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 June 28, 2019
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

COCA COLA CO
(Exact name of Registrant as specified in its charter)

				
Delaware	 	58-0628465	
(State or other jurisdiction of incorporation or organization)	 	(I.R.S. Employer Identification No.)	
One Coca-Cola Plaza	 	 	
Atlanta	Georgia	 	30313	
(Address of principal executive offices)	 	(Zip Code)	
Registrant's telephone number, including area code:  (404) 676-2121
Securities registered pursuant to Section 12(b) of the Act:

			
Title of each class	Trading Symbol(s)	Name of each exchange on which registered	
Common Stock, $0.25 Par Value	KO	New York Stock Exchange	
Floating Rate Notes Due 2019	KO19A	New York Stock Exchange	
0.000% Notes Due 2021	KO21B	New York Stock Exchange	
Floating Rate Notes Due 2021	KO21C	New York Stock Exchange	
1.125% Notes Due 2022	KO22	New York Stock Exchange	
0.125% Notes Due 2022	KO22B	New York Stock Exchange	
0.75% Notes Due 2023	KO23B	New York Stock Exchange	
0.500% Notes Due 2024	KO24	New York Stock Exchange	
1.875% Notes Due 2026	KO26	New York Stock Exchange	
0.750% Notes Due 2026	KO26C	New York Stock Exchange	
1.125% Notes Due 2027	KO27	New York Stock Exchange	
1.250% Notes Due 2031	KO31	New York Stock Exchange	
1.625% Notes Due 2035	KO35	New York Stock Exchange	
1.100% Notes Due 2036	KO36	New York Stock Exchange	
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes   ☒     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 22, 2019	
$0.25 Par Value	 	4,276,027,437	

	

THE COCA-COLA COMPANY AND SUBSIDIARIES
Table of Contents

			
 	 	Page	
 	Forward-Looking Statements	1	
 	 	 	
 	Part I. Financial Information	 	
 	 	 	
Item 1.	Financial Statements (Unaudited)	2	
 	 	 	
 	Condensed Consolidated Statements of Income
 Three and Six Months Ended June 28, 2019 and June 29, 2018	2	
 	 	 	
 	Condensed Consolidated Statements of Comprehensive Income
 Three and Six Months Ended June 28, 2019 and June 29, 2018	3	
 	 	 	
 	Condensed Consolidated Balance Sheets
 June 28, 2019 and December 31, 2018	4	
 	 	 	
 	Condensed Consolidated Statements of Cash Flows
 Six Months Ended June 28, 2019 and June 29, 2018	5	
 	 	 	
 	Notes to Condensed Consolidated Financial Statements	6	
 	 	 	
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	40	
 	 	 	
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	59	
 	 	 	
Item 4.	Controls and Procedures	59	
 	 	 	
 	Part II. Other Information	 	
 	 	 	
Item 1.	Legal Proceedings	59	
 	 	 	
Item 1A.	Risk Factors	60	
 	 	 	
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	61	
 	 	 	
Item 6.	Exhibits	61	
 	Signatures	64	

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

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

3

THE COCA-COLA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions except par value)

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

4

THE COCA-COLA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In millions)

							
 	Six Months Ended	
 	June 28,
2019		June 29,
2018		
Operating Activities	 	 	
Consolidated net income	$	4,331		$	3,731		
Depreciation and amortization	602		553		
Stock-based compensation expense	88		121		
Deferred income taxes	(163	)	24		
Equity (income) loss — net of dividends	(254	)	(148	)	
Foreign currency adjustments	37		(119	)	
Significant (gains) losses — net	247		98		
Other operating charges	93		576		
Other items	180		43		
Net change in operating assets and liabilities	(660	)	(2,193	)	
Net Cash Provided by Operating Activities	4,501		2,686		
Investing Activities	 		 		
Purchases of investments	(2,935	)	(4,833	)	
Proceeds from disposals of investments	3,395		7,621		
Acquisitions of businesses, equity method investments and nonmarketable securities	(5,353	)	(218	)	
Proceeds from disposals of businesses, equity method investments and nonmarketable securities	265		304		
Purchases of property, plant and equipment	(767	)	(689	)	
Proceeds from disposals of property, plant and equipment	43		63		
Other investing activities	(10	)	6		
Net Cash Provided by (Used in) Investing Activities	(5,362	)	2,254		
Financing Activities			 		
Issuances of debt	14,518		16,280		
Payments of debt	(14,278	)	(16,666	)	
Issuances of stock	602		600		
Purchases of stock for treasury	(689	)	(1,317	)	
Dividends	(1,709	)	(1,662	)	
Other financing activities	124		(70	)	
Net Cash Provided by (Used in) Financing Activities	(1,432	)	(2,835	)	
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash
    equivalents	2		(109	)	
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	 				
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents
    during the period	(2,291	)	1,996		
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period	9,318		6,373		
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents at End of Period	7,027		8,369		
Less: Restricted cash and restricted cash equivalents at end of period	296		220		
Cash and Cash Equivalents at End of Period	$	6,731		$	8,149		
Refer to Notes to Condensed Consolidated Financial Statements.

5

THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 : SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and notes required by U.S. GAAP for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the Notes to Consolidated Financial Statements included in the Annual Report on Form 10-K of The Coca-Cola Company for the year ended December 31, 2018 .
When used in these notes, the terms "The Coca-Cola Company," "Company," "we," "us" and "our" mean The Coca-Cola Company and all entities included in our condensed consolidated financial statements. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 28, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 . Sales of our nonalcoholic ready-to-drink beverages are somewhat seasonal, with the second and third calendar quarters accounting for the highest sales volumes. The volume of sales in the beverage business may be affected by weather conditions.
Each of our interim reporting periods, other than the fourth interim reporting period, ends on the Friday closest to the last day of the corresponding quarterly calendar period. The second quarter of 2019 and the second quarter of 2018 ended on June 28, 2019 and June 29, 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 three months ended June 28, 2019 , the Company updated its plans for Coca-Cola Beverages Africa Proprietary Limited ("CCBA") and now intends to maintain its majority stake in CCBA for the foreseeable future. As a result, the Company now presents the financial results of CCBA within its results from continuing operations and includes the results of CCBA in the Bottling Investments operating segment. Accordingly, all prior period operating segment and Corporate information presented herein has been adjusted to reflect these changes. Refer to Note 2 and Note 17 .
As of June 28, 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.

6

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 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 on our consolidated balance sheet, and amounts classified in assets held for sale. We manage our exposure to counterparty credit risk through specific minimum credit standards, diversification of counterparties and procedures to monitor our concentrations of credit risk.
The following table provides a summary of cash, cash equivalents, restricted cash and restricted cash equivalents that constitute the total amounts shown in the condensed consolidated statements of cash flows (in millions): 

							
 	June 28,
2019		December 31,
2018		
Cash and cash equivalents	$	6,731		$	9,077		
Cash and cash equivalents included in assets held for sale	—		—		
Cash and cash equivalents included in other assets 1	296		241		
Cash, cash equivalents, restricted cash and restricted cash equivalents	$	7,027		$	9,318		
 	June 29,
2018		December 31, 2017		
Cash and cash equivalents	$	8,149		$	6,102		
Cash and cash equivalents included in assets held for sale	—		13		
Cash and cash equivalents included in other assets 1	220		258		
Cash, cash equivalents, restricted cash and restricted cash equivalents	$	8,369		$	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 .
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 $1,330 million and $1,353 million , respectively, as of June 28, 2019 , which include preliminary amounts recorded resulting from the acquisition of Costa in January 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.

7

In August 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-12,  Targeted Improvements to Accounting for Hedging Activities , which eliminates the requirement to separately measure and report hedge ineffectiveness and requires companies to recognize all elements of hedge accounting that impact earnings in the same line item in the statement of income where the hedged item resides. The amendments in this update include new alternatives for measuring the hedged item for fair value hedges of interest rate risk and ease the requirements for effectiveness testing, hedge documentation and applying the critical terms match method. 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 effects of the Tax Cuts 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 included in net income is not affected by this update. We adopted ASU 2018-02 effective  January 1, 2019 . We recognized a cumulative effect adjustment to increase the opening balance of reinvested earnings as of  January 1, 2019  by  $513 million .
Accounting Guidance Not Yet Adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Measurement of Credit Losses on Financial Instruments , which requires measurement and recognition of expected credit losses for financial assets held. ASU 2016-13 is effective for the Company beginning January 1, 2020 and is required to be applied prospectively. We are currently evaluating the impact that ASU 2016-13 will have on our consolidated financial statements.
NOTE 2 : ACQUISITIONS AND DIVESTITURES
Acquisitions
During the six months ended June 28, 2019 , our Company's acquisitions of businesses, equity method investments and nonmarketable securities totaled $ 5,353 million , which primarily related to the acquisition of Costa and the remaining equity ownership interest in C.H.I. Limited ("CHI"), a Nigerian producer of value-added dairy and juice beverages and iced tea.
During the six months ended June 29, 2018 , our Company's acquisitions of businesses, equity method investments and nonmarketable securities totaled $218 million , which primarily related to the acquisition of additional interests in the Company’s franchise bottlers in the United Arab Emirates and in Oman, both of which were previously equity method investees of the Company. As a result of the additional interest acquired in the Oman bottler, we obtained a controlling interest, resulting in its consolidation.
Costa Limited
In January 2019, the Company acquired Costa in exchange for $4.9 billion of cash, net of cash acquired. Costa is a coffee company with retail outlets in over 30 countries, the Costa Express vending system and a state-of-the-art roastery. We believe this acquisition will allow us to increase our presence in the hot beverage market as Costa has a scalable platform across multiple formats and channels, including opportunities to introduce ready-to-drink products. As of June 28, 2019 , $2.4 billion of the purchase price was preliminarily allocated to the Costa trademark and $2.5 billion was preliminarily allocated to goodwill. The goodwill recognized as part of this acquisition is primarily related to synergistic value created from the opportunity for additional expansion as well as our ability to market and distribute Costa in ready-to-drink form throughout our bottling system. It also includes certain other intangible assets that do not qualify for separate recognition, such as an assembled workforce. The goodwill is not tax deductible and has been assigned to the Global Ventures operating segment. The preliminary allocation of the purchase price is subject to refinement when valuations are finalized. As of June 28, 2019 , the valuations that have not been finalized primarily relate to operating lease ROU assets and operating lease liabilities and certain fixed assets. The final purchase price allocation will be completed as soon as possible, but no later than the first quarter of 2020.
C.H.I. Limited
In January 2019, the Company acquired the remaining 60 percent interest in CHI in exchange for $260 million of cash, net of cash acquired, under the terms of the agreement for our original investment in CHI. Upon consolidation, we recognized a net charge of $121 million , which included the remeasurement of our previously held equity interest in CHI to fair value and the reversal of the related cumulative translation adjustments. The fair value of our previously held equity investment was determined using a discounted cash flow model based on Level 3 inputs. The net charge was recorded in the line item other income (loss) — net in our condensed consolidated statement of income.

8

Divestitures
During the six months ended June 28, 2019 , proceeds from disposals of businesses, equity method investments and nonmarketable securities totaled $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  six months ended June 29, 2018 , proceeds from disposals of businesses, equity method investments and nonmarketable securities totaled  $304 million , which primarily related to the proceeds from the refranchising of our Latin American bottling operations.
Refranchising of Latin American Bottling Operations
During the three and six months ended June 29, 2018 , the Company sold its bottling operations in Latin America to Coca-Cola FEMSA, S.A.B. de C.V. ("Coca-Cola FEMSA"), an equity method investee. We received net cash proceeds of  $277 million as a result of these sales and recognized a net gain of $36 million , which was included in the line item other income (loss) — net in our condensed consolidated statement of income.
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 charges of $102 million during the three months ended June 29, 2018 and net charges of $4 million and $ 104 million during the six months ended June 28, 2019 and June 29, 2018 , respectively. These 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 June 29, 2018 , the Company recorded charges of $2 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 six months ended June 28, 2019 and June 29, 2018 , the Company recorded charges of $ 4 million and $ 21 million , respectively, related to such payments. The additional requirements generally include a binding national governance model, mandatory incidence pricing and additional core performance requirements, among other things. As a result of these conversions, the legacy territories and any previously refranchised territories for each of the related bottling partners will be governed under similar CBAs, which will provide consistency across each such bottler's respective territory, as well as consistency with other U.S. bottlers that have been granted or converted to this form of CBA. The charges related to these payments were included in the line item other income (loss) — net in our condensed consolidated statements of income.
Refer to Note 17 for the impact these items had on our operating segments and Corporate.
Coca-Cola Beverages Africa Proprietary Limited
Due to the Company's original intent to refranchise CCBA, CCBA was accounted for as held for sale and a discontinued operation from October 2017, when the Company became the controlling shareowner of CCBA, through the first quarter of 2019. While the Company had discussions with a number of potential partners throughout the period CCBA was held for sale, during the second quarter of 2019, the Company updated its plans for CCBA and now intends to maintain its controlling stake in CCBA for the foreseeable future. As a result, CCBA no longer qualifies as held for sale or as a discontinued operation, and CCBA's financial results are now presented within the Company's continuing operations. The financial results for prior periods have also been retrospectively reclassified herein. As of the date we changed our plans, the Company was required to measure CCBA's property, plant and equipment and definite-lived intangible assets at the lower of their current fair values or their carrying amounts before they were classified as held for sale, adjusted for depreciation and amortization expense that would have been recognized had the business been classified as held and used during the period that CCBA was classified as held for sale. As a result, the Company reallocated the allowance for reduction of assets held for sale balance that was originally recorded during the third quarter of 2018 to reduce the carrying value of CCBA's property, plant and equipment by $ 225 million and CCBA's definite-lived intangible assets by $ 329 million based on the relative amount of depreciation and amortization that would have been recognized during the periods they were held for sale. We also recorded a $160 million adjustment to reduce the carrying value of CCBA's property, plant and equipment and definite-lived intangible assets by an additional $ 34 million and $ 126 million , respectively, during the three and six months ended June 28, 2019 . These additional adjustments were included in the line item other income (loss) — net in our condensed consolidated statements of income.

9

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.  
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 and 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)

10

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

	
										
 	United States		International		Total		
Six Months Ended June 28, 2019							
Concentrate operations	$	2,600		$	7,756		$	10,356		
Finished product operations	3,148		5,187		8,335		
Total	$	5,748		$	12,943		$	18,691		
Six Months Ended June 29, 2018							
Concentrate operations	$	2,361		$	7,935		$	10,296		
Finished product operations	3,257		4,166		7,423		
Total	$	5,618		$	12,101		$	17,719		

Refer to Note 17 for additional revenue disclosures by operating segment and Corporate.
NOTE 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.

11

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

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

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

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

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

12

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

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

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

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

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

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

The Company expects that actual maturities may differ from the contractual maturities above because borrowers have the right to call or prepay certain obligations.
The sale and/or maturity of available-for-sale debt securities resulted in the following realized activity (in millions): 

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

13

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 $1,133 million as of June 28, 2019 and $1,056 million as of December 31, 2018 , which are classified in the line item other assets in our condensed consolidated balance sheets because the assets are not available to satisfy our current obligations.
NOTE 5 : INVENTORIES
Inventories consist primarily of raw materials and packaging (which include ingredients and supplies) and finished goods (which include concentrates and syrups in our concentrate operations and finished beverages in our finished product operations). Inventories are valued at the lower of cost or net realizable value. We determine cost on the basis of the average cost or first-in, first-out methods. Inventories consisted of the following (in millions):

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

NOTE 6 : HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS
The Company is directly and indirectly affected by changes in certain market conditions. These changes in market conditions may adversely impact the Company's financial performance and are referred to as "market risks." When deemed appropriate, our Company uses derivatives as a risk management tool to mitigate the potential impact of certain market risks. The primary market risks managed by the Company through the use of derivative and non-derivative financial instruments are foreign currency exchange rate risk, commodity price risk and interest rate risk.
The Company uses various types of derivative instruments including, but not limited to, forward contracts, commodity futures contracts, option contracts, collars and swaps. Forward contracts and commodity futures contracts are agreements to buy or sell a quantity of a currency or commodity at a predetermined future date and at a predetermined rate or price. An option contract is an agreement that conveys the purchaser the right, but not the obligation, to buy or sell a quantity of a currency or commodity at a predetermined rate or price during a period or at a time in the future. A collar is a strategy that uses a combination of options to limit the range of possible positive or negative returns on an underlying asset or liability to a specific range, or to protect expected future cash flows. To do this, an investor simultaneously buys a put option and sells (writes) a call option, or alternatively buys a call option and sells (writes) a put option. A swap agreement is a contract between two parties to exchange cash flows based on specified underlying notional amounts, assets and/or indices. We do not enter into derivative financial instruments for trading purposes. The Company may also designate certain non-derivative instruments, such as our foreign 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.

14

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 Value 1,2	
Derivatives Designated as Hedging Instruments	Balance Sheet Location 1	June 28,
2019		December 31, 2018		
Assets:	 	 	 	
Foreign currency contracts	Prepaid expenses and other assets	$	31		$	43		
Foreign currency contracts	Other assets	97		114		
Interest rate contracts	Other assets	500		88		
Total assets	 	$	628		$	245		
Liabilities:	 	 	 	
Foreign currency contracts	Accounts payable and accrued expenses	$	30		$	19		
Foreign currency contracts	Other liabilities	37		15		
Commodity contracts	Accounts payable and accrued expenses	—		1		
Interest rate contracts	Accounts payable and accrued expenses	17		—		
Interest rate contracts	Other liabilities	11		40		
Total liabilities	 	$	95		$	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 16 for the net presentation of the Company's derivative instruments.
2 Refer to Note 16 for additional information related to the estimated fair value.

