UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 29, 2017June 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
cocacolaa51.jpg
COCA COLA CO
(Exact name of Registrant as specified in its Charter)charter)
Delaware58-0628465
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
One Coca-Cola Plaza
AtlantaGeorgia30313
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (404)676-2121
Securities registered pursuant to Section 12(b) of the Act:
Delaware
(State or other jurisdictionTitle of
incorporation or organization)
each class
Trading Symbol(s)
58-0628465
(I.R.S. Employer
Identification No.)
Name of each exchange on which registered
One Coca-Cola Plaza
Atlanta, Georgia
(Address of principal executive offices)
Common Stock, $0.25 Par Value
KO
30313
(Zip Code)
New York Stock Exchange
Floating Rate Notes Due 2019KO19ANew York Stock Exchange
0.000% Notes Due 2021KO21BNew York Stock Exchange
Floating Rate Notes Due 2021KO21CNew York Stock Exchange
1.125% Notes Due 2022KO22New York Stock Exchange
0.125% Notes Due 2022KO22BNew York Stock Exchange
0.75% Notes Due 2023KO23BNew York Stock Exchange
0.500% Notes Due 2024KO24New York Stock Exchange
1.875% Notes Due 2026KO26New York Stock Exchange
0.750% Notes Due 2026KO26CNew York Stock Exchange
1.125% Notes Due 2027KO27New York Stock Exchange
1.250% Notes Due 2031KO31New York Stock Exchange
1.625% Notes Due 2035KO35New York Stock Exchange
1.100% Notes Due 2036KO36New York Stock Exchange
Registrant's telephone number, including area code:(404) 676-2121
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o


Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes ý    No o
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerý
 
Accelerated filer o
Non-accelerated filero
(Do not check if a smaller reporting company)
 
Smaller reporting companyo
Emerging growth companyo
 
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.o
Indicate by check mark if the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý
Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date.
Class of Common Stock  Shares Outstanding as of October 23, 2017July 22, 2019
$0.25 Par Value 4,260,667,316 Shares4,276,027,437
 






THE COCA-COLA COMPANY AND SUBSIDIARIES
Table of Contents
  Page Number
 
   
  
   
Item 1.
   
 
Condensed Consolidated Statements of Income

Three and nine months ended SeptemberSix Months Ended June 28, 2019 and June 29, 2017 and September 30, 20162018
   
 
Condensed Consolidated Statements of Comprehensive Income

Three and nine months ended SeptemberSix Months Ended June 28, 2019 and June 29, 2017 and September 30, 20162018
   
 
Condensed Consolidated Balance Sheets

September 29, 2017June 28, 2019 and December 31, 20162018
   
 
Condensed Consolidated Statements of Cash Flows

Nine months ended SeptemberSix Months Ended June 28, 2019 and June 29, 2017 and September 30, 20162018
   
 
   
Item 2.
   
Item 3.
   
Item 4.
   
  
   
Item 1.
   
Item 1A.
   
Item 2.
   
Item 6.
 








FORWARD-LOOKING STATEMENTS
This report contains information that may constitute "forward-looking statements." Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will" and similar expressions identify forward-looking statements, which generally are not historical in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future — including statements relating to volume growth, share of sales and earnings per share growth, and statements expressing general views about future operating results — are forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. Our Company undertakesWe undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our Company's historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in Part II, "Item 1A. Risk Factors" and elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 20162018, and those described from time to time in our future reports filed with the Securities and Exchange Commission.




Part I. Financial Information
Item 1.  Financial Statements (Unaudited)
THE COCA-COLA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In millions except per share data)
 Three Months Ended Six Months Ended
 June 28,
2019

June 29,
2018

 June 28,
2019

June 29,
2018

Net Operating Revenues$9,997
$9,421
 $18,691
$17,719
Cost of goods sold3,921
3,543
 7,286
6,619
Gross Profit6,076
5,878
 11,405
11,100
Selling, general and administrative expenses2,996
2,887
 5,763
5,626
Other operating charges92
225
 219
761
Operating Income2,988
2,766
 5,423
4,713
Interest income142
173
 275
339
Interest expense236
247
 481
483
Equity income (loss) — net329
324
 462
465
Other income (loss) — net(174)(74) (405)(147)
Income Before Income Taxes3,049
2,942
 5,274
4,887
Income taxes421
611
 943
1,156
Consolidated Net Income2,628
2,331
 4,331
3,731
Less: Net income attributable to noncontrolling interests21
15
 46
47
Net Income Attributable to Shareowners
    of The Coca-Cola Company
$2,607
$2,316
 $4,285
$3,684
Basic Net Income Per Share1
$0.61
$0.54
 $1.00
$0.86
Diluted Net Income Per Share1
$0.61
$0.54
 $1.00
$0.86
Average Shares Outstanding4,269
4,255
 4,270
4,260
Effect of dilutive securities36
35
 35
38
Average Shares Outstanding Assuming Dilution4,305
4,290
 4,305
4,298

1
Calculated based on net income attributable to shareowners of The Coca-Cola Company.
 Three Months Ended Nine Months Ended
 September 29,
2017

September 30,
2016

 September 29,
2017

September 30,
2016

NET OPERATING REVENUES$9,078
$10,633
 $27,898
$32,454
Cost of goods sold3,395
4,131
 10,567
12,671
GROSS PROFIT5,683
6,502
 17,331
19,783
Selling, general and administrative expenses3,203
4,009
 9,660
11,682
Other operating charges360
222
 1,491
830
OPERATING INCOME2,120
2,271
 6,180
7,271
Interest income175
164
 495
472
Interest expense208
182
 631
485
Equity income (loss) — net358
281
 883
678
Other income (loss) — net(771)(1,106) (1,122)(315)
INCOME BEFORE INCOME TAXES1,674
1,428
 5,805
7,621
Income taxes230
378
 1,805
1,618
CONSOLIDATED NET INCOME1,444
1,050
 4,000
6,003
Less: Net income (loss) attributable to noncontrolling interests(3)4
 026
NET INCOME ATTRIBUTABLE TO SHAREOWNERS OF
THE COCA-COLA COMPANY
$1,447
$1,046
 $4,000
$5,977
BASIC NET INCOME PER SHARE1
$0.34
$0.24
 $0.94
$1.38
DILUTED NET INCOME PER SHARE1
$0.33
$0.24
 $0.92
$1.37
DIVIDENDS PER SHARE$0.37
$0.35
 $1.11
$1.05
AVERAGE SHARES OUTSTANDING4,266
4,315
 4,275
4,322
Effect of dilutive securities54
49
 52
52
AVERAGE SHARES OUTSTANDING ASSUMING DILUTION4,320
4,364
 4,327
4,374
1 Calculated based on net income attributable to shareowners of The Coca-Cola Company.
Refer to Notes to Condensed Consolidated Financial Statements.




THE COCA-COLA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(In millions)
 Three Months Ended Nine Months Ended
 September 29,
2017

September 30,
2016

 September 29,
2017

September 30,
2016

CONSOLIDATED NET INCOME$1,444
$1,050
 $4,000
$6,003
Other comprehensive income:   

Net foreign currency translation adjustment693
86
 1,511
415
Net gain (loss) on derivatives(96)(101) (394)(666)
Net unrealized gain (loss) on available-for-sale securities1
(82) 165
79
Net change in pension and other benefit liabilities49
39
 82
128
TOTAL COMPREHENSIVE INCOME (LOSS)2,091
992
 5,364
5,959
Less: Comprehensive income (loss) attributable to noncontrolling interests(2)2
 2
17
TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY$2,093
$990
 $5,362
$5,942
 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 liabilities37
282
 68
316
Total Comprehensive Income2,011
438
 4,694
2,573
Less: Comprehensive income (loss) attributable to noncontrolling interests60
(142) 57
(51)
Total Comprehensive Income Attributable to Shareowners
    of The Coca-Cola Company
$1,951
$580
 $4,637
$2,624
Refer to Notes to Condensed Consolidated Financial Statements.







THE COCA-COLA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions except par value)
 September 29,
2017

December 31,
2016

ASSETS  
CURRENT ASSETS  
Cash and cash equivalents$12,528
$8,555
Short-term investments9,691
9,595
TOTAL CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS22,219
18,150
Marketable securities5,138
4,051
Trade accounts receivable, less allowances of $488 and $466, respectively3,664
3,856
Inventories2,608
2,675
Prepaid expenses and other assets2,993
2,481
Assets held for sale1,782
2,797
TOTAL CURRENT ASSETS38,404
34,010
EQUITY METHOD INVESTMENTS21,644
16,260
OTHER INVESTMENTS1,117
989
OTHER ASSETS4,480
4,248
 PROPERTY, PLANT AND EQUIPMENT, less accumulated depreciation of
$8,424 and $10,621, respectively
8,306
10,635
TRADEMARKS WITH INDEFINITE LIVES6,575
6,097
BOTTLERS' FRANCHISE RIGHTS WITH INDEFINITE LIVES138
3,676
GOODWILL9,473
10,629
OTHER INTANGIBLE ASSETS378
726
TOTAL ASSETS$90,515
$87,270
LIABILITIES AND EQUITY  
CURRENT LIABILITIES  
Accounts payable and accrued expenses$10,212
$9,490
Loans and notes payable13,398
12,498
Current maturities of long-term debt3,231
3,527
Accrued income taxes355
307
Liabilities held for sale437
710
TOTAL CURRENT LIABILITIES27,633
26,532
LONG-TERM DEBT32,471
29,684
OTHER LIABILITIES3,946
4,081
DEFERRED INCOME TAXES4,313
3,753
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 surplus15,699
14,993
Reinvested earnings64,759
65,502
Accumulated other comprehensive income (loss)(9,843)(11,205)
Treasury stock, at cost — 2,778 and 2,752 shares, respectively(50,256)(47,988)
EQUITY ATTRIBUTABLE TO SHAREOWNERS OF THE COCA-COLA COMPANY22,119
23,062
EQUITY ATTRIBUTABLE TO NONCONTROLLING INTERESTS33
158
TOTAL EQUITY22,152
23,220
TOTAL LIABILITIES AND EQUITY$90,515
$87,270
 June 28,
2019

December 31,
2018

ASSETS  
Current Assets  
Cash and cash equivalents$6,731
$9,077
Short-term investments2,572
2,025
Total Cash, Cash Equivalents and Short-Term Investments9,303
11,102
Marketable securities4,058
5,013
Trade accounts receivable, less allowances of $524 and $501, respectively4,888
3,685
Inventories3,453
3,071
Prepaid expenses and other assets2,658
2,059
Total Current Assets24,360
24,930
Equity method investments19,418
19,412
Other investments894
867
Other assets5,596
4,148
     Deferred income tax assets2,559
2,674
 Property, plant and equipment, less accumulated depreciation of
$8,222 and $8,335, respectively
10,254
9,598
Trademarks with indefinite lives9,313
6,682
Bottlers' franchise rights with indefinite lives110
51
Goodwill16,840
14,109
Other intangible assets652
745
Total Assets$89,996
$83,216
LIABILITIES AND EQUITY  
Current Liabilities  
Accounts payable and accrued expenses$12,819
$9,533
Loans and notes payable13,030
13,835
Current maturities of long-term debt2,749
5,003
Accrued income taxes784
411
Total Current Liabilities29,382
28,782
Long-term debt29,296
25,376
Other liabilities8,336
7,646
Deferred income tax liabilities2,687
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 surplus16,833
16,520
Reinvested earnings64,602
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 Company18,181
16,981
Equity attributable to noncontrolling interests2,114
2,077
Total Equity20,295
19,058
Total Liabilities and Equity$89,996
$83,216
Refer to Notes to Condensed Consolidated Financial Statements.




THE COCA-COLA COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In millions)
Nine Months EndedSix Months Ended
September 29,
2017

September 30,
2016

June 28,
2019

June 29,
2018

OPERATING ACTIVITIES  
Operating Activities 
Consolidated net income$4,000
$6,003
$4,331
$3,731
Depreciation and amortization926
1,323
602
553
Stock-based compensation expense167
191
88
121
Deferred income taxes606
(98)(163)24
Equity (income) loss — net of dividends(559)(417)(254)(148)
Foreign currency adjustments322
193
37
(119)
Significant (gains) losses on sales of assets — net942
364
Significant (gains) losses — net247
98
Other operating charges918
277
93
576
Other items(9)(205)180
43
Net change in operating assets and liabilities(1,395)(908)(660)(2,193)
Net cash provided by operating activities5,918
6,723
INVESTING ACTIVITIES 
Net Cash Provided by Operating Activities4,501
2,686
Investing Activities 
 
Purchases of investments(12,925)(12,733)(2,935)(4,833)
Proceeds from disposals of investments12,161
13,210
3,395
7,621
Acquisitions of businesses, equity method investments and nonmarketable securities(538)(767)(5,353)(218)
Proceeds from disposals of businesses, equity method investments and nonmarketable securities2,790
745
265
304
Purchases of property, plant and equipment(1,194)(1,561)(767)(689)
Proceeds from disposals of property, plant and equipment72
92
43
63
Other investing activities(122)(319)(10)6
Net cash provided by (used in) investing activities244
(1,333)
FINANCING ACTIVITIES 
Net Cash Provided by (Used in) Investing Activities(5,362)2,254
Financing Activities

 
Issuances of debt24,899
22,667
14,518
16,280
Payments of debt(22,424)(20,406)(14,278)(16,666)
Issuances of stock1,320
1,295
602
600
Purchases of stock for treasury(3,087)(2,509)(689)(1,317)
Dividends(3,165)(3,028)(1,709)(1,662)
Other financing activities(42)198
124
(70)
Net cash provided by (used in) financing activities(2,499)(1,783)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS310
231
CASH AND CASH EQUIVALENTS 
Net increase (decrease) during the period3,973
3,838
Balance at beginning of period8,555
7,309
Balance at end of period$12,528
$11,147
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 period9,318
6,373
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents at End of Period7,027
8,369
Less: Restricted cash and restricted cash equivalents at end of period296
220
Cash and Cash Equivalents at End of Period$6,731
$8,149
Refer to Notes to Condensed Consolidated Financial Statements.






THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statementscondensed 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, 20162018.
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.condensed consolidated financial statements. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and ninesix months ended September 29, 2017June 28, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 20172019. 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 thirdsecond quarter of 20172019 and the thirdsecond quarter of 20162018 ended on SeptemberJune 28, 2019 and June 29, 2017 and September 30, 20162018, 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 as disclosed in Note 1 of our 2016 Annual Report on Form 10-K, 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.
Hyperinflationary EconomiesLeases
A hyperinflationary economy is one thatEffective 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 cumulative inflation of 100 percent or more overthe right to control the asset during the contract period and other facts and circumstances.


Lessee
We are the lessee in a three-year period. In accordance with U.S. GAAP, local subsidiarieslease contract when we obtain the right to control the asset. Operating leases are included in hyperinflationary economies are requiredthe 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 U.S. dollar as their functional currencylease term and remeasurelease liabilities represent our obligation to make lease payments arising from the monetary assets and liabilities not denominated in U.S. dollars using the rate applicable to conversionlease, both of a currency for purposes of dividend remittances. All exchange gains and losses resulting from remeasurementwhich are recognized currentlybased 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.
Venezuela has been designated 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 hyperinflationary economy. Duringsingle lease component. Refer to Note 8 for further discussion.
Lessor
We have various arrangements for certain fountain equipment under which we are the ninelessor. 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 ended September 30, 2016,or less at the Venezuelan government devalued its currencydate of purchase as cash equivalents or restricted cash equivalents, as applicable. Restricted cash and changed its official and most preferential exchange rate, which should be used for purchasesrestricted cash equivalents generally consist of certain essential goods, to 10 bolivars per U.S. dollar from 6.3. The official and most preferential rate is now known as DIPRO. The Venezuelan government also announced a new rate known as DICOM, which is allowed to float freely and is expected to fluctuate based on supply and demand. Management determined that the DICOM rate was the most appropriate legally available rate to remeasure the net monetary assets of our Venezuelan subsidiary.
In addition to the foreign currency exchange exposure related to our Venezuelan subsidiary's net monetary assets, we also sell concentrate to our bottling partner in Venezuela from outside the country. These sales are denominated in U.S. dollars. As a result of the continued lack of liquidity and our revised assessment of the U.S. dollar value we expected to realize upon the conversion of Venezuelan bolivars into U.S. dollarsamounts held by our bottling partner to pay our concentrate sales receivables, we recorded a write-down of $76 million during the three and nine months ended September 30, 2016captive insurance companies, which are included in the line item other operating chargesassets 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 income.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 assets1
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 assets1
220
258
Cash, cash equivalents, restricted cash and restricted cash equivalents$8,369
$6,373

We also have certain U.S. dollar-denominated intangible assets associated with products sold in Venezuela. As a result of weaker sales1 Amounts represent cash and the volatility of foreign currency exchange rates resulting from continued political instability, we recorded impairment charges of $34 million during the nine months ended September 29, 2017 in the line item other operating chargescash equivalents in our condensed consolidated statementsolvency capital portfolio set aside primarily to cover pension obligations in certain of income. As a result of these impairment charges, the remaining carrying value of all U.S. dollar-denominated intangible assets associated with products sold in Venezuela is zero.
our European and Canadian pension plans. Refer to Note 4.
Recently Issued Accounting Guidance
In May 2014, the FinancialRecently Adopted Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers, which will replace most existing revenue recognition guidance in U.S. GAAP and is intended to improve and converge with international standards the financial reporting requirements for revenue from contracts with customers. The core principle of ASU 2014-09 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. ASU 2014-09 also requires additional disclosures about the nature, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASU 2014-09 allows for adoption either on a full retrospective basis to each prior reporting period presented or on a modified retrospective basis with the cumulative effect of initially applying the new guidance recognized at the date of initial application, which will be effective for the Company beginning January 1, 2018.Guidance
The Company plans to adopt ASU 2014-09 and its amendments on a modified retrospective basis. We expect that ASU 2014-09's broad definition of variable consideration will require the Company to estimate and record certain variable payments resulting from collaborative funding arrangements, rebates and other pricing allowances earlier than it currently does. While we do not expect this change to have a material impact on our net operating revenues on an annual basis, we do expect that it will have an impact on our revenue in interim periods. Additionally, as a result of electing certain of the practical expedients available under the ASU, the Company expects there will be some reclassifications to or from net operating revenues, cost of goods sold, and selling, general and administrative expenses. As we continue our assessment, the Company is also identifying and preparing to implement changes to our accounting policies and practices, business processes, systems and controls to support the new revenue recognition and disclosure requirements. We are in the process of quantifying the impacts that will result from applying the new guidance. Our assessment will be completed during fiscal year 2017.
In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. The amendments in this update are intended to simplify the presentation of deferred income taxes and require that deferred tax liabilities and assets be classified as noncurrent in a consolidated statement of financial position. The standard was prospectively adopted by the Company on January 1, 2017. Had the Company retrospectively adopted the standard as of December 31, 2016, the line items prepaid expenses and other assets and accounts payable and accrued expenses in our condensed consolidated balance sheet would have been reduced by $80 million and $692 million, respectively, as a result of reclassifying the current deferred tax assets and liabilities. The offsetting impact for the reclassifications as of December 31, 2016 would have increased the noncurrent line items other assets and deferred income taxes in our condensed consolidated balance sheet by $54 million and $666 million, respectively.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments — Overall: Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of the recognition, measurement, presentation and disclosure of financial instruments. The amendment will be effective for the Company beginning January 1, 2018 and will require us to recognize any changes in the fair value of certain equity investments in net income. These changes are currently recognized in other comprehensive income ("OCI").
In February 2016, the FASB issued ASU 2016-02, Leases, whichASC 842 requires lessees to recognize on the balance sheet a right-of-use asset,operating lease ROU assets, representing their right to use the underlying asset for the lease term, and aoperating lease liabilityliabilities 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. The standard requiresWe adopted ASC 842 using the use of a modified retrospective method and utilized the optional transition approach,method under which includes a numberwe 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 optional practical expedients that entities may electpermitted under the transition guidance which permits us to apply. ASU 2016-02 is effective forcarry forward the Company beginninghistorical 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 1, 2019 and we are currently evaluating the2019. The adoption of this standard did not impact that ASU 2016-02 will have on our consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting.The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. The Company adopted ASU 2016-09 on January 1, 2017 by prospectively recognizing excess tax benefits and tax deficiencies in our consolidated statement of income as the awards vested or were settled. Effective January 1, 2017, the Company also prospectively presented excess tax benefits as an operating activity, rather than a financing activity, in our consolidated statement of cash flows. Had these changes been requiredRefer to be adopted retrospectively, during the three and nine months ended September 30, 2016, the Company would have recognized an additional $20 million and $140 million, respectively, of excess tax benefits in our condensed consolidated statements of income. Additionally, during the nine months ended September 30,Note 8 for further discussion.



