposable income, declines in consumer confidence, or economic slowdowns or recessions, have caused, and could continue to cause, a decrease in demand for our products.
•We are accelerating our business strategy and are taking certain actions to address challenges posed by the COVID-19 pandemic and deliver on our commitment to emerge stronger from this crisis. These include focusing investments on a defined growth portfolio by prioritizing brands best positioned for consumer reach; streamlining the innovation pipeline through initiatives that are scalable regionally or globally as well as a maintaining a disciplined approach to local experimentation; refreshing our marketing approach, with a focus on improving our marketing investment effectiveness and efficiency; and investing in new capabilities to capitalize on emerging shifts in consumer behaviors that we anticipate may last beyond this crisis. These actions, which may require substantial additional investment of management time and financial resources, may not be sufficient to accomplish our goals.
•We have experienced temporary disruptions in certain of our concentrate production operations. We have taken measures to protect our employees and facilities around the world, which have included, but have not been limited to, checking the temperature of employees when they enter our facilities, requiring employees to wear masks and other protective clothing as appropriate, and implementing additional cleaning and sanitization routines. These measures may not be sufficient to prevent the spread of COVID-19 among our employees and, therefore, we may face additional concentrate production disruptions in the future, which may place constraints on our ability to supply concentrates to our bottling partners in a timely manner or may increase our concentrate supply costs.
•We have faced, and may continue to face, delays in the delivery of concentrates to our bottling partners as a result of shipping delays due to, among other things, additional safety requirements imposed by port authorities, closures of or congestion at ports, and capacity constraints experienced by our transportation contractors.
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•Some of our bottling partners have experienced, and may experience in the future, temporary plant closures, production slowdowns and disruptions in distribution operations as a result of the impact of the COVID-19 pandemic on their respective businesses.
•Disruptions in supply chains have placed, and may continue to place, constraints on our and our bottling partners’ ability to source beverage containers, such as glass bottles and cans, which has increased, and in the future may increase, our and their packaging costs.
•We have experienced, and expect to continue to experience, adverse fluctuations in foreign currency exchange rates, particularly an increase in the value of the U.S. dollar against certain key foreign currencies, which negatively affected, and we expect will continue to negatively affect, our reported results of operations and financial condition.
•Our borrowing costs have increased as a result of disruptions and increased volatility and pricing in the commercial paper and debt markets caused by the COVID-19 pandemic and, if the current uncertain conditions in the credit markets continue or worsen, our borrowing costs may continue to increase.
•The current uncertain credit market conditions and their actual or perceived effects on our and our major bottling partners' results of operations and financial condition, along with the current unfavorable economic environment in the United States and much of the world, may increase the likelihood that one or more of the major independent credit agencies will downgrade our credit ratings, which could have a negative effect on our borrowing costs.
•Governmental authorities in the United States and throughout the world may increase or impose new income taxes or indirect taxes, or revise interpretations of existing tax rules and regulations, as a means of financing the costs of stimulus and other measures enacted or taken, or that may be enacted or taken in the future, to protect populations and economies from the impact of the COVID-19 pandemic. Such actions could have an adverse effect on our results of operations and cash flows.