15

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

								
 	 	Fair Value 1,2	
Derivatives Not Designated as Hedging Instruments	Balance Sheet Location 1	June 28,
2019		December 31, 2018		
Assets:	 	 	 	
Foreign currency contracts	Prepaid expenses and other assets	$	24		$	61		
Commodity contracts	Prepaid expenses and other assets	11		2		
Commodity contracts	Other assets	1		—		
Other derivative instruments	Prepaid expenses and other assets	18		7		
Other derivative instruments	Other assets	1		—		
Total assets	 	$	55		$	70		
Liabilities:	 	 	 	
Foreign currency contracts	Accounts payable and accrued expenses	$	86		$	101		
Foreign currency contracts	Other liabilities	1		—		
Commodity contracts	Accounts payable and accrued expenses	41		38		
Commodity contracts	Other liabilities	5		8		
Other derivative instruments	Accounts payable and accrued expenses	—		13		
Total liabilities	 	$	133		$	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 16 for the net presentation of the Company's derivative instruments.
2 Refer to Note 16 for additional information related to the estimated fair value.
Credit Risk Associated with Derivatives
We have established strict counterparty credit guidelines and enter into transactions only with financial institutions of investment grade or better. We monitor counterparty exposures regularly and review any downgrade in credit rating immediately. If a downgrade in the credit rating of a counterparty were to occur, we have provisions requiring collateral for substantially all of our transactions. To mitigate presettlement risk, minimum credit standards become more stringent as the duration of the derivative financial instrument increases. In addition, the Company's master netting agreements reduce credit risk by permitting the Company to net settle for transactions with the same counterparty. To minimize the concentration of credit risk, we enter into derivative transactions with a portfolio of financial institutions. Based on these factors, we consider the risk of counterparty default to be minimal.
Cash Flow Hedging Strategy
The Company uses cash flow hedges to minimize the variability in cash flows of assets or liabilities or forecasted transactions caused by fluctuations in foreign currency exchange rates, commodity prices or interest rates. The changes in the fair values of derivatives designated as cash flow hedges are recorded in AOCI and are reclassified into the line item in our condensed consolidated statement of income in which the hedged items are recorded in the same period the hedged items affect earnings. The changes in fair values of hedges that are determined to be ineffective are immediately reclassified from AOCI into earnings. The maximum length of time for which the Company hedges its exposure to future cash flows is typically 3 years.
The Company maintains a foreign currency cash flow hedging program to reduce the risk that our eventual U.S. dollar net cash inflows from sales outside the United States and U.S. dollar net cash outflows from procurement activities will be adversely affected by fluctuations in foreign currency exchange rates. We enter into forward contracts and purchase foreign currency options (principally euros and Japanese yen) and collars to hedge certain portions of forecasted cash flows denominated in foreign currencies. When the U.S. dollar strengthens against the foreign currencies, the decline in the present value of future foreign currency cash flows is partially offset by gains in the fair value of the derivative instruments. Conversely, when the U.S. dollar weakens, the increase in the present value of future foreign currency cash flows is partially offset by losses in the fair value of the derivative instruments. The total notional values of derivatives that were designated and qualify for the Company's foreign currency cash flow hedging program were $ 5,560 million and $ 3,175 million as of June 28, 2019 and December 31, 2018 , respectively.

16

The Company uses cross-currency swaps to hedge the changes in cash flows of certain of its foreign currency denominated debt and other monetary assets or liabilities due to changes in foreign currency exchange rates. For this hedging program, the Company records the change in carrying value of these foreign currency denominated assets and liabilities due to changes in exchange rates into earnings each period. The changes in fair value of the cross-currency swap derivatives are recorded in AOCI with an immediate reclassification into earnings for the change in fair value attributable to fluctuations in foreign currency exchange rates. The total notional values of derivatives that have been designated as cash flow hedges for the Company's foreign currency denominated assets and liabilities were $3,028 million as of June 28, 2019 and December 31, 2018 .
The Company has entered into commodity futures contracts and other derivative instruments on various commodities to mitigate the price risk associated with forecasted purchases of materials used in our manufacturing process. These derivative instruments have been designated and qualify as part of the Company's commodity cash flow hedging program. The objective of this hedging program is to reduce the variability of cash flows associated with future purchases of certain commodities. The total notional values of derivatives that have been designated and qualify for this program were $ 4 million and $ 9 million as of June 28, 2019 and December 31, 2018 , respectively.
Our Company monitors our mix of short-term debt and long-term debt regularly. From time to time, we manage our risk to interest rate fluctuations through the use of derivative financial instruments. The Company has entered into interest rate swap agreements and has designated these instruments as part of the Company's interest rate cash flow hedging program. The objective of this hedging program is to mitigate the risk of adverse changes in benchmark interest rates on the Company's future interest payments. The total notional value of these interest rate swap agreements that were designated and qualified for the Company's interest rate cash flow hedging program was $500 million as of June 28, 2019 . During the six months ended June 29, 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. As of December 31, 2018 , we did not have any interest rate swaps designated as a cash flow hedge.
The following tables present the pretax impact that changes in the fair values of derivatives designated as cash flow hedges had on other comprehensive income ("OCI"), AOCI and earnings (in millions):

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

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.

17

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

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.

As of June 28, 2019 , the Company estimates that it will reclassify into earnings during the next 12 months net losses of $36 million from the pretax amount recorded in AOCI as the anticipated cash flows occur.
Fair Value Hedging Strategy
The Company uses interest rate swap agreements designated as fair value hedges to minimize exposure to changes in the fair value of fixed-rate debt that results from fluctuations in benchmark interest rates. The Company also uses cross-currency interest rate swaps to hedge the changes in the fair value of foreign currency denominated debt relating to changes in foreign currency exchange rates and benchmark interest rates. The changes in fair values of derivatives designated as fair value hedges and the offsetting changes in fair values of the hedged items are recognized in earnings. The ineffective portions of these hedges are immediately recognized in earnings. 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 $ 12,696 million and $8,023 million as of June 28, 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 June 28, 2019 and December 31, 2018 , we did not have any fair value hedges of this type.

18

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

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

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

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

														
 	Carrying Value of the Hedged Item	 	Cumulative Amount of Fair Value
Hedging Adjustments Included in the
Carrying Value of the Hedged Item 1	
 	June 28,
2019		December 31,
2018		 	June 28,
2019		December 31,
2018		
Long-term debt	$	13,310		$	8,043		 	$	526		$	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 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 net investment hedges are reclassified from AOCI into earnings during the period of change.

19

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

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

The Company did not reclassify any gains or losses related to net investment hedges from AOCI into earnings during the three and six months ended June 28, 2019 and June 29, 2018 . In addition, the Company did not have any ineffectiveness related to net investment hedges during the three and six months ended June 28, 2019 and June 29, 2018 . The cash inflows and outflows associated with the Company's derivative contracts designated as net investment hedges are classified in the line item other investing activities in our condensed consolidated statement of cash flows.
Economic (Nondesignated) Hedging Strategy
In addition to derivative instruments that are designated and qualify for hedge accounting, the Company also uses certain derivatives as economic hedges of foreign currency, interest rate and commodity exposure. Although these derivatives were not designated and/or did not qualify for hedge accounting, they are effective economic hedges. The changes in the fair value of economic hedges are immediately recognized into earnings.
The Company uses foreign currency economic hedges to offset the earnings impact that fluctuations in foreign currency exchange rates have on certain monetary assets and liabilities denominated in nonfunctional currencies. The changes in fair value of economic hedges used to offset those monetary assets and liabilities are immediately recognized into earnings in the line item other income (loss) — net in our condensed consolidated 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 fair values of economic hedges used to offset the variability in U.S. dollar net cash flows are recognized into earnings in the line items net operating revenues, 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 $ 6,188 million and $ 10,939 million as of June 28, 2019 and December 31, 2018 , respectively.
The Company also uses certain derivatives as economic hedges to mitigate the price risk associated with the purchase of materials used in the manufacturing process and for vehicle fuel. The changes in fair values of these economic hedges are immediately recognized into earnings in the line items net operating revenues, cost of goods sold, or selling, general and 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 $ 718 million and $ 373 million as of June 28, 2019 and December 31, 2018 , respectively.
The following tables present the pretax impact that changes in the fair values of derivatives not designated as hedging instruments had on earnings (in millions): 

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

20

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

NOTE 7 : DEBT AND BORROWING ARRANGEMENTS
During the six months ended June 28, 2019 , the Company issued euro-denominated debt totaling €3,500 million . The carrying value of this debt as of June 28, 2019 was $3,956 million . The general terms of the notes issued are as follows:

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

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

•	€1,000 million total principal amount of notes due 2026, at a fixed interest rate of 0.75 percent ; and	

•	€750 million total principal amount of notes due 2031, at a fixed interest rate of 1.25 percent .	
During the six months ended June 28, 2019 , the Company retired upon maturity $1,000 million total principal amount of notes due May 30, 2019, at a fixed interest rate of 1.375 percent and €1,500 million total principal amount of notes due March 8, 2019, at a variable interest rate equal to the three month EURIBOR plus 0.25 percent .
NOTE 8 : LEASES
We have operating leases primarily for real estate, vehicles, and manufacturing and other equipment.
Balance sheet information related to operating leases is as follows (in millions):

				
 	June 28,
2019		
Operating lease ROU assets 1	$	1,330		
Current portion of operating lease liabilities 2	$	282		
Noncurrent portion of operating lease liabilities 3	1,071		
Total operating lease liabilities	$	1,353		
1 Operating lease ROU assets are recorded in the line item other assets in our condensed consolidated balance sheet.
2 The current portion of operating lease liabilities is recorded in the line item accounts payable and accrued expenses in our condensed
consolidated balance sheet.
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 $85 million and $158 million for the three and six months ended June 28, 2019 , respectively. Cash paid for amounts included in the measurement of operating lease liabilities was $172 million during the six months ended June 28, 2019 . Operating lease ROU assets obtained in exchange for operating lease obligations were $93 million during the six months ended June 28, 2019 .
Information associated with the measurement of our remaining operating lease obligations as of June 28, 2019 is as follows:

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

21

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

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

Our leases have remaining lease terms of 1 year to 20 years , inclusive of renewal or termination options that we are reasonably certain to exercise.
NOTE 9 : COMMITMENTS AND CONTINGENCIES
Guarantees
As of June 28, 2019 , we were contingently liable for guarantees of indebtedness owed by third parties of $ 634 million , of which $ 252 million was related to variable interest entities. Our guarantees are primarily related to third-party customers, bottlers, vendors and container manufacturing operations and have arisen through the normal course of business. These guarantees have various terms, and none of these guarantees 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, with respect to some of which the outcome is uncertain. We establish reserves to remove some or all of the tax benefit of any of our tax positions at the time we determine that it becomes uncertain based upon one of the following conditions: (1) the tax position is not "more likely than not" to be sustained; (2) the tax position is "more likely than not" to be sustained, but for a lesser amount; or (3) the tax position is "more likely than not" to be sustained, but not in the financial period in which the tax position was originally taken. For purposes of evaluating whether or not a tax position is uncertain, (1) we presume the tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information; (2) the technical merits of a tax position are derived from authorities such as legislation and statutes, legislative intent, regulations, rulings and case law and their applicability to the facts and circumstances of the tax position; and (3) each tax position is evaluated without consideration of the possibility of offset or aggregation with other tax positions taken. A number of years may elapse before a particular uncertain tax position is audited and finally resolved. 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 .

22

On September 17, 2015, the Company received a Statutory Notice of Deficiency ("Notice") from the Internal Revenue Service ("IRS") for the tax years 2007 through 2009, after a five-year audit. In the Notice, the IRS claimed that the Company's United States taxable income should be increased by an amount that creates a potential additional federal income tax liability of approximately  $3.3 billion  for the period, plus interest. No penalties were asserted in the Notice. The disputed amounts largely relate to a transfer pricing matter involving the appropriate amount of taxable income the Company should report in the United States in connection with its licensing of intangible property to certain related foreign licensees regarding the manufacturing, distribution, sale, marketing and promotion of products in overseas markets.
During the 2007-2009 audit period, the Company followed the same transfer pricing methodology for these licenses that had consistently been followed since the methodology was agreed with the IRS in a 1996 closing agreement that applied back to 1987. The closing agreement provided prospective penalty protection 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 1996 closing agreement. The IRS designated the matter for litigation on October 15, 2015. To the extent the matter remains designated, the Company will be prevented from pursuing any administrative settlement at IRS Appeals or under the IRS Advance Pricing and Mutual Agreement Program.
The Company firmly believes that the IRS' claims are without merit and 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 decision. In the interim, or subsequent to the court's decision, the IRS may propose similar adjustments for years subsequent to the 2007-2009 litigation period. While the Company continues to strongly disagree with the IRS' position, there is no assurance that the court will rule in the Company's favor, and it is possible that all or some portion of the adjustment proposed by the IRS Notice ultimately could be sustained. In that event, the Company will be subject to significant additional liabilities for the years at issue and potentially also for subsequent periods, which could have a material adverse impact on the Company's financial position, results of operations and cash flows.
The Company regularly assesses the likelihood of adverse outcomes resulting from tax disputes such as this and other examinations for all open years to determine the adequacy of its tax reserves. Any such adjustments related to years prior to 2018, either in the litigation period or later, may have an impact on the transition tax payable as part of the Tax Reform Act.
Risk Management Programs
The Company has numerous global insurance programs in place to help protect the Company from the risk of loss. In general, we are self-insured for large portions of many different types of claims; however, we do use commercial insurance above our self-insured retentions to reduce the Company's risk of catastrophic loss. Our reserves for the Company's self-insured losses are estimated using actuarial methods and assumptions of the insurance industry, adjusted for our specific expectations based on our claim history. Our self-insurance reserves totaled $ 324 million and $ 362 million as of June 28, 2019 and December 31, 2018 , respectively.
NOTE 10 : OTHER COMPREHENSIVE INCOME
AOCI attributable to shareowners of The Coca-Cola Company is separately presented in our condensed consolidated balance sheet as a component of The Coca-Cola Company's shareowners' equity, which also includes our proportionate share of equity method investees' AOCI. OCI attributable to noncontrolling interests is allocated to, and included in, our condensed consolidated balance sheet as part of the line item equity attributable to noncontrolling interests.

23

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

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

1 The change in the balance from December 31, 2018 includes a portion of a $513 million reclassification to reinvested earnings from AOCI
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): 

										
 	Six Months Ended June 28, 2019	
 	Shareowners of
The Coca-Cola Company		Noncontrolling
Interests		Total		
Consolidated net income	$	4,285		$	46		$	4,331		
Other comprehensive income:	 	 	 	
Net foreign currency translation adjustments	270		11		281		
Net gains (losses) on derivatives 1	(16	)	—		(16	)	
Net change in unrealized gains (losses) on available-for-sale debt
   securities 2	30		—		30		
Net change in pension and other benefit liabilities 3	68		—		68		
Total comprehensive income	$	4,637		$	57		$	4,694		
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.
3 Refer to Note 14 for additional information related to the Company's pension and other postretirement benefit liabilities.

24

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 28, 2019	Before-Tax Amount		 	Income Tax		 	After-Tax Amount		
Foreign currency translation adjustments:	 	 	 	 	 	
Translation adjustments arising during the period	$	(882	)	 	$	2		 	$	(880	)	
Gains (losses) on intra-entity transactions that are of a long-term investment nature	323		 	—		 	323		
Gains (losses) on net investment hedges arising during the period 1	(156	)	 	29		 	(127	)	
Net foreign currency translation adjustments	$	(715	)	 	$	31		 	$	(684	)	
Derivatives:		 		 		
Gains (losses) arising during the period	$	(81	)	 	$	19		 	$	(62	)	
Reclassification adjustments recognized in net income	51		 	(13	)	 	38		
Net gains (losses) on derivatives 1	$	(30	)	 	$	6		 	$	(24	)	
Available-for-sale debt securities:		 		 		
Unrealized gains (losses) arising during the period	$	35		 	$	(3	)	 	$	32		
Reclassification adjustments recognized in net income	(22	)	 	5		 	(17	)	
Net change in unrealized gains (losses) on available-for-sale debt securities 2	$	13		 	$	2		 	$	15		
Pension and other benefit liabilities:		 		 		
Net pension and other benefit liabilities arising during the period	$	8		 	$	1		 	$	9		
Reclassification adjustments recognized in net income	37		 	(9	)	 	28		
Net change in pension and other benefit liabilities 3	$	45		 	$	(8	)	 	$	37		
Other comprehensive income (loss) attributable to shareowners of The Coca-Cola
   Company	$	(687	)	 	$	31		 	$	(656	)	

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.	

3  	Refer to Note 14 for additional information related to the Company's pension and other postretirement benefit liabilities.	

25

	
												
Six Months Ended June 28, 2019	Before-Tax Amount		 	Income Tax		 	After-Tax Amount		
Foreign currency translation adjustments:	 	 	 	 	 	
Translation adjustments arising during the period	$	115		 	$	(71	)	 	$	44		
Reclassification adjustments recognized in net income	192		 	—		 	192		
Gains (losses) on intra-entity transactions that are of a long-term investment nature	36		 	—		 	36		
Gains (losses) on net investment hedges arising during the period 1	(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 income	104		 	(26	)	 	78		
Net gains (losses) on derivatives 1	$	(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 securities 2	$	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 income	74		 	(18	)	 	56		
Net change in pension and other benefit liabilities 3	$	81		 	$	(13	)	 	$	68		
Other comprehensive income (loss) attributable to shareowners of The Coca-Cola
   Company	$	443		 	$	(91	)	 	$	352		

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.	