2016, the Company would have reduced our financing activities and increased our operating activities by $140 million in our condensed consolidated statement of cash flows. The Company has elected, consistent with past practice, to estimate the number of awards that are expected to vest to determine the amount of stock-based compensation expense recognized in earnings.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Measurement of Credit Losses on Financial Instruments, which requires measurement and recognition of expected credit losses for financial assets held. ASU 2016-13 is effective for the Company beginning January 1, 2020 and we are currently evaluating the impact that ASU 2016-13 will have on our consolidated financial statements.
In October 2016, the FASB issued ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, which requires the Company to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 is effective for the Company beginning January 1, 2018 and will be applied using a modified retrospective basis. We currently expect the cumulative-effect adjustment will result in a net deferred tax asset of approximately $2.8 billion. This amount will primarily be recorded as a deferred tax asset in the line item other assets in our consolidated balance sheet.
In November 2016, the FASB issued ASU 2016-18, Restricted Cash. The amendments in this update address diversity in practice that exists in the classification and presentation of changes in restricted cash and require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. ASU 2016-18 is effective for the Company beginning January 1, 2018 and is required to be applied using a retrospective transition method to each period presented. The Company is currently evaluating the impact that ASU 2016-18 will have on our consolidated statement of cash flows.
In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business, which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 is required to be applied prospectively and will be effective for the Company beginning January 1, 2018. The impact on our consolidated financial statements will depend on the facts and circumstances of any specific future transactions.
In March 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which requires that the service cost component of the Company's net periodic pension cost and net periodic postretirement benefit cost be included in the same line item as other compensation costs arising from services rendered by employees, with the other components of net periodic benefit cost being classified outside of a subtotal of income from operations. Of the components of net periodic benefit cost, only the service cost component will be eligible for asset capitalization. ASU 2017-07 is effective for the Company beginning January 1, 2018 and is required to be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in our income statement. ASU 2017-07 allows a practical expedient for the estimation basis for applying the retrospective presentation requirements and requires the prospective adoption, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit cost in assets.
In August 2017, the FASBFinancial Accounting Standards Board ("FASB") issued ASUAccounting 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 incomeline item in the statement line itemof income where the hedged item resides. The amendments in this update include new alternatives for measuring the hedged item for fair value hedges of interest rate risk and ease the requirements for effectiveness testing, hedge documentation and applying the critical terms match method. Finally,We adopted ASU 2017-12 effective January 1, 2019 using the standard introduces new alternativesmodified 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 permit companiesrequires the effect of changes in tax laws or rates to reducebe 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 riskopening balance of material error ifreinvested earnings as of January 1, 2019 by $513 million.
Accounting Guidance Not Yet Adopted
In June 2016, the shortcut method is misapplied.FASB issued ASU 2017-122016-13, Financial Instruments — Measurement of Credit Losses onFinancial Instruments, which requires measurement and recognition of expected credit losses for financial assets held. ASU 2016-13 is effective for the Company beginning January 1, 20192020 and is required to be applied prospectively. The Company isWe are currently evaluating the impact that ASU 2017-122016-13 will have on our consolidated financial statements.
NOTE 2: ACQUISITIONS AND DIVESTITURES
Acquisitions
During the ninesix months ended September 29, 2017,June 28, 2019, our Company's acquisitions of businesses, equity method investments and nonmarketable securities totaled $538$5,353 million, which primarily related to the acquisition of AdeS, a plant-based beverage business, byCosta and the Company and several of its bottling partners in Latin America. Additionally, in conjunction with the refranchising of Coca-Cola Refreshments' ("CCR") Southwest operating unit ("Southwest Transaction"), we obtained anremaining equity ownership interest in AC Bebidas, S. de R.L. de C.V.C.H.I. Limited ("AC Bebidas"CHI"), a subsidiaryNigerian producer of Arca Continental, S.A.B. de C.V. ("Arca").value-added dairy and juice beverages and iced tea.
During the ninesix months ended September 30, 2016,June 29, 2018, our Company's acquisitions of businesses, equity method investments and nonmarketable securities totaled $767$218 million, which primarily related to ourthe acquisition of Xiamen Culiangwang Beverageadditional 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

Technology Co., Ltd. ("China Green"),In January 2019, the Company acquired Costa in exchange for $4.9 billion of cash, net of cash acquired. Costa is a maker of plant-based protein beveragescoffee company with retail outlets in China,over 30 countries, the Costa Express vending system and a minority investmentstate-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 Limited ("CHI"), a Nigerian producerin exchange for $260 million of value-added dairy and juice beverages, which is accounted forcash, net of cash acquired, under the equity method of accounting. 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 Company is obligated to acquirereversal of the remaining ownership interest from the existing shareowners in 2019related cumulative translation adjustments. The fair value of our previously held equity investment was determined using a discounted cash flow model based on an agreed-upon formula.Level 3 inputs. The net charge was recorded in the line item other income (loss) — net in our condensed consolidated statement of income.


Divestitures
During the ninesix months ended September 29, 2017,June 28, 2019, proceeds from disposals of businesses, equity method investments and nonmarketable securities totaled $2,790$265 million, which primarily related to proceeds from the refranchisingsale of certain bottling territoriesa portion of our equity method investment in North AmericaEmbotelladora 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 our China bottling operations.other governance rights.
During the ninesix months ended September 30, 2016,June 29, 2018, proceeds from disposals of businesses, equity method investments and nonmarketable securities totaled $745$304 million, which primarily related to the proceeds from the refranchising of certainour Latin American bottling territories in North America.operations.
Refranchising of ChinaLatin American Bottling Operations
In November 2016,During the three and six months ended June 29, 2018, the Company entered into definitive agreements for the sale of the Company-owned bottling operations in China to the two existing local franchise bottlers, one of which is an equity method investee, and to sell a related cost method investment to one of the franchise bottlers. As a result, the Company's bottling operations in China and a related cost method investment were classified as held for sale as of December 31, 2016. On April 1, 2017, the Company sold a substantial portion of its bottling operations in ChinaLatin America to the two local franchise bottlers. The remaining bottling operations and costCoca-Cola FEMSA, S.A.B. de C.V. ("Coca-Cola FEMSA"), an equity method investment were sold on July 1, 2017.investee. We received net cash proceeds of $963$277 million as a result of these sales and recognized gainsa net gain of $79$36 million, and $88which 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 and nine months ended SeptemberJune 29, 2017, respectively, which2018 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.
North America Refranchising
In conjunction with implementing a new beverage partnership model in North America, the Company refranchised bottling territories thatincome and were previously managed by CCRprimarily related to certain of our unconsolidated bottling partners. These territories generally border these bottlers' existing territories, allowing each bottler to better service local customers and provide more efficient execution. By entering into comprehensive beverage agreements ("CBAs") with each of the bottlers, we granted certain exclusive territory rights for the distribution, promotion, marketing and sale of Company-owned and licensed beverage productspost-closing adjustments as definedcontemplated by the CBA. In some cases, the Company has entered into, or agreed to enter into, manufacturing agreements that authorize certain bottlers that have executed a CBA to manufacture certain beverage products. If a bottler has not entered into a specific manufacturing agreement, then under the CBA for these territories, CCR retains the rights to produce these beverage products, and the bottlers will purchase from CCR (or other Company-authorized manufacturing bottlers) substantially all of the related finished products needed in order to service the customers in these territories.
Each CBA generally has a term of 10 years and is renewable, in most cases by the bottler and in some cases by the Company, indefinitely for successive additional terms of 10 years each. Under the CBA, except for the CBA entered into in conjunction with the Southwest Transaction and for additional territories sold to AC Bebidas, the bottlers will make ongoing quarterly payments to the Company based on their gross profit in the refranchised territories throughout the term of the CBA, including renewals, in exchange for the grant of the exclusive territory rights.
Contemporaneously with the grant of these rights, the Company sold the distribution assets, certain working capital items, and the exclusive rights to distribute certain beverage brands not owned by the Company, but distributed by CCR, in each of these territories, excluding the territory included in the Southwest Transaction, to the respective bottlers in exchange for cash.
In 2016, the Company formed a new National Product Supply System ("NPSS") to facilitate optimal operation of the U.S. product supply system. Under the NPSS, the Company and several of its existing independent producing bottlers administer key national product supply activities for these bottlers. Additionally, we have sold or are in the process of selling certain production facilities from CCR to these independent producing bottlers in exchange for cash, excluding production facilities included in the Southwest Transaction.agreements.
During the nine months ended September 29, 2017 and September 30, 2016, cash proceeds from these sales totaled $1,814 million and $732 million, respectively. Included in the cash proceeds for the nine months ended September 29, 2017 and September 30, 2016, was $279 million and $181 million, respectively, from Coca-Cola Bottling Co. Consolidated ("CCBCC"), an equity method investee. Also included in the cash proceeds for the nine months ended September 29, 2017, was $216 million from AC Bebidas, an equity method investee.
Under the applicable accounting guidance, we were required to derecognize all of the tangible assets sold as well as the intangible assets transferred, including distribution rights, customer relationships and an allocated portion of goodwill related to these territories. We recognized losses of $762 million and $1,089 million during the three months ended SeptemberJune 29, 2017 and September 30, 2016, respectively. During the nine months ended September 29, 2017 and September 30, 2016, the


Company recognized losses of $2,533 million and $1,657 million, respectively. These losses primarily related to the derecognition of the intangible assets transferred or reclassified as held for sale and were included in the line item other income (loss) — net in our condensed consolidated statements of income. See further discussion of assets and liabilities held for sale below. In total, we expect to recover the value of the intangible assets transferred to the bottlers under the CBAs through the future quarterly payments; however, as the payments for the territory rights are dependent on the bottlers' future gross profit in these territories, they are considered a form of contingent consideration.
There is diversity in practice as it relates to the accounting for contingent consideration by the seller. The seller can account for the future contingent payments received as a gain contingency, recognizing the amounts in the income statement only after the related contingencies are resolved and the gain is realized, which in this arrangement will be quarterly as the bottlers earn gross profit in the transferred territories. Alternatively, the seller can record a receivable for the contingent consideration at fair value on the date of sale and record any future differences between the payments received and this receivable in the income statement as they occur. We elected the gain contingency treatment since the quarterly payments will be received throughout the terms of the CBAs, including all subsequent renewals, regardless of the cumulative amount received as compared to the value of the intangible assets transferred.
During the three and nine months ended September 29, 2017,2018, the Company recorded charges of $72$2 million and $287 million, respectively, primarily related to payments made to certain of our unconsolidated bottling partners in order to convert the bottling agreements for their legacy territories and any previously refranchised territories to a single form of CBAcomprehensive 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, andas well as consistency with other U.S. bottlers that have been granted or converted to this form of CBA. The expensecharges related to these payments waswere included in the line item other income (loss) — net in our condensed consolidated statementstatements of incomeincome.
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 ninesix months ended September 29, 2017.
On April 1, 2017, the Company refranchised the Southwest operating unit of CCR, which includes Texas and parts of
Oklahoma, New Mexico and Arkansas, in the Southwest Transaction. In conjunction with the Southwest Transaction, Arca contributed its existing beverage business to AC Bebidas. CCR contributed its Southwest operating unit, including all of its assets and liabilities, to AC Bebidas in exchange for an approximate 20 percent interest in AC Bebidas. Arca owns the remaining interest in AC Bebidas. After post-closingJune 28, 2019. These additional adjustments CCR will have made cash payments of approximately $112 million, net of cash received. As a result of the Southwest Transaction, the Company recognized a gain of $1,060 million due to the difference in the recorded carrying value of the net assets transferred compared to the value of the interest it obtained in AC Bebidas of $2,960 million, which was determined using an income and market approach (a Level 3 measurement). This gain was recordedwere included in the line item other income (loss) — net in our condensed consolidated statementstatements of income.AC Bebidas will participate in the NPSS



NOTE 3: REVENUE RECOGNITION
Our Company markets, manufactures and sells:
beverage concentrates, sometimes referred to as it relates"beverage bases," and syrups, including fountain syrups (we refer to its U.S. territory. The Company accounts for its interest in AC Bebidasthis part of our business as an equity method investment based on our equity ownership percentage, our representation on AC Bebidas' Board of Directors, material intercompany transactions"concentrate business" or "concentrate operations"); and
finished sparkling soft drinks and other governance rights.nonalcoholic beverages (we refer to this part of our business as our "finished product business" or "finished product operations").
Coca-Cola European PartnersGenerally, finished product operations generate higher net operating revenues but lower gross profit margins than concentrate operations.
In August 2015,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 entered into an agreementalso operates non-bottling finished product operations in which we sell finished beverages to merge our German bottling operations with Coca-Cola Enterprises, Inc. ("CCE")distributors and Coca-Cola Iberian Partners, S.A.U., formerly known as Coca-Cola Iberian Partners, S.A. ("CCIP"), to create Coca-Cola European Partners plc ("CCEP"). On May 28, 2016, the transaction closed and we exchanged our German bottling operations for an 18 percent interest in CCEP. As a result of recording our interest in CCEP at fair value based on its quoted market price, the deconsolidation of our German bottling operations, and the related reversal of its cumulative translation adjustments, we recognized a gain of $1,400 million. This gain was partially offset by a $77 million loss incurred as a result of reclassifying losses related to our net investment hedges of our German bottling operations from accumulated other comprehensive income (loss) ("AOCI") into earnings as well as transaction costs incurred resulting in a net gain of $1,288 million during the nine months ended September 30, 2016. Refer to Note 8. With the exception of the transaction costs, the net gain was recorded in the line item other income (loss) — net in our condensed consolidated statement of income. The Company accounts for its 18 percent interest in CCEP as an equity method investment based on our equity ownership percentage, our representation on CCEP's Board of Directors, material intercompany transactions and other governance rights.
Coca-Cola Beverages Africa Proprietary Limited
In November 2014, the Company, SABMiller plc and Gutsche Family Investments entered into an agreement to combine the bottling operations of each of the parties' nonalcoholic ready-to-drink beverage businesses in Southern and East Africa. In connection with the July 2, 2016 closing of the transaction to form the new bottler, which is called Coca-Cola Beverages Africa Proprietary Limited ("CCBA"), the Company: (1) contributed its South African bottling operations to CCBA, which included certain wholly owned subsidiaries and an equity method investment, (2) paid $150 million in cash, (3) obtained a 12 percent


interest in CCBA and a 3 percent interest in CCBA's South African subsidiary and (4) acquired several trademarkswholesalers that are generally indefinite-lived.
As a resultnot one of recording our intereststhe Company's bottling partners. These operations are generally included in CCBA and its South African subsidiary at fair value, the deconsolidationone of our South Africangeographic 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 operations,partners who resell the derecognitionfountain 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 equity method investment,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 reversalflexibility 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 related cumulative translation adjustments, we recognized a loss of $21 million.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 fair values of the equity investments in CCBA and CCBA's South African subsidiary, alongamounts associated with the acquired trademarks, were determined using income approaches, including discounted cash flow models,arrangements described above are defined as variable consideration under ASC 606 and the Company believes the inputs and assumptions used are consistent with those hypothetical marketplace participants would use. The loss recognized resulted primarily from the reversalan estimate of the related cumulative translation adjustments. This losswhich is recordedincluded in the line item other income (loss) —transaction price as a component of net operating revenues in our condensed consolidated statement of income upon completion of our performance obligations. The total revenue recorded, including any variable consideration, cannot exceed the amount for which it is probable that a significant reversal will not occur when uncertainties related to variability are resolved. As a result, we are recognizing revenue based on our faithful depiction of the consideration that we expect to receive. In making our estimates of variable consideration, we consider past results and make significant assumptions related to: (1) customer sales volumes; (2) customer ending inventories; (3) customer selling price per unit; (4) selling channels; and (5)


discount rates, rebates and other pricing allowances, as applicable. In gathering data to estimate our variable consideration, we generally calculate our estimates using a portfolio approach at the country and product line level rather than at the individual contract level. The result of making these estimates will impact the line items trade accounts receivable and accounts payable and accrued expenses in our 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 ninesix months ended September 30, 2016.June 28, 2019 related to performance obligations satisfied in prior periods was immaterial.
ThroughThe following tables present net operating revenues disaggregated between the Company's 12 percent interest in CCBA, the Company is representedUnited States and International and further by two directors on CCBA's 10-member Boardline of Directors. Based on the level of equity ownership, the Company’s representation on the Board of Directors and other governance rights, the Company is accounting for its interests in CCBA and CCBA's South African subsidiary as equity method investments. The Company’s interest in CCBA provides it with a call option to acquire the ownership interest of SABMiller plc at fair value upon the occurrence of certain events, including upon a change in control of SABMiller plc. business (in millions):
 United States
International
Total
Three Months Ended June 28, 2019





Concentrate operations$1,415
$4,163
$5,578
Finished product operations1,688
2,731
4,419
Total$3,103
$6,894
$9,997
Three Months Ended June 29, 2018





Concentrate operations$1,250
$4,300
$5,550
Finished product operations1,786
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 operations3,148
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 operations3,257
4,166
7,423
Total$5,618
$12,101
$17,719

Refer to Note 1617 for more information.
Keurig Green Mountain, Inc.
In March 2016, a JAB Holding Company-led investor group acquired Keurig Green Mountain, Inc. ("Keurig"), including the shares heldadditional revenue disclosures by the Company, for $92 per share. As a result of the transaction, the Company received proceeds of $2,380 million, which were recorded in the line item proceeds from disposals of investments in our condensed consolidated statement of cash flows, and recorded a gain of $18 million related to the disposal of our shares of Keurig in the line item other income (loss) — net in our condensed consolidated statement of income during the nine months ended September 30, 2016.
Assets and Liabilities Held for Sale
As of September 29, 2017, the Company had entered into agreements, or otherwise approved plans, to refranchise its remaining U.S. bottling territories. For bottling territories that met the criteria to be classified as held for sale, we were required to record their assets and liabilities at the lower of carrying value or fair value less any costs to sell based on the agreed-upon sale price and present the related assets and liabilities as separate line items in our condensed consolidated balance sheet. The Company expects that these bottling territories will be refranchised by December 31, 2017.




























The following table presents information related to the major classes of assets and liabilities that were classified as held for sale in our condensed consolidated balance sheets (in millions):
 September 29,
2017

 December 31, 2016
 
Cash, cash equivalents and short-term investments$10
 $49
 
Trade accounts receivable, less allowances300
 43
 
Inventories181
 264
 
Prepaid expenses and other assets34
 114
 
Equity method investments
 1
 
Other investments
 42
 
Other assets7
 17
 
Property, plant and equipment — net1,145
 1,780
 
Bottlers' franchise rights with indefinite lives1,121
 1,388
 
Goodwill296
 390
 
Other intangible assets154
 51
 
Allowance for reduction of assets held for sale(1,466) (1,342) 
Total assets$1,782
1 
$2,797
2 
Accounts payable and accrued expenses$381
 $393
 
Accrued income taxes4
 13
 
Other liabilities52
 1
 
Deferred income taxes
 303
 
Total liabilities$437
1 
$710
3 
1 Consists of total assets and total liabilities relating to North America refranchising of $1,782 million and $437 million, respectively, which are included in the Bottling Investments operating segment.
2 Consists of total assets relating to North America refranchising of $1,247 million, China bottling operations of $1,533 million and other assets held for sale of $17 million, which are included in the Bottling Investments operating segment and Corporate.
3
Consists of total liabilities relating to North America refranchising of $224 million, China bottling operations of $483 million and other liabilities held for sale of $3 million, which are included in the Bottling Investments operating segment and Corporate.
We determined that the operations included in the table above did not meet the criteria to be classified as discontinued operations under the applicable guidance.
NOTE 34: INVESTMENTS
InvestmentsWe measure all equity investments that do not result in debtconsolidation and marketable securities, other than investmentsare 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. Our marketable equity investments are classified as either trading or available-for-sale with their cost basis determined by the specific identification method. Our investments in debt securities areheld-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 andare included in net income. For debt securities classified as available-for-sale, realized gains and losses on available-for-sale securities are included in net income. Unrealized gains and losses, net of deferred taxes,tax, on available-for-sale debt securities are included in our condensed consolidated balance sheetssheet as a component of AOCI, except for the change in fair value attributable to the currency risk being hedged.hedged, if applicable, which is included in net income. Refer to Note 56 for additional information related to the Company's fair value hedges of available-for-sale debt securities.
Trading Securities
As of September 29, 2017




Equity securities with readily determinable fair values that are not accounted for under the equity method and December 31, 2016, ourdebt 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 hadwithout 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 $427 million and $384 million, respectively, and consisted primarily of equity securities. The Company had net unrealized gains on trading securities of $74 million and $39 million as of September 29, 2017 and December 31, 2016, respectively.