•We rely on third-party service providers and business partners, such as cloud data storage and other information technology service providers, suppliers, distributors, contractors, joint venture partners and other external business partners, for certain functions or for services in support of key portions of our operations. These third-party service providers and business partners are subject to risks and uncertainties related to the COVID-19 pandemic, which may interfere with their ability to fulfill their respective commitments and responsibilities to us in a timely manner and in accordance with the agreed-upon terms.
•The financial impact of the COVID-19 pandemic may cause one or more of our counterparty financial institutions to fail or default on their obligations to us, which could cause us to incur significant losses.
•We may be required to record significant impairment charges with respect to noncurrent assets, including trademarks, bottler franchise rights, goodwill and other intangible assets, equity method investments, and other long-lived assets, whose fair values may be negatively affected by the effects of the COVID-19 pandemic on our operations. Also, we may be required to write off obsolete inventory and the unamortized balances of advanced funding provided to customers that permanently close as a result of the COVID-19 pandemic’s damaging impacts on their respective businesses. In addition, we are required to record impairment charges related to our proportionate share of impairment charges that may be recorded by equity method investees, and such charges may be significant.
•The significant declines in the equity markets and in the valuation of other assets precipitated by the COVID-19 pandemic negatively affected the values of our pension plan assets during the quarter ended March 27, 2020. While the equity markets and the valuation of other assets have recovered somewhat during the quarter ended June 26, 2020, the fair values of our pension plan assets remain lower than pre-pandemic levels. If pension plan asset values do not continue to recover to pre-pandemic levels or deteriorate again as a result of uncertainty regarding the timing and pace of economic recovery from the COVID-19 pandemic, we may incur increased pension expense in future periods.
•As a result of the COVID-19 pandemic, including related governmental guidance or directives, we have required most office-based employees, including most employees based at our global headquarters in Atlanta, to work remotely. We may experience reductions in productivity and disruptions to our business routines while our remote work policy remains in place.
•Actions we have taken or may take, or decisions we have made or may make, as a consequence of the COVID-19 pandemic may result in legal claims or litigation against us.
The resumption of normal business operations after the disruptions caused by the COVID-19 pandemic may be delayed or constrained by its lingering effects on our bottling partners, consumers, suppliers and/or third-party service providers.
Any of the negative impacts of the COVID-19 pandemic, including those described above, alone or in combination with others, may have a material adverse effect on our results of operations, financial condition and cash flows. Any of these negative
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impacts, alone or in combination with others, could exacerbate many of the risk factors discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2019. The full extent to which the COVID-19 pandemic will negatively affect our results of operations, financial condition and cash flows will depend on future developments that are highly uncertain and cannot be predicted, including the scope and duration of the pandemic, the duration of the various shelter-in-place orders and reopening plans across the globe, and actions taken, or that may be taken in the future, by governmental authorities and other third parties in response to the pandemic.
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
The following table presents information with respect to purchases of common stock of the Company made during the three months endedSeptember 27, 2019 June 26, 2020 by the Company or any "affiliated purchaser" of the Company as defined in Rule 10b-18(a)(3) under the Exchange Act:
Period
Total Number
of Shares
Purchased1
Average
Price Paid
Per Share
Total Number
of Shares
Purchased as
Part of
Publicly
Announced
Plan2
Maximum
Number of
Shares That May
Yet Be
Purchased Under
Publicly
Announced
Plans3
March 28, 2020 through April 24, 20202,886  $44.70  —  161,029,667  
April 25, 2020 through May 22, 20201,334  46.15  —  161,029,667  
May 23, 2020 through June 26, 2020295  46.67  —  161,029,667  
Total4,515  $45.26  —   
Period
Total Number
of Shares
Purchased1