3  	Refer to Note 14 for additional information related to the Company's pension and other postretirement benefit liabilities.	

												
Three Months Ended June 29, 2018	Before-Tax Amount		 	Income Tax		 	After-Tax Amount		
Foreign currency translation adjustments:	 	 	 	 	 	
Translation adjustments arising during the period	$	(1,152	)	 	$	(17	)	 	$	(1,169	)	
Reclassification adjustments recognized in net income	42		 	—		 	42		
Gains (losses) on intra-entity transactions that are of a long-term investment nature	(1,372	)	 	—		 	(1,372	)	
Gains (losses) on net investment hedges arising during the period 1	705		 	(202	)	 	503		
Net foreign currency translation adjustments	$	(1,777	)		$	(219	)		$	(1,996	)	
Derivatives:	 	 	 	 	 	
Gains (losses) arising during the period	$	(1	)	 	$	24		 	$	23		
Reclassification adjustments recognized in net income	60		 	(15	)	 	45		
Net gains (losses) on derivatives 1	$	59		 	$	9		 	$	68		
Available-for-sale debt securities:	 	 	 	 	 	
Unrealized gains (losses) arising during the period	$	(113	)	 	$	23		 	$	(90	)	
Net change in unrealized gains (losses) on available-for-sale debt securities 2	$	(113	)	 	$	23		 	$	(90	)	
Pension and other benefit liabilities:	 	 	 	 	 	
Net pension and other benefit liabilities arising during the period	$	261		 	$	(61	)	 	$	200		
Reclassification adjustments recognized in net income	111		 	(29	)	 	82		
Net change in pension and other benefit liabilities 3	$	372		 	$	(90	)	 	$	282		
Other comprehensive income (loss) attributable to shareowners of The Coca-Cola
Company	$	(1,459	)		$	(277	)		$	(1,736	)	

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.	

3  	Refer to Note 14 for additional information related to the Company's pension and other postretirement benefit liabilities.	

26

	
												
Six Months Ended June 29, 2018	Before-Tax Amount		 	Income Tax		 	After-Tax Amount		
Foreign currency translation adjustments:	 	 	 	 	 	
Translation adjustments arising during the period	$	(985	)	 	$	(85	)	 	$	(1,070	)	
Reclassification adjustments recognized in net income	98		 	—		 	98		
Gains (losses) on intra-entity transactions that are of a long-term investment nature	(576	)	 	—		 	(576	)	
Gains (losses) on net investment hedges arising during the period 1	294		 	(73	)	 	221		
Net foreign currency translation adjustments	$	(1,169	)		$	(158	)		$	(1,327	)	
Derivatives:	 	 	 	 	 	
Gains (losses) arising during the period	$	65		 	$	(14	)	 	$	51		
Reclassification adjustments recognized in net income	2		 	(1	)	 	1		
Net gains (losses) on derivatives 1	$	67		 	$	(15	)	 	$	52		
Available-for-sale debt securities:	 	 	 	 	 	
Unrealized gains (losses) arising during the period	$	(126	)	 	$	21		 	$	(105	)	
Reclassification adjustments recognized in net income	5		 	(1	)	 	4		
Net change in unrealized gains (losses) on available-for-sale debt securities 2	$	(121	)	 	$	20		 	$	(101	)	
Pension and other benefit liabilities:	 	 	 	 	 	
Net pension and other benefit liabilities arising during the period	$	271		 	$	(62	)	 	$	209		
Reclassification adjustments recognized in net income	144		 	(37	)	 	107		
Net change in pension and other benefit liabilities 3	$	415		 	$	(99	)	 	$	316		
Other comprehensive income (loss) attributable to shareowners of The Coca-Cola
Company	$	(808	)	 	$	(252	)	 	$	(1,060	)	

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.	

3  	Refer to Note 14 for additional information related to the Company's pension and other postretirement benefit liabilities.	

27

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

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

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 .	

28

NOTE 11 : 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 28, 2019	Common Shares Outstanding		Total		Reinvested
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Common
Stock		Capital
Surplus		Treasury
Stock		Non-
controlling
Interests		
March 29, 2019	4,268		$	19,804		$	63,704		$	(12,325	)	$	1,760		$	16,577		$	(51,981	)	$	2,069		
Comprehensive income (loss)	—		2,011		2,607		(656	)	—		—		—		60		
Dividends paid/payable to
  shareowners of The Coca-Cola
  Company ($0.40 per share)	—		(1,709	)	(1,709	)	—		—		—		—		—		
Dividends paid to noncontrolling
   interests	—		(15	)	—		—		—		—		—		(15	)	
Purchases of treasury stock	(5	)	(237	)	—		—		—		—		(237	)	—		
Impact related to stock-based
   compensation plans	12		441		—		—		—		256		185		—		
June 28, 2019	4,275		$	20,295		$	64,602		$	(12,981	)	$	1,760		$	16,833		$	(52,033	)	$	2,114		

																								
 	 	 	Shareowners of The Coca-Cola Company   	 		
Six Months Ended June 28, 2019	Common Shares Outstanding		Total		Reinvested
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Common
Stock		Capital
Surplus		Treasury
Stock		Non-
controlling
Interests		
December 31, 2018	4,268		$	19,058		$	63,234		$	(12,814	)	$	1,760		$	16,520		$	(51,719	)	$	2,077		
Adoption of accounting standards 1	—		(18	)	501		(519	)	—		—		—		—		
Comprehensive income (loss)	—		4,694		4,285		352		—		—		—		57		
Dividends paid/payable to
   shareowners of The Coca-Cola
   Company ($0.80 per share)	—		(3,418	)	(3,418	)	—		—		—		—		—		
Dividends paid to noncontrolling
   interests	—		(20	)	—		—		—		—		—		(20	)	
Purchases of treasury stock	(14	)	(635	)	—		—		—		—		(635	)	—		
Impact related to stock-based
   compensation plans	21		634		—		—		—		313		321		—		
June 28, 2019	4,275		$	20,295		$	64,602		$	(12,981	)	$	1,760		$	16,833		$	(52,033	)	$	2,114		
1 Refer to Note 1 and Note 6 .

29

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

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

30

NOTE 12 : SIGNIFICANT OPERATING AND NONOPERATING ITEMS
Other Operating Charges
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 $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 13 for additional information on the Company's productivity and reinvestment program. Refer to Note 17 for the impact these charges had on our operating segments and Corporate.
During the six months ended June 28, 2019 , the Company recorded other operating charges of $219 million . These charges primarily consisted of $123 million related to the Company's productivity and reinvestment program. In addition, other operating charges included $46 million of transaction costs associated with the purchase of Costa, which we acquired in January 2019, and $40 million for costs incurred to refranchise certain of our North America bottling operations. Other operating charges also included  $2 million related to tax litigation expense. Refer to Note 2 for additional information on the acquisition of Costa. Refer to Note 9 for additional information related to the tax litigation. Refer to Note 13 for additional information on the Company's productivity and reinvestment program. Refer to Note 17 for the impact these charges had on our operating segments and Corporate.
During the  three months ended   June 29, 2018 , the Company recorded other operating charges of  $225 million . These charges primarily consisted of  $111 million  related to the Company's productivity and reinvestment program and $60 million  of CCR asset impairments. In addition, other operating charges included  $34 million  related to costs incurred to refranchise certain of our North America bottling operations. Other operating charges also included  $22 million related to tax litigation expense. Refer to Note 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.
During the  six months ended   June 29, 2018 , the Company recorded other operating charges of  $761 million . These charges primarily consisted of  $450 million  of CCR asset impairments and  $206 million  related to the Company's productivity and reinvestment program. In addition, other operating charges included  $79 million  related to costs incurred to refranchise certain of our North America bottling operations. Other operating charges also included  $27 million related to tax litigation expense. 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 six months ended June 28, 2019 , the Company recorded net charges of $26 million and $68 million , respectively. During the three and six months ended June 29, 2018 , the Company recorded net charges of $33 million and $84 million , respectively. 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 17 for the impact these items had on our operating segments and Corporate.

31

Other Income (Loss) — Net
During the three months ended June 28, 2019 , the Company recorded an adjustment to reduce the carrying amount of CCBA's fixed assets and definite-lived intangible assets by $160 million . The Company also recorded an other-than-temporary impairment charge of $49 million related to one of our equity method investees in Latin America and a net gain of $10 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities. Refer to Note 2 for additional information on the CCBA asset adjustment. Refer to Note 4 for additional information on equity and debt securities. Refer to Note 16  for information on how the Company determined the adjustment to CCBA's assets and impairment charge. Refer to Note 17 for the impact these items had on our operating segments and Corporate.
During the six months ended June 28, 2019 , the Company recognized other-than-temporary impairment charges of $286 million related to Coca-Cola Bottlers Japan Holdings Inc. ("CCBJHI"), an equity method investee, $57 million related to one of our equity method investees in North America, and $49 million related to one of our other equity method investees. The Company also recorded an adjustment to reduce the carrying amount of CCBA's fixed assets and definite-lived intangible assets by $160 million and recognized a $121 million loss in conjunction with our acquisition of the remaining equity ownership interest in CHI. Additionally, the Company recognized net charges of $4 million due to the refranchising of certain bottling territories in North America and charges of $4 million primarily related to payments made to convert the bottling agreements for certain North America bottling partners' territories to a single form of CBA with additional requirements. These charges were partially offset by a net gain of $159 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities and a gain of $39 million related to the sale of a portion of our equity ownership interest in Andina. Refer to Note 2 for additional information on the CCBA asset adjustment, refranchising activities, the North America conversion payments, the acquisition of the remaining equity ownership interest in CHI and the sale of a portion of our equity ownership interest in Andina. Refer to Note 4 for additional information on equity and debt securities. Refer to Note 16  for information on how the Company determined the adjustment to CCBA's assets and impairment charges and the loss recognized in conjunction with our acquisition of the remaining equity ownership interest in CHI. Refer to Note 17 for the impact these items had on our operating segments and Corporate.
During the three months ended June 29, 2018 , the Company recorded a net loss of $86 million related to pension settlements and net charges of $102 million due to the refranchising of certain bottling territories in North America. The Company also recorded an other-than-temporary impairment charge of $52 million related to one of our equity method investees. These charges were partially offset by a net gain of $36 million related to the refranchising of our Latin American bottling operations, and a net gain of $36 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities. Refer to Note 2 for additional information on refranchising activities. Refer to Note 4  for additional information on equity and debt securities. Refer to Note 17 for the impact these items had on our operating segments.
During the six months ended June 29, 2018 , the Company recorded charges of $86 million related to pension settlements and net charges of $104 million due to the refranchising of certain bottling territories in North America. The Company also recorded an other-than-temporary impairment charge of $52 million related to one of our equity method investees and a net loss of $49 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities. Additionally, the Company recognized a net loss of $33 million primarily related to the reversal of the cumulative translation adjustments resulting from the substantial liquidation of the Company's former Russian juice operations, and charges of $21 million primarily related to payments made to convert the bottling agreements for certain North America bottling partners' territories to a single form of CBA with additional requirements. These charges were partially offset by a net gain of $36 million related to the refranchising of our Latin American bottling operations. Refer to Note 4 for additional information on equity and debt securities. Refer to Note 2 for additional information on refranchising activities and North America conversion payments. Refer to Note 17 for the impact these items had on our operating segments.

32

NOTE 13 : PRODUCTIVITY AND REINVESTMENT PROGRAM
In February 2012, the Company announced a productivity and reinvestment program designed to further enable our efforts to strengthen our brands and reinvest our resources to drive long-term profitable growth. This program is focused on the following initiatives: global supply chain optimization; global marketing and innovation effectiveness; operating expense leverage and operational excellence; data and information technology systems standardization; and the integration of Coca‑Cola 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 focuses on four key areas: restructuring the Company's global supply chain; implementing zero-based work, an evolution of zero-based budget principles, across the organization; streamlining and simplifying the Company's operating model; and further driving increased discipline and efficiency in direct marketing investments.
In April 2017, the Company announced another expansion of our productivity and reinvestment program. This expansion is focused on achieving additional efficiencies in both our supply chain and our marketing expenditures as well as transitioning to a new, more agile operating model to enable growth. Under this operating model, our business units will be supported by an expanded enabling services organization and a corporate center focused on a few strategic initiatives, policy and governance. The expanded enabling services organization will focus on both simplifying and standardizing key transactional processes and providing support to business units through global centers of excellence.
The Company has incurred total pretax expenses of $3,689 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 17 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 summarizes the balance of accrued expenses related to these productivity and reinvestment initiatives and the changes in the accrued amounts as of and for the three months ended June 28, 2019 (in millions):

																
 	Accrued Balance
March 29, 2019		Costs Incurred
Three Months Ended
June 28, 2019		Payments		Noncash
and
Exchange		Accrued Balance
June 28, 2019		
Severance pay and benefits	$	51		$	1		$	(3	)	$	—		$	49		
Outside services	13		23		(28	)	—		8		
Other direct costs	10		31		(28	)	(5	)	8		
Total	$	74		$	55		$	(59	)	$	(5	)	$	65		

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

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

33

NOTE 14 : PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS
Net periodic benefit cost (income) for our pension and other postretirement benefit plans consisted of the following (in millions):

														
 	Pension Benefits  	 	Other Benefits  	
 	Three Months Ended	
 	June 28,
2019		June 29,
2018		 	June 28,
2019		June 29,
2018		
Service cost	$	26		$	31		 	$	3		$	2		
Interest cost	73		73		 	6		6		
Expected return on plan assets 1	(138	)	(162	)	 	(4	)	(4	)	
Amortization of prior service cost (credit)	(1	)	2		 	—		(3	)	
Amortization of net actuarial loss	38		29		 	—		1		
Net periodic benefit cost (income)	(2	)	(27	)	 	5		2		
Settlement charges 2	—		86		 	—		—		
Total cost (income) recognized in condensed consolidated statements
    of income	$	(2	)	$	59		 	$	5		$	2		
1 The weighted-average expected long-term rates of return on plan assets used in computing 2019 net periodic benefit cost (income) are
7.7 percent for pension benefit plans and 4.6 percent for other benefit plans.
2 The settlement charges in 2018 were related to North America refranchising and the Company's productivity and reinvestment program.

														
 	Pension Benefits  	 	Other Benefits  	
 	Six Months Ended	
 	June 28,
2019		June 29,
2018		 	June 28,
2019		June 29,
2018		
Service cost	$	52		$	63		 	$	5		$	5		
Interest cost	145		146		 	13		12		
Expected return on plan assets 1	(276	)	(330	)	 	(7	)	(7	)	
Amortization of prior service cost (credit)	(2	)	4		 	(1	)	(7	)	
Amortization of net actuarial loss	76		63		 	1		2		
Net periodic benefit cost (income)	(5	)	(54	)	 	11		5		
Settlement charges 2	—		86		 	—		—		
Total cost (income) recognized in condensed consolidated statements
    of income	$	(5	)	$	32		 	$	11		$	5		
1 The weighted-average expected long-term rates of return on plan assets used in computing 2019 net periodic benefit cost (income) are
7.7 percent for pension benefit plans and 4.6 percent for other benefit plans.
2 The settlement charges in 2018 were related to North America refranchising and the Company's productivity and reinvestment program.
All of the amounts in the tables above, other than service cost, were recorded in the line item other income (loss) — net in our condensed consolidated statements of income. During the six months ended June 28, 2019 , the Company contributed $22 million to our pension trusts, and we anticipate making additional contributions of approximately $ 4 million during the remainder of 2019. The Company contributed $34 million to our pension trusts during the six months ended June 29, 2018 .
NOTE 15 : INCOME TAXES
The Company recorded income taxes of $421 million ( 13.8 percent effective tax rate) and $611 million ( 20.7 percent effective tax rate) during the three months ended June 28, 2019 and June 29, 2018 , respectively. The Company recorded income taxes of $943 million ( 17.9 percent effective tax rate) and $1,156 million ( 23.6 percent effective tax rate) during the six months ended June 28, 2019 and June 29, 2018 , respectively.
The Company's effective tax rates for the three and six months ended June 28, 2019 and June 29, 2018 vary from the statutory U.S. federal income tax rate 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 of accounting, both of which are generally taxed at rates lower than the statutory U.S. rate.
The Company's effective tax rates for the three and six months ended June 28, 2019 included $199 million of tax benefit recorded as result of CCBA no longer qualifying as a discontinued operation.

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The Company's effective tax rates for the three and six months ended June 29, 2018 included $42 million of tax benefit and $134 million of tax expense, respectively, to adjust our provisional tax estimate recorded as of December 31, 2017, related to the Tax Reform Act signed into law on December 22, 2017.
On September 17, 2015, the Company received a Statutory Notice of Deficiency from the IRS for the tax years 2007 through 2009, after a five-year audit. Refer to Note 9 .
NOTE 16 : 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.