The Company's trading securities were includedeach investment. When such events or changes occur, we evaluate the fair value compared to our cost basis in the following line items in our condensed consolidated balance sheets (in millions):
 September 29,
2017

December 31, 2016
Marketable securities$318
$282
Other assets109
102
Total$427
$384
Available-for-Sale and Held-to-Maturity Securities
As of September 29, 2017 and December 31, 2016, the Company did not have any held-to-maturity securities. As of September 29, 2017, available-for-sale securities consisted of the following (in millions):
  Gross Unrealized Estimated
 Cost
Gains
Losses
 Fair Value
Available-for-sale securities:1
     
Equity securities$1,326
$602
$(35) $1,893
Debt securities6,550
169
(21) 6,698
Total$7,876
$771
$(56) $8,591
1Refer to Note 14investment. We also perform this evaluation every reporting period for additional information related to the estimated fair value.
As of December 31, 2016, available-for-sale securities consisted of the following (in millions):
  Gross Unrealized Estimated
 Cost
Gains
Losses
 Fair Value
Available-for-sale securities:1
     
Equity securities$1,252
$425
$(22) $1,655
Debt securities4,700
89
(31) 4,758
Total$5,952
$514
$(53) $6,413
1 Refer to Note 14each investment for additional information related to the estimated fair value.
The sale and/or maturity of available-for-sale securities resulted in the following realized activity (in millions):
 Three Months Ended Nine Months Ended
 September 29,
2017

September 30,
2016

 September 29,
2017

September 30,
2016

Gross gains$11
$21
 $51
$131
Gross losses(7)(6) (21)(42)
Proceeds4,210
2,072
 10,760
8,889
As of September 29, 2017 and December 31, 2016, the Company had investments classified as available-for-sale in 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 investment. Management assessed each of the available-for-sale securities that were in a gross unrealized loss position on an individualcost basis, management is required to determine if the decline in fair value wasis 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. As a result
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 investments811
83
Other assets969

Total equity securities$2,088
$83
December 31, 2018

Marketable securities$278
$
Other investments787
80
Other assets869

Total equity securities$1,934
$80

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

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

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




Debt Securities
Our debt securities consisted of the following (in millions):
  Gross Unrealized Estimated Fair Value
 Cost
Gains
Losses
 
June 28, 2019     
Trading securities$43
$1
$
 $44
Available-for-sale securities3,879
131
(5) 4,005
Total debt securities$3,922
$132
$(5) $4,049
December 31, 2018     
Trading securities$45
$
$(1) $44
Available-for-sale securities4,901
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 securities44
3,706
 44
4,691
Other assets
292
 
302
Total debt securities$44
$4,005
 $44
$4,993

The contractual maturities of these assessments, management determinedavailable-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 years2,740
2,848
After 5 years through 10 years72
84
After 10 years216
223
Total$3,879
$4,005

The Company expects that actual maturities may differ from the declinecontractual 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 fair valuethe 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)
Proceeds1,068
3,236
 1,790
6,323





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 these investments was not other than temporaryits solvency capital in a portfolio of marketable equity and did not record any impairment charges.
debt securities. These securities are included in the disclosures above. The Company uses twoone of its consolidated captive insurance captivescompanies to reinsure group annuity insurance contracts that cover the pension obligations of certain of our European and Canadian pension plans. In accordance with local insurance regulations, our insurance captives are required to meet and maintain minimumThis captive's solvency capital requirements. The Company elected to invest its solvency capital in a portfoliofunds included equity and debt securities of available-for-sale securities,$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. As of September 29, 2017 and December 31, 2016, the Company's available-for-sale securities included solvency capital funds of $1,112 million and $985 million, respectively.


The Company's available-for-sale securities were included in the following line items in our condensed consolidated balance sheets (in millions):
 September 29,
2017

December 31,
2016

Cash and cash equivalents$1,682
$682
Marketable securities4,820
3,769
Other investments971
849
Other assets1,118
1,113
Total$8,591
$6,413
The contractual maturities of these available-for-sale securities as of September 29, 2017, were as follows (in millions):
 Cost
Estimated Fair Value
Within 1 year$2,301
$2,353
After 1 year through 5 years3,722
3,799
After 5 years through 10 years208
223
After 10 years319
323
Equity securities1,326
1,893
Total$7,876
$8,591
The Company expects that actual maturities may differ from the contractual maturities above because borrowers have the right to call or prepay certain obligations.
Cost Method Investments
Cost method investments are initially recorded at cost, and we record dividend income when applicable dividends are declared. Cost method investments are reported as other investments in our condensed consolidated balance sheets, and dividend income from cost method investments is reported in other income (loss) — net in our condensed consolidated statements of income. We review all of our cost method investments quarterly to determine if impairment indicators are present; however, we are not required to determine the fair value of these investments unless impairment indicators exist. When impairment indicators exist, we generally use discounted cash flow analyses to determine the fair value. We estimate that the fair values of our cost method investments approximated or exceeded their carrying values as of September 29, 2017 and December 31, 2016. Our cost method investments had carrying values of $146 million and $140 million as of September 29, 2017 and December 31, 2016, respectively.
NOTE 45: 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 goods906
773
Other346
273
Total inventories$3,453
$3,071
 September 29,
2017

December 31,
2016

Raw materials and packaging$1,639
$1,565
Finished goods741
844
Other228
266
Total inventories$2,608
$2,675










NOTE 56: 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-denominatedforeign currency denominated debt, in hedging relationships.
All derivative instruments are carried at fair value in our condensed consolidated balance sheetssheet, 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 valuevalues of the derivative instruments are generally offset by changes in the fair values or cash flows of the underlying exposures being hedged. The changes in the fair values of derivatives that were not designated and/or did not qualify as hedging instruments are immediately recognized into earnings.


For derivatives that will be accounted for as hedging instruments, the Company formally designates and documents, at inception, the financial instrument as a hedge of a specific underlying exposure, the risk management objective and the strategy for undertaking the hedge transaction. In addition, the Company formally assesses, both at the inception and at least quarterly thereafter, whether the financial instruments used in hedging transactions are effective at offsetting changes in either the fair values or cash flows of the related underlying exposures. Any ineffective portion of a financial instrument's change in fair value is immediately recognized into earnings.
The Company determines the fair values of its derivatives based on quoted market prices or pricing models using current market rates. Refer to Note 14.16. The notional amounts of the derivative financial instruments do not necessarily represent amounts exchanged by the parties and, therefore, are not a direct measure of our exposure to the financial risks described above. The amounts exchanged are calculated by reference to the notional amounts and by other terms of the derivatives, such as interest rates, foreign currency exchange rates, commodity rates or other financial indices. The Company does not view the fair values of its derivatives in isolation but rather in relation to the fair values or cash flows of the underlying hedged transactions or other exposures. Virtually all of our derivatives are straightforward over-the-counter instruments with liquid markets.








On January 1, 2019, we adopted ASU 2017-12. For highly effective cash flow hedges, this ASU requires the entire change in fair value of the hedging instrument included in the assessment of hedge effectiveness to be recorded in other comprehensive income. No components of the Company's hedging instruments were excluded from the assessment of hedge effectiveness. To reflect the adoption of the new hedging standard on our cash flow hedging relationships at January 1, 2019, we recorded a $6 million increase, net of taxes, to the opening balance of reinvested earnings and a corresponding decrease to AOCI. For fair value hedges of interest rate risk, this ASU allows entities to elect to use the benchmark interest rate component of the contractual coupon cash flows to calculate the change in fair value of the hedged item attributable to changes in the benchmark interest rate. As a result of applying the new hedging standard to our fair value hedges on January 1, 2019, we recorded a $24 million increase to our hedged long-term debt balances, with a corresponding decrease to the opening balance of reinvested earnings of $18 million, net of taxes.
The following table presents the fair values of the Company's derivative instruments that were designated and qualified as part of a hedging relationship (in millions):
 
Fair Value1,2
 
Fair Value1,2
Derivatives Designated as Hedging Instruments
Balance Sheet Location1
September 29,
2017

December 31, 2016
Balance Sheet Location1
June 28,
2019

December 31, 2018
Assets:    
Foreign currency contractsPrepaid expenses and other assets$210
$400
Prepaid expenses and other assets$31
$43
Foreign currency contractsOther assets95
60
Other assets97
114
Interest rate contractsOther assets71
105
Other assets500
88
Total assets $376
$565
 $628
$245
Liabilities:    
Foreign currency contractsAccounts payable and accrued expenses$120
$40
Accounts payable and accrued expenses$30
$19
Foreign currency contractsOther liabilities8
54
Other liabilities37
15
Commodity contractsAccounts payable and accrued expenses
1
Accounts payable and accrued expenses
1
Interest rate contractsAccounts payable and accrued expenses33
36
Accounts payable and accrued expenses17

Interest rate contractsOther liabilities34
47
Other liabilities11
40
Total liabilities $195
$178
 $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 1416 for the net presentation of the Company's derivative instruments.
2 Refer to Note 1416 for additional information related to the estimated fair value.


The following table presents the fair values of the Company's derivative instruments that were not designated as hedging instruments (in millions):
 
Fair Value1,2
 
Fair Value1,2
Derivatives Not Designated as Hedging Instruments
Balance Sheet Location1
September 29,
2017

December 31, 2016
Balance Sheet Location1
June 28,
2019

December 31, 2018
Assets:    
Foreign currency contractsPrepaid expenses and other assets$39
$284
Foreign currency contractsOther assets25

Prepaid expenses and other assets$24
$61
Commodity contractsPrepaid expenses and other assets15
27
Prepaid expenses and other assets11
2
Commodity contractsOther assets1
1
Other assets1

Other derivative instrumentsPrepaid expenses and other assets8
4
Prepaid expenses and other assets18
7
Other derivative instrumentsOther assets1
1
Other assets1

Total assets $89
$317
 $55
$70
Liabilities:    
Foreign currency contractsAccounts payable and accrued expenses$59
$60
Accounts payable and accrued expenses$86
$101
Foreign currency contractsOther liabilities41
16
Other liabilities1

Commodity contractsAccounts payable and accrued expenses16
16
Accounts payable and accrued expenses41
38
Commodity contractsOther liabilities1
1
Other liabilities5
8
Interest rate contractsAccounts payable and accrued expenses
8
Interest rate contractsOther liabilities
1
Other derivative instrumentsAccounts payable and accrued expenses1
2
Other derivative instrumentsOther liabilities
5
Accounts payable and accrued expenses
13
Total liabilities $118
$109
 $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 1416 for the net presentation of the Company's derivative instruments.
2 Refer to Note 1416 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 three3 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 $4,4955,560 million and $6,0743,175 million as of September 29, 2017June 28, 2019 and December 31, 20162018, respectively.





The Company uses cross-currency swaps to hedge the changes in cash flows of certain of its foreign currency denominated debt and other monetary assets or liabilities due to changes in foreign currency exchange rates. For this hedging program, the Company records the change in carrying value of thethese foreign currency denominated debtassets 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 cross-currency swapsforeign currency denominated assets and liabilities were $1,851$3,028 million as of both September 29, 2017June 28, 2019 and December 31, 2016.2018.
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 $24 million and $129 million as of September 29, 2017June 28, 2019 and December 31, 20162018, 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 valuesvalue of these interest rate swap agreements that were designated and qualified for the Company's interest rate cash flow hedging program werewas $500 million and $1,500 million as of SeptemberJune 28, 2019. During the six months ended June 29, 2017 and 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, 2016, respectively.
















2018, we did not have any interest rate swaps designated as a cash flow hedge.
The following table presentstables 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 during the three months ended September 29, 2017 (in millions):
 
Gain (Loss) Recognized
in OCI

Location of Gain (Loss)
Recognized in Income1
Gain (Loss)
Reclassified from
AOCI into Income
(Effective Portion)2

Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)2

 
Three Months Ended June 28, 2019     
Foreign currency contracts$(25)Net operating revenues$1
$
 
Foreign currency contracts(3)Cost of goods sold3

 
Foreign currency contracts
Interest expense(2)
 
Foreign currency contracts(31)Other income (loss) — net(43)
 
Interest rate contracts(17)Interest expense(10)
 
Total$(76)
$(51)$
 
Three Months Ended June 29, 2018     
Foreign currency contracts$65
Net operating revenues$39
$1
 
Foreign currency contracts14
Cost of goods sold2

3 
Foreign currency contracts
Interest expense(2)
 
Foreign currency contracts(79)Other income (loss) — net(87)(3) 
Interest rate contracts
Interest expense(10)
 
Total$
 $(58)$(2) 

 
Gain (Loss) Recognized
in OCI

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

Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)
 
Foreign currency contracts$(35)Net operating revenues$116
$
2 
Foreign currency contracts(11)Cost of goods sold(4)
2 
Foreign currency contracts
Interest expense(2)
 
Foreign currency contracts100
Other income (loss) — net100
7
 
Interest rate contracts(1)Interest expense(9)
 
Commodity contracts
Cost of goods sold(1)
 
Total$53
 $200
$7
 
1The Company records gains and losses reclassified from AOCI into income for the effective portion and the ineffective portion, if any, to the same line items in our condensed consolidated statementsstatement of income.
2Effective January 1, 2019, ASU 2017-12 eliminated the requirement to separately measure and report hedge ineffectiveness for cash flow hedges. No components of the Company’s hedging instruments were excluded from the assessment of hedge effectiveness.
3 Includes a de minimis amount of ineffectiveness in the hedging relationship.
The following table presents the pretax impact that changes in the fair values of derivatives designated as cash flow hedges had on AOCI and earnings during the nine months ended September 29, 2017 (in millions):

 
Gain (Loss) Recognized
in OCI

Location of Gain (Loss)
Recognized in Income1
Gain (Loss)
Reclassified from
AOCI into Income
(Effective Portion)2

Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)2

 
Six Months Ended June 28, 2019     
Foreign currency contracts$(27)Net operating revenues$7
$
 
Foreign currency contracts(2)Cost of goods sold7

 
Foreign currency contracts
Interest expense(4)
 
Foreign currency contracts(53)Other income (loss) — net(93)
 
Interest rate contracts(17)Interest expense(20)
 
Total$(99) $(103)$
 
Six Months Ended June 29, 2018     
Foreign currency contracts$8
Net operating revenues$54
$1
 
Foreign currency contracts10
Cost of goods sold1
(3) 
Foreign currency contracts
Interest expense(4)
 
Foreign currency contracts26
Other income (loss) — net(20)2
 
Interest rate contracts22
Interest expense(20)(8) 
Commodity contracts
Cost of goods sold
(5) 
Total$66
 $11
$(13) 

 
Gain (Loss) Recognized
in OCI

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

Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)
 
Foreign currency contracts$(216)Net operating revenues$339
$(1) 
Foreign currency contracts(27)Cost of goods sold1

2 
Foreign currency contracts
Interest expense(7)
 
Foreign currency contracts113
Other income (loss) — net152
7
 
Interest rate contracts(25)Interest expense(26)2
 
Commodity contracts(1)Cost of goods sold

 
Total$(156) $459
$8
 
1The Company records gains and losses reclassified from AOCI into income for the effective portion and the ineffective portion, if any, to the same line items in our condensed consolidated statementsstatement of income.
2Includes a de minimis amount ofEffective January 1, 2019, ASU 2017-12 eliminated the requirement to separately measure and report hedge ineffectiveness in the hedging relationship.
The following table presents the pretax impact that changes in the fair values of derivatives designated asfor cash flow hedges had on AOCI and earnings duringhedges. No components of the three months ended September 30, 2016 (in millions):Company’s hedging instruments were excluded from the assessment of hedge effectiveness.

 
Gain (Loss)
Recognized
in OCI

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

Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)
 
Foreign currency contracts$(48)Net operating revenues$141
$(2) 
Foreign currency contracts9
Cost of goods sold8

 
Foreign currency contracts
Interest expense(2)
 
Foreign currency contracts36
Other income (loss) — net40

 
Interest rate contracts26
Interest expense(2)3
 
Commodity contracts(1)Cost of goods sold

 
Total$22
 $185
$1
 
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 statements of income.








The following table presents the pretax impact that changes in the fair values of derivatives designated as cash flow hedges had on AOCI and earnings during the nine months ended September 30, 2016 (in millions):
 
Gain (Loss)
Recognized
in OCI

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

Gain (Loss) Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)
 
Foreign currency contracts$(348)Net operating revenues$419
$(3) 
Foreign currency contracts(34)Cost of goods sold41
(1) 
Foreign currency contracts
Interest expense(6)
 
Foreign currency contracts25
Other income (loss) — net38

 
Interest rate contracts(226)Interest expense(6)3
 
Commodity contracts
Cost of goods sold

 
Total$(583) $486
$(1) 
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 statements of income.
As of September 29, 2017,June 28, 2019, the Company estimates that it will reclassify into earnings during the next 12 months $175 millionnet losses of gains$36 million from the pretax amount recorded in AOCI as the anticipated cash flows occur.
Fair Value Hedging Strategy
The Company uses interest rate swap agreements designated as fair value hedges to minimize exposure to changes in the fair value of fixed-rate debt that results from fluctuations in benchmark interest rates. The Company also uses cross-currency interest rate swaps to hedge the changes in the fair value of foreign currency denominated debt relating to changes in foreign currency exchange rates and benchmark interest rates. The changes in fair values of derivatives designated as fair value hedges and the offsetting changes in fair values of the hedged items are recognized in earnings. The ineffective portions of these hedges are immediately recognized in earnings. As of September 29, 2017, such adjustments had cumulatively increased the carrying value of our long-term debt by $25 million. When a derivative is no longer designated as a fair value hedge for any reason, including termination and maturity, the remaining unamortized difference between the carrying value of the hedged item at that time and the face value of the hedged item is amortized to earnings over the remaining life of the hedged item, or immediately if the hedged item has matured. The total notional values of derivatives that related to our fair value hedges of this type were $8,12312,696 million and $6,158$8,023 million as of September 29, 2017June 28, 2019 and December 31, 20162018, respectively.
The Company also uses fair value hedges to minimize exposure to changes in the fair value of certain available-for-sale securities from fluctuations in foreign currency exchange rates. The changes in fair values of derivatives designated as fair value hedges and the offsetting changes in fair values of the hedged items due to changes in foreign currency exchange rates are recognized in earnings. As a result, any difference is reflected in earnings as ineffectiveness. The total notional valuesAs of derivatives that related to ourJune 28, 2019 and December 31, 2018, we did not have any fair value hedges of this type were $1,002 million and $1,163 million as of September 29, 2017 and December 31, 2016, respectively.type.


The following table summarizestables 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 contractsInterest expense$229
$(3)
Fixed-rate debtInterest 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 contractsInterest expense$441
$(19)
Fixed-rate debtInterest expense(437)9
Net impact to interest expense $4
$(10)
Foreign currency contractsOther income (loss) — net$
$(6)
Available-for-sale securitiesOther income (loss) — net
6
Net impact to other income (loss) — net $
$
Net impact of fair value hedging instruments $4
$(10)
Hedging Instruments and Hedged Items
Location of Gain (Loss)
Recognized in Income
Gain (Loss)
Recognized in Income1
Three Months Ended
September 29,
2017

September 30,
2016

Interest rate contractsInterest expense$19
$
Fixed-rate debtInterest expense(15)(1)
Net impact to interest expense $4
$(1)
Foreign currency contractsOther income (loss) — net$(23)$(67)
Available-for-sale securitiesOther income (loss) — net26
66
Net impact to other income (loss) — net


$3
$(1)
Net impact of fair value hedging instruments
$7
$(2)
1 The net impacts represent the ineffective portions of the hedge relationships and the amounts excluded from the assessment of hedge effectiveness.



The following table summarizes the pretax impact that changesamounts recorded in the fair values of derivatives designated ascondensed consolidated balance sheets related to hedged items in fair value hedges had on earningshedging relationships (in millions):
Hedging Instruments and Hedged Items
Location of Gain (Loss)
Recognized in Income
Gain (Loss)
Recognized in Income1
Nine Months Ended
September 29,
2017

September 30,
2016

Interest rate contractsInterest expense$(46)$398
Fixed-rate debtInterest expense42
(364)
Net impact to interest expense $(4)$34
Foreign currency contractsOther income (loss) — net$(66)$(37)
Available-for-sale securitiesOther income (loss) — net72
34
Net impact to other income (loss) — net


$6
$(3)
Net impact of fair value hedging instruments
$2
$31
 Carrying Value of the Hedged Item 
Cumulative Amount of Fair Value
Hedging Adjustments Included in the
Carrying Value of the Hedged Item1
 June 28,
2019

December 31,
2018

 June 28,
2019

December 31,
2018

Long-term debt$13,310
$8,043
 $526
$62
1 The net impacts represent the ineffective portionsCumulative amount of the hedge relationships and the amounts excluded from the assessment of hedge effectiveness.fair value hedging adjustments does not include changes due to foreign currency exchange rates.
Hedges of Net Investments in Foreign Operations Strategy
The Company uses forward contracts and a portion of its foreign currency denominated debt, a non-derivative financial instrument, to protect the value of our net investments in a number of foreign subsidiaries.operations. For derivative instruments that are designated and qualify as hedges of net investments in foreign operations, the changes in fair values of the derivative instruments are recognized in net foreign currency translation adjustment,adjustments, a component of AOCI, to offset the changes in the values of the net investments being hedged. For non-derivative financial instruments that are designated and qualify as hedges of net investments in foreign operations, the change in the carrying value of the designated portion of the non-derivative financial instrument due to changes in foreign currency exchange rates is recorded in net foreign currency translation adjustment.adjustments. Any ineffective portions of net investment hedges are reclassified from AOCI into earnings during the period of change.