Average
Price Paid
Per Share

Total Number
of Shares
Purchased as
Part of the
Publicly
Announced
Plans2

Maximum
Number of
Shares That May
Yet Be
Purchased Under
the Publicly
Announced
Plans3

June 29, 2019 through July 26, 20192,759
$51.92
—
168,335,321
July 27, 2019 through August 23, 2019606
52.78
—
168,335,321
August 24, 2019 through September 27, 201916,994
55.02
—
168,335,321
Total20,359
$54.53
—
 
1 The total number of shares purchased includes: (1) shares purchased pursuant to the 2012 Plan described in footnote 2 below, if any, and (2) shares surrendered to the Company to pay the exercise price and/or to satisfy tax withholding obligations in connection with so-called stock swap exercises of employee stock options and/or the vesting of restricted stock issued to employees.
2 On October 18, 2012, wethe Company publicly announced that our Board of Directors had authorized a plan (the "2012("2012 Plan") for the Company to purchase up to 500 million shares of our Company's common stock. This column discloses the number of shares purchased pursuant to the 2012 Plan during the indicated time periods (including shares purchased pursuant to the terms of preset trading plans meeting the requirements of Rule 10b5-1 under the Exchange Act).
3 On February 21, 2019, wethe Company publicly announced that our Board of Directors had authorized a new plan (the "2019("2019 Plan") for the Company to purchase up to 150 million shares of our Company's common stock following the completion of the 2012 Plan. This column discloses the number of shares available for purchase under the 2012 Plan and the number of shares authorized for purchase under the 2019 Plan.
Item 6.  Exhibits
In reviewing the agreements included as exhibits to this report, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements contain representations, warranties, covenants and conditions by or of each of the parties to the applicable agreement. These representations, warranties, covenants and conditions have been made solely for the benefit of the other parties to the applicable agreement and:
•should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
•may have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
•may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
•were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.
Accordingly, these representations, warranties, covenants and conditions may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this report and the Company's other public filings, which are available without charge through the Securities and Exchange Commission's website at http://www.sec.gov.
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EXHIBIT INDEX
Exhibit No.
Exhibit No.
(With regard to applicable cross-references in the list of exhibits below, the Company's Current, Quarterly and Annual Reports are filed with the Securities and Exchange Commission (the "SEC") under File No. 001-02217; and Coca-Cola Refreshments USA, Inc.'s (formerly known as Coca-Cola Enterprises Inc.) Current, Quarterly and Annual Reports are filed with the SEC under File No. 001-09300).
3.1


3.2
4.1Intentionally omitted.
4.2As permitted by the rules of the SEC, the Company has not filed certain instruments defining the rights of holders of long-term debt of the Company or consolidated subsidiaries under which the total amount of securities authorized does not exceed 10 percent of the total assets of the Company and its consolidated subsidiaries. The Company agrees to furnish to the SEC, upon request, a copy of any omitted instrument.
4.24.3
4.34.4
4.44.5
4.54.6
4.64.7
4.74.8
4.84.9
4.94.10
4.104.11
4.114.12
4.124.13
4.134.14
4.144.15
4.154.16
4.164.17
4.174.18
4.184.19
4.194.20
54

4.204.21
4.214.22
4.224.23
4.234.24
4.244.25


4.254.26
4.264.27
4.274.28
4.284.29
4.294.30
4.304.31
4.31
4.32
4.33
4.34
4.35
4.36
4.37
4.38
4.39
4.40
4.41
4.42Indenture, dated as of July 30, 1991, between Coca-Cola Refreshments USA, Inc. and Deutsche Bank Trust Company Americas, as trustee — incorporated herein by reference to Exhibit 4.1 to Coca-Cola Refreshments USA, Inc.'s Current Report on Form 8-K dated July 30, 1991.
4.324.43First Supplemental Indenture, dated as of January 29, 1992, to the Indenture, dated as of July 30, 1991, between Coca-Cola Refreshments USA, Inc. and Deutsche Bank Trust Company Americas, as trustee — incorporated herein by reference to Exhibit 4.01 to Coca-Cola Refreshments USA, Inc.'s Current Report on Form 8-K dated January 29, 1992.
4.334.44
4.344.45
55

10.1
31.1
31.2
32.1
101The following financial information from The Coca-Cola Company's Quarterly Report on Form 10-Q for the quarter ended September 27, 2019,June 26, 2020, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Income for the three and ninesix months ended September 27,June 26, 2020 and June 28, 2019, and September 28, 2018, (ii) Condensed Consolidated Statements of Comprehensive Income for the three and ninesix months ended September 27,June 26, 2020 and June 28, 2019, and September 28, 2018, (iii) Condensed Consolidated Balance Sheets as of September 27, 2019June 26, 2020 and December 31, 2018,2019, (iv) Condensed Consolidated Statements of Cash Flows for the ninesix months ended September 27,June 26, 2020 and June 28, 2019, and September 28, 2018, and (v) Notes to Condensed Consolidated Financial Statements.
104Cover Page Interactive Data File (the cover page XBRL tags are embedded within the iXBRL document).

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
THE COCA-COLA COMPANY
(Registrant)
THE COCA-COLA COMPANY
(Registrant)
/s/ KATHY LOVELESS
Date:July 22, 2020
/s/ LARRY M. MARK
Date:October 24, 2019
Larry M. Mark
Kathy Loveless
Vice President and Controller

(On behalf of the Registrant)
/s/ MARK RANDAZZA
Date:October 24, 2019July 22, 2020
Mark Randazza

Vice President, Assistant Controller and Chief Accounting Officer

(Principal Accounting Officer)


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