35

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

																						
June 28, 2019	Level 1		Level 2		Level 3		 	Other 3		Netting
Adjustment		4  	Fair Value
Measurements		 	
Assets:	 	 	 	 	 	 	 	 	 	
Equity securities with readily determinable values 1	$	1,810		$	208		$	10		 	$	60		$	—		 	$	2,088		 	
Debt securities 1	—		4,030		19			—		—		 	4,049		 	
Derivatives 2	16		667		—		 	—		(446	)	5  	237		6  	
Total assets	$	1,826		$	4,905		$	29		 	$	60		$	(446	)	 	$	6,374		 	
Liabilities:	 	 	 	 	 	 	 	 	 	
Derivatives 2	$	(18	)	$	(210	)	$	—		 	$	—		$	197		 	$	(31	)	6  	
Total liabilities	$	(18	)	$	(210	)	$	—		 	$	—		$	197		 	$	(31	)	 	
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 $258 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: $ 237 million in the line item other assets and $ 31 million in the line item other liabilities. Refer to Note 6 for additional information related to the composition of our derivative portfolio.	

																						
December 31, 2018	Level 1		Level 2		Level 3		 	Other 3		Netting
Adjustment		4  	Fair Value
Measurements		 	
Assets:	 	 	 	 	 	 	 	 	 	
Equity securities with readily determinable values 1	$	1,681		$	186		$	6		 	$	61		$	—		 	$	1,934		 	
Debt securities 1	—		5,018		19		 	—		—		 	5,037		 	
Derivatives 2	2		313		—		 	—		(261	)	5  	54		7  	
Total assets	$	1,683		$	5,517		$	25		 	$	61		$	(261	)	 	$	7,025		 	
Liabilities:	 		 		 		 	 	 		 	 		 	
Derivatives 2	$	(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 The Company is obligated to return $96 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: $54 million in the line item other assets; $3 million in the line item current liabilities 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 six months ended June 28, 2019 and June 29, 2018 .
The Company recognizes transfers between levels within the hierarchy as of the beginning of the reporting period. Gross transfers between levels within the hierarchy were not significant for the three and six months ended June 28, 2019 and June 29, 2018 .

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Nonrecurring Fair Value Measurements
In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company records assets and liabilities at fair value on a nonrecurring basis as required by U.S. GAAP. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges, or as a result of observable changes in equity securities using the measurement alternative. Refer to Note 4 .
The gains and losses on assets measured at fair value on a nonrecurring basis are summarized in the table below (in millions):

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

1 The Company recognized an other-than-temporary impairment charge of $49 million during the three and six months ended June 28, 2019 and $52 million during the three and six months ended June 29, 2018 related to one of our equity method investees in Latin America, primarily driven by revised projections of future operating results. The fair value of this investment was derived using discounted cash flow analyses based on Level 3 inputs. During the six months ended June 28, 2019 , the Company recognized an other-than-temporary impairment 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 had been less than our carrying value as well as the financial condition and near-term prospects of the issuer, management determined that the decline in fair value was other than temporary in nature. This impairment charge was determined using the quoted market price (a Level 1 measurement) of CCBJHI. During the six months ended June 28, 2019 , the Company also recognized an other-than-temporary impairment charge of  $57 million related to one of our equity method investees in North America. This impairment charge was derived using Level 3 inputs and was primarily driven by revised projections of future operating results.
2 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 .
3 The Company recognized charges of $60 million related to CCR's property, plant and equipment during the three months ended June 29, 2018 and charges of $312 million and $138 million related to CCR's property, plant and equipment and intangible assets, respectively, during the six months ended June 29, 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.
4 The Company recognized a loss of  $121 million  in conjunction with our acquisition of the remaining equity ownership interest in CHI, primarily driven by foreign currency exchange rate fluctuations. The fair value of this investment was derived using discounted cash flow analyses based on Level 3 inputs. Refer to Note 2 .
Other Fair Value Disclosures
The carrying amounts of cash and cash equivalents; short-term investments; trade accounts receivable; accounts payable and accrued expenses; and loans and notes payable approximate their fair values because of the short-term maturities of these financial instruments. As of June 28, 2019 , the carrying amount and fair value of our long-term debt, including the current portion, were $ 32,045 million and $ 32,934 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 million , respectively.
NOTE 17 : OPERATING SEGMENTS
Effective January 1, 2019, we established a new operating segment, Global Ventures, which includes the results of Costa, which we acquired in January 2019, and the results of our innocent and doğadan businesses as well as fees earned pursuant to distribution coordination agreements between the Company and Monster. Additionally, during the three months ended June 28, 2019 , the Company updated its plans for CCBA and now intends to maintain its majority stake in CCBA for the foreseeable future. As a result, the Company now presents the financial results of CCBA within its results from continuing operations and includes the results of CCBA in the Bottling Investments operating segment. Accordingly, all prior period operating segment and Corporate information presented herein has been adjusted to reflect these changes.

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

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

During the three months ended 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 $ 13 million for North America, $1 million for Bottling Investments and $ 41 million for Corporate due to the Company's productivity and reinvestment program. Refer to Note 13 .	

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

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

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

•	Income (loss) before income taxes was reduced by $49 million for Latin America due to an other-than-temporary impairment charge related to one of our equity method investees. Refer to  Note 16 .	
During the three months ended June 29, 2018 , the results of our operating segments and Corporate were impacted by the following items:

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

•	Operating income (loss) and income (loss) before income taxes were reduced by $60 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  $34 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  $22 million  for Corporate due to tax litigation expense.	

38

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

•	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 and $39 million for Corporate due to pension settlements. Refer to  Note 14 .	

•	Income (loss) before income taxes was reduced by  $31 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 increased by  $36 million  for Corporate related to the refranchising of our Latin American bottling operations. Refer to Note 2 .	

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

During the six months ended 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 $1 million for Europe, Middle East and Africa, $30 million for North America, $3 million for Bottling Investments and $89 million for Corporate due to the Company's productivity and reinvestment program. Refer to Note 13 .	

•	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  $40 million for Bottling Investments related to costs incurred to refranchise certain of our North America bottling operations. Refer to  Note 12 .	

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

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

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

•	Income (loss) before income taxes was reduced by $66 million for Bottling Investments and $2 million for Corporate due to the Company's proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees.	

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

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

39

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

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

•	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  $79 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  $27 million  for Corporate due to tax litigation expense.	

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

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

•	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 and $39 million for Corporate due to pension settlements. Refer to  Note 13 .	

•	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  $21 million  for North America primarily related to payments made to convert the bottling agreements for certain North America bottling partners' territories to a single form of CBA with additional requirements. Refer to  Note 2 .	

•	Income (loss) before income taxes was increased by  $36 million  for Corporate related to the refranchising of our Latin American bottling operations. Refer to Note 2.	
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations
When used in this report, the terms "The Coca-Cola Company," "Company," "we," "us" and "our" mean The Coca-Cola Company and all entities included in our condensed consolidated financial statements.
Effective January 1, 2019, we established a new operating segment, Global Ventures, which includes the results of Costa Limited ("Costa"), which we acquired in January 2019, and the results of our innocent and doğadan businesses as well as fees earned pursuant to distribution coordination agreements between the Company and Monster Beverage Corporation ("Monster"). Additionally, during the three months ended June 28, 2019 , the Company updated its plans for Coca-Cola Beverages Africa Proprietary Limited ("CCBA") and now intends to maintain its majority stake in CCBA for the foreseeable future. As a result, the Company now presents the financial results of CCBA within its results from continuing operations and includes the results of CCBA in the Bottling Investments operating segment. Accordingly, all prior period operating segment and Corporate information presented herein has been adjusted to reflect these changes.

40

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 . As a result, management must make numerous assumptions which involve a significant amount of judgment when completing recoverability and impairment tests of current and noncurrent assets in various regions around the world.
We perform recoverability and impairment tests of current and noncurrent assets in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). For certain assets, recoverability and/or impairment tests are required only when conditions exist that indicate the carrying value may not be recoverable. For other assets, impairment tests are required at least annually, or more frequently if events or circumstances indicate that an asset may be impaired.
Our equity method investees also perform such recoverability and/or impairment tests. If an impairment charge is recorded by one of our equity method investees, the Company records its proportionate share of such charge as a reduction of equity income (loss) — net in our condensed consolidated statement of income. However, the actual amount we record with respect to our proportionate share of such 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 six months ended June 28, 2019 , the Company 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 six months ended June 28, 2019 , the Company recognized an other-than-temporary impairment charge of $286 million related to our investment in Coca-Cola Bottlers Japan Holdings Inc. ("CCBJHI"), an equity method investee. Based on the length of time and the extent to which the market value of our investment in CCBJHI had been less than our carrying value as well as the financial condition and near-term prospects of the issuer, management determined that the decline in fair value was other than temporary in nature. During the six months ended June 28, 2019 , the Company also recognized an other-than-temporary impairment charge of  $57 million related to one of our equity method investees in North America. This impairment charge was primarily driven by revised projections of future operating results.
During the three and six months ended June 29, 2018 , the Company recorded an other-than-temporary impairment charge of $52 million related to one of our equity method investees in Latin America, primarily driven by revised projections of future operating results.
The following table presents the difference between calculated fair values, based on quoted closing prices of publicly traded shares, and our Company's cost basis in investments in publicly traded companies accounted for under the equity method (in millions): 

										
June 28, 2019	Fair
Value		Carrying
Value		Difference		
Monster Beverage Corporation	$	6,518		$	3,679		$	2,839		
Coca-Cola European Partners plc	4,969		3,587		1,382		
Coca-Cola FEMSA, S.A.B. de C.V.	3,892		1,861		2,031		
Coca-Cola HBC AG	3,216		1,296		1,920		
Coca-Cola Amatil Limited	1,578		615		963		
Coca-Cola Bottlers Japan Holdings Inc. 1	842		866		(24	)	
Coca-Cola Consolidated, Inc.	743		141		602		
Coca-Cola İçecek A.Ş.	252		178		74		
Embotelladora Andina S.A.	213		124		89		
Total	$	22,223		$	12,347		$	9,876		
1 The carrying value of our investment in CCBJHI exceeded its fair value as of June 28, 2019 . Based on the length of time and the extent to which the market value has been less than our cost basis and our intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in market value, management determined that the decline in fair value was temporary in nature. Therefore, we did not record an impairment charge.
As of June 28, 2019 , gross unrealized gains and losses on available-for-sale debt securities were $131 million and $5 million , respectively. Management assessed each of the available-for-sale debt securities that were in a gross unrealized loss position on an individual basis to determine if the decline in fair value was other than temporary. As a result of these assessments, management determined that the decline in fair value of these investments was temporary and did not record any impairment

41

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  three and six months ended June 28, 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  three and six months ended   June 29, 2018 , the Company recorded impairment charges of  $60 million and $312 million , respectively, related to CCR's property, plant and equipment as a result of management's estimate of the proceeds that were expected to be received for the remaining bottling territories upon their refranchising. These charges were recorded in our Bottling Investments operating segment in the line item other operating charges in our condensed consolidated statements of income and were determined by comparing the fair value of the assets to their carrying value. Refer to Note 16 of Notes to Condensed Consolidated Financial Statements.
Goodwill, Trademarks and Other Intangible Assets
During the  three and six months ended June 28, 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  six months ended   June 29, 2018 , the Company recorded impairment charges of  $138 million  related to certain intangible assets. These charges included  $100 million  related to bottlers' franchise rights with indefinite lives and  $38 million related to definite-lived intangible assets. These impairment charges were incurred as a result of management's revised estimate of the proceeds that 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 accounting for the highest sales volumes. The volume of sales in the beverage business may be affected by weather conditions.
Structural Changes, Acquired Brands and Newly Licensed Brands
In order to continually improve upon the Company's operating performance, from time to time, we engage in buying and selling ownership interests in bottling partners and other manufacturing operations. In addition, we also acquire brands or enter into license agreements for certain brands to supplement our beverage offerings. These items impact our operating results and certain key metrics used by management in assessing the Company's performance.
Unit case volume growth is a metric used by management to evaluate the Company's performance because it measures demand for our products at the consumer level. The Company's unit case volume represents the number of unit cases (or unit case equivalents) of Company beverage products directly or indirectly sold by the Company and its bottling partners to customers and, therefore, reflects unit case volume for both consolidated and unconsolidated bottlers. Refer to the heading "Beverage Volume" below.
Concentrate sales volume represents the amount of concentrates, syrups, beverage bases, source waters and powders/minerals (in all instances expressed in equivalent unit cases) sold by, or used in finished products sold by, the Company to its bottling partners or other customers. Refer to the heading "Beverage Volume" below.
Our Bottling Investments operating segment and our other finished product operations typically generate net operating revenues by selling sparkling soft drinks and a variety of other beverages, such as juices, juice drinks, sports drinks, waters, teas and coffees, to retailers or to distributors, wholesalers and bottling partners who distribute them to retailers. In addition, in the United States, we manufacture fountain syrups and sell them to fountain retailers such as restaurants and convenience stores who use the fountain syrups to produce beverages for immediate consumption, or to authorized fountain wholesalers or bottling partners who resell the fountain syrups to fountain retailers. For these consolidated finished product operations, we recognize the associated concentrate sales volume at the time the unit case or unit case equivalent is sold to the customer. Our concentrate operations typically generate net operating revenues by selling concentrates and syrups to authorized bottling operations. For these concentrate operations, we recognize concentrate revenue and concentrate sales volume when we sell concentrate and

42

syrups to the authorized unconsolidated bottling operations, and we typically report unit case volume when finished products manufactured from the concentrates and syrups are sold to the customer. When we analyze our net operating revenues we generally consider the following four factors: (1) volume growth (concentrate sales volume or unit case volume, as applicable); (2) acquisitions and divestitures (including structural changes defined below), as applicable; (3) changes in price, product and geographic mix; and (4) foreign currency fluctuations. 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 bottling operations in Zambia. The impact of this acquisition has been included in acquisitions and divestitures in our analysis of net operating revenues on a consolidated basis as well as for the Bottling Investments operating segment.
In 2018, the Company 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 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. The Company also acquired a controlling interest in the franchise bottler in Oman. The impact of this acquisition has been included as a structural change in our analysis of net operating revenues on a consolidated basis as well as for the Bottling Investments operating segment.
In 2018, the Company acquired bottling operations in Zambia and Botswana. The impact of these acquisitions has been included in acquisitions and divestitures in our analysis of net operating revenues on a consolidated basis as well as for the Bottling Investments operating segment.
In 2018, the Company refranchised our Canadian and Latin American bottling operations. The impact of these refranchising activities has been included as a structural change in our analysis of net operating revenues on a consolidated basis as well as for our North America, Latin America and Bottling Investments operating segments. In addition, for non-Company-owned and licensed 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

43

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

44

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

													
 	Percent Change 2019 versus 2018	 	
 	Three Months Ended June 28, 2019	 	Six Months Ended June 28, 2019	 	
 	Unit Cases 1,2,3		 	Concentrate
Sales 4		 	Unit Cases 1,2,3		 	Concentrate
Sales 4		 	
Worldwide	3	%	 	4	%	 	2	%	 	3	%	 	
Europe, Middle East & Africa	2	%	 	3	%	 	2	%	 	4	 %	8  	
Latin America	1		 	3		6  	—		 	—		 	
North America	(1	)	 	—		7  	(1	)	 	(1	)	7  	
Asia Pacific	7		 	8		 	7		 	5		9  	
Global Ventures	5		 	5		 	3		 	1		 	
Bottling Investments	30		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) 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. 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 2019 had one less day when compared to the first quarter of 2018, and the fourth quarter of 2019 will have one additional day when compared to the fourth quarter of 2018.

5  	After considering the impact of structural changes, unit case volume for Bottling Investments grew 14 percent and 9 percent for the three and six months ended June 28, 2019, respectively.	
6 After considering the impact of structural changes, concentrate sales volume for Latin America grew 4 percent for the three months ended June 28, 2019.
7 After considering the impact of structural changes, concentrate sales volume for North America declined 1 percent and 2 percent for the three and six months ended June 28, 2019, respectively.
8 Due to uncertainties related to t he 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 was a result of this activity. We currently expect the concentrate inventory levels of these bottlers to return to optimal levels throughout 2019.

9  	After considering the impact of structural changes, concentrate sales volume for Asia Pacific grew 7 percent for the six months ended	
June 28, 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 2019 and 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 June 28, 2019 versus Three Months Ended June 29, 2018
Unit case volume in Europe, Middle East and Africa grew 2 percent, which included growth of 2 percent in sparkling soft drinks and 2 percent in water, enhanced water and sports drinks. Growth in sparkling soft drinks was primarily driven by Trademark Coca-Cola. The group reported increases in unit case volume in the Western Europe; Turkey, Caucasus & Central Asia; South & East Africa and West Africa business units. The increases in these business units were partially offset by a decrease in the Middle East & North Africa business unit.
In Latin America, unit case volume grew 1 percent, which included growth of 4 percent in water, enhanced water and sports drinks and 1 percent in sparkling soft drinks, partially offset by a 2 percent decline in juice, dairy and plant-based beverages.