The following table summarizes the notional values and pretax impact of changes in the fair values of instruments designated as net investment hedges (in millions):
 Notional Amount Gain (Loss) Recognized in OCI
 as of Three Months Ended Six Months Ended
 June 28,
2019

December 31, 2018
 June 28,
2019

June 29,
2018

 June 28,
2019

June 29,
2018

Foreign currency contracts$
$
 $7
$
 $29
$
Foreign currency denominated debt12,510
12,494
 (163)705
 (32)294
Total$12,510
$12,494
 $(156)$705
 $(3)$294
 Notional Amount Gain (Loss) Recognized in OCI
 as of Three Months Ended Nine Months Ended
 September 29,
2017

December 31, 2016
 September 29,
2017

September 30,
2016

 September 29,
2017

September 30,
2016

Foreign currency contracts$170
$100
 $(4)$(9) $(19)$(235)
Foreign currency denominated debt13,118
11,113
 (549)(67) (1,475)(323)
Total$13,288
$11,213
 $(553)$(76) $(1,494)$(558)

The Company did not reclassify any gains or losses related to net investment hedges from AOCI into earnings during the three and ninesix months ended SeptemberJune 28, 2019 and June 29, 2017.2018. In addition, the Company did not have any ineffectiveness related to net investment hedges during the three and ninesix months ended SeptemberJune 28, 2019 and June 29, 2017.2018. 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 statementsstatement of cash flows.
The Company reclassified net deferred losses of $77 million related to the deconsolidation of our German bottling operations from AOCI into earnings during the nine months ended September 30, 2016. Refer to Note 2.
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 statementsstatement of income. In addition, we use foreign currency economic hedges to minimize the variability in cash flows associated with fluctuations in foreign currency exchange rates.rates, including those related to certain acquisition and divestiture activities. The changes in fair values of economic hedges used to offset the variability in U.S. dollar net cash flows are recognized into earnings in the line items net operating revenues, or cost of goods sold or other income (loss) — net in our condensed consolidated statementsstatement of income, as applicable. The total notional values of derivatives related to our foreign currency economic hedges were $6,0266,188 million and $5,27610,939 million as of September 29, 2017June 28, 2019 and December 31, 20162018, 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, andor selling, general and administrative expenses in our condensed consolidated statementsstatement of income, as applicable. The total notional values of derivatives related to our economic hedges of this type were $402718 million and $447373 million as of September 29, 2017June 28, 2019 and December 31, 20162018, respectively.
The following table presentstables present the pretax impact that changes in the fair values of derivatives not designated as hedging instruments had on earnings (in millions):
 Three Months Ended
Derivatives Not Designated
as Hedging Instruments
Location of Gain (Loss)
Recognized in Income
September 29,
2017

September 30,
2016

Location of Gain (Loss) Recognized in Income
Gain (Loss)
Recognized in Income
Derivatives Not Designated as Hedging InstrumentsThree Months Ended
June 28,
2019

June 29,
2018

Net operating revenues$(2)$33
Foreign currency contractsNet operating revenues$(5)$(6)Cost of goods sold4
1
Foreign currency contractsOther income (loss) — net47

Other income (loss) — net(46)(73)
Interest rate contracts
Interest expense

2
Interest expense
1
Commodity contractsNet operating revenues12

Cost of goods sold(18)(2)
Commodity contractsCost of goods sold(15)(9)
Commodity contractsSelling, general and administrative expenses3
(1)
Other derivative instrumentsSelling, general and administrative expenses8
3
Selling, general and administrative expenses11
(1)
Other derivative instrumentsOther income (loss) — net1

Other income (loss) — net
1
Total $51
$(11) $(51)$(40)
The following table presents the pretax impact that changes in the fair values of derivatives not designated as hedging instruments had on earnings (in millions):

Derivatives Not Designated as Hedging InstrumentsLocation of Gain (Loss) Recognized in Income
Gain (Loss)
Recognized in Income
Six Months Ended
June 28,
2019

June 29,
2018

Foreign currency contractsNet operating revenues$(13)$26
Foreign currency contractsCost of goods sold2
(6)
Foreign currency contractsOther income (loss) — net(25)(116)
Interest rate contractsInterest expense
(1)
Commodity contractsCost of goods sold2
12
Other derivative instrumentsSelling, general and administrative expenses28
(7)
Other derivative instrumentsOther income (loss) — net34

Total $28
$(92)
  Nine Months Ended
Derivatives Not Designated
as Hedging Instruments
Location of Gain (Loss)
Recognized in Income
September 29,
2017

September 30,
2016

Foreign currency contractsNet operating revenues$(23)$(34)
Foreign currency contractsCost of goods sold
4
Foreign currency contractsOther income (loss) — net149
(116)
Interest rate contractsInterest expense
2
Commodity contractsNet operating revenues7
3
Commodity contractsCost of goods sold13
68
Commodity contractsSelling, general and administrative expenses
3
Other derivative instrumentsSelling, general and administrative expenses33
11
Other derivative instrumentsOther income (loss) — net2
(14)
Total $181
$(73)













NOTE 6:7: DEBT AND BORROWING ARRANGEMENTS
During the ninesix months ended September 29, 2017,June 28, 2019, the Company issued U.S. dollar- and euro-denominated debt of $1,000 million and €2,500 million, respectively.totaling €3,500 million. The carrying value of this debt as of September 29, 2017,June 28, 2019 was $3,967$3,956 million. The general terms of the notes issued are as follows:
$500€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 25, 2022,30, 2019, at a fixed interest rate of 2.20 percent;
$500 million total principal amount of notes due May 25, 2027, at a fixed interest rate of 2.90 percent;
€1,5001.375 percent and €1,500 million total principal amount of notes due March 8, 2019, at a variable interest rate equal to the three-month Euro Interbank Offered Rate ("EURIBOR")three month EURIBOR plus 0.25 percent;
€500 million total principal amount of notes due March 9, 2021, at a fixed interest rate of 0.00 percent; and
€500 million total principal amount of notes due March 8, 2024, at a fixed interest rate of 0.50 percent.
During the nine months ended September 29, 2017, the Company retired upon maturity $206 million total principal amount of notes due August 1, 2017, at a fixed interest rate of 7.125 percent
NOTE 8: LEASES
We have operating leases primarily for real estate, vehicles, and €2,000 million total principal amount of notes due March 9, 2017, at a variable interest rate equalmanufacturing and other equipment.
Balance sheet information related to the three-month EURIBOR plus 0.15 percent. The Company also extinguished a portion of the long-term debt that was assumed in connection with our acquisition of CCE's former North America business ("Old CCE"). The extinguished notes had a carrying value of $417 million, which included fair value adjustments recordedoperating leases is as part of purchase accounting. The general terms of the notes extinguished were as follows:follows (in millions):
$95.6 million total principal amount of notes due August 15, 2019, at a fixed interest rate of 4.50 percent;
 June 28,
2019

Operating lease ROU assets1
$1,330
Current portion of operating lease liabilities2
$282
Noncurrent portion of operating lease liabilities3
1,071
Total operating lease liabilities$1,353
$38.6 million total principal amount of notes due February 1 2022, at a fixed interest rate of 8.50 percent;
$11.7 million total principal amount of notes due September 15, 2022, at a fixed interest rate of 8.00 percent;
$36.5 million total principal amount of notes due September 15, 2023, at a fixed interest rate of 6.75 percent;
$9.9 million total principal amount of notes due October 1, 2026, at a fixed interest rate of 7.00 percent;
$53.8 million total principal amount of notes due November 15, 2026, at a fixed interest rate of 6.95 percent;
$41.3 million total principal amount of notes due September 15, 2028, at a fixed interest rate of 6.75 percent;
$32.0 million total principal amount of notes due October 15, 2036, at a fixed interest rate of 6.70 percent;
$3.4 million total principal amount of notes due March 18, 2037, at a fixed interest rate of 5.71 percent;
$24.3 million total principal amount of notes due January 15, 2038, at a fixed interest rate of 6.75 percent; and
$4.7 million total principal amount of notes due May 15, 2098, at a fixed interest rate of 7.00 percent.
The CompanyOperating lease ROU assets are recorded a net charge of $38 million in the line item interest expenseother assets in our condensed consolidated statementbalance sheet.
2 The current portion of incomeoperating 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 ninesix months ended September 29, 2017. This net charge was dueJune 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 term7 years
Weighted-average discount rate3%




The following table summarizes the maturity of our operating lease liabilities as of June 28, 2019 (in millions):
2019$144
2020261
2021223
2022189
2023156
Thereafter465
Total operating lease payments1,438
Less: Imputed interest85
Total operating lease liabilities$1,353

Our leases have remaining lease terms of 1 year to the extinguishment20 years, inclusive of long-term debt described above.renewal or termination options that we are reasonably certain to exercise.
NOTE 79: COMMITMENTS AND CONTINGENCIES
Guarantees
As of September 29, 2017,June 28, 2019, we were contingently liable for guarantees of indebtedness owed by third parties of $690$634 million, of which $351$252 million was related to variable interest entities. TheseOur 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 wasis individually significant. The amount representsThese amounts represent the maximum potential future payments that we could be required to make under the guarantees; however, we do not consider it probable that we will be required to satisfy these guarantees.
We believe our exposure to concentrations of credit risk is limited due to the diverse geographic areas covered by our operations.
Legal Contingencies
The Company is involved in various legal proceedings. We establish reserves for specific legal proceedings when we determine that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated. Management has also identified certain other legal matters where we believe an unfavorable outcome is reasonably possible and/or for which no estimate of possible losses can be made. Management believes that the total liabilities toof the Company that may arise as a result of currently pending legal proceedings will not have a material adverse effect on the Company taken as a whole.


Tax Audits
The Company is involved in various tax matters, with respect to some of which the outcome is uncertain. We establish reserves to remove some or all of the tax benefit of any of our tax positions at the time we determine that it becomes uncertain based upon one of the following conditions: (1) the tax position is not "more likely than not" to be sustained,sustained; (2) the tax position is "more likely than not" to be sustained, but for a lesser amount,amount; or (3) the tax position is "more likely than not" to be sustained, but not in the financial period in which the tax position was originally taken. For purposes of evaluating whether or not a tax position is uncertain, (1) we presume the tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information; (2) the technical merits of a tax position are derived from authorities such as legislation and statutes, legislative intent, regulations, rulings and case law and their applicability to the facts and circumstances of the tax position; and (3) each tax position is evaluated without consideration of the possibility of offset or aggregation with other tax positions taken. A number of years may elapse before a particular uncertain tax position is audited and finally resolved or when a tax assessment is raised.resolved. The number of years subject to tax audits or tax assessments varies depending on the tax jurisdiction. The tax benefit that has been previously reserved because of a failure to meet the "more likely than not" recognition threshold would be recognized in our income tax expense in the first interim period when the uncertainty disappears under any one of the following conditions: (1) the tax position is "more likely than not" to be sustained,sustained; (2) the tax position, amount, and/or timing is ultimately settled through negotiation or litigation,litigation; or (3) the statute of limitations for the tax position has expired. Refer to Note 13.15.


On September 17, 2015, the Company received a Statutory Notice of Deficiency ("Notice") from the Internal Revenue Service ("IRS") for the tax years 2007 through 2009, after a five-year audit. In the Notice, the IRS claimsclaimed 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.
TheDuring the 2007-2009 audit period, the Company has 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 providesprovided prospective penalty protection as long asconditioned on the Company followsCompany's continued adherence to the prescribed methodology andabsent a change in material facts andor circumstances andor relevant federal tax law have not changed. On February 11, 2016,law. Although the IRS notified the Company,subsequently asserted, without further explanation, that the IRS has determined that material facts and circumstances and relevant federal tax law havehad changed, and that it may asserthas not asserted penalties. The Company does not agree with this determination. The Company's compliance with the closing agreement was audited and confirmed by the IRS in five successive audit cycles covering the subsequent 11 years through 2006, with the last audit concluding as recently as 2009.
The Notice represents a repudiation of the methodology previously adopted in the 1996 closing agreement. The IRS designated the matter for litigation on October 15, 2015. To the extent the matter remains designated, the Company will be prevented from pursuing any administrative settlement at IRS Appeals or under the IRS Advance Pricing and Mutual Agreement Program.
The Company firmly believes that the IRS' claims are without merit and plansis pursuing, and will continue to pursue, all available administrative and judicial remedies necessary to resolve this matter.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 potential tax liabilityadjustment of $135 million. This increases the potential additional federal income tax liability to approximately $3.4 billion for the period, plus interest. A trial date has been set for March 5, 2018. The Company intends to vigorously defend its position and is confident in its ability to prevail on the merits.
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. ThatOn December 14, 2017, the U.S. Tax Court issued a decision on the summary judgment motion is still pending.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 regularly assessesand the likelihoodIRS 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 adverse outcomes resulting from examinations such as thisthe court's decision. In the interim, or subsequent to determine the adequacy of its tax reserves. Thecourt's decision, the IRS may propose similar adjustments for years subsequent to the 2007-2009 litigation period. While the Company believescontinues to strongly disagree with the IRS' position, there is no assurance that the final adjudicationcourt will rule in the Company's favor, and it is possible that all or some portion of this matter will not have a material impact on its consolidated financial position, results of operations or cash flows. However, the ultimate outcome of disputes of this nature is uncertain, and ifadjustment proposed by the IRS wereNotice ultimately could be sustained. In that event, the Company will be subject to prevail on its assertions,significant additional liabilities for the additional tax, interestyears at issue and any potential penaltiespotentially 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 $514$324 million and $527$362 million as of September 29, 2017June 28, 2019 and December 31, 2016,2018, respectively.


NOTE 810: OTHER COMPREHENSIVE INCOME
AOCI attributable to shareowners of The Coca-Cola Company is separately presented in our condensed consolidated balance sheetssheet 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 sheetssheet as part of the line item equity attributable to noncontrolling interests.



AOCI attributable to shareowners of The Coca-Cola Company consisted of the following, net of tax (in millions):
 June 28,
2019

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

 September 29,
2017

 December 31, 2016
Foreign currency translation adjustments$(8,271) $(9,780)
Accumulated derivative net gains (losses)(80) 314
Unrealized net gains (losses) on available-for-sale securities470
 305
Adjustments to pension and other benefit liabilities(1,962) (2,044)
Accumulated other comprehensive income (loss)$(9,843) $(11,205)
1The 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):
Nine Months Ended September 29, 2017

Six Months Ended June 28, 2019
Shareowners of
The Coca-Cola Company

Noncontrolling
Interests

Total
Shareowners of
The Coca-Cola Company

Noncontrolling
Interests

Total
Consolidated net income$4,000
$
$4,000
$4,285
$46
$4,331
Other comprehensive income:  
Net foreign currency translation adjustments1,509
2
1,511
270
11
281
Net gain (loss) on derivatives1
(394)
(394)
Net change in unrealized gain (loss) on available-for-sale securities2
165

165
Net gains (losses) on derivatives1
(16)
(16)
Net change in unrealized gains (losses) on available-for-sale debt
securities2
30

30
Net change in pension and other benefit liabilities3
82

82
68

68
Total comprehensive income$5,362
$2
$5,364
$4,637
$57
$4,694
1 Refer to Note 56 for additional information related to the net gaingains or losslosses on derivative instruments designated and qualifying as cash flow hedging instruments.
2 Refer to Note 34 for additional information related to the net unrealized gaingains or losslosses on available-for-sale debt securities.
3
Refer to Note 12 for additional information related to the Company's pension and other postretirement benefit liabilities.

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



The following tables present OCI attributable to shareowners of The Coca-Cola Company, including our proportionate share of equity method investees' OCI (in millions):
Three Months Ended September 29, 2017Before-Tax Amount
 Income Tax
 After-Tax Amount
Three Months Ended June 28, 2019Before-Tax Amount
 Income Tax
 After-Tax Amount
Foreign currency translation adjustments:          
Translation adjustments arising during the period$162
 $(174) $(12)$(882) $2
 $(880)
Reclassification adjustments recognized in net income(17) 
 (17)
Gains (losses) on intra-entity transactions that are of a long-term-investment nature1,063
 
 1,063
Gains (losses) on intra-entity transactions that are of a long-term investment nature323
 
 323
Gains (losses) on net investment hedges arising during the period1
(553) 211
 (342)(156) 29
 (127)
Net foreign currency translation adjustments655
 37
 692
$(715) $31
 $(684)
Derivatives:
 
 

 
 
Gains (losses) arising during the period54
 (19) 35
$(81) $19
 $(62)
Reclassification adjustments recognized in net income(207) 76
 (131)51
 (13) 38
Net gains (losses) on derivatives1
(153) 57
 (96)$(30) $6
 $(24)
Available-for-sale securities:
 
 
Available-for-sale debt securities:
 
 
Unrealized gains (losses) arising during the period20
 (17) 3
$35
 $(3) $32
Reclassification adjustments recognized in net income(4) 2
 (2)(22) 5
 (17)
Net change in unrealized gain (loss) on available-for-sale securities2
16
 (15) 1
Net change in unrealized gains (losses) on available-for-sale debt securities2
$13
 $2
 $15
Pension and other benefit liabilities:
 
 

 
 
Net pension and other benefit liabilities arising during the period(120) 49
 (71)$8
 $1
 $9
Reclassification adjustments recognized in net income193
 (73) 120
37
 (9) 28
Net change in pension and other benefit liabilities3
73
 (24) 49
$45
 $(8) $37
Other comprehensive income (loss) attributable to shareowners of The Coca-Cola Company$591
 $55
 $646
$(687) $31
 $(656)
1 
Refer to Note 56 for additional information related to the net gaingains or losslosses on derivative instruments designated and qualifying as cash flow hedging instruments.
2 
Includes reclassification adjustments related to divestitures of certain available-for-sale securities. Refer to Note 3 and Note 104 for additional information related to these divestitures.the net unrealized gains or losses on available-for-sale debt securities.
3 
Refer to Note 1214 for additional information related to the Company's pension and other postretirement benefit liabilities.











Six Months Ended June 28, 2019Before-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 income192
 
 192
Gains (losses) on intra-entity transactions that are of a long-term investment nature36
 
 36
Gains (losses) on net investment hedges arising during the period1
(3) 1
 (2)
Net foreign currency translation adjustments$340
 $(70) $270
Derivatives:     
Gains (losses) arising during the period$(117) $23
 $(94)
Reclassification adjustments recognized in net income104
 (26) 78
Net gains (losses) on derivatives1
$(13) $(3) $(16)
Available-for-sale debt securities:     
Unrealized gains (losses) arising during the period$59
 $(10) $49
Reclassification adjustments recognized in net income(24) 5
 (19)
Net change in unrealized gains (losses) on available-for-sale debt securities2
$35
 $(5) $30
Pension and other benefit liabilities:     
Net pension and other benefit liabilities arising during the period$7
 $5
 $12
Reclassification adjustments recognized in net income74
 (18) 56
Net change in pension and other benefit liabilities3
$81
 $(13) $68
Other comprehensive income (loss) attributable to shareowners of The Coca-Cola
   Company
$443
 $(91) $352
1
Refer to Note 6 for additional information related to the net gains or losses on derivative instruments.
2
Refer to Note 4 for additional information related to the net unrealized gains or losses on available-for-sale debt securities.
3
Refer to Note 14 for additional information related to the Company's pension and other postretirement benefit liabilities.
Nine Months Ended September 29, 2017Before-Tax Amount
 Income Tax
 After-Tax Amount
Three Months Ended June 29, 2018Before-Tax Amount
 Income Tax
 After-Tax Amount
Foreign currency translation adjustments:          
Translation adjustments arising during the period$(793) $(142) $(935)$(1,152) $(17) $(1,169)
Reclassification adjustments recognized in net income103
 (6) 97
42
 
 42
Gains (losses) on intra-entity transactions that are of a long-term-investment nature3,270
 
 3,270
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 period1
(1,494) 571
 (923)705
 (202) 503
Net foreign currency translation adjustments1,086
 423
 1,509
$(1,777)
$(219)
$(1,996)
Derivatives:
 
 
     
Gains (losses) arising during the period(159) 56
 (103)$(1) $24
 $23
Reclassification adjustments recognized in net income(466) 175
 (291)60
 (15) 45
Net gains (losses) on derivatives1
(625) 231
 (394)$59
 $9
 $68
Available-for-sale securities:
 
 
Available-for-sale debt securities:     
Unrealized gains (losses) arising during the period365
 (123) 242
$(113) $23
 $(90)
Reclassification adjustments recognized in net income(117) 40
 (77)
Net change in unrealized gain (loss) on available-for-sale securities2
248
 (83) 165
Net change in unrealized gains (losses) on available-for-sale debt securities2
$(113) $23
 $(90)
Pension and other benefit liabilities:
 
 
     
Net pension and other benefit liabilities arising during the period(161) 73
 (88)$261
 $(61) $200
Reclassification adjustments recognized in net income266
 (96) 170
111
 (29) 82
Net change in pension and other benefit liabilities3
105
 (23) 82
$372
 $(90) $282
Other comprehensive income (loss) attributable to shareowners of The Coca-Cola Company$814
 $548
 $1,362
$(1,459)
$(277)
$(1,736)
1 
Refer to Note 56 for additional information related to the net gaingains or losslosses on derivative instruments designated and qualifying as cash flow hedging instruments.
2 
Includes reclassification adjustments related to divestitures of certain available-for-sale securities. Refer to Note 3 and Note 104 for additional information related to these divestitures.the net unrealized gains or losses on available-for-sale debt securities.
3 
Refer to Note 1214 for additional information related to the Company's pension and other postretirement benefit liabilities.




Three Months Ended September 30, 2016Before-Tax Amount
 Income Tax
 After-Tax Amount
Six Months Ended June 29, 2018Before-Tax Amount
 Income Tax
 After-Tax Amount
Foreign currency translation adjustments:          
Translation adjustments arising during the period$(130) $41
 $(89)$(985) $(85) $(1,070)
Reclassification adjustments recognized in net income242
 (18) 224
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 period1
(76) 29
 (47)294
 (73) 221
Net foreign currency translation adjustments36
 52
 88
$(1,169)
$(158)
$(1,327)
Derivatives:
 
 
     
Gains (losses) arising during the period22
 (8) 14
$65
 $(14) $51
Reclassification adjustments recognized in net income(186) 71
 (115)2
 (1) 1
Net gains (losses) on derivatives1
(164) 63
 (101)$67
 $(15) $52
Available-for-sale securities:
 
 
Available-for-sale debt securities:     
Unrealized gains (losses) arising during the period(98) 31
 (67)$(126) $21
 $(105)
Reclassification adjustments recognized in net income(19) 4
 (15)5
 (1) 4
Net change in unrealized gain (loss) on available-for-sale securities2
(117) 35
 (82)
Net change in unrealized gains (losses) on available-for-sale debt securities2
$(121) $20
 $(101)
Pension and other benefit liabilities:
 
 
     
Net pension and other benefit liabilities arising during the period13
 (2) 11
$271
 $(62) $209
Reclassification adjustments recognized in net income43
 (15) 28
144
 (37) 107
Net change in pension and other benefit liabilities3
56
 (17) 39
$415
 $(99) $316
Other comprehensive income (loss) attributable to shareowners of The Coca-Cola Company$(189) $133
 $(56)$(808) $(252) $(1,060)
1 
Refer to Note 56 for additional information related to the net gaingains or losslosses on derivative instruments designated and qualifying as cash flow hedging instruments.
2 
Includes reclassification adjustments related to divestitures of certain available-for-sale securities. Refer to Note 34 for additional information related to these divestitures.the net unrealized gains or losses on available-for-sale debt securities.
3 
Refer to Note 1214 for additional information related to the Company's pension and other postretirement benefit liabilities.
Nine Months Ended September 30, 2016Before-Tax Amount
 Income Tax
 After-Tax Amount
Foreign currency translation adjustments:     
Translation adjustments arising during the period$332
 $39
 $371
Reclassification adjustments recognized in net income368
 (18) 350
Gains (losses) on net investment hedges arising during the period1
(558) 214
 (344)
Reclassification adjustments for net investment hedges recognized in net income1
77
 (30) 47
Net foreign currency translation adjustments219
 205
 424
Derivatives:
 
 
Gains (losses) arising during the period(585) 221
 (364)
Reclassification adjustments recognized in net income(485) 183
 (302)
Net gains (losses) on derivatives1
(1,070) 404
 (666)
Available-for-sale securities:
 
 
Unrealized gains (losses) arising during the period196
 (46) 150
Reclassification adjustments recognized in net income(93) 22
 (71)
Net change in unrealized gain (loss) on available-for-sale securities2
103
 (24) 79
Pension and other benefit liabilities:
 
 
Net pension and other benefit liabilities arising during the period1
 (1) 
Reclassification adjustments recognized in net income192
 (64) 128
Net change in pension and other benefit liabilities3
193
 (65) 128
Other comprehensive income (loss) attributable to shareowners of The Coca-Cola Company$(555) $520
 $(35)
1
Refer to Note 5 for additional information related to the net gain or loss on derivative instruments designated and qualifying as cash flow hedging instruments.
2
Includes reclassification adjustments related to divestitures of certain available-for-sale securities. Refer to Note 3 for additional information related to these divestitures.
3
Refer to Note 12 for additional information related to the Company's pension and other postretirement benefit liabilities.




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
  
Amount Reclassified from AOCI
into Income
 
Description of AOCI ComponentFinancial Statement Line ItemThree Months Ended September 29, 2017 Nine Months Ended September 29, 2017 Financial Statement Line ItemThree Months Ended June 28, 2019
 Six Months Ended June 28, 2019
 
Foreign currency translation adjustments:          
Divestitures, deconsolidations and other1
Other income (loss) — net$(17) $103
 Other income (loss) — net$
 $192
 
Income before income taxes(17) 103
 Income before income taxes
 192
 
Income taxes
 (6) Consolidated net income$
 $192
 
Consolidated net income$(17) $97
 
Derivatives:          
Foreign currency contractsNet operating revenues$(116) $(338) Net operating revenues$(1) $(7) 
Foreign currency and commodity contractsCost of goods sold5
 (1) 
Foreign currency contractsOther income (loss) — net(107) (159) Cost of goods sold(3) (7) 
Divestitures, deconsolidations and other1

Other income (loss) — net
 1
 
Foreign currency contractsOther income (loss) — net43
 93
 
Divestitures, deconsolidations and otherOther income (loss) — net
 1
 
Foreign currency and interest rate contractsInterest expense11
 31
 Interest expense12
 24
 
Income before income taxes(207) (466) Income before income taxes51
 104
 
Income taxes76
 175
 Income taxes(13) (26) 
Consolidated net income$(131) $(291) Consolidated net income$38
 $78
 
Available-for-sale securities:     
Divestitures, deconsolidations and other1

Other income (loss) — net$
 $(87) 
Sale of securitiesOther income (loss) — net(4) (30) 
Available-for-sale debt securities:     
Sale of debt securitiesOther income (loss) — net$(22) $(24) 
Income before income taxes(4) (117) Income before income taxes(22) (24) 
Income taxes2
 40
 Income taxes5
 5
 
Consolidated net income$(2) $(77) Consolidated net income$(17) $(19) 
Pension and other benefit liabilities:          
Curtailment charges (credits)2
Other operating charges$1
 $(17) 
Settlement charges (credits)2
Other operating charges150
 150
 
Divestitures, deconsolidations and other1
Other income (loss) — net
 7
 
Recognized net actuarial loss (gain)*46
 139
 
Recognized net actuarial lossOther income (loss) — net$38
 $77
 
Recognized prior service cost (credit)*(4) (13) Other income (loss) — net(1) (3) 
Income before income taxes193
 266
 Income before income taxes37
 74
 
Income taxes(73) (96) Income taxes(9) (18) 
Consolidated net income$120
 $170
 Consolidated net income$28
 $56
 
1Primarily related to the integration of Coca-Cola West Co., Ltd. ("CCW") and Coca-Cola East Japan Co., Ltd. ("CCEJ") to establish
Coca-Cola Bottlers Japan Inc. ("CCBJI"). Refer to Note 10.
2 The curtailment charges (credits) and settlement charges (credits) were primarily related to North America refranchising and the
Company's productivity, restructuring and integration initiatives.
*This component of AOCI is included in the Company's computation of net periodic benefit cost and is not reclassified out of AOCI into a
single line item in our condensed consolidated statements of income in its entirety. Refer to Note 12 for additional information.
1
Primarily related to our previously held equity ownership interest in CHI and the sale of a portion of our equity ownership interest in Andina. Refer to Note 2.




















NOTE 911: CHANGES IN EQUITY
The following table providestables 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, 2019Common Shares Outstanding
Total
Reinvested
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Common
Stock

Capital
Surplus

Treasury
Stock

Non-
controlling
Interests

March 29, 20194,268
$19,804
$63,704
$(12,325)$1,760
$16,577
$(51,981)$2,069
Comprehensive income (loss)
2,011
2,607
(656)


60
Dividends paid/payable to
  shareowners of The Coca-Cola
  Company ($0.40 per share)

(1,709)(1,709)




Dividends paid to noncontrolling
   interests

(15)




(15)
Purchases of treasury stock(5)(237)



(237)
Impact related to stock-based
   compensation plans
12
441



256
185

June 28, 20194,275
$20,295
$64,602
$(12,981)$1,760
$16,833
$(52,033)$2,114
   
Shareowners of The Coca-Cola Company  
 
 Common Shares Outstanding
Total
Reinvested
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Common
Stock

Capital
Surplus

Treasury
Stock

Non-
controlling
Interests

December 31, 20164,288
$23,220
$65,502
$(11,205)$1,760
$14,993
$(47,988)$158
Comprehensive income (loss)
5,364
4,000
1,362



2
Dividends paid/payable to shareowners of The Coca-Cola Company
(4,743)(4,743)




Dividends paid to noncontrolling interests
(15)




(15)
Deconsolidation of certain entities
(153)




(153)
Purchases of treasury stock(69)(3,012)



(3,012)
Impact related to stock compensation plans43
1,453



709
744

Other activities
38



(3)
41
September 29, 20174,262
$22,152
$64,759
$(9,843)$1,760
$15,699
$(50,256)$33
   
Shareowners of The Coca-Cola Company  
 
Six Months Ended June 28, 2019Common Shares Outstanding
Total
Reinvested
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Common
Stock

Capital
Surplus

Treasury
Stock

Non-
controlling
Interests

December 31, 20184,268
$19,058
$63,234
$(12,814)$1,760
$16,520
$(51,719)$2,077
Adoption of accounting standards1

(18)501
(519)



Comprehensive income (loss)
4,694
4,285
352



57
Dividends paid/payable to
   shareowners of The Coca-Cola
   Company ($0.80 per share)

(3,418)(3,418)




Dividends paid to noncontrolling
   interests

(20)




(20)
Purchases of treasury stock(14)(635)



(635)
Impact related to stock-based
   compensation plans
21
634



313
321

June 28, 20194,275
$20,295
$64,602
$(12,981)$1,760
$16,833
$(52,033)$2,114
1Refer to Note 1 and Note 6.



   Shareowners of The Coca-Cola Company   
Three Months Ended June 29, 2018Common Shares Outstanding
Total
Reinvested
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Common
Stock

Capital
Surplus

Treasury
Stock

Non-controlling
Interests

March 30, 20184,259
$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, 20184,253
$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, 2018Common Shares Outstanding
Total
Reinvested
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Common
Stock

Capital
Surplus

Treasury
Stock

Non-controlling
Interests

December 31, 20174,259
$18,977
$60,430
$(10,305)$1,760
$15,864
$(50,677)$1,905
Adoption of accounting standards1

2,605
3,014
(409)



Comprehensive income (loss)
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, 20184,253
$20,176
$63,808
$(11,774)$1,760
$16,117
$(51,588)$1,853
1 Refer to Note 1, Note 3 and Note 4.



NOTE 1012: SIGNIFICANT OPERATING AND NONOPERATING ITEMS
Other Operating Charges
During the three months ended September 29, 2017,June 28, 2019, the Company recorded other operating charges of $360$92 million. These charges primarily consisted of $213$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. In addition, other operating charges included $129 million related to the Company's productivity and reinvestment program and $18 million related to tax litigation expense. Refer to Note 1113 for additional information on the Company's productivity integration and restructuring initiatives.reinvestment program. Refer to Note 1517 for the impact these charges had on our operating segments.segments and Corporate.
During the ninesix months ended September 29, 2017,June 28, 2019, the Company recorded other operating charges of $1,491$219 million. These charges primarily consisted of $737 million of CCR asset impairments and $355$123 million related to the Company's productivity and reinvestment program. In addition, other operating charges included $314$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, $43operations. Other operating charges also included $22 million related to tax litigation expense and $34 million related to impairments of Venezuelan intangible assets.expense. Refer to Note 19 for additional information aboutrelated to the Venezuelan intangible assetstax litigation. Refer to Note 13 for additional information on the Company's productivity and reinvestment program. Refer to Note 1416 for information on how the Company determined the asset impairment charges. Refer to Note 11 for additional information on the Company's productivity, integration and restructuring initiatives. Refer to Note 1517 for the impact these charges had on our operating segments.segments and Corporate.
During the threesix months ended September 30, 2016,June 29, 2018, the Company incurredrecorded other operating charges of $222$761 million. These charges primarily consisted of a charge$450 million of $76CCR asset impairments and $206 million duerelated to the write-down we recorded related to our receivables from our bottling partner in Venezuela due to changes in exchange ratesCompany's productivity and reinvestment program. In addition, other operating charges of $73included $79 million related to costs incurred to refranchise certain of our North America bottling territories. These costs include, among other items, internal and external costsoperations. Other operating charges also included $27 million related to tax litigation expense. Refer to Note 9 for individuals directly workingadditional information related to the tax litigation. Refer to Note 13 for additional information on the refranchising efforts, severance and costs associated with the implementation of information technology systems to facilitate consistent data standards and availability throughout the North America bottling system. In addition, the Company recorded charges of $59 million due to the Company's productivity and reinvestment program. Refer to Note 116 for additional information on how the Venezuelan exchange rates and Note 11 for additional information onCompany determined the Company's productivity, integration and restructuring initiatives.asset impairment charges. Refer to Note 1517 for the impact these charges had on our operating segments.
During the nine months ended September 30, 2016, the Company incurred other operating charges of $830 million. These charges primarily consisted of $187 million due to the Company's productivitysegments and reinvestment program and $240 million due to the integration of our German bottling operations. In addition, the Company recorded charges of $170 million related to


costs incurred to refranchise certain of our North America bottling territories. The Company also recorded a charge of $100 million related to a cash contribution we made to The Coca-Cola Foundation, a charge of $76 million due to the write-down we recorded related to our receivables from our bottling partner in Venezuela due to changes in exchange rates, and charges of $37 million related to noncapitalizable transaction costs associated with pending and closed transactions. Refer to Note 11 for additional information on the Company's productivity, integration and restructuring initiatives and Note 1 for additional information on the Venezuelan exchange rates. Refer to Note 15 for the impact these charges had on our operating segments.Corporate.
Other Nonoperating Items
Interest Expense
During the nine months ended September 29, 2017, the Company recorded a net charge of $38 million related to the extinguishment of long-term debt. Refer to Note 6.
Equity Income (Loss) — Net
During the three and ninesix months ended September 29, 2017,June 28, 2019, the Company recorded net charges of $16$26 million and $37$68 million, respectively. During the three and ninesix months ended September 30, 2016,June 29, 2018, the Company recorded net charges of $14$33 million and $35$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 1517 for the impact these items had on our operating segments.segments and Corporate.












Other Income (Loss) — Net
During the three months ended September 29, 2017,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 $762$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 $72$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 $50$52 million related to one of our international equity method investees, primarily driven by foreign currency exchange rate fluctuations.investees. These charges were partially offset by a net gain of $79$36 million related to the refranchising of our remaining ChinaLatin American bottling operations, and a net gain of $36 million related cost method investment.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 refranchising of our China bottling operations, North America refranchising and the conversion payments.activities. Refer to Note 154 for additional information on equity and debt securities. Refer to Note 17 for the impact these items had on our operating segments.
During the ninesix months ended SeptemberJune 29, 2017,2018, the Company recognized arecorded charges of $86 million related to pension settlements and net chargecharges of $1,473$104 million due to the refranchising of certain bottling territories in North AmericaAmerica. 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 $287$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. The Company also recorded an other-than-temporary impairment charge of $50 million related to one of our international equity method investees, primarily driven by foreign currency exchange rate fluctuations. Additionally, the Company incurred a charge of $26 million related to our former German bottling operations. These charges were partially offset by a net gain of $445 million related to the integration of CCW and CCEJ to establish CCBJI. In exchange for our previously existing equity interests in CCW and CCEJ, we received an approximate 17 percent equity interest in CCBJI. The Company also recognized a gain of $88$36 million related to the refranchising of our ChinaLatin American bottling operationsoperations. Refer to Note 4 for additional information on equity and related cost method investment and a gain of $25 million as a result of Coca-Cola FEMSA, S.A.B. de C.V. ("Coca-Cola FEMSA"), an equity method investee, issuing additional shares of its stock during the period at a per share amount greater than the carrying value of the Company's per share investment.debt securities. Refer to Note 2 for additional information on therefranchising activities and North America refranchising, the conversion payments and the refranchising of our China bottling operations. Refer to Note 15 for the impact these items had on our operating segments.
During the three months ended September 30, 2016, the Company recognized losses of $1,089 million due to the refranchising of certain bottling territories in North America and a loss of $21 million due to the deconsolidation of our South African bottling operations in exchange for investments in CCBA and CCBA's South African subsidiary. Additionally, the Company incurred charges of $17 million related to payments made to convert the bottling agreements for certain North America bottling partners' territories to a single form of CBA with additional requirements. Refer to Note 2 for additional information on the North America refranchising, the deconsolidation of our South African bottling operations and the conversion payments. Refer to Note 15 for the impact these items had on our operating segments.
During the nine months ended September 30, 2016, the Company recognized a gain of $1,323 million due to the deconsolidation of our German bottling operations and a gain of $18 million resulting from the Company's disposal of its investment in Keurig. These gains were offset by losses of $1,657 million due to the refranchising of certain bottling territories in North America and a loss of $21 million due to the deconsolidation of our South African bottling operations in exchange for investments in CCBA and CCBA's South African subsidiary. Additionally, the Company incurred charges of $17 million related to payments made to convert the bottling agreements for certain North America bottling partners' territories to a single form of


CBA with additional requirements. Refer to Note 2 for additional information on the deconsolidation of our German bottling operations, the Keurig investment disposal, the deconsolidation of our South African bottling operations, the North America refranchising and the conversion payments. Refer to Note 1517 for the impact these items had on our operating segments.


NOTE 1113: PRODUCTIVITY INTEGRATION AND RESTRUCTURING INITIATIVES
Productivity and ReinvestmentREINVESTMENT 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 Old CCE.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 will focusfocuses on four key areas: restructuring the Company's global supply chain; implementing zero-based work, an evolution of zero-based budget principles, across the organization; streamlining and simplifying the Company's operating model; and further driving increased discipline and efficiency in direct marketing investments.
In April 2017, the Company announced its plans to transitionanother 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 $2,763$3,689 million related to thisour productivity and reinvestment program since it commenced. These expenses were recorded in the line itemitems other operating charges and other income (loss) — net in our condensed consolidated statements of income. Refer to Note 1517 for the impact these charges had on our operating segments.segments and Corporate. Outside services reported in the tabletables below primarily relate to expenses in connection with legal, outplacement and consulting activities. Other direct costs reported in the tabletables 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 September 29, 2017June 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 services13
23
(28)
8
Other direct costs10
31
(28)(5)8
Total$74
$55
$(59)$(5)$65

 
Accrued
Balance
June 30, 2017

Costs
Incurred
Three Months Ended
September 29, 2017

Payments
Noncash
and
Exchange

Accrued
Balance
September 29, 2017

Severance pay and benefits$162
$43
$(88)$2
$119
Outside services11
19
(20)(1)9
Other direct costs16
67
(69)(3)11
Total$189
$129
$(177)$(2)$139








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 ninesix months ended September 29, 2017June 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 services10
50
(52)
8
Other direct costs4
61
(40)(17)8
Total$90
$123
$(132)$(16)$65
 
Accrued
Balance
December 31, 2016

Costs
Incurred
Nine Months Ended
September 29, 2017

Payments
Noncash
and
Exchange

Accrued
Balance
September 29, 2017

Severance pay and benefits$123
$143
$(146)$(1)$119
Outside services6
62
(58)(1)9
Other direct costs22
150
(154)(7)11
Total$151
$355
$(358)$(9)$139
Integration of Our German Bottling Operations
In 2008, the Company began the integration of our German bottling operations acquired in 2007. The Company incurred pretax expenses of $240 million related to this initiative during the nine months ended September 30, 2016 and has incurred total pretax expenses of $1,367 million related to this initiative since it commenced. These charges were recorded in the line item other operating charges in our condensed consolidated statements of income and impacted the Bottling Investments operating segment. The expenses recorded in connection with these integration activities were primarily due to involuntary terminations. During the year ended December 31, 2016, the Company deconsolidated our German bottling operations. Therefore, there was no remaining accrual balance as of December 31, 2016.