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The group's volume reflected growth of 5 percent in the Brazil business unit, 1 percent in the Mexico business unit and 2 percent in the Latin Center business unit, partially offset by a 4 percent decline in the South Latin business unit.
Unit case volume in North America declined 1 percent, with even performance in sparkling soft drinks, a decline of 1 percent in water, enhanced water and sports drinks and in juice, dairy and plant-based beverages. The group's sparkling soft drinks volume reflected growth of 1 percent in Trademark Coca-Cola.
In Asia Pacific, unit case volume grew 7 percent, reflecting 11 percent growth in sparkling soft drinks and 6 percent growth in juice, dairy and plant-based beverages. Growth in sparkling soft drinks volume included 12 percent growth in Trademark Coca‑Cola, 9 percent growth in Trademark Fanta and 8 percent growth in Trademark Sprite. The group's volume reflects growth of 20 percent in the India & South West Asia business unit, 13 percent in the ASEAN business unit, 2 percent in the Greater China & Korea business unit and 4 percent in the South Pacific business unit. The growth in these business units was partially offset by a decline of 6 percent in the Japan business unit.
Unit case volume for Global Ventures grew 5 percent, which included growth of 13 percent in juice, dairy and plant-based beverages and growth in energy drinks, partially offset by a decline in tea.
Unit case volume for Bottling Investments grew 30 percent. This increase primarily reflects the impact of the recent acquisition of a controlling interest in the Philippine bottling operations as well as growth in India and South Africa.
Six Months Ended June 28, 2019 versus Six Months Ended June 29, 2018
Unit case volume in Europe, Middle East and Africa grew 2 percent, which included growth of 2 percent in sparkling soft drinks, 5 percent in water, enhanced water and sports drinks and 4 percent in tea and coffee. Growth in sparkling soft drinks was primarily driven by Trademark Coca-Cola. The group reported increases in unit case volume in the Western Europe; Central & Eastern Europe; Turkey, Caucasus & Central Asia; West Africa and South & East Africa business units. Growth in these business units was partially offset by a decline in the Middle East & North Africa business unit.
In Latin America, unit case volume was even, which included a 1 percent decline in sparkling soft drinks, offset by growth of 3 percent in water, enhanced water and sports drinks. The group reported an increase in unit case volume of 5 percent in the Brazil business unit and even performance in the Mexico business unit, which were offset by declines of 6 percent and 1 percent in the South Latin and Latin Center business units, respectively.
Unit case volume in North America declined 1 percent, reflecting a 1 percent decline in sparkling soft drinks. The group's sparkling soft drinks volume included even performance in Trademark Coca-Cola.
In Asia Pacific, unit case volume grew 7 percent, reflecting 9 percent growth in sparkling soft drinks, 5 percent growth in water, enhanced water and sports drinks and 4 percent growth in juice, dairy and plant-based beverages. Growth in sparkling soft drinks volume included 10 percent growth in Trademark Coca‑Cola, 9 percent growth in Trademark Fanta and 7 percent growth in Trademark Sprite. Volume within the water, enhanced water and sports drinks category cluster included growth of 7 percent in packaged water. The group's volume reflects growth of 15 percent in the India & South West Asia business unit, 14 percent in the ASEAN business unit, 5 percent in the Greater China & Korea business unit and even performance in the South Pacific business unit. The growth in these business units was partially offset by a decline of 3 percent in the Japan business unit.
Unit case volume for Global Ventures grew 3 percent, which included growth of 11 percent in juice, dairy and plant-based beverages and growth in energy drinks, partially offset by a decline in tea.
Unit case volume for Bottling Investments grew 23 percent. This increase primarily reflects the impact of the recent acquisition of a controlling interest in the Philippine bottling operations as well as growth in India and South Africa.
Concentrate Sales Volume
During the three months ended June 28, 2019 , worldwide unit case volume grew 3 percent and concentrate sales volume grew 4 percent compared to the three months ended June 29, 2018 . During the six months ended June 28, 2019 , worldwide unit case volume grew 2 percent and concentrate sales volume grew 3 percent compared to the six months ended June 29, 2018 . Concentrate sales volume growth is calculated based on the amount of concentrate sold during the reporting periods, which is impacted by the number of days. Conversely, unit case volume growth is calculated based on average daily sales, which is not impacted by the number of days in the reporting periods. The first quarter of 2019 had one less day when compared to the first quarter of 2018, which contributed to the differences between unit case volume and concentrate sales volume growth rates on a consolidated basis and for the individual operating segments during the six months ended June 28, 2019 .
The differences between unit case volume and concentrate sales volume growth rates during the three and six months ended June 28, 2019 were due to structural changes and the impact of unit case volume from certain joint ventures in which the Company has an equity interest but to which the Company does not sell concentrates, syrups, beverage bases, source waters or powders/minerals. In addition, the differences during the three months ended June 28, 2019 were impacted by the timing of concentrate shipments in Brazil and the differences during the six months ended June 28, 2019 were impacted by the timing of

46

concentrate shipments resulting from uncertainties due to Brexit. We expect these timing differences to reverse by the end of 2019.
Net Operating Revenues
Three Months Ended June 28, 2019 versus Three Months Ended June 29, 2018
During the three months ended June 28, 2019 , net operating revenues were $9,997 million compared to $9,421 million during the three months ended June 29, 2018 , an increase of $576 million , or 6 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 2018	
 	Volume 1		Acquisitions & Divestitures	Price, Product & Geographic Mix		Currency Fluctuations		Total		
Consolidated	4	%	6	%	2	%	(6	)%	6	 %	
Europe, Middle East & Africa	3	%	3	%	1	%	(10	)%	(4	)%	
Latin America	4		(1	)	5		(11	)	(3	)	
North America	(1	)	—		4		—		3		
Asia Pacific	8		—		(3	)	(3	)	2		
Global Ventures	5		218		(3	)	(19	)	201		
Bottling Investments	14		(1	)	3		(7	)	9		
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) 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.
Refer to the heading "Beverage Volume" above for additional information related to changes in our unit case and concentrate sales volumes.
"Acquisitions and divestitures" refers to acquisitions and divestitures of brands and businesses, some of which the Company considers to be structural changes. Refer to the heading "Structural Changes, Acquired Brands and Newly Licensed Brands" above for additional information related to the structural changes.
"Price, product and geographic mix" refers to the change in net operating revenues caused by factors such as price changes, the mix of products and packages sold, and the mix of channels and geographic territories where the sales occurred.
Price, product and geographic mix had a 2 percent favorable impact on our consolidated net operating revenues. Price, product and geographic mix was impacted by a variety of factors and events including, but not limited to, the following:

•	Europe, Middle East and Africa — favorable price mix across most markets, partially offset by unfavorable geographic mix;	

•	Latin America — favorable price mix in the Mexico and Brazil business units and the impact of inflationary environments in certain markets;	

•	North America — favorable pricing initiatives;	

•	Asia Pacific — unfavorable geographic mix;	

•	Global Ventures — unfavorable product mix; and	

•	Bottling Investments — favorable price, product and package mix in certain bottling operations.	
Fluctuations in foreign currency exchange rates decreased our consolidated net operating revenues by 6 percent. This unfavorable impact was primarily due to a stronger U.S. dollar compared to certain foreign currencies, including the euro, British pound sterling, Japanese yen, Mexican peso, Brazilian real, South African rand and Australian dollar, which had an unfavorable impact on all of our operating segments, except for North America. Refer to the heading "Liquidity, Capital Resources and Financial Position — Foreign Exchange" below.

47

Six Months Ended June 28, 2019 versus Six Months Ended June 29, 2018
During the six months ended June 28, 2019 , net operating revenues were $18,691 million , compared to $17,719 million during the six months ended June 29, 2018 , an increase of $972 million , or 5 percent.
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 2018	
 	Volume 1		Acquisitions & Divestitures	Price, Product & Geographic Mix		Currency Fluctuations		Total		
Consolidated	3	%	6	%	3	%	(6	)%	5	%	
Europe, Middle East & Africa	4	%	3	%	5	%	(11	)%	—	%	
Latin America	—		—		7		(13	)	(6	)	
North America	(2	)	—		4		—		2		
Asia Pacific	7		(1	)	(2	)	(3	)	—		
Global Ventures	1		220		—		(20	)	201		
Bottling Investments	9		(2	)	3		(8	)	3		
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) 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.
Refer to the heading "Beverage Volume" above for additional information related to changes in our unit case and concentrate sales volumes.
Price, product and geographic mix had a 3 percent favorable impact on our consolidated net operating revenues. Price, product and geographic mix was impacted by a variety of factors and events including, but not limited to, the following:

•	Europe, Middle East and Africa — favorable price mix across most markets and the timing of concentrate shipments as a result of certain bottlers increasing their concentrate inventories due to uncertainties related to Brexit;	

•	Latin America — favorable price mix in the Mexico and Brazil business units and the impact of inflationary environments in certain markets;	

•	North America — favorable pricing initiatives;	

•	Asia Pacific — unfavorable geographic mix; and	

•	Bottling Investments — favorable price, product and package mix in certain bottling operations, partially offset by unfavorable geographic mix.	
We estimate that net operating revenues recognized on incremental concentrate shipments related to Brexit were approximately $100 million during the six months ended June 28, 2019.
Fluctuations in foreign currency exchange rates decreased our consolidated net operating revenues by 6 percent. This unfavorable impact 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. Refer to the heading "Liquidity, Capital Resources and Financial Position — Foreign Exchange" below.
Net operating revenue growth rates are impacted by sales volume; acquisitions and divestitures; price, product and geographic mix; and foreign currency fluctuations. The size and timing of acquisitions and divestitures are not consistent from period to period. The Company currently expects acquisitions and divestitures to have a favorable impact of 7 percent on 2019 full year net operating revenues. Based on current spot rates and our hedging coverage in place, we expect currencies will have an unfavorable impact on net operating revenues through the end of the year.

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Gross Profit Margin
Our gross profit margin decreased to 60.8 percent for the three months ended June 28, 2019 , compared to 62.4 percent for the three months ended June 29, 2018 . Our gross profit margin decreased to 61.0 percent for the six months ended June 28, 2019, compared to 62.6 percent for the six months ended June 29, 2018. These decreases were primarily due to 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. 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 Ended	 	Six Months Ended	
 	June 28,
2019		June 29,
2018		 	June 28,
2019		June 29,
2018		
Stock-based compensation expense	$	48		$	49		 	$	88		$	121		
Advertising expenses	1,165		1,181		 	2,118		2,167		
Selling and distribution expenses	713		643		 	1,388		1,235		
Other operating expenses	1,070		1,014		 	2,169		2,103		
Selling, general and administrative expenses	$	2,996		$	2,887		 	$	5,763		$	5,626		
During the three and six months ended June 28, 2019 , selling, general and administrative expenses increased $109 million, or 4 percent, and $137 million, or 2 percent, respectively, versus the prior year comparable periods. These increases were primarily the result of the impact of structural changes, partially offset by a foreign currency exchange rate impact of 5 percent.
During the three and six months ended June 28, 2019 , foreign currency exchange rate fluctuations decreased advertising expenses by 5 percent.
The increase in selling and distribution expenses during the three and six months ended June 28, 2019 was primarily due to the impact of structural changes, partially offset by the impact of foreign currency exchange rate fluctuations.
The increase in other operating expenses during the three and six months ended June 28, 2019 was primarily due to the impact of structural changes, partially offset by savings from our productivity initiatives.
As of June 28, 2019 , we had $343 million of total unrecognized compensation cost related to nonvested stock-based compensation arrangements granted under our plans, which we expect to recognize over a weighted-average period of 2.4 years as stock-based compensation expense. This expected cost does not include the impact of any future stock-based compensation awards.
Other Operating Charges
Other operating charges incurred by operating segment and Corporate were as follows (in millions):

														
 	Three Months Ended	 	Six Months Ended	
 	June 28,
2019		June 29,
2018		 	June 28,
2019		June 29,
2018		
Europe, Middle East & Africa	$	—		$	—		 	$	1		$	2		
Latin America	—		1		 	—		3		
North America	13		47		 	30		99		
Asia Pacific	—		1		 	—		1		
Global Ventures	—		—		 	—		—		
Bottling Investments	30		106		 	43		547		
Corporate	49		70		 	145		109		
Total	$	92		$	225		 	$	219		$	761		

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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 $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 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 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 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  three months ended   June 29, 2018 , the Company recorded other operating charges of  $225 million . These charges primarily consisted of  $111 million  related to the Company's productivity and reinvestment program and $60 million  of CCR asset impairments. In addition, other operating charges included  $34 million  related to costs incurred to refranchise certain of our North America bottling operations. Other operating charges also included  $22 million related to tax litigation expense. Refer to Note 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.
During the  six months ended   June 29, 2018 , the Company recorded other operating charges of  $761 million . These charges primarily consisted of  $450 million  of CCR asset impairments and  $206 million  related to the Company's productivity and reinvestment program. In addition, other operating charges included  $79 million  related to costs incurred to refranchise certain of our North America bottling operations. Other operating charges also included  $27 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.

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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 Ended	 	Six Months Ended	
 	June 28,
2019		June 29,
2018		 	June 28,
2019		June 29,
2018		
Europe, Middle East & Africa	34.7	%	39.5	%	 	37.2	%	42.6	%	
Latin America	19.7		21.4		 	20.0		24.7		
North America	23.8		23.4		 	23.9		24.4		
Asia Pacific	24.5		25.4		 	23.5		26.8		
Global Ventures	2.4		1.4		 	2.6		1.4		
Bottling Investments	4.0		(0.6	)	 	4.0		(7.2	)	
Corporate	(9.1	)	(10.5	)	 	(11.2	)	(12.7	)	
Total	100.0	%	100.0	%	 	100.0	%	100.0	%	
Information about our operating margin on a consolidated basis and by operating segment and Corporate is as follows:

										
 	Three Months Ended	 	Six Months Ended	
 	June 28,
2019		June 29,
2018		 	June 28,
2019		June 29,
2018		
Consolidated	29.9	%	29.4	%	 	29.0	%	26.6	%	
Europe, Middle East & Africa	57.5	%	58.0	%	 	58.6	%	58.7	%	
Latin America	58.6		58.6		 	57.1		58.5		
North America	22.5		21.5		 	22.2		20.5		
Asia Pacific	54.1		50.3		 	52.8		50.5		
Global Ventures	11.5		17.7		 	11.4		16.4		
Bottling Investments	5.9		(0.9	)	 	5.7		(9.2	)	
Corporate	*		*		 	*		*		
* Calculation is not meaningful.
Three Months Ended June 28, 2019 versus Three Months Ended June 29, 2018
During the three months ended June 28, 2019 , operating income was $2,988 million , compared to $2,766 million during the three months ended June 29, 2018 , an increase of $222 million, or 8 percent. Operating income for the three months ended June 28, 2019 was favorably impacted by the timing of concentrate shipments, price mix, lower operating expenses as a result of productivity initiatives, lower other operating charges and the impact of acquisitions and divestitures. These favorable impacts were partially offset by the unfavorable impact of foreign currency exchange rate fluctuations.
During the three months ended June 28, 2019 , fluctuations in foreign currency exchange rates unfavorably impacted consolidated operating income by 10 percent due to a stronger U.S. dollar compared to certain foreign currencies, including the euro, British pound sterling, Japanese yen, Mexican peso, Brazilian real, South African rand and Australian dollar, which had an unfavorable impact on all of our operating segments, except for North America. Refer to the heading "Liquidity, Capital Resources and Financial Position — Foreign Exchange" below.
The Company's Europe, Middle East and Africa segment reported operating income of $1,038 million and $1,093 million for the three months ended June 28, 2019 and June 29, 2018 , respectively. The decrease in operating income was driven by an unfavorable foreign currency exchange rate impact of 14 percent, partially offset by concentrate sales volume growth of 3 percent and favorable price mix.
Latin America reported operating income of $588 million and $593 million for the three months ended June 28, 2019 and June 29, 2018 , respectively. The decrease in operating income was driven by an unfavorable foreign currency exchange rate impact of 13 percent, partially offset by concentrate sales volume growth of 4 percent and favorable price, product and geographic mix.
Operating income for North America for the three months ended June 28, 2019 and June 29, 2018 was $711 million and $648 million , respectively. The increase in operating income was primarily driven by favorable price mix and lower other operating charges.

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Asia Pacific's operating income for the three months ended June 28, 2019 and June 29, 2018 was $731 million and $703 million , respectively. The increase in operating income for the segment reflects concentrate sales volume growth of 8 percent, partially offset by unfavorable geographic mix and an unfavorable foreign currency exchange rate impact of 3 percent.
Global Ventures operating income for the three months ended June 28, 2019 and June 29, 2018 was $73 million and $37 million , respectively. Operating income for the segment was favorably impacted by the acquisition of Costa, partially offset an unfavorable foreign currency exchange rate impact of 4 percent.
Operating income for our Bottling Investments segment for the three months ended June 28, 2019 was $119 million compared to an operating loss of $17 million for the three months ended June 29, 2018 . Operating income in 2019 was impacted by lower other operating charges, strong performance in India and South Africa, and the favorable impact of the acquisition of the Philippine bottling operations.
Corporate's operating loss for the three months ended June 28, 2019 and June 29, 2018 was $272 million and $291 million , respectively. Operating loss in 2019 was favorably impacted by lower other operating charges and savings from our productivity initiatives.
Based on current spot rates and our hedging coverage in place, we expect currencies will have an unfavorable impact on operating income through the end of the year.
Six Months Ended June 28, 2019 versus Six Months Ended June 29, 2018
During the six months ended June 28, 2019 , operating income was $5,423 million , compared to $4,713 million during the six months ended June 29, 2018 , an increase of $710 million, or 15 percent. Operating income for the six months ended June 28, 2019 was favorably impacted by concentrate sales volume growth of 3 percent, favorable price, product and geographic mix, lower other operating charges and a reduction in operating expenses resulting from productivity initiatives. These favorable impacts were partially offset by the unfavorable impact of foreign currency exchange rate fluctuations.
During the six months ended June 28, 2019 , fluctuations in foreign currency exchange rates unfavorably impacted consolidated operating income by 11 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. Refer to the heading "Liquidity, Capital Resources and Financial Position — Foreign Exchange" below.
The Company's Europe, Middle East and Africa segment reported operating income of $2,016 million and $2,007 million for the six months ended June 28, 2019 and June 29, 2018 , respectively. Operating income for the segment reflects concentrate sales volume growth of 4 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, partially offset by an unfavorable foreign currency exchange rate impact of 14 percent.
Latin America reported operating income of $1,084 million and $1,164 million for the six months ended June 28, 2019 and June 29, 2018 , respectively. The decrease in operating income was driven by an unfavorable foreign currency exchange rate impact of 16 percent, partially offset by favorable price mix.
Operating income for North America for the six months ended June 28, 2019 and June 29, 2018 was $1,297 million and $1,151 million , respectively. The increase in operating income was primarily driven by favorable price mix, lower other operating charges and lower operating expenses as a result of productivity initiatives. These favorable impacts were partially offset by a decline in concentrate sale volume of 1 percent.
Asia Pacific's operating income for the six months ended June 28, 2019 and June 29, 2018 was $1,273 million and $1,265 million , respectively. The increase in operating income was driven by concentrate sales volume growth of 5 percent, partially offset by unfavorable geographic mix and an unfavorable foreign currency exchange rate impact of 3 percent.
Global Ventures' operating income for the six months ended June 28, 2019 and June 29, 2018 was $139 million and $66 million , respectively. Operating income for the segment was favorably impacted by the acquisition of Costa, partially offset by an unfavorable foreign currency exchange rate impact of 6 percent.
Operating income for our Bottling Investments segment for the six months ended June 28, 2019 was $219 million compared to an operating loss of $342 million for the six months ended June 29, 2018 . Operating income in 2019 was impacted by lower other operating charges, strong performance in India and the favorable impact of the acquisition of the Philippine bottling operations.
Corporate's operating loss for the six months ended June 28, 2019 and June 29, 2018 was $605 million and $598 million , respectively. Operating loss in 2019 was unfavorably impacted by higher other operating charges, partially offset by savings from our productivity initiatives.