NOTE 1214: 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
 September 29,
2017

September 30,
2016

 September 29,
2017

September 30,
2016

Service cost$49
$59
 $4
$6
Interest cost76
79
 7
8
Expected return on plan assets1
(163)(161) (3)(3)
Amortization of prior service cost (credit)

 (4)(5)
Amortization of net actuarial loss44
46
 2
2
Net periodic benefit cost6
23
 6
8
Curtailment charges (credits)2
2

 

Settlement charges (credits)2
150

 

Special termination benefits2
15
4
 

Other

 
31
Total cost recognized in condensed consolidated statements of income$173
$27
 $6
$39
 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 cost73
73
 6
6
Expected return on plan assets1
(138)(162) (4)(4)
Amortization of prior service cost (credit)(1)2
 
(3)
Amortization of net actuarial loss38
29
 
1
Net periodic benefit cost (income)(2)(27) 5
2
Settlement charges2

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 20172019 net periodic benefit cost (income) are 8.0
7.7 percent for pension benefitsbenefit plans and 4.54.6 percent for other benefits.
2
The curtailment charges (credits), settlement charges (credits) and special termination benefits were primarily related to North America refranchising and the Company's productivity, restructuring and integration initiatives. Refer to Note 2 and Note 11.

benefit plans.

2The settlement charges in 2018 were related to North America refranchising and the Company's productivity and reinvestment program.
 Pension Benefits   Other Benefits  
 Nine Months Ended
 September 29,
2017

September 30,
2016

 September 29,
2017

September 30,
2016

Service cost$149
$178
 $13
$17
Interest cost232
239
 22
23
Expected return on plan assets1
(487)(490) (9)(9)
Amortization of prior service cost (credit)
(1) (13)(14)
Amortization of net actuarial loss133
138
 6
5
Net periodic benefit cost27
64
 19
22
Curtailment charges (credits)2
2

 (42)
Settlement charges (credits)2
150

 

Special termination benefits2
72
17
 

Other

 
31
Total cost recognized in condensed consolidated statements of income$251
$81
 $(23)$53
 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 cost145
146
 13
12
Expected return on plan assets1
(276)(330) (7)(7)
Amortization of prior service cost (credit)(2)4
 (1)(7)
Amortization of net actuarial loss76
63
 1
2
Net periodic benefit cost (income)(5)(54) 11
5
Settlement charges2

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 20172019 net periodic benefit cost (income) are 8.0
7.7 percent for pension benefitsbenefit plans and 4.54.6 percent for other benefits.benefit plans.
2
The curtailment charges (credits), settlement charges (credits) and special termination benefits were primarily related to North America refranchising and the Company's productivity, restructuring and integration initiatives. Refer to Note 2 and Note 11.
2The settlement charges in 2018 were related to North America refranchising and the Company's productivity and reinvestment program.
All of the amounts in the tables above, other than service cost, were recorded in the line item other income (loss) — net in our condensed consolidated statements of income. During the ninesix months ended September 29, 2017,June 28, 2019, the Company contributed $88$22 million to our pension plans,trusts, and we anticipate making additional contributions of approximately $85$4 million during the remainder of 2017.2019. The Company contributed $519$34 million to our pension planstrusts during the ninesix months ended September 30, 2016. June 29, 2018.
NOTE 1315: INCOME TAXES
OurThe 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 reflectsof 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 which are generally taxed at rates lower than the U.S. statutory rate of 35.0 percent. As a result of employment actions and capital investments made by the Company, certain tax jurisdictions provide income tax incentive grants, including Brazil, Costa Rica, Singapore and Swaziland. The terms of these grants expire from 2017 to 2036. We anticipate that we will be able to extend or renew the grants in these locations. In addition, our effective tax rate reflects the benefits of having 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. statutory rate.
At the end of each interim period, we make our best estimate of theThe Company's effective tax rate expected to be applicablerates for the full fiscal year. This estimate reflects, among other items, our best estimatethree and six months ended June 28, 2019 included $199 million of operating results and foreign currency exchange rates. Based on current tax laws, thebenefit recorded as result of CCBA no longer qualifying as a discontinued operation.


The Company's estimated effective tax raterates for 2017 is 24.0 percent. However, in arriving at this estimate we do not include the estimated impactthree and six months ended June 29, 2018 included $42 million of significant operatingtax benefit and nonoperating items, which may cause significant variations in the customary relationship between income$134 million of tax expense, and income before income taxes.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 7.
The Company recorded income tax expense of $230 million (13.7 percent effective tax rate) and $378 million (26.5 percent effective tax rate) during the three months ended September 29, 2017 and September 30, 2016, respectively. The Company recorded income tax expense of $1,805 million (31.1 percent effective tax rate) and $1,618 million (21.2 percent effective tax rate) during the nine months ended September 29, 2017 and September 30, 2016, respectively.


The following table illustrates the income tax expense (benefit) associated with significant operating and nonoperating items for the interim periods presented (in millions):
 Three Months Ended Nine Months Ended 
 September 29,
2017

 September 30,
2016

 September 29,
2017

 September 30,
2016

 
Asset impairments$
1 
$

$(164)
1 
$

Productivity and reinvestment program(44)
2 
(20)
9 
(127)
2 
(65)
9 
Other productivity, integration and restructuring initiatives






10 
Transaction gains and losses(361)
3 
(246)
11 
172
4 
(363)
12 
Certain tax matters(40)
5 
7
13 
(110)
6 
84
13 
Other — net(12)
7 
8
14 
(41)
8 
(38)
15 
1
Related to charges of $50 million and $821 million during the three and nine months ended September 29, 2017, respectively, due to the impairment of certain assets. Refer to Note 10 and Note 14.
2
Related to charges of $129 million and $355 million during the three and nine months ended September 29, 2017, respectively. These charges were due to the Company's productivity and reinvestment program. Refer to Note 11.
3
Related to a net charge of $968 million which primarily consisted of $762 million of charges as a result of the refranchising of certain bottling territories in North America, $213 million related to costs incurred to refranchise certain of our bottling operations and $72 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 $79 million gain related to the refranchising of our remaining China bottling operations and related cost method investment. Refer to Note 2 and Note 10.
4
Related to a net charge of $1,551 million which primarily consisted of $1,473 million of net charges as a result of the refranchising of certain bottling territories in North America, $314 million of charges related to costs incurred to refranchise certain of our bottling operations, $287 million of charges 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 and a $26 million charge related to our former German bottling operations. These charges were partially offset by a $445 million gain related to the merger of CCW and CCEJ, an $88 million gain related to the refranchising of our China bottling operations and related cost method investment and a $25 million gain related to Coca-Cola FEMSA, an equity method investee, issuing additional shares of its stock. Refer to Note 2 and Note 10.
5
Related to $40 millionof excess tax benefits associated with the Company's share-based compensation arrangements.
6 Related to $122 million of excess tax benefits associated with the Company's share-based compensation arrangements and the tax benefit associated with the reversal of valuation allowances in certain of the Company's foreign jurisdictions, both of which were partially offset by changes to our uncertain tax positions, including interest and penalties.
7 Related to charges of $35 million which primarily consisted of an $18 million charge related to tax litigation expense and a $16 million net charge due to our proportionate share of unusual or infrequent items recorded by certain of our equity method investees. Refer to Note 10.
8 Related to charges of $121 million which primarily consisted of a net charge of $38 million related to the extinguishment of long-term debt, a $43 million charge related to tax litigation expense and a net charge of $37 million due to our proportionate share of unusual or infrequent items recorded by certain of our equity method investees. Refer to Note 10.
9 Related to charges of $59 million and $187 million during the three and nine months ended September 30, 2016, respectively. These charges were due to the Company's productivity and reinvestment program. Refer to Note 10 and Note 11.
10 Related to charges of $240 million during the nine months ended September 30, 2016. These charges were due to the integration of our German bottling operations. Refer to Note 10 and Note 11.
11 Related to charges of $1,204 million which primarily consisted of $1,089 million of charges due to the refranchising of bottling territories in North America, $73 million related to costs incurred to refranchise our North America bottling territories, charges of $17 million  related to payments made to convert the bottling agreements for certain North America bottling partners' territories to a single form of CBA with additional requirements, a loss of $21 million related to the deconsolidation of our South African bottling operations and the $80 million tax impact resulting from the accrual of tax on temporary differences related to the investment in foreign subsidiaries that are now expected to reverse in the foreseeable future. Refer to Note 2 and Note 10.
12 Related to a net charge of $561 million which primarily consisted of $1,657 million of charges due to the refranchising of bottling territories in North America, $170 million related to costs incurred to refranchise our North America bottling territories, charges of $17 million  related to payments made to convert the bottling agreements for certain North America bottling partners' territories to a single form of CBA with additional requirements, a loss of $21 million related to the deconsolidation of our South African bottling operations and the $80 million tax impact resulting from the accrual of tax on temporary differences related to the investment in foreign subsidiaries that are now expected to reverse in the foreseeable future. These charges were partially offset by a $1,288 million net gain related to the deconsolidation of our German bottling operations and an $18 million net gain related to the disposal of our investment in Keurig. Refer to Note 2 and Note 10.
13 Primarily related to changes to our uncertain tax positions, including interest and penalties. The components of the net change in uncertain tax positions were individually insignificant.


14 Related to charges of $99 million which included a $76 million write-down we recorded related to receivables from our bottling partner in Venezuela, a $14 million charge due to our proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees and a $9 million charge due to tax litigation expense. Refer to Note 10.
15 Related to charges of $230 million which included a $100 million cash contribution to The Coca-Cola Foundation, a $76 million charge due to the write-down we recorded related to receivables from our bottling partner in Venezuela, a $35 million net charge due to our proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees and a $19 million charge due to tax litigation expense. Refer to Note 10.
The Company evaluates the recoverability of our deferred tax assets in accordance with U.S. GAAP. We perform our recoverability tests on a quarterly basis, or more frequently, to determine whether it is more likely than not that any of our deferred tax assets will not be realized within their life cycle based on the available evidence. The Company's deferred tax asset valuation allowances are primarily the result of uncertainties regarding the future realization of recorded tax benefits on tax loss carryforwards from operations in various jurisdictions.9.
NOTE 1416: 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 andsecurities 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 TradingDebt and Available-for-SaleEquity Securities
The fair values of our investments in tradingdebt and available-for-saleequity 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 tradingdebt and available-for-saleequity securities classified as Level 2 are priced using quoted market prices for similar instruments or non-bindingnonbinding market prices that are corroborated by observable market data. Inputs into these valuation techniques include actual trade data, benchmark yields, broker/dealer quotes and other similar data. These inputs are obtained from quoted market prices, independent pricing vendors or other sources.
Derivative Financial Instruments
The fair values of our futures contracts are primarily determined using quoted contract prices on futures exchange markets. The fair values of these instruments are based on the closing contract price as of the balance sheet date and are classified as Level 1.
The fair values of our derivative instruments other than futures are determined using standard valuation models. The significant inputs used in these models are readily available in public markets, or can be derived from observable market transactions, and therefore have been classified as Level 2. Inputs used in these standard valuation models for derivative instruments other than futures include the applicable exchange rates, forward rates, interest rates, discount rates and commodity prices. The standard valuation model for options also uses implied volatility as an additional input. The discount rates are based on the historical U.S. Deposit or U.S. Treasury rates, and the implied volatility specific to options is based on quoted rates from financial institutions.
Included in the fair values of derivative instruments is an adjustment for nonperformance risk. The adjustment is based on current credit default swap ("CDS") rates applied to each contract, by counterparty. We use our counterparty's CDS rate when we are in an asset position and our own CDS rate when we are in a liability position. The adjustment for nonperformance risk did not have a significant impact on the fair values of our derivative instruments.



The following tables summarize those assets and liabilities measured at fair value on a recurring basis (in millions):
September 29, 2017Level 1
Level 2
Level 3
 
Other4

Netting
Adjustment5

 
Fair Value
Measurements

 
June 28, 2019Level 1
Level 2
Level 3
 
Other3

Netting
Adjustment

4 
Fair Value
Measurements

 
Assets:              
Trading securities1
$233
$123
$4
 $67
$
 $427
 
Available-for-sale securities1
1,892
6,532
167
3 


 8,591
 
Equity securities with readily determinable values1
$1,810
$208
$10
 $60
$
 $2,088
 
Debt securities1

4,030
19



 4,049
 
Derivatives2
7
458

 
(358)
6 
107
8 
16
667

 
(446)
5 
237
6 
Total assets$2,132
$7,113
$171
 $67
$(358) $9,125
 $1,826
$4,905
$29
 $60
$(446) $6,374
 
Liabilities:              
Derivatives2
$(12)$(301)$
 $
$232
7 
$(81)
8 
$(18)$(210)$
 $
$197
 $(31)
6 
Total liabilities$(12)$(301)$
 $
$232
 $(81) $(18)$(210)$
 $
$197
 $(31) 
1
Refer to Note 3 for additional information related to the composition of our trading securities and available-for-sale securities.
21Refer to Note 54 for additional information related to the composition of our equity securities with readily determinable values and debt securities.
2Refer to Note 6 for additional information related to the composition of our derivative portfolio.
3 Primarily relatedCertain 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 debt securities that maturereconcile to the amounts presented in 2018.Note 4.
4
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 3.
54 Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle 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 5.
6The Company is obligated to return $138 million in cash collateral it has netted against its net asset derivative position.
7
The Company has the right to reclaim $1 million in cash collateral it has netted against its net liability derivative position.
8
The Company's derivative financial instruments are recorded at fair value in our condensed consolidated balance sheets as follows: $107 million in the line item other assets and $81 million in the line item other liabilities. Refer to Note 5 for additional information related to the composition of our derivative portfolio.
December 31, 2016Level 1
Level 2
Level 3
 
Other4

Netting
Adjustment5

 
Fair Value
Measurements

 
Assets:         
Trading securities1
$202
$115
$4
 $63
$
 $384
 
Available-for-sale securities1
1,655
4,619
139
3 


 6,413
 
Derivatives2
4
878

 
(369)
6 
513
8 
Total assets$1,861
$5,612
$143
 $63
$(369) $7,310
 
Liabilities:         
Derivatives2
$11
$276
$
 $
$(192)
7 
$95
8 
Total liabilities$11
$276
$
 $
$(192) $95
 
1
Refer to Note 3 for additional information related to the composition of our trading securities and available-for-sale securities.
2 Refer to Note 5 for additional information related to the composition of our derivative portfolio.
3Primarily related to long-term debt securities that mature in 2018.
4
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 3.
5Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle 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 5.
6The Company is obligated to return $201 million in cash collateral it has netted against its derivative position.6.
75 
The Company has the rightis obligated to reclaim $17return $258 million in cash collateral it has netted against its derivative position.
86 
The Company's derivative financial instruments are recorded at fair value in our condensed consolidated balance sheetssheet as follows: $347 million in the line item prepaid expenses and other assets; $166$237 million in the line item other assets; $42 million in the line item accounts payableassets and accrued expenses; and $53$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, 2018Level 1
Level 2
Level 3
 
Other3

Netting
Adjustment

4 
Fair Value
Measurements

 
Assets:         
Equity securities with readily determinable values1
$1,681
$186
$6
 $61
$
 $1,934
 
Debt securities1

5,018
19
 

 5,037
 
Derivatives2
2
313

 
(261)
5 
54
7 
Total assets$1,683
$5,517
$25
 $61
$(261) $7,025
 
Liabilities: 
 
 
   
  
 
Derivatives2
$(14)$(221)$
 $
$182
6 
$(53)
7 
Total liabilities$(14)$(221)$
 $
$182
 $(53) 
1
Refer to Note 4 for additional information related to the composition of our equity securities with readily determinable values and debt securities.
2 Refer to Note 6 for additional information related to the composition of our derivative portfolio.
3
Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy but are included to reconcile to the amounts presented in Note 4.
4 Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle net positive and negative positions and also cash collateral held or placed with the same counterparties. There are no amounts subject to legally enforceable master netting agreements that management has chosen not to offset or that do not meet the offsetting requirements. Refer to Note 6.
5The 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 ninesix months ended SeptemberJune 28, 2019 and June 29, 2017 and September 30, 2016.2018.
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 ninesix months ended SeptemberJune 28, 2019 and June 29, 2017 and September 30, 2016.2018.






Nonrecurring Fair Value Measurements
In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company records assets and liabilities at fair value on a nonrecurring basis as required by U.S. GAAP. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges.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) 

 
Gains (Losses)  
 Three Months EndedNine Months Ended
 September 29, 2017
 September 30,
2016

September 29, 2017
 September 30,
2016

Assets held for sale1
$(307) $(1,044)$(1,819) $(1,490)
Intangible assets


(442)
2 

Other long-lived assets
 
(329)
3 

Valuation of shares in equity method investee
 
25
4 

Other-than-temporary impairment charge(50)
5 

(50)
5 

Total$(357) $(1,044)$(2,615) $(1,490)
1
The Company is required to record assets and liabilities that are held for sale at the lower of carrying value or fair value less any costs to sell based on the agreed-upon sale price. These losses related to refranchising activities in North America, which were calculated based on Level 3 inputs. Refer to Note 2.
21 The Company recognized an other-than-temporary impairment charge of $375$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 CCR goodwill.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. The Company also recognized an impairment charge of $33 million related to certain U.S. bottlers' franchise rights. This charge was determined by comparing the fair value of the asset to its current carrying value. Each of these impairment charges were primarily a result of refranchising activities in North America and management's estimates of the proceeds that are expected to be received for the remaining bottling territories upon their refranchising. Additionally, the Company recorded impairment charges of $34 million related to Venezuelan intangible assets due to weaker sales and the volatility of foreign currency exchange rates resulting from continued political instability. The fair value of these assets was derived using discounted cash flow analyses based on Level 3 inputs.
3 The Company recognized impairment charges of $310 million related to CCR property, plant and equipment and $19 millionrelated to CCR other assets primarily as a result of refranchising activities in North America. The fair value of these assets was derived using management's estimate of the proceeds that are expected to be received for the remaining bottling territories upon their refranchising.
4The Company recognized a gainloss of $25$121 million as a result of Coca-Cola FEMSA, an equity method investee, issuing additional shares of its stock at a per share amount greater than the carrying valuein conjunction with our acquisition of the Company's per share investment. Accordingly, the Company is required to treat this type of transaction as if the Company had sold a proportionate share of its investmentremaining equity ownership interest in Coca-Cola FEMSA. These gains were determined using Level 1 inputs.
5 The Company recognized an other-than-temporary impairment charge of $50 million related to one of our international equity method investees,CHI, primarily driven by foreign currency exchange rate fluctuations. The fair value of this investment was derivedusing 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 receivables;receivable; accounts payable and accrued expenses; and loans and notes payable approximate their fair values because of the short-term maturities of these instruments.
The fair value of our long-term debt is estimated using Level 2 inputs based on quoted prices for those instruments. Where quoted prices are not available, fair value is estimated using discounted cash flows and market-based expectations for interest rates, credit risk and the contractual terms of the debtfinancial instruments. As of September 29, 2017,June 28, 2019, the carrying amount and fair value of our long-term debt, including the current portion, were $35,702$32,045 million and $36,375$32,934 million, respectively. As of December 31, 2016,2018, the carrying amount and fair value of our long-term debt, including the current portion, were $33,211$30,379 million and $33,752$30,456 million, respectively.


NOTE 1517: OPERATING SEGMENTS
Effective January 1, 2019, we established a new operating segment, Global Ventures, which includes the results of Costa, which we acquired in January 2019, and the results of our innocent and doğadan businesses as well as fees earned pursuant to distribution coordination agreements between the Company and Monster. Additionally, during the three months ended June 28, 2019, the Company updated its plans for CCBA and now intends to maintain its majority stake in CCBA for the foreseeable future. As a result, the Company now presents the financial results of CCBA within its results from continuing operations and includes the results of CCBA in the Bottling Investments operating segment. Accordingly, all prior period operating segment and Corporate information presented herein has been adjusted to reflect these changes.


Information about our Company's 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
Intersegment126

4
190

2

(322)
Total net operating revenues1,930
1,003
3,162
1,540
635
2,026
23
(322)9,997
Operating income (loss)1,038
588
711
731
73
119
(272)
2,988
Income (loss) before income taxes1,062
540
729
738
75
393
(488)
3,049
Identifiable operating assets8,511
2,008
18,512
2,266
7,236
10,727
20,424

69,684
Noncurrent investments731
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
Intersegment124
19
70
118
1
2

(334)
Total net operating revenues2,008
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 taxes1,114
541
660
710
40
131
(254)
2,942
Identifiable operating assets8,240
1,847
17,951
2,427
995
10,198
26,310

67,968
Noncurrent investments1,172
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 investments789
784
400
216

14,372
3,718

20,279
 Europe, Middle East & Africa
Latin
America

North
America

Asia Pacific
Bottling
Investments

Corporate
Eliminations
Consolidated
As of and for the three months ended September 29, 2017        
Net operating revenues:        
Third party$1,959
$1,009
$2,308
$1,345
$2,409
$48
$
$9,078
Intersegment
26
442
87
23

(578)
Total net revenues1,959
1,035
2,750
1,432
2,432
48
(578)9,078
Operating income (loss)936
563
646
577
(217)(385)
2,120
Income (loss) before income taxes962
561
583
588
(673)(347)
1,674
Identifiable operating assets5,475
1,909
17,224
2,146
6,433
34,567

67,754
Noncurrent investments1,261
908
105
178
16,800
3,509

22,761
As of and for the three months ended September 30, 2016        
Net operating revenues:        
Third party$1,852
$949
$1,661
$1,315
$4,809
$47
$
$10,633
Intersegment
16
1,003
145
31

(1,195)
Total net revenues1,852
965
2,664
1,460
4,840
47
(1,195)10,633
Operating income (loss)914
435
666
583
124
(451)
2,271
Income (loss) before income taxes922
447
653
589
(734)(449)
1,428
Identifiable operating assets4,337
1,964
16,406
2,257
17,390
33,546

75,900
Noncurrent investments1,315
823
123
166
12,223
3,377

18,027
As of December 31, 2016        
Identifiable operating assets$4,067
$1,785
$16,566
$2,024
$15,973
$29,606
$
$70,021
Noncurrent investments1,302
804
109
164
11,456
3,414

17,249

During the three months ended September 29, 2017,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 $6 million for Europe, Middle East and Africa, $2 million for Latin America, $47$13 million for North America, $1 million for Asia Pacific, $15 million for Bottling Investments and $58$41 million for Corporate due to the Company's productivity and reinvestment program. Refer to Note 11.13.
Operating income (loss) and income (loss) before income taxes were reduced by $213$29 million for Bottling Investments duerelated to costs incurred to refranchise certain of our North America bottling operations. Refer to Note 2 and Note 10.
Operating income (loss) and income (loss) before income taxes were reduced by $18 million for Corporate due to tax litigation expense. Refer to Note 7.12.
Income (loss) before income taxes was reduced by $14$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. Refer to Note 10.
Income (loss) before income taxes was reduced by $72$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.


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
Intersegment264

6
317
2
4

(593)
Total net operating revenues3,702
1,899
5,845
2,727
1,220
3,836
55
(593)18,691
Operating income (loss)2,016
1,084
1,297
1,273
139
219
(605)
5,423
Income (loss) before income taxes2,050
1,031
1,266
1,288
143
293
(797)
5,274
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
Intersegment273
38
124
224
2
4

(665)
Total net operating revenues3,694
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 taxes2,041
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.


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 reduced by $762 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 increased by $79 million for Corporate due to a gain recognized upon refranchising our remaining China bottling operations and related cost method investment. Refer to Note 2.
Income (loss) before income taxes was reduced by $50 million for Corporate due to an other-than-temporary impairment charge related to one of our international equity method investees. Refer to Note 10.




During the three months ended September 30, 2016, the results of our operating segments 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, $22 million for North America, $22 million for Bottling Investments and $14 million for Corporate due to the Company's productivity and reinvestment program as well as other restructuring initiatives. Operating income (loss) and income (loss) before income taxes were increased by $1 million for Latin America due to the refinement of previously established accruals related to the Company's productivity and reinvestment program. Refer to Note 11.
Operating income (loss) and income (loss) before income taxes were reduced by $76 million for Latin America due to the write-down we recorded related to our receivables from our bottling partner in Venezuela due to changes in exchange rates. Refer to Note 1.
Operating income (loss) and income (loss) before income taxes were reduced by $73 million for Bottling Investments due to costs incurred to refranchise certain of our North America bottling territories. Refer to Note 10.
Income (loss) before income taxes was reduced by $14 million for Bottling Investments due to the Company's proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees. Refer to Note 10.
Income (loss) before income taxes was reduced by $17 million for North America 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 reduced by $1,089 million for Bottling Investments primarily due to the refranchising of certain bottling territories in North America. Refer to Note 2 and Note 10.
Income (loss) before income taxes was reduced by $21 million for Corporate due to the deconsolidation of our South African bottling operations in exchange for investments in CCBA and CCBA's South African subsidiary. Refer to Note 2.
During the three months ended September 29, 2017 and September 30, 2016, our operating segments were impacted by acquisition and divestiture activities. Refer to Note 2.
 Europe, Middle East & Africa
Latin
America

North
America

Asia Pacific
Bottling
Investments

Corporate
Eliminations
Consolidated
Nine Months Ended September 29, 2017        
Net operating revenues:        
Third party$5,628
$2,857
$6,216
$3,807
$9,268
$122
$
$27,898
Intersegment
54
1,799
340
69

(2,262)
Total net revenues5,628
2,911
8,015
4,147
9,337
122
(2,262)27,898
Operating income (loss)2,884
1,625
1,967
1,835
(979)(1,152)
6,180
Income (loss) before income taxes2,958
1,627
1,711
1,853
(1,730)(614)
5,805
Nine Months Ended September 30, 2016        
Net operating revenues:        
Third party$5,369
$2,787
$4,759
$3,818
$15,631
$90
$
$32,454
Intersegment264
50
2,978
437
116
5
(3,850)
Total net revenues5,633
2,837
7,737
4,255
15,747
95
(3,850)32,454
Operating income (loss)2,897
1,470
1,982
1,892
222
(1,192)
7,271
Income (loss) before income taxes2,950
1,485
1,978
1,903
(897)202

7,621
During the nine months ended September 29, 2017, the results of our operating segments 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, $131 million for North America, $4 million for Asia Pacific, $39 million for Bottling Investments and $176 million for Corporate due to the Company's productivity and reinvestment program. Refer to Note 11.
Operating income (loss) and income (loss) before income taxes were reduced by $314 million for Bottling Investments due to costs incurred to refranchise certain of our bottling operations. Refer to Note 2 and Note 10.
Operating income (loss) and income (loss) before income taxes were reduced by $737 million for Bottling Investments and $34 million for Corporate due to asset impairment charges. Refer to Note 1 and Note 10.


Operating income (loss) and income (loss) before income taxes were reduced by $43 million for Corporate due to tax litigation expense. Refer to Note 7.
Income (loss) before income taxes was reduced by $50 million for Corporate due to an other-than-temporary impairment charge related to one of our international equity method investees. Refer to Note 10.
Income (loss) before income taxes was reduced by $4 million for Europe, Middle East and Africa, $29 million for Bottling Investments and $4 million for Corporate due to the Company's proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees. Refer to Note 10.
Income (loss) before income taxes was reduced by $287 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 reduced by $1,473 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 increased by $445 million for Corporate due to a gain recognized resulting from the merger of CCW and CCEJ. Refer to Note 10.
Income (loss) before income taxes was increased by $88 million for Corporate due to a gain recognized upon refranchising our China bottling operations and related cost method investment. Refer to Note 2.
Income (loss) before income taxes was increased by $25 million for Corporate due to Coca-Cola FEMSA, an equity method investee, issuing additional shares of its stock during the period at a per share amount greater than the carrying value of the Company's per share investment.
Income (loss) before income taxes was reduced by $26 million for Corporate due to a charge related to our former German bottling operations.
Income (loss) before income taxes was reduced by $38 million for Corporate due to the extinguishment of long-term debt. Refer to Note 6.
During the nine months ended September 30, 2016, the results of our operating segments were impacted by the following items:
Operating income (loss) and income (loss) before income taxes were reduced by $6 million for Europe, Middle East and Africa, $80 million for North America, $1 million for Asia Pacific, $300 million for Bottling Investments and $42 million for Corporate due to the Company's productivity and reinvestment program as well as other restructuring initiatives. Operating income (loss) and income (loss) before income taxes were increased by $2 million for Latin America due to the refinement of previously established accruals related to the Company's productivity and reinvestment program. Refer to Note 11.
Operating income (loss) and income (loss) before income taxes were reduced by $76 million for Latin America due to the write-down we recorded related to our receivables from our bottling partner in Venezuela due to changes in exchange rates. Refer to Note 1.
Operating income (loss) and income (loss) before income taxes were reduced by $170 million for Bottling Investments due to costs incurred to refranchise our North America bottling territories. Refer to Note 10.
Operating income (loss) and income (loss) before income taxes were reduced by $8 million for Bottling Investments and $29$36 million for Corporate related to noncapitalizable transaction costs associated with pending and closed transactions. Refer to Note 10.
Operating income (loss) and income (loss) before income taxes were reduced by $100 million for Corporate as a result of a cash contribution to The Coca-Cola Foundation. Refer to Note 10.
Income (loss) before income taxes was reduced by $32 million for Bottling Investments and $3 million for Corporate due to the Company's proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees. Refer to Note 10.
Income (loss) before income taxes was reduced by $17 million for North America 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 reduced by $1,657 million for Bottling Investments due to the refranchising of certain bottling territories in North America. Refer to Note 2 and Note 10.
Income (loss) before income taxes was increased by $1,323 million for Corporate as a result of the deconsolidation of our GermanLatin American bottling operations. Refer to Note 2.


Income (loss) before income taxes was increased by $18 million for Corporate as a result of the disposal of our investment in Keurig. Refer to Note 2.
Income (loss) before income taxes was reduced by $21 million for Corporate due to the deconsolidation of our South African bottling operations in exchange for investments in CCBA and CCBA's South African subsidiary. Refer to Note 2.
During the nine months ended September 29, 2017 and September 30, 2016, our operating segments were impacted by acquisition and divestiture activities. Refer to Note 2.
NOTE 16: SUBSEQUENT EVENTS

On October 4, 2017, the Company and Anheuser-Busch InBev ("ABI") completed the transition of ABI's 54.5 percent majority interest in CCBA to the Company for $3.15 billion. CCBA, the largest Coca-Cola bottler in Africa, was formed in 2016 through the combination of African nonalcoholic ready-to-drink bottling interests of the Company, SABMiller plc, and Gutsche Family Investments. ABI later acquired SABMiller including its 54.5 percent equity stake in CCBA. We plan to hold our controlling interest in CCBA temporarily and are currently in discussions with several potential buyers. We will account for CCBA as a discontinued operation.





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


CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Recoverability of Current and Noncurrent Assets
Our Company faces many uncertainties and risks related to various economic, political and regulatory environments in the countries in which we operate, particularly in developing and emerging markets. Refer to the heading "Item 1A. Risk Factors" in Part I and "Our Business — Challenges and Risks" in Part II of our Annual Report on Form 10-K for the year ended December 31, 20162018. 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 chargescharge may be impacted by items such as basis differences, deferred taxes and deferred gains.
Investments in Equity and Debt Securities
Investments classified as trading securities are not assessed forDuring the three and six months ended June 28, 2019, the Company recorded an other-than-temporary impairment since they are carried at fair value with the change in fair value included in net income. We reviewcharge of $49 million related to one of our investments in equity and debt securities that are accounted for using the equity method or cost method or that are classified as available-for-sale or held-to-maturity each reporting period to determine whether a significant event or changeinvestees in circumstances has occurred that may haveLatin America. This impairment charge was primarily driven by revised projections of future operating results. During the six months ended June 28, 2019, the Company recognized an adverse effect on the fair valueother-than-temporary impairment charge of each investment. When such events or changes occur, we evaluate the fair value compared$286 million related to our cost basisinvestment in the investment. We also perform this evaluation every reporting period for each investment for which our cost basis has exceeded the fair value. The fair values of most of our Company's investments in publicly traded companies are often readily available basedCoca-Cola Bottlers Japan Holdings Inc. ("CCBJHI"), an equity method investee. Based on quoted market prices. For investments in nonpublicly traded companies, management's assessment of fair value is based on valuation methodologies including discounted cash flows, estimates of sales proceeds and appraisals, as appropriate. We consider the assumptions that we believe a hypothetical marketplace participant would use in evaluating estimated future cash flows when employing the discounted cash flow or estimates of sales proceeds valuation methodologies. The ability to accurately predict future cash flows, especially in emerging and developing markets, may impact the determination of fair value.
In the event the fair value of an investment declines below our cost basis, management is required to determine if the decline in fair value is other than temporary. If management determines the decline is other than temporary, an impairment charge is recorded. Management's assessment as to the nature of a decline in fair value is based on, among other things, the length of time and the extent to which the market value hasof our investment in CCBJHI had been less than our cost basis;carrying value as well as the financial condition and near-term prospects of the issuer; and our intent and ability to retainissuer, management determined that the investment for a period of time sufficient to allow for any anticipated recoverydecline in market value.fair value was other than temporary in nature. During the three and ninesix months ended September 29, 2017, weJune 28, 2019, the Company also recognized an other-than-temporary impairment charge of $50$57 million related to one of our international equity method investees in North America. This impairment charge was primarily driven by foreign currency exchange rate fluctuations.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):
September 29, 2017
Fair
Value

Carrying
Value

Difference
June 28, 2019
Fair
Value

Carrying
Value

Difference
Monster Beverage Corporation$5,642
$3,352
$2,290
$6,518
$3,679
$2,839
Coca-Cola European Partners plc4,969
3,587
1,382
Coca-Cola FEMSA, S.A.B. de C.V.4,648
1,819
2,829
3,892
1,861
2,031
Coca-Cola European Partners plc 1
3,661
3,674
(13)
Coca-Cola HBC AG2,776
1,295
1,481
3,216
1,296
1,920
Coca-Cola Amatil Limited1,370
713
657
1,578
615
963
Coca-Cola Bottlers Japan Inc.1
1,126
1,162
(36)
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.618
289
329
213
124
89
Coca-Cola İçecek A.Ş.553
263
290
Coca-Cola Bottling Co. Consolidated536
118
418
Corporación Lindley S.A.
283
125
158
Total$21,213
$12,810
$8,403
$22,223
$12,347
$9,876
1The carrying valuesvalue of our investmentsinvestment in CCBJHI exceeded theirits fair valuesvalue as of September 29, 2017.June 28, 2019. Based on the length of time and the extent to
which the market values havevalue has been less than our cost basis; the financial condition and near-term prospects of the issuers;basis and our intent and
ability to retain the investmentsinvestment for a period of time sufficient to allow for any anticipated recovery in market value, management
determined that the declinesdecline in fair values werevalue was temporary in nature. Therefore, we did not record anyan impairment charges.charge.
As of September 29, 2017,June 28, 2019, gross unrealized gains and losses on available-for-sale debt securities were $771$131 million and $56$5 million, respectively. Management assessed each of the available-for-sale debt securities that were in a gross unrealized loss position on an individual basis to determine if the decline in fair value was other than temporary. As a result of these assessments, management determined that the decline in fair value of these investments was temporary and did not record any impairment


charges. We will continue to monitor these investments in future periods. Refer to Note 34 of Notes to Condensed Consolidated Financial Statements.
Other AssetsProperty, Plant and Equipment
OurDuring the three and six months ended June 28, 2019, the Company invests in infrastructure programs with our bottlerswas 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 are directed at strengthening our bottling systemwould have been recognized had the business been classified as held and increasing unit case volume. Additionally, our Company advances payments to certain customersused during the period that CCBA was classified as held for distribution rights as well as to fund future marketing activities intended to generate profitable volume andsale. As a result, we expense such payments over the periods benefited. Payments under these programs are generally capitalized and reported in the line items prepaid expenses and other assets or other assets, as appropriate, in our condensed consolidated balance sheets. When facts and circumstances indicate thatreduced the carrying value of these assets or asset groups may not be recoverable, management assesses the recoverability of the carrying value by preparing estimates of sales volume and the resulting gross profit and cash flows. These estimated future cash flows are consistent with those we use in our internal planning. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount, we recognize an impairment loss. The impairment loss recognized is the amount by which the carrying amount exceeds the fair value.
During the nine months ended September 29, 2017, the Company recorded an impairment charge of $19 million related to Coca-Cola Refreshments' ("CCR") other assets as a result of current year refranchising activities in North America and management's estimate of the proceeds that are expected to be received for the remaining bottling territories upon their refranchising. This charge was recorded in our Bottling Investments operating segment in the line item other operating charges in our condensed consolidated statement of income and was determined by comparing the fair value of the asset to its carrying value.
Property, Plant and Equipment
As of September 29, 2017, the carrying value of ourCCBA's property, plant and equipment netby $34 million. Refer to Note 2 of depreciation, was $8,306 million, or 9 percent of our total assets. Certain events or changes in circumstances may indicate that the recoverability of the carrying amount or remaining useful life of property, plant and equipment should be assessed, including, among others, the manner or length of time in which the Company intendsNotes to use the asset, a significant decrease in market value, a significant change in the business climate in a particular market, or a current period operating or cash flow loss combined with historical losses or projected future losses. When such events or changes in circumstances are present and an impairment review is performed, we estimate the future cash flows expected to result from the use of the asset or asset group and its eventual disposition. These estimated future cash flows are consistent with those we use in our internal planning. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount, we recognize an impairment loss. The impairment loss recognized is the amount by which the carrying amount exceeds the fair value. We use a variety of


methodologies to determine the fair value of property, plant and equipment, including appraisals and discounted cash flow models, which are consistent with the assumptions we believe a hypothetical marketplace participant would use.Condensed Consolidated Financial Statements.
During the ninethree and six months ended SeptemberJune 29, 2017,2018, the Company recorded impairment charges of $310$60 million and $312 million, respectively, related to CCR's property, plant and equipment as a result of current year refranchising activities in North America and management's estimate of the proceeds that arewere 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 statementstatements of income and were determined by comparing the fair value of the assets to their carrying value. Refer to Note 1416 of Notes to Condensed Consolidated Financial Statements.
Goodwill, Trademarks and Other Intangible Assets
Intangible assets are classified into one ofDuring the three categories: (1)and six months ended June 28, 2019, the Company was required to measure CCBA's definite-lived intangible assets with definite lives subject toat the lower of their current fair values or their carrying amounts before they were classified as held for sale, adjusted for amortization (2) intangible assets with indefinite lives not subject to amortizationexpense that would have been recognized had the business been classified as held and (3) goodwill. For intangible assets with definite lives, testsused during the period that CCBA was classified as held for impairment must be performed if conditions exist that indicatesale. As a result, we reduced the carrying value may not be recoverable. Forof CCBA's definite-lived intangible assets with indefinite lives and goodwill, tests for impairment must be performed at least annually, or more frequently if events or circumstances indicate that an asset may be impaired.
The assessment of recoverability and the performance of impairment tests of intangible assets involve critical accounting estimates. These estimates require significant management judgment, include inherent uncertainties and are often interdependent; therefore, they do not change in isolation. Factors that management must estimate include, among others, the economic life of the asset, sales volume, pricing, cost of raw materials, delivery costs, inflation, cost of capital, marketing spending, foreign currency exchange rates, tax rates, capital spending and proceeds from the sale of assets. These factors are even more difficult to predict when global financial markets are highly volatile. The estimates we use when assessing the recoverability of intangible assets are consistent with those we use in our internal planning. When performing impairment tests, we estimate the fair values of the assets using management's best assumptions, which we believe would be consistent with what a hypothetical marketplace participant would use. Estimates and assumptions used in these tests are evaluated and updated as appropriate. The variability of these factors depends on a number of conditions, including uncertainty about future events, and thus our accounting estimates may change from period to period. If other assumptions and estimates had been used when these tests were performed, impairment charges could have resulted. As mentioned above, these factors do not change in isolation and, therefore, we do not believe it is practicable or meaningful to present the impact of changing a single factor. Furthermore, if management uses different assumptions or if different conditions exist in future periods, future impairment charges could result.by $126 million. Refer to the heading "Operations Review" below for additional information relatedNote 2 of Notes to our present business environment. Certain factors discussed above are impacted by our current business environment and are discussed throughout this report, as appropriate.
Intangible assets acquired in recent transactions are naturally more susceptible to impairment, primarily due to the fact that they are recorded at fair value based on recent operating plans and macroeconomic conditions present at the time of acquisition. Consequently, if operating results and/or macroeconomic conditions deteriorate shortly after an acquisition, it could result in the impairment of the acquired assets. A deterioration of macroeconomic conditions may not only negatively impact the estimated operating cash flows used in our cash flow models but may also negatively impact other assumptions used in our analyses, including, but not limited to, the estimated cost of capital and/or discount rates. Additionally, as discussed above, in accordance with U.S. GAAP, we are required to ensure that assumptions used to determine fair value in our analyses are consistent with the assumptions that we believe a hypothetical marketplace participant would use. As a result, the cost of capital and/or discount rates used in our analyses may increase or decrease based on market conditions and trends, regardless of whether our Company's actual cost of capital has changed. Therefore, if the cost of capital and/or discount rates change, our Company may recognize an impairment of an intangible asset in spite of realizing actual cash flows that are approximately equal to, or greater than, our previously forecasted amounts.
We perform impairment tests of goodwill at our reporting unit level, which is one level below our operating segments. Our operating segments are primarily based on geographic responsibility, which is consistent with the way management runs our business. Our operating segments are subdivided into smaller geographic regions or territories that we sometimes refer to as "business units." These business units are also our reporting units. The Bottling Investments operating segment includes all Company-owned or consolidated bottling operations, regardless of geographic location, including CCR's bottling and associated supply chain operations in the United States and Canada. Generally, each Company-owned or consolidated bottling operation within our Bottling Investments operating segment is its own reporting unit. Goodwill is assigned to the reporting unit or units that benefit from the synergies arising from each business combination.
In order to test for goodwill impairment, the Company compares the fair value of the reporting unit to its carrying value, including goodwill. If the fair value of the reporting unit is lower than its carrying amount, goodwill impairment is indicated and goodwill is written down for the amount by which the carrying amount exceeds the reporting unit's fair value. However, the loss recognized cannot exceed the carrying amount of goodwill. We typically use discounted cash flow models to determine the