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Based on current spot rates and our hedging coverage in place, we expect currencies will have an unfavorable impact on operating income through the end of the year.        
Interest Income
During the three months ended June 28, 2019 , interest income was $142 million , compared to $173 million during the three months ended June 29, 2018 , a decrease of $31 million, or 18 percent. During the six months ended June 28, 2019 , interest income was $275 million , compared to $339 million during the six months ended June 29, 2018 , a decrease of $64 million, or 19 percent. These decreases were primarily driven by lower investment balances due to liquidating a portion of our short-term investments in connection with the acquisition of Costa , partially offset by higher cash balances in certain of our international locations. Refer to  Note 2  of Notes to Condensed Consolidated Financial Statements for additional information.
Interest Expense
During the three months ended June 28, 2019 , interest expense was $236 million , compared to $247 million during the three months ended June 29, 2018 , a decrease of $11 million, or 4 percent. During the six months ended June 28, 2019 , interest expense was $481 million , compared to $483 million during the six months ended June 29, 2018, a decrease of $2 million. These decreases were primarily due to maturities of long-term debt with higher interest rates and the impact of prior year hedge accounting activities, partially offset by the impact of higher short-term U.S. interest rates.
Equity Income (Loss) — Net
Three Months Ended June 28, 2019 versus Three Months Ended June 29, 2018
During the three months ended June 28, 2019 , equity income was $329 million , compared to equity income of $324 million during the three months ended June 29, 2018 , an increase of $5 million, or 2 percent. This increase reflects more favorable operating results reported by several of our equity method investees, partially offset by the impacts of 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") and the acquisition of the Philippine bottling operations, which was previously accounted for under the equity method, as well as the unfavorable impact of foreign currency exchange rate fluctuations. In addition, the Company recorded net charges of $26 million and $33 million in the line item equity income (loss) — net during the three months ended June 28, 2019 and June 29, 2018 , respectively. These amounts represent the Company's proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees.
Six Months Ended June 28, 2019 versus Six Months Ended June 29, 2018
During the six months ended June 28, 2019 , equity income was $462 million , compared to equity income of $465 million during the six months ended June 29, 2018 , a decrease of $3 million, or 1 percent. This decrease reflects, among other things, the impacts of the sale of our equity ownership interest in Lindley, the sale of a portion of our equity ownership interest in Andina, and the acquisition of the Philippine bottling operations, which was previously accounted for under the equity method, as well as the unfavorable impact of foreign currency exchange rate fluctuations. In addition, the Company recorded net charges of $68 million and $84 million in the line item equity income (loss) — net during the six months ended June 28, 2019 and June 29, 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 June 28, 2019 versus Three Months Ended June 29, 2018
Other income (loss) — net includes, among other things, the impact of foreign currency exchange gains and losses; dividend income; rental income; gains and losses related to the disposal of property, plant and equipment; gains and losses related to business combinations and disposals; non-service cost components of net periodic benefit cost for pension and postretirement benefit plans; other benefit plan charges and credits; realized and unrealized gains and losses on equity securities and trading debt securities; and realized gains and losses on available-for-sale debt securities. 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   June 28, 2019 , other income (loss) — net was a loss of $174 million . 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 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. Other income (loss) — net also included income of $26 million related to the non-service cost components of net periodic benefit cost and $29 million of dividend

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income, partially offset by net foreign currency exchange losses of $39 million. None of the other items included in other income (loss) — net during the three months ended June 28, 2019 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 16  of Notes to Condensed Consolidated Financial Statements for information on how the Company determined the impairment charge. Refer to Note 17 of Notes to Condensed Consolidated Financial Statements for the impact these items had on our operating segments and Corporate.
During the  three months ended   June 29, 2018 , other income (loss) — net was a loss of  $74 million . The Company recorded a net loss of $86 million related to pension settlements and net charges of $102 million due to the refranchising of certain bottling territories in North America. The Company also recorded an other-than-temporary impairment charge of $52 million related to one of our equity method investees. These charges were partially offset by a net gain of $36 million related to the refranchising of our Latin American bottling operations and a net gain of $36 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities. Other income (loss) — net also included income of $58 million related to the non-service cost components of net periodic benefit cost and $28 million of dividend income, partially offset by net foreign currency exchange losses of $7 million. None of the other items included in other income (loss) — net during the three months ended June 29, 2018 was individually significant. Refer to Note 1 and Note 4 of Notes to Condensed Consolidated Financial Statements for additional information on equity and debt securities. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information on refranchising activities. Refer to Note 16  of Notes to Condensed Consolidated Financial Statements for information on how the Company determined the impairment charge. Refer to Note 17 of Notes to Condensed Consolidated Financial Statements for the impact these items had on our operating segments.
Six Months Ended June 28, 2019 versus Six Months Ended June 29, 2018
During the  six months ended   June 28, 2019 , other income (loss) — net was a loss of $405 million . During the six months ended June 28, 2019 , the Company recognized other-than-temporary impairment charges of $286 million related to CCBJHI, an equity method investee, $57 million related to one of our equity method investees in North America, and $49 million related to one of our other equity method investees. The Company also recorded an adjustment to reduce the carrying amount of CCBA's fixed assets and definite-lived intangible assets by $160 million and recognized a $121 million loss in conjunction with our acquisition of the remaining equity ownership interest in CHI. Additionally, the Company recognized net charges of $4 million due to the refranchising of certain bottling territories in North America and charges of $4 million primarily related to payments made to convert the bottling agreements for certain North America bottling partners' territories to a single form of comprehensive beverage agreement ("CBA") with additional requirements. These charges were partially offset by a net gain of $159 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities and a gain of $39 million related to the sale of a portion of our equity ownership interest in Andina. Other income (loss) — net also included income of $51 million related to the non-service cost components of net periodic benefit cost and $40 million of dividend income, partially offset by net foreign currency exchange losses of $61 million. None of the other items included in other income (loss) — net during the six months ended 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 16  of Notes to Condensed Consolidated Financial Statements for 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 17 of Notes to Condensed Consolidated Financial Statements for the impact these items had on our operating segments and Corporate.
During the  six months ended   June 29, 2018 , other income (loss) — net was a loss of $147 million . During the six months ended June 29, 2018 , the Company recorded charges of $86 million related to pension settlements and net charges of $104 million due to the refranchising of certain bottling territories in North America. The Company also recorded an other-than-temporary impairment charge of $52 million related to one of our equity method investees and a net loss of $49 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities. Additionally, the Company recognized a net loss of $33 million primarily related to the reversal of the cumulative translation adjustments resulting from the substantial liquidation of the Company's former Russian juice operations and charges of $21 million primarily related to payments made to convert the bottling agreements for certain North America bottling partners' territories to a single form of CBA with additional requirements. These charges were partially offset by a net gain of $36 million related to the refranchising of our Latin American bottling operations. Other income (loss) — net also included income of $117 million related to the non-service cost components of net periodic benefit cost and $46 million of dividend income, partially offset by net foreign currency exchange losses of $40 million. None of the other items included in other income (loss) — net during the six months ended June 28, 2019 was individually significant. Refer to Note 1 and Note 4 of Notes to Condensed Consolidated Financial Statements for additional information on equity and debt securities. Refer to

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Note 2 of Notes to Condensed Consolidated Financial Statements for additional information on refranchising activities and North America conversion payments. Refer to Note 16 of Notes to Condensed Consolidated Financial Statements for the impact these items had on our operating segments.
Income Taxes
The Company recorded income taxes of $421 million ( 13.8 percent effective tax rate) and $611 million ( 20.7 percent effective tax rate) during the three months ended June 28, 2019 and June 29, 2018 , respectively. The Company recorded income taxes of $943 million ( 17.9 percent effective tax rate) and $1,156 million ( 23.6 percent effective tax rate) during the six months ended June 28, 2019 and June 29, 2018 , respectively.
The Company's effective tax rates for the three and six months ended June 28, 2019 and June 29, 2018 vary from the statutory U.S. federal income tax rate 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 of accounting, both of which are generally taxed at rates lower than the statutory U.S. rate.
The Company's effective tax rates for the three and six months ended June 28, 2019 included $199 million of tax benefit recorded as a result of CCBA no longer qualifying as a discontinued operation.
The Company's effective tax rates for the three and six months ended June 29, 2018 included $42 million of tax benefit and $134 million of tax expense, respectively, to adjust our provisional tax estimate recorded as of December 31, 2017, related to the Tax Cuts and Jobs Act of 2017 (the "Tax Reform Act") signed into law on December 22, 2017.
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. Refer to Note 9 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 2019 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 one of our fundamental financial strengths. Refer to the heading "Cash Flows from Operating Activities" below. The near-term outlook for our business remains strong, and we expect to generate substantial cash flows from operations in 2019. As a result of our expected cash flows from operations, we have significant flexibility to meet our financial commitments. 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 in the future. Our debt financing includes the use of an extensive commercial paper program as part of our overall cash management strategy. The Company reviews its optimal mix of short-term and long-term debt regularly and may replace certain amounts of commercial paper, short-term debt and current maturities of long-term debt with new issuances of long-term debt in the future. The Company's cash, cash equivalents, short-term investments and marketable securities totaled $13.4 billion as of June 28, 2019 . In addition to these funds, our commercial paper program and our ability to issue long-term debt, we had $8,600 million in lines of credit for general corporate purposes as of June 28, 2019 . These backup lines of credit expire at various times from 2019 through 2022.
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.
Cash Flows from Operating Activities
Net cash provided by operating activities for the six months ended June 28, 2019 and June 29, 2018 was $ 4,501 million and $ 2,686 million , respectively, an increase of $1,815 million , or 68 percent. This increase was primarily driven by operating income growth, the acquisition of Costa in January 2019, the efficient management of working capital and the timing of tax payments, partially offset by the impact of refranchising bottling operations and the unfavorable impact of foreign currency exchange rate fluctuations.

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Cash Flows from Investing Activities
Net cash used in investing activities for the six months ended June 28, 2019 was $5,362 million , compared to net cash provided by investing activities of $2,254 million during the prior year comparable period.
Purchases of Investments and Proceeds from Disposals of Investments
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 $460 million . During the six months ended June 29, 2018 , purchases of investments were $ 4,833 million and proceeds from disposals of investments were $ 7,621 million , resulting in a net cash inflow of $2,788 million . This activity represents the purchases of and proceeds related to our short-term investments that were made as part of the Company's overall cash management strategy as well as our 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 six months ended June 28, 2019 , the Company's acquisitions of businesses, equity method investments and nonmarketable securities totaled $5,353 million , which primarily related to the acquisitions of Costa and the remaining interest in CHI. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information.
During the six months ended June 29, 2018 , the Company's acquisitions of businesses, equity method investments and nonmarketable securities totaled $218 million , which primarily related to the acquisition of additional interests in the Company’s franchise bottlers in the United Arab Emirates and in Oman, both of which were equity method investees. As a result of the additional interest in the Oman bottler, we obtained a controlling interest, resulting in its consolidation. 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 six months ended June 28, 2019 , proceeds from disposals of businesses, equity method investments and nonmarketable securities were $265 million , which primarily related to the proceeds from the sale of a portion of our equity ownership interest in Andina.
During the six months ended June 29, 2018 , proceeds from disposals of businesses, equity method investments and nonmarketable securities were $304 million , which related to 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 net of disposals for the six months ended June 28, 2019 and June 29, 2018 were $724 million and $626 million , respectively.
The Company currently expects our 2019 full year capital expenditures to be approximately $2.4 billion as we continue to make investments to enable growth in our business and further enhance our operational effectiveness.
Cash Flows from Financing Activities
Our financing activities include net borrowings, issuances of stock, share repurchases and dividends. Net cash used in financing activities during the six months ended June 28, 2019 and June 29, 2018 was $1,432 million and $2,835 million , respectively, a decrease of $1,403 million .
Debt Financing
Issuances and payments of debt included both short-term and long-term financing activities. During the six months ended June 28, 2019 , the Company had issuances of debt of $ 14,518 million , which included $10,596 million of net issuances related to commercial paper and short-term debt with maturities greater than 90 days, and long-term debt issuances of $3,922 million, net of related discounts and issuance costs.
The Company made payments of debt of $ 14,278 million during the six months ended June 28, 2019 , which included $8,470 million of payments of commercial paper and short-term debt with maturities greater than 90 days, $3,104 million of payments of commercial paper and short-term debt with maturities less than 90 days, and payments of long-term debt of $2,704 million.
During the six months ended June 28, 2019 , the Company issued euro-denominated debt totaling €3,500 million . The carrying value of this debt as of June 28, 2019 was $3,956 million . The general terms of the notes issued are as follows:

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

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

56

		
•	€1,000 million total principal amount of notes due 2026, at a fixed interest rate of 0.75 percent ; and	

•	€750 million total principal amount of notes due 2031, at a fixed interest rate of 1.25 percent .	
During the six months ended June 28, 2019 , the Company retired upon maturity $1,000 million total principal amount of notes due May 30, 2019, at a fixed interest rate of 1.375 percent and retired upon maturity €1,500 million total principal amount of notes due March 8, 2019, at a variable interest rate equal to the three month EURIBOR plus 0.25 percent .
As of June 28, 2019 , the carrying value of the Company's long-term debt included $199 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.
Issuances of Stock
During the six months ended June 28, 2019 , the Company received cash proceeds from issuances of stock of $ 602 million , an increase of $2 million when compared to cash proceeds from issuances of stock of $600 million during the six months ended June 29, 2018 .
Share Repurchases
During the six months ended June 28, 2019 , the Company repurchased 13.7 million shares of 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 $ 689 million during the six months ended June 28, 2019 . The total cash outflow for treasury stock during the first six months of 2019 includes treasury stock that was purchased and settled during the six months ended June 28, 2019 ; however, it does not include treasury stock that was purchased but did not settle during the six months ended June 28, 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 of stock and share repurchases during the six months ended June 28, 2019 resulted in a net cash outflow of $87 million . In 2019, we expect to repurchase shares to offset dilution resulting from employee stock-based compensation plans.
Dividends
During the six months ended June 28, 2019 and June 29, 2018 , the Company paid dividends of $1,709 million and $1,662 million , respectively. The Company paid the second quarter dividend in both 2019 and 2018 during the first week of July.
Our Board of Directors approved the Company's regular quarterly dividend of $0.40 per share at its July 2019 meeting. This dividend is payable on October 1, 2019 to shareowners of record as of September 16, 2019.
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 months ended June 28, 2019 by 10 percent. The impact of changes in foreign currency exchange rates decreased our operating income for the six months ended June 28, 2019 by 11 percent .
Based on current spot rates and our hedging coverage in place, we expect currencies will have an unfavorable impact on operating income and cash flows from operations through the end of the year.

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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):

													
 	June 28,
2019		December 31, 2018		Increase
(Decrease)		 	Percent
Change		
Cash and cash equivalents	$	6,731		$	9,077		$	(2,346	)	 	(26	)%	
Short-term investments	2,572		2,025		547		 	27		
Marketable securities	4,058		5,013		(955	)	 	(19	)	
Trade accounts receivable — net	4,888		3,685		1,203		 	33		
Inventories	3,453		3,071		382		 	12		
Prepaid expenses and other assets	2,658		2,059		599		 	29		
Equity method investments	19,418		19,412		6		 	—		
Other investments	894		867		27		 	3		
Other assets	5,596		4,148		1,448		 	35		
Deferred income tax assets	2,559		2,674		(115	)	 	(4	)	
Property, plant and equipment — net	10,254		9,598		656		 	7		
Trademarks with indefinite lives	9,313		6,682		2,631		 	39		
Bottlers' franchise rights with indefinite lives	110		51		59		 	116		
Goodwill	16,840		14,109		2,731		 	19		
Other intangible assets	652		745		(93	)	 	(12	)	
Total assets	$	89,996		$	83,216		$	6,780		 	8	 %	
Accounts payable and accrued expenses	$	12,819		$	9,533		$	3,286		 	34	 %	
Loans and notes payable	13,030		13,835		(805	)	 	(6	)	
Current maturities of long-term debt	2,749		5,003		(2,254	)	 	(45	)	
Accrued income taxes	784		411		373		 	91		
Long-term debt	29,296		25,376		3,920		 	15		
Other liabilities	8,336		7,646		690		 	9		
Deferred income tax liabilities	2,687		2,354		333		 	14		
Total liabilities	$	69,701		$	64,158		$	5,543		 	9	 %	
Net assets	$	20,295		$	19,058		$	1,237		1  	6	 %	
1 Includes an increase in net assets of $281 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 due to seasonality and 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 $1,330 million of operating lease right-of-use ("ROU") 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 second quarter 2019 dividend of approximately $1.7 billion, which was paid during the first week of July. Additionally, accounts payable and accrued expenses increased due to our adoption of ASC 842 and the acquisition of Costa , which required us to record $282 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 euro-denominated debt. Refer to the heading "Cash Flows from Financing Activities" above for additional information.	