fair value of a reporting unit. The assumptions used in these models are consistent with those we believe a hypothetical marketplace participant would use.Condensed Consolidated Financial Statements.
During the ninesix months ended SeptemberJune 29, 2017,2018, the Company recorded impairment charges of $442$138 million related to certain intangible assets. These charges included $375 million related to goodwill and $33$100 million related to bottlers' franchise rights with indefinite lives. The impairment chargeslives and $38 million related to goodwill were determined by comparing the fair value of the reporting unit, based on Level 3 inputs, to its carrying value. As a result of these charges, the carrying value of CCR's goodwill is zero. The impairment charge related to bottlers' franchise rights with indefinite lives was determined by comparing the fair value of the assets, based on Level 3 inputs, to the current carrying value.definite-lived intangible assets. These impairment charges were incurred primarily as a result of current year refranchising activities in North America and management's revised estimate of the proceeds that arewere 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. Additionally, we recorded impairment charges related to Venezuelan intangible assets for the nine months ended September 29, 2017, of $34 million. The Venezuelan intangible assets were written down due to weaker sales and the volatility of foreign currency exchange rates resulting from continued political instability. These charges were recorded in Corporate in the line item other operating charges in our condensed consolidated statement of income and were determined by comparing the fair value of the assets, derived using discounted cash flow analyses, to the respective carrying values.
The Company did not record any significant impairment charges related to intangible assets during the three and nine months ended September 30, 2016.
If macroeconomic conditions worsen or our current financial projections are not achieved, it is possible that we may experience significant impairments of some of our intangible assets, including goodwill, which would require us to recognize impairment charges. On June 7, 2007, our Company acquired Energy Brands Inc., also known as glacéau, for approximately $4.1 billion. The total combined fair value of the various trademarks in the glacéau portfolio significantly exceeds the remaining combined carrying value of $2.9 billion as of September 29, 2017. However, the fair value of one of the individual trademarks in the portfolio currently approximates its carrying value. If the future operating results of this trademark do not support the current financial projections, or if macroeconomic conditions change causing the cost of capital and/or discount rate to increase without an offsetting increase in the operating results, it is likely that we would be required to recognize an additional impairment charge related to this trademark. Management will continue to monitor the fair value of our intangible assets in future periods.
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 and canning


operations. For these concentrate operations, we recognize concentrate revenue and concentrate sales volume when we sell concentratesconcentrate and


syrups to the authorized unconsolidated bottling and canning 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 appropriate),applicable); (2) acquisitions and divestitures (including structural changes defined below), as applicable,applicable; (3) changes in price, product and geographic mixmix; and (4) foreign currency fluctuations. Refer to the heading "Net Operating Revenues" below.
We generally refer to acquisitions and divestitures of bottling distribution or canning operations and consolidation or deconsolidation of bottling and distribution entities for accounting purposesoperations as structural changes, which are a component of acquisitions and divestitures ("structural changes").divestitures. Typically, structural changes do not impact the Company's unit case volume or concentrate sales volume on a consolidated basis or at the geographic operating segment level. We recognize unit case volume for all sales of Company beverage products, with the exception of Costa non-ready-to-drink products, regardless of our ownership interest in the bottling partner, if any. However, the unit case volume reported by our Bottling Investments operating segment is generally impacted by structural changes because it only includes the unit case volume of our consolidated bottling operations. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information on the Company's acquisitions and divestitures.
"Acquired brands" refers to brands acquired during the past 12 months. Typically, the Company has not reported unit case volume or recognized concentrate sales volume related to acquired brands in periods prior to the closing of a transaction. Therefore, the unit case volume and concentrate sales volume from the sale of these brands is incremental to prior year volume. We do not generally consider acquired brands to be structural changes.
"Licensed brands" refers to brands not owned by the Company, but for which we hold certain rights, generally including, but not limited to, distribution rights, and from which we derive an economic benefit when these brands are ultimately sold. Typically, the Company has not reported unit case volume or recognized concentrate sales volume related to these brands in periods prior to the beginning of the term of a license agreement. Therefore, in the year that the licenses are entered into, the unit case volume and concentrate sales volume from the sale of these brands is incremental to prior year volume. We do not generally consider newly licensed brands to be structural changes.
In 2017,2019, the Company refranchised itsacquired 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 China to the two local franchise bottlers.Zambia. The impact of these refranchising activitiesthis 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 ourthe Bottling Investments and Asia Pacific andoperating 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 segments.segment.
During 2017In 2018, the Company acquired bottling operations in Zambia and 2016,Botswana. The impact of these acquisitions has been included in acquisitions and divestitures in our analysis of net operating revenues on a consolidated basis as well as for the Bottling Investments operating segment.
In 2018, the Company refranchised our Canadian and Latin American bottling territories in North America that were previously managed by CCR to certain of our unconsolidated bottling partners.operations. The impact of these refranchising activities has been included as a structural change in our analysis of net operating revenues on a consolidated basis as well as for our North America, Latin America and Bottling Investments operating segments. In addition, for non-Company-owned and licensed beverage productsbrands 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 20172019 versus 20162018 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.
During 2016, the Company deconsolidated its South African bottling operations and disposed of its related equity method investment in exchange for equity method investments in Coca-Cola Beverages Africa Proprietary Limited ("CCBA") and CCBA's South African subsidiary. As part of the transaction, the Company also acquired and licensed several brands. The impacts of the deconsolidation, the disposal of the related equity method investment and the new equity method investments have been included as a structural change in our analysis of net operating revenues on a consolidated basis as well as for our Europe, Middle East and Africa and Bottling Investments operating segments. The brands and licenses that the Company acquired impacted the Company's unit case volume and concentrate sales volume and therefore, in addition to being included as a structural change, they are also considered acquired brands. Refer to the headings "Beverage Volume" and "Net Operating Revenues" below.
During 2016, the Company also deconsolidated our German bottling operations as a result of their being combined to create Coca-Cola European Partners plc ("CCEP"). As a result of the transaction, the Company now owns an equity method investment in CCEP. Accordingly, the impact of the deconsolidation and new equity method investment has been included as a structural change in our analysis of net operating revenues on a consolidated basis as well as for our Europe, Middle East and Africa and Bottling Investments operating segments. The Company also changed our funding arrangement with our bottling partners in China, which resulted in a reduction in net operating revenues with an offsetting reduction in direct marketing expense. The impact of the change in the arrangement has been included as a structural change in our analysis of net operating revenues on a consolidated basis as well as for our Asia Pacific operating segment. Refer to the headings "Beverage Volume" and "Net Operating Revenues" below.



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


subsequent sale of the finished products manufactured from the concentrates or syrups to a third party or independent customer does not impact the timing of recognizing the concentrate revenue or concentrate sales volume. When we account for an unconsolidated bottling partner as an equity method investment, we eliminate the intercompany profit related to these transactions to the extent of our ownership interest until the equity method investee has sold finished products manufactured from the concentrates or syrups to a third party or independent customer.
The Company is currently pursuing certain transactions that, if completed, will be included as structural changes for the applicable periods. We intend to refranchise 100 percent of Company-owned bottling operations in the United States by the end of 2017. Additionally, on October 4, 2017, the Company and Anheuser-Busch InBev ("ABI") completed the transition of ABI's 54.5 percent majority interest in CCBA to the Company for $3.15 billion. We will account for CCBA as a discontinued operation.Refer to Note 16 of Notes to Condensed Consolidated Financial Statements for additional information.
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 powderspowders/minerals may give rise to differences between unit case volume and concentrate sales volume growth rates. With the exception of ready-to-drink products, the Company does not report unit case volume or concentrate sales volume for Costa, a component of the Global Ventures operating segment.






Information about our volume growth worldwide and by operating segment is as follows:
Percent Change 2017 versus 2016 Percent Change 2019 versus 2018 
Three Months Ended September 29, 2017 Nine Months Ended September 29, 2017 Three Months Ended June 28, 2019 Six Months Ended June 28, 2019 
Unit Cases1,2,3

Concentrate
Sales4

 
Unit Cases1,2,3

Concentrate
Sales4

 
Unit Cases1,2,3

 
Concentrate
Sales4

 
Unit Cases1,2,3

 
Concentrate
Sales4

 
Worldwide
%
5 
%(1)% 3% 4% 2% 3% 
Europe, Middle East & Africa1 %4% 2 %3%
8 
2% 3% 2% 4 %
8 
Latin America(3)(4) (3)(4) 1
 3
6 

 
 
North America
2
6 

1
9 
(1) 
7 
(1) (1)
7 
Asia Pacific3
3
7 
2
3
10 
7
 8
 7
 5
9 
Global Ventures5
 5
 3
 1
 
Bottling Investments(53)N/A
 (42)N/A
 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, both consolidated and unconsolidated.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 20172019 had two fewer daysone less day when compared to the first quarter of 2016,2018, and the fourth quarter of 20172019 will have one additional day when compared to the fourth quarter of 2016.2018.
5 
After considering the impact of structural changes, worldwide concentrate salesunit case volume for Bottling Investments grew 14 percent and 9 percent for the three and six months ended September 29, 2017 grew 1 percent.June 28, 2019, respectively.
6After 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 September 29, 2017 grewJune 28, 2019, respectively.
8 Due to uncertainties related to the United Kingdom's impending withdrawal from the European Union ("Brexit"), our bottling partners in certain European markets increased their concentrate inventory levels above their normal optimal levels. We estimate that approximately 1 percent.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.
79 
After considering the impact of structural changes, concentrate sales volume for Asia Pacific grew 7 percent for the threesix months ended September 29, 2017 grew 2 percent.
8
After considering the impact of structural changes, concentrate sales volume for Europe, Middle East and Africa for the nine months ended September 29, 2017 grew 2 percent.
9
After considering the impact of structural changes, concentrate sales volume for North America for the nine months ended September 29, 2017 was even.
10 After considering the impact of structural changes, concentrate sales volume for Asia Pacific for the nine months ended September 29, 2017 grew 1 percent.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 20172019 and 20162018 reflects the impact of the transfer of distribution rights with respect to non-Company-owned brands that were previously licensed to us in North Americaour Canadian bottling territories that have since been refranchised. The Company eliminated the unit case volume related to thesethis structural changeschange from the base year when calculating the volume growth rates. Refer to the heading "Structural Changes, Acquired Brands and Newly Licensed Brands" above.
Three Months Ended September 29, 2017June 28, 2019 versus Three Months Ended September 30, 2016June 29, 2018
Unit case volume in Europe, Middle East and Africa grew 12 percent, which included growth of 42 percent in bothsparkling soft drinks and 2 percent in water, enhanced water and sports drinks and tea and coffee. Sparklingdrinks. Growth in sparkling soft drinks volume was even primarily due to 12 percent growth in Coca-Cola Zero, offsetdriven by an 11 percent decline in Diet Coke.Trademark Coca-Cola. The group reported increases in unit case volume in the Western Europe; Turkey, Caucasus & Central Asia; South & Eastern Europe, Turkey & Caucasus Central AsiaEast Africa and Middle East & NorthWest Africa business units. The increases in these business units were partially offset by decreasesa decrease in the Western Europe and WestMiddle East & North Africa business units.unit.
In Latin America, unit case volume declined 3grew 1 percent, which reflected declinesincluded growth of 4 percent in sparkling soft drinks and 3 percent in water, enhanced water and sports drinks partially offset by growth in juice, dairy and plant-based beverages driven by incremental volume from the recently acquired AdeS brand of plant-based beverages. The group's volume decline reflected declines of 81 percent in the Latin Center business unit and 7 percent in the Brazil business unit as a result of continued macroeconomic challenges in these regions. The Mexico business unit declined 1 percent due to a 2 percent decline in


sparkling soft drinks, and a 5 percent decline in tea and coffee partially offset by 7 percent growth in juice, dairy and plant-based beverages.
Unit case volume in North America was even, reflecting even sparkling soft drinks volume, a 2 percent decline in juice, dairy and plant-based beverages as well as abeverages.


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 offset by growthand in energy drinks.juice, dairy and plant-based beverages. The group's sparkling soft drinks volume included a 5reflected growth of 1 percent decline in Diet Coke, offset by 4 percent growth in Trademark Sprite and 2 percent growth in Trademark Fanta.Coca-Cola.
In Asia Pacific, unit case volume increased 3grew 7 percent, reflecting 511 percent growth in sparkling soft drinks and 46 percent growth in juice, dairy and plant-based beverages, partially offset by a 3 percent declinebeverages. Growth in water, enhanced water and sports drinks. Sparklingsparkling soft drinks volume included 812 percent growth in Trademark Coca-Cola, 3Coca‑Cola, 9 percent growth in Trademark Fanta and 28 percent growth in Trademark Sprite. The group's volume reflects growth of 4 percent in the ASEAN business, 720 percent in the India & South West Asia business unit, and13 percent in the ASEAN business unit, 2 percent in the Greater China & Korea business unit and 4 percent in the South Pacific business unit. Unit case volumeThe growth in these business units was evenpartially 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 declined 53grew 30 percent. This decreaseincrease primarily reflects the North America refranchising activitiesimpact of the recent acquisition of a controlling interest in the Philippine bottling operations as well as growth in India and the refranchising of our Chinese bottling operations.South Africa.
NineSix Months Ended September 29, 2017June 28, 2019 versus NineSix Months Ended September 30, 2016June 29, 2018
InUnit case volume in Europe, Middle East and Africa unit case volume grew 2 percent, including 1 pointwhich included growth of growth from acquired brands, which were primarily water brands in Africa. The group's growth reflected an increase of 12 percent in sparkling soft drinks, an increase of 75 percent in water, enhanced water and sports drinks and a 104 percent increase in tea and coffee. TheseGrowth in sparkling soft drinks was primarily driven by Trademark Coca-Cola. The group reported increases werein 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 decrease ofdecline in the Middle East & North Africa business unit.
In Latin America, unit case volume was even, which included a 1 percent in juice, dairy and plant-based beverages. All business units within the group reported growth in unit case volume.
Unit case volume in Latin America declined 3 percent, which reflected a decline of 4 percent in sparkling soft drinks, partially offset by growth in juice, dairy and plant-based beverages. The group's volume reflects declines of 133 percent in the Latin Center businesswater, enhanced water and sports drinks. The group reported an increase in unit and 9case volume of 5 percent in the Brazil business unit. These declines were partially offset by unit case volume growth of 2 percentand even performance in the Mexico business unit, which reflectedwere 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, 35 percent growth in water, enhanced water and sports drinks and 104 percent growth in juice, dairy and plant-based beverages.
In North America, unit case volume was even, reflecting even volume for sparkling soft drinks and juice, dairy and plant-based beverages, growth in energy drinks and a 2 percent decline in water, enhanced water and sports drinks. The group's sparkling soft drinks unit case volume included a 4 percent decline in Diet Coke, offset by 4 percent growth in both Trademark Sprite and Trademark Fanta.
Unit case volume in Asia Pacific grew 2 percent, reflecting an increase of 2 percent in sparkling soft drinks and 5 percent growth in juice, dairy and plant-based beverages. The increase Growth in sparkling soft drinks volume included 410 percent growth in Trademark Coca-ColaCoca‑Cola, 9 percent growth in Trademark Fanta and 17 percent growth in Trademark Sprite. Unit caseVolume 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 our Greater China & Korea andthe 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 grew 4was partially offset by a decline of 3 percent and 1 percent, respectively. Unit case volume in the Japan business unit was even.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 declined 42grew 23 percent. This decreaseincrease primarily reflects the North America refranchising activitiesimpact of the recent acquisition of a controlling interest in the Philippine bottling operations as well as growth in India and the refranchising of our Chinese bottling operations.South Africa.
Concentrate Sales Volume
During the three months ended September 29, 2017,June 28, 2019, worldwide unit case volume grew 3 percent and concentrate sales volume were evengrew 4 percent compared to the three months ended September 30, 2016.June 29, 2018. During the ninesix months ended September 29, 2017,June 28, 2019, worldwide unit case volume was evengrew 2 percent and concentrate sales volume declined 1grew 3 percent compared to the ninesix months ended September 30, 2016. The difference between the consolidated unit case volume and concentrate sales volume growth rates during the nine months ended SeptemberJune 29, 2017, was primarily due to having two fewer days during the first quarter of 2017 when compared to the first quarter of 2016.2018. 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. In additionThe first quarter of 2019 had one less day when compared to the impactfirst quarter of two fewer days,2018, which contributed to the differences between unit case volume and concentrate sales volume growth rates inon a consolidated basis and for the individual operating segments during the six months ended June 28, 2019.
The differences between unit case volume and concentrate sales volume growth rates during the three and ninesix months ended September 29, 2017June 28, 2019 were due to the timing of concentrate shipments, structural changes and the impact of unit case volume from certain joint ventures in which the Company has an equity interest but to which the Company does not sell concentrates, syrups, beverage bases, source waters or powders.
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




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 September 29, 2017June 28, 2019 versus Three Months Ended September 30, 2016June 29, 2018
The Company'sDuring the three months ended June 28, 2019, net operating revenues decreased $1,555were $9,997 million compared to $9,421 million during the three months ended June 29, 2018, an increase of $576 million, or 156 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 2017 versus 2016Percent Change 2019 versus 2018
Volume1

Acquisitions & Divestitures
Price, Product & Geographic Mix
Currency Fluctuations
Total
Volume1

Acquisitions & DivestituresPrice, Product & Geographic Mix
Currency Fluctuations
Total
Consolidated1%(18)%3%%(15)%4%6%2%(6)%6 %
Europe, Middle East & Africa4% %1%1%6 %3%3%1%(10)%(4)%
Latin America(4)
10
1
7
4
(1)5
(11)(3)
North America1
1
2

3
(1)
4

3
Asia Pacific2

1
(5)(2)8

(3)(3)2
Global Ventures5
218
(3)(19)201
Bottling Investments(1)(53)4

(50)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 structural changes.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.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"divestitures" refers to acquisitions and divestitures of brands orand businesses, some of which the Company considers to be structural changes. Refer to the heading "Structural Changes, Acquired Brands and Newly Licensed Brands" above for additional information related to the structural changes.
"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 32 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 — favorably impacted as a result of pricing initiatives, product and packagefavorable price mix across most markets, partially offset by unfavorable geographic mix;
Latin America — favorable price mix in all four of the segment'sMexico and Brazil business units and the impact of inflationary environments in certain markets;
North America — favorably impacted as a result offavorable pricing initiatives and product and package mix;initiatives;
Asia Pacific — favorably impacted as a result of pricing initiatives,unfavorable geographic mix;
Global Ventures — unfavorable product and package mix, partially offset by geographic mix; and
Bottling Investments — favorably impacted as a result of pricing initiatives andfavorable price, product and package mix in North America.certain bottling operations.
The impact of fluctuationsFluctuations in foreign currency exchange rates ondecreased our consolidated net operating revenues was even.by 6 percent. This unfavorable impact was primarily due to a stronger U.S. dollar compared to certain foreign currencies, including the U.K.euro, British pound sterling, Japanese yen, Mexican peso, Brazilian real, South African rand and Argentine peso,Australian dollar, which had an unfavorable impact on all of our Europe, Middle East and Africa, Asia Pacific and Latin America operating segments, offset by the impact of a weaker U.S. dollar compared to certain other foreign currencies, including the euro, South African rand, Australian dollar, Mexican peso, and Brazilian real, which had a favorable impact on our Europe, Middle East and Africa, Asia Pacific and Latin America operating segments.except for North America. Refer to the heading "Liquidity, Capital Resources and Financial Position — Foreign Exchange" below.



Nine
Six Months Ended September 29, 2017June 28, 2019 versus NineSix Months Ended September 30, 2016June 29, 2018
The Company'sDuring the six months ended June 28, 2019, net operating revenues decreased $4,556were $18,691 million, compared to $17,719 million during the six months ended June 29, 2018, an increase of $972 million, or 145 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 2017 versus 2016Percent Change 2019 versus 2018
Volume1

Acquisitions & Divestitures
Price, Product & Geographic Mix
Currency Fluctuations
Total
Volume1

Acquisitions & DivestituresPrice, Product & Geographic Mix
Currency Fluctuations
Total
Consolidated(1)%(15)%3%(1)%(14)%3%6%3%(6)%5%
Europe, Middle East & Africa2 %(1)%2%(3)% %4%3%5%(11)%%
Latin America(4)
7

3


7
(13)(6)
North America
1
3

4
(2)
4

2
Asia Pacific1


(3)(3)7
(1)(2)(3)
Global Ventures1
220

(20)201
Bottling Investments(3)(40)2

(41)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 structural changes.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.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 or businesses