•	Other liabilities increased as a result of our adoption of ASC 842 and the acquisition of Costa , which required us to record $1,071 million related to the noncurrent portion of operating lease liabilities.	

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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 .
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 2 percent of consolidated net income as of and for the quarter ended June 28, 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 June 28, 2019 .
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 June 28, 2019 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. The following updates and restates the description of the previously reported U.S. Federal Income Tax Dispute matter and describes a new environmental matter.
U.S. Federal Income Tax Dispute
On September 17, 2015, the Company received a Statutory Notice of Deficiency ("Notice") from the Internal Revenue Service ("IRS") for the tax years 2007 through 2009, after a five-year audit. In the Notice, the IRS claimed that the Company's United States taxable income should be increased by an amount that creates a potential additional federal income tax liability of approximately  $3.3 billion  for the period, plus interest. No penalties were asserted in the Notice. The disputed amounts largely relate to a transfer pricing matter involving the appropriate amount of taxable income the Company should report in the United States in connection with its licensing of intangible property to certain related foreign licensees regarding the manufacturing, distribution, sale, marketing and promotion of products in overseas markets.
During the 2007-2009 audit period, the Company followed the same transfer pricing methodology for these licenses that had consistently been followed since the methodology was agreed with the IRS in a 1996 closing agreement that applied back to 1987. The closing agreement provided prospective penalty protection 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 1996 closing agreement. The IRS designated the matter for litigation on October 15, 2015. To the extent the matter remains designated, the Company will be prevented from pursuing any administrative settlement at IRS Appeals or under the IRS Advance Pricing and Mutual Agreement Program.

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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 decision. In the interim, or subsequent to the court's decision, the IRS may propose similar adjustments for years subsequent to the 2007-2009 litigation period. While the Company continues to strongly disagree with the IRS' position, there is no assurance that the court will rule in the Company's favor, and it is possible that all or some portion of the adjustment proposed by the IRS Notice ultimately could be sustained. In that event, 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. The Company is cooperating with the EPA and is engaged in settlement discussions regarding the allegations in the NOV. The Company believes that any monetary sanctions that may be imposed on the Company will not be material to its business, financial condition or results of operations.
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 , which could materially affect our business, financial condition or future results. The 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.

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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 ended June 28, 2019 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
Purchased 1		Average
Price Paid
Per Share		Total Number
of Shares
Purchased as
Part of the
Publicly
Announced
Plans 2		Maximum
Number of
Shares That May
Yet Be
Purchased Under
the Publicly
Announced
Plans 3		
March 30, 2019 through April 26, 2019	2,984,973		$	46.80		2,986,993		170,337,162		
April 27, 2019 through May 24, 2019	2,006,851		48.40		2,001,841		168,335,321		
May 25, 2019 through June 28, 2019	1,252,885		51.47		—		168,335,321		
Total	6,244,709		$	48.25		4,988,834		 		
1 The total number of shares purchased includes: (1) shares purchased pursuant to the 2012 Plan described in footnote 2 below 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, we publicly announced that our Board of Directors had authorized a plan (the "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 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, we publicly announced that our Board of Directors had authorized a new plan (the "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.

		
EXHIBIT INDEX	
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	Certificate of Incorporation of the Company, including Amendment of Certificate of Incorporation, dated July 27, 2012 — incorporated herein by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 28, 2012.	

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3.2	By-Laws of the Company, as amended and restated through September 2, 2015 — incorporated herein by reference to Exhibit 3.2 of the Company's Current Report on Form 8-K filed on September 3, 2015.	
4.1	As 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.	
4.2	Amended and Restated Indenture, dated as of April 26, 1988, between the Company and Deutsche Bank Trust Company Americas, as successor to Bankers Trust Company, as trustee — incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on May 25, 2017.	
4.3	First Supplemental Indenture, dated as of February 24, 1992, to Amended and Restated Indenture, dated as of April 26, 1988, between the Company and Deutsche Bank Trust Company Americas, as successor to Bankers Trust Company, as trustee — incorporated herein by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed on May 25, 2017.	
4.4	Second Supplemental Indenture, dated as of November 1, 2007, to Amended and Restated Indenture, dated as of April 26, 1988, as amended, between the Company and Deutsche Bank Trust Company Americas, as successor to Bankers Trust Company, as trustee — incorporated herein by reference to Exhibit 4.3 of the Company's Current Report on Form 8-K filed on May 25, 2017.	
4.5	Form of Note for 3.150% Notes due November 15, 2020 — incorporated herein by reference to Exhibit 4.7 to the Company's Current Report on Form 8-K filed on November 18, 2010.	
4.6	Form of Note for 3.30% Notes due September 1, 2021 — incorporated herein by reference to Exhibit 4.14 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011.	
4.7	Form of Note for 2.500% Notes due 2023 — incorporated herein by reference to Exhibit 4.6 to the Company's Current Report on Form 8-K filed on March 5, 2013.	
4.8	Form of Note for 2.450% Notes due 2020 — incorporated herein by reference to Exhibit 4.7 to the Company's Current Report on Form 8-K filed on November 1, 2013.	
4.9	Form of Note for 3.200% Notes due 2023 — incorporated herein by reference to Exhibit 4.8 to the Company's Current Report on Form 8-K filed on November 1, 2013.	
4.10	Form of Note for 1.875% Notes due 2026 — incorporated herein by reference to Exhibit 4.4 to the Company's Registration Statement on Form 8-A filed on September 19, 2014.	
4.11	Form of Note for 1.125% Notes due 2022 — incorporated herein by reference to Exhibit 4.5 to the Company's Registration Statement on Form 8-A filed on September 19, 2014.	
4.12	Form of Note for Floating Rate Notes due 2019 — incorporated herein by reference to Exhibit 4.5 to the Company's Registration Statement on Form 8-A filed on March 6, 2015.	
4.13	Form of Note for 0.75% Notes due 2023 — incorporated herein by reference to Exhibit 4.6 to the Company's Registration Statement on Form 8-A filed on March 6, 2015.	
4.14	Form of Note for 1.125% Notes due 2027 — incorporated herein by reference to Exhibit 4.7 to the Company's Registration Statement on Form 8-A filed on March 6, 2015.	
4.15	Form of Note for 1.625% Notes due 2035 — incorporated herein by reference to Exhibit 4.8 to the Company's Registration Statement on Form 8-A filed on March 6, 2015.	
4.16	Form of Note for 1.875% Notes due 2020 — incorporated herein by reference to Exhibit 4.5 to the Company's Current Report on Form 8-K filed on October 27, 2015.	
4.17	Form of Note for 2.875% Notes due 2025 — incorporated herein by reference to Exhibit 4.6 to the Company's Current Report on Form 8-K filed on October 27, 2015.	
4.18	Form of Note for 1.375% Notes due 2019 — incorporated herein by reference to Exhibit 4.5 to the Company's Current Report on Form 8-K filed on May 31, 2016.	
4.19	Form of Note for 2.55% Notes due 2026 — incorporated herein by reference to Exhibit 4.6 to the Company's Current Report on Form 8-K filed on May 31, 2016.	
4.20	Form of Note for 1.550% Notes due 2021 — incorporated herein by reference to Exhibit 4.4 to the Company's Current Report on Form 8-K filed on September 1, 2016.	
4.21	Form of Note for 2.250% Notes due 2026 — incorporated herein by reference to Exhibit 4.5 to the Company's Current Report on Form 8-K filed on September 1, 2016.	
4.22	Form of Note for 1.100% Notes due 2036 — incorporated herein by reference to Exhibit 4.4 to the Company’s Registration Statement on Form 8-A filed on September 2, 2016.	
4.23	Form of Note for 0.000% Notes due 2021 — incorporated herein by reference to Exhibit 4.5 to the Company’s Registration Statement on Form 8-A filed on March 9, 2017.	
4.24	Form of Note for 0.500% Notes due 2024 — incorporated herein by reference to Exhibit 4.6 to the Company’s Registration Statement on Form 8-A filed on March 9, 2017.	

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4.25	Form of Note for 2.200% Notes due 2022 — incorporated herein by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K filed on May 25, 2017.	
4.26	Form of Note for 2.900% Notes due 2027 — incorporated herein by reference to Exhibit 4.5 to the Company’s Current Report on Form 8-K filed on May 25, 2017.	
4.27	Form of Note for Floating Rate Notes due 2021 — incorporated herein by reference to Exhibit 4.4 to the Company's Registration Statement on Form 8-A filed on March 8, 2019.	
4.28	Form of Note for 0.125% Notes due 2022 — incorporated herein by reference to Exhibit 4.5 to the Company's Registration Statement on Form 8-A filed on March 8, 2019.	
4.29	Form of Note for 0.750% Notes due 2026 — incorporated herein by reference to Exhibit 4.6 to the Company's Registration Statement on Form 8-A filed on March 8, 2019.	
4.30	Form of Note for 1.250% Notes due 2031 — incorporated herein by reference to Exhibit 4.7 to the Company's Registration Statement on Form 8-A filed on March 8, 2019.	
4.31	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 4.1 to Coca-Cola Refreshments USA, Inc.'s Current Report on Form 8-K dated July 30, 1991.	
4.32	First 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.	
4.33	Second Supplemental Indenture, dated as of June 22, 2017, to the Indenture, dated as of July 30, 1991, as amended, among Coca-Cola Refreshments USA, Inc., the Company and Deutsche Bank Trust Company Americas, as trustee — incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on June 23, 2017.	
4.34	Third Supplemental Indenture, dated as of July 5, 2017, to the Indenture, dated as of July 30, 1991, as amended, among Coca-Cola Refreshments USA, Inc., the Company and Deutsche Bank Trust Company Americas, as trustee — incorporated herein by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K filed on July 6, 2017.	
10.1	The Coca-Cola Company Directors' Plan, amended and restated on February 21, 2019, effective April 24, 2019.	
31.1	Rule 13a-14(a)/15d-14(a) Certification, executed by James Quincey, Chairman of the Board of Directors and Chief Executive Officer of The Coca-Cola Company.	
31.2	Rule 13a-14(a)/15d-14(a) Certification, executed by John Murphy, Executive Vice President and Chief Financial Officer of The Coca-Cola Company.	
32.1	Certifications required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. Section 1350), executed by James Quincey, Chairman of the Board of Directors and Chief Executive Officer of The Coca-Cola Company, and by John Murphy, Executive Vice President and Chief Financial Officer of The Coca-Cola Company.	
101	The following financial information from The Coca-Cola Company's Quarterly Report on Form 10-Q for the quarter ended June 28, 2019, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Income for the three and six months ended June 28, 2019 and June 29, 2018, (ii) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 28, 2019 and June 29, 2018, (iii) Condensed Consolidated Balance Sheets as of June 28, 2019 and December 31, 2018, (iv) Condensed Consolidated Statements of Cash Flows for the six months ended June 28, 2019 and June 29, 2018, and (v) Notes to Condensed Consolidated Financial Statements. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.	

63

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)	
 	 	 	
 	 	/s/ LARRY M. MARK	
Date:	July 25, 2019	Larry M. Mark
Vice President and Controller
(On behalf of the Registrant)	
 	 	 	
 	 	/s/ MARK RANDAZZA	
Date:	July 25, 2019	Mark Randazza
Vice President, Assistant Controller and Chief Accounting Officer
(Principal Accounting Officer)

64

Exhibit 10.1

THE COCA-COLA COMPANY DIRECTORS’ PLAN

The Coca-Cola Company Directors’ Plan (the “Plan”), dated December 13, 2012, effective January 1, 2013, is amended and restated on February 21, 2019, effective April 24, 2019 (“Effective Date”). The Plan sets forth the compensation for non-employee Directors of The Coca-Cola Company (the “Company”), and the deferred compensation provisions of the Plan are designed to provide non-employee Directors with an opportunity to defer certain compensation as a Director.

All compensation awarded to and/or deferred by non-employee Directors of the Company prior to the Effective Date shall be subject to the terms of the Compensation Plan for Non-Employee Directors of The Coca-Cola Company, as amended on December 13, 2007, The Coca-Cola Company Compensation and Deferred Compensation Plan for Non-Employee Directors, as adopted on February 19, 2009 effective January 1, 2013, The Coca-Cola Company Directors’ Plan, dated December 13, 2012 and effective January 1, 2013 or The Coca-Cola Company Deferred Compensation Plan for Non-Employee Directors as amended and restated effective April 1, 2006, as applicable (the “Prior Plans”).

ARTICLE I
DEFINITIONS

The following words and phrases as used herein shall have the meaning specified below, unless a different meaning is plainly required by the context.

“ AC Account ” shall mean an annual compensation account maintained under the Plan for a Participant in accordance with Article III.

“ Beneficiary ” shall mean the person, persons or trust designated in writing by the Participant to receive any benefits from the Plan due to the death of the Participant. If no Beneficiary is designated, the Beneficiary shall be the Participant’s spouse. If no Beneficiary is designated and the Participant has no current spouse, the Beneficiary shall be the Participant’s estate.

“ Board ” shall mean the Board of Directors of The Coca-Cola Company.

“ Calculation Date ” shall mean April 1 or, if April 1 is not a trading day, the trading day immediately preceding April 1.
“ Cash Payment ” shall mean the cash payment described in Section 3.2.
“ Change in Control ” shall mean a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14C under the Securities Exchange Act of 1934, as amended ("1934 Act"), as in effect on February 21, 2019, provided that such a change in control shall be deemed to have occurred at such time as (i) any "person" (as that term is used in Sections 13(d) and 14(d)(2) of

1

Exhibit 10.1

the 1934 Act), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the 1934 Act as in effect on February 21, 2019 directly or indirectly, of securities representing 20% or more of the combined voting power for election of directors of the then outstanding securities of the Company or any successor of the Company; (ii) during any period of two (2) consecutive years or less, individuals who at the beginning of such period constituted the Board of the Company cease, for any reason, to constitute at least a majority of the Board, unless the election or nomination for election of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period; (iii) the shareowners of the Company approve any merger or consolidation as a result of which the Stock (as defined below) shall be changed, converted or exchanged (other than a merger with a wholly owned subsidiary of the Company) or any liquidation of the Company or any sale or other disposition of 50% or more of the assets or earning power of the Company and such merger, consolidation, liquidation or sale is completed; or (iv) the shareowners of the Company approve any merger or consolidation to which the Company is a party as a result of which the persons who were shareowners of the Company immediately prior to the effective date of the merger or consolidation shall have beneficial ownership of less than 50% of the combined voting power for election of directors of the surviving corporation following the effective date of such merger or consolidation and such merger or consolidation is completed; provided, however, that no Change in Control shall be deemed to have occurred if, prior to such times as a Change in Control would otherwise be deemed to have occurred, the Board determines otherwise, and provided the Change in Control constitutes a change in control pursuant to Section 409A of the Code.
“ Code ” shall mean the Internal Revenue Code of 1986, as amended.
“ Committee ” shall mean the Committee on Directors and Corporate Governance of the Board of Directors of the Company.
“ Company ” shall mean The Coca-Cola Company.

“ Director ” shall mean a duly-appointed or elected member of the Board.

“ DC Account ” shall mean a deferred compensation account maintained under the Plan for a Participant in accordance with Article IV.

“ Effective Date ” shall mean April 24, 2019.

“ Majority-Owned Related Company ” shall mean a corporation(s) or other business organization(s) in which the Company owns, directly or indirectly, 50% or more of the voting stock or capital at the relevant time.

“ Participant ” shall mean a Director who is eligible for the Plan in accordance with Article II and/or a former Director for whom accounts are maintained under the Plan.

2

Exhibit 10.1

“ Payment Date ” shall mean the date that is the later of (i) January 15 of the year following the year in which service as a Director terminates or (ii) six months following the date on which service as a Director terminates. Where a Participant has elected to receive payment of the balance in the Participant’s DC Account in the form of installments in accordance with the terms of the Plan, the first installment payment shall be paid on the Payment Date and all other installment payments shall be paid annually on the anniversary date of the Payment Date.

“ Plan ” shall mean The Coca-Cola Company Directors’ Plan.

“ Share Unit ” shall mean a hypothetical share of Stock that is credited to a Participant’s AC Account or DC Account.

“ Stock ” shall mean the common stock of the Company.

“ Unforeseeable Emergency ” shall mean a severe unforeseeable financial hardship as defined in Section 409A of the Code and the regulations thereunder, including a severe financial hardship resulting from (i) an illness or accident of the Participant, the Participant’s spouse, the Participant’s designated Beneficiary, or the Participant’s dependent (as defined in Section 152 of the Code, without regard to section 152(b)(1), (b)(2), and (d)(1)(B)), (ii) the loss of the Participant’s property due to casualty, or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the Participant’s control.

“ Valuation Date ” shall mean the trading date immediately preceding the Payment Date.

ARTICLE II
ELIGIBILITY

2.1	Limitation to Non-Employee Directors . Only Directors who are not employed by the Company or a Majority-Owned Related Company shall be eligible for the Plan.	

2.2	Date of Eligibility . Directors who are on the Board as of April 24, 2019 shall be eligible to participate. Thereafter, a new Director shall be eligible as of the date he or she is appointed or elected to the Board.	

ARTICLE III
COMPENSATION

3.1	Accounts; Mandatory Annual Transfer . Each Participant shall have an AC Account administered in his or her name. Such AC Account shall be a bookkeeping entry only and no Stock or other assets shall be placed in the Participant’s name. On December 31 of each year, all Share Units credited to	

3

Exhibit 10.1

a Participant’s AC Account pursuant to Section 3.3 automatically shall be transferred to that Participant’s DC Account.

3.2	Cash Payment . Unless the Participant has elected to defer all or a portion of the Cash Payment into Share Units in accordance with Article IV of this Plan, (a) the Participant will be paid $50,000 annually for service on the Board (the “Director Payment”), payable in equal quarterly installments, and prorated for partial years of service as set forth in Section 3.4, as applicable (b) the Chair of each committee of the Board of Directors shall be paid an additional $20,000 annually for service as a committee Chair (the “Chair Payment”, payable in equal quarterly installments, and prorated for partial years of service as set forth in Section 3.4, as applicable; and (c) the Lead Independent Director of the Board of Directors shall be paid an additional $30,000 annually for service as Lead Independent Director (the “LID Payment”, and together with the Director Payment and the Chair Payment, the “Cash Payment”), payable in equal quarterly installments, and prorated for partial years of service as set forth in Section 3.4, as applicable. For the avoidance of doubt, in the event a Participant is a Chair of a committee and Lead Independent Director, such Participate shall receive a Chair Payment and a LID Payment.	

3.3	Crediting of Share Units . On the Calculation Date, each Participant’s AC Account shall be credited with Share Units, provided that any Participant that becomes eligible for the Plan after January 1 in a particular year, shall be credited Share Units in accordance with Section 3.4. The value of such Share Units for 2013 shall be $200,000 and may be adjusted in subsequent years by the Board of Directors (the “Dollar Amount”). The number of Share Units credited to each Participant shall be determined by dividing the Dollar Amount by the average of the high and low price of Stock on the New York Stock Exchange Composite Transactions listing on the Calculation Date.	

3.4	New Directors/Committee Chairs Appointed or Elected During the Year .	

(a)	With respect to the Director Payment, if a Participant becomes eligible for the Plan after January 1 in a particular year, the Director Payment shall be prorated for the number of regularly-scheduled Board meetings remaining in the year (which shall include the meeting at which the Director was appointed or elected, if such meeting is a regularly-scheduled meeting), as illustrated in the table below. Such Director Payment shall be payable in equal installments in accordance with the payment schedule set forth in Section 3.2.	

With respect to the Chair Payment or LID Payment, if a Participant becomes the Chair of a committee of the Board or Lead Independent Director after January 1, the Chair Payment or LID Payment, as applicable, shall be prorated for the number of regularly-scheduled

4

Exhibit 10.1

Board meetings remaining in the year (which shall include the meeting at which the Director was appointed Chair or Lead Independent Director, if such meeting is a regularly-scheduled meeting), as illustrated in the table below. For the avoidance of doubt, an outgoing committee Chair or Lead Independent Director shall receive a prorated Chair or LID fee for the number of regularly-scheduled meetings at which the Director served as Chair of such committee or Lead Independent Director.

	
		
Meeting at which Director is Appointed or Elected / Appointed Chair/Lead Independent Director	Percentage of applicable Cash Payment to be paid	
Meeting #1	100%	
Meeting #2	80%	
Meeting #3	60%	
Meeting #4	40%	
Meeting #5	20%	

(b)	If a Participant becomes eligible for the Plan after January 1 in a particular year, his or her AC Account shall be credited with Share Units equal to the number of Share Units calculated on the Calculation Date for the year pursuant to Section 3.3, prorated for the number of regularly-scheduled Board meetings remaining in the year (which shall include the meeting at which the Director was appointed or elected, if such meeting is a regularly-scheduled meeting). Such Share Units shall be posted to a new Participant’s AC Account as of the date such Participant becomes eligible for the Plan , provided that if such date is prior to the Calculation Date, then the Share Units shall be posted on the Calculation Date.	

For purposes of illustration, if there are five regularly-scheduled Board meetings, Share Units shall be prorated using the schedule below: 

		
Meeting at which Director is Elected	Percentage of Share Units credited	
Meeting #1	100%	
Meeting #2	80%	
Meeting #3	60%	
Meeting #4	40%	
Meeting #5	20%	

ARTICLE IV
DC ACCOUNTS; ELIGIBLE COMPENSATION; ELECTIONS TO DEFER

5

Exhibit 10.1

4.1	Establishment of DC Accounts . The Company shall establish a DC Account for each Participant. Such DC Account shall be a bookkeeping entry only and no Stock or other assets shall be placed in the Participant’s name. All eligible compensation, as described in Section 4.2, that a Participant elects to defer in accordance with this Article IV shall be credited to that Participant’s DC Account in the manner set forth in this Article IV. In addition, on December 31 of each year, all compensation credited to a Participant’s AC Account pursuant to Section 3.3 automatically shall be transferred to that Participant’s DC Account.	

4.2	Eligible Compensation . A Participant may elect to defer all or a specified percentage (from 10% - 100%) of the annual Cash Payment (including the Director Payment, the Chair Payment and/or the LID Payment) receivable by such Director under the Plan. No other compensation or expense reimbursement shall be eligible for voluntary deferral.	

4.3	Elections to Defer . Participants must elect to defer eligible Cash Payments under the following provisions. Elections shall be in writing on forms or via electronic format as determined by the Secretary of the Company. The election shall specify the applicable percentage to be deferred.	

(a)	Annual Cash Payments . If a Participant wishes to defer all or a portion of his or her annual Cash Payment, he or she must elect a percentage to defer, from 10% - 100%, no later than December 31 prior to the beginning of the year for which the Cash Payment is earned. This election is irrevocable for all amounts paid for the calendar year.	
		
(b)	New Directors . A new Director appointed or elected to the Board during the calendar year shall not be eligible to defer the Cash Payment that is payable through the end of that first calendar year of service.	

(c)	Duration of Elections . If an election is made to defer with respect to the annual Cash Payment, the election shall continue in effect until the end of the Participant’s service as a Director or until the end of the calendar year during which the Director gives the Company written notice of the discontinuance of the election. Such a notice of discontinuance shall operate prospectively from the first day of the calendar year following the giving of notice. An election with respect to the Cash Payment becomes irrevocable as of December 31 of the year prior to the year the Cash Payment is earned.	

4.4	Elections and Forms of Payment .	

(a)	Forms of Payment . All payments under the Plan shall be in cash. A Participant may elect to receive payments in a single lump sum or in a series of annual installments (not to exceed five). If a Participant fails to	

6

Exhibit 10.1

make an election in accordance with this Section 4.4, the balance in the Participant’s DC Account upon the Participant’s termination of service with the Company shall be paid in the form of a lump sum, unless otherwise provided in this Section 4.4. In the event of death or a Change in Control, all payments shall be made in the form of a lump sum payment.

(b)	Payment Distribution Election Under Prior Plans . All elections made under the Prior Plans regarding the form of payment distribution for compensation awarded to a Participant prior to the Effective Date cannot be changed with respect to such compensation. Any elections made under the Prior Plans also shall apply to all compensation awarded under the Plan, unless the Participant makes a new form of payment distribution election in accordance with Section 4.4(c).	

(c)	Payment Distribution Election Under the Plan . A Participant may make a different election for future compensation under the Plan. An individual who becomes a Director during the calendar year must make an initial election within 30 days of his or her appointment or election to the Board. Once a Participant makes an election under the Plan, it shall apply to all future compensation awarded to the Participant under the Plan unless a new election is made by December 31 of the year prior to the time the compensation is paid.	

4.5	Deferral of Cash Payments; Crediting of Share Units . If a Participant has elected to defer the Cash Payment (or any portion thereof) pursuant to Section 4.3, the amount elected shall be added to the Share Units awarded to such Participant pursuant to Section 3.3 on the Calculation Date and credited to the Participant’s DC Account. Such amount shall be converted on the Calculation Date to a number of Share Units equal to the number of shares of Stock that theoretically could have been purchased on such date with such amount, using the average share price on the New York Stock Exchange Composite Transactions listing on such date, or if such date is not a trading day, on the next trading day.	

ARTICLE V
ADJUSTMENTS TO ACCOUNTS
		
5.1	Hypothetical Dividends . As of each date on which dividends on the Stock are payable to shareowners of the Company, each Participant’s AC Account and DC Account shall be credited with the value of the dividends that would be payable on Share Units in such accounts if they were shares of Stock (not taking into account the record date). These hypothetical dividends shall be converted to Share Units using the average of the high and low price of Stock on the New York Stock Exchange Composite Transactions listing on the	

7

Exhibit 10.1

dividend payment date or if such date is not a trading day, on the trading day preceding the dividend payment date.

 5.2	Stock Split; Stock Dividend . Each Participant’s AC Account and DC Account shall be credited on the date of any stock split or stock dividend, with the number of Share Units necessary for an equitable adjustment.	

ARTICLE VI
PAYMENT OF PLAN ACCOUNTS

6.1	Permitted Payment Events . Payment of accounts under the Plan shall not be made except following death, disability, termination of service from the Board, or upon a Change in Control. Payments shall not be accelerated, except as permitted by Section 409A of the Code and the regulations thereunder.	

6.2	Payment of Account Balance . Upon a Participant’s separation of service as a Director of the Company, all Share Units in the Participant’s AC Account that have been earned for such year, as calculated pursuant to Section 6.4, shall be transferred to that Participant’s DC Account.	

(a)	Lump Sum Payment . Except in the case of death, the value of the Participant’s DC Account shall be paid on the Payment Date. In the event of a Participant’s death, the value of the Participant’s DC Account shall be paid to the Participant’s Beneficiary as soon as possible, but no later than 60 days following the date of death.	

(b)	Installment Payments Election . If the Participant has elected to receive payment of the Participant’s DC Account balance in the form of annual installments in accordance with Section 4.4, the amount of each such payment shall be computed as provided in this Section 6.2(b). The amount of the first payment shall be a fraction of the balance in the Participant’s DC Account as of December 31 of the year preceding such payment, the numerator of which is one and the denominator of which is the total number of installments elected. The amount of each subsequent payment shall be a fraction of the balance in the Participant’s DC Account as of December 31 of the year preceding each subsequent payment, the numerator of which is one and the denominator of which is the total number of installments elected minus the number of installments previously paid.	

6.3	Valuation of Account Balance . Except in the case of a Director’s separation of service from the Company due to death or a Change in Control, the balance in the Participant’s DC Account in Share Units shall be valued in an amount equal to the number of Share Units in the Participant’s DC Account multiplied	

8

Exhibit 10.1

by the average of the high and low market prices at which a share of Stock shall have been sold on the Valuation Date, as reported on the New York Stock Exchange Composite Transactions listing. In the event of separation due to death or a Director or a Change in Control, the value of the balance of Share Units in the Participant’s DC Account shall be calculated in the same manner as set forth above in this Section 6.3, except that the Valuation Date for such purposes shall be the date of death of the Director or the date of the Change in Control, as the case may be.

6.4	Separation During the Year; Proration of Annual Compensation . In the event of a Director’s separation of service from the Company during the calendar year, the quarterly Cash Payment shall be retained for any portion of a calendar quarter during which such Participant served as a Director.	

In the event of a Director’s separation of service from the Company during the calendar year, the Share Units attributable to each such period shall be prorated for the number of regularly-scheduled Board meetings that took place in the year prior to the separation from of service, as illustrated in the table below. Any Share Units that have been credited to the Participant’s AC Account due to dividends paid to shareowners of the Company during the Participant’s period of service during that year shall be added.

For purposes of illustration, if there are five regularly-scheduled Board meetings, Share Units shall be prorated using the schedule below: 

		
Meetings Prior to Director’s Separation	Percentage of Share Units Retained	
1 Meeting	20%	
2 Meetings	40%	
3 Meetings	60%	
4 Meetings	80%	
5 Meetings	100%	

6.5	Unforseeable Emergency . A Participant shall be permitted to elect a distribution from his or her DC Account prior to the date the DC Accounts were to be distributed, subject to the following restrictions:	

(a)	the election to take a distribution due to an Unforeseeable Emergency shall be made by requesting such a distribution in writing to the Committee, including the amount requested and a description of the need for the distribution;	

(b)	the Committee shall make a determination, in its sole discretion, that the requested distribution is on account of an Unforseeable Emergency; and	

9

Exhibit 10.1

		
(c)	the Unforseeable Emergency cannot be relieved (i) through reimbursement or compensation by insurance or otherwise, (ii) by liquidation of the Participant's assets, to the extent the liquidation of assets would not itself cause severe financial hardship, or (iii) by cessation of deferrals under this Plan.	

The amount determined by the Committee as distributable due to an Unforeseeable Emergency shall be paid within 30 days after the request for the distribution is approved by the Committee.

ARTICLE VII
ADMINISTRATION AND MISCELLANEOUS PROVISIONS

7.1	Administration of the Plan . The Committee shall oversee the administration of the Plan. The Committee has the exclusive responsibility and complete discretionary authority to control the operation and administration of the Plan, with all powers necessary to enable it to properly carry out such responsibility, including but not limited to the power to construe the terms of the Plan, to determine status, coverage and eligibility for benefits and to resolve all interpretive, equitable, and other questions, including questions of fact, that shall arise in the operation and administration of the Plan. The Plan shall be interpreted consistently with the provisions of Section 409A of the Code. All actions or determinations of the Committee shall be final, conclusive and binding on all persons.	
		
7.2	Amendment and Termination of the Plan . The Board may amend, modify, suspend or terminate the Plan in whole or in part, except that no amendment, modification, suspension or termination may retroactively adversely affect any Participant’s right to a benefit which has been earned under the Plan before such date.	

7.3	Controlling Law . This Plan shall be subject to the laws of the State of Georgia, and the parties agree that all disputes arising from or related to this Plan shall be litigated in the state or federal courts located in Fulton County, Georgia. The parties agree that such courts shall be the exclusive forum for such disputes and hereby submit to the jurisdiction and venue of such courts for the litigation of all such disputes. The parties hereby waive any claims of improper venue or lack of personal or subject matter jurisdiction as to any such disputes.	

7.4	Limitation of Responsibility . Neither the establishment of this Plan nor any modification thereof, nor the creation of any AC Account or DC Account, nor the payment of any benefits, shall be construed as giving to any Participant or other person any legal or equitable right against the Company, or its	

10

Exhibit 10.1

subsidiaries, or any officer or employee thereof; and in no event shall the terms of any Director’s Board appointment be modified or in any way affected thereby.
		
7.5	Unsecured General Creditor . Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, claims, or interest in any specific property or assets of the Company. No assets of the Company shall be held in any way as collateral security for the fulfilling of the obligations of the Company under this Plan. The Company's obligation under the Plan shall be merely that of an unfunded and unsecured promise of the Company to pay money in the future, and the rights of the Participants and Beneficiaries shall be no greater than those of unsecured general creditors. Nothing contained in this Plan, and no actions taken pursuant to the provisions of this Plan shall create or be construed to create a trust or any kind of fiduciary relationship between the Company and any Participant, Beneficiary, or any other person.	

7.6	Taxes . Federal, state, FICA/Medicare and all other taxes shall be solely the responsibility of the Participant. The Company will report all payments as required by the Internal Revenue Code or other tax regulations and withhold any applicable taxes where required.	

11

Exhibit 31.1

CERTIFICATIONS
I, James Quincey, Chairman of the Board of Directors and Chief Executive Officer of The Coca-Cola Company, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of The Coca-Cola Company;	

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	

4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	

(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	

(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	

(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and	

5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):	

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and	

(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.	

		
Date:	July 25, 2019	

/s/ JAMES QUINCEY	
James Quincey
Chairman of the Board of Directors and Chief Executive Officer of The Coca-Cola Company	

Exhibit 31.2

CERTIFICATIONS
I, John Murphy, Executive Vice President and Chief Financial Officer of The Coca-Cola Company, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of The Coca-Cola Company;	

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	

4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	

(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	

(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	

(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and	

5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):	

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and	

(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.	

		
Date:	July 25, 2019	

/ s / JOHN MURPHY	
John Murphy
Executive Vice President and Chief Financial Officer of The Coca-Cola Company	

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of The Coca-Cola Company (the "Company") on Form 10-Q for the period ended June 28, 2019 (the "Report"), I, James Quincey, Chairman of the Board of Directors and Chief Executive Officer of the Company and I, John Murphy, Executive Vice President and Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	to my knowledge, the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and	

(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.	

	
 	
/ s / JAMES QUINCEY	
James Quincey
Chairman of the Board of Directors and Chief Executive Officer of The Coca-Cola Company	
July 25, 2019	

/ s / JOHN MURPHY	
John Murphy
Executive Vice President and Chief Financial Officer of The Coca-Cola Company	
July 25, 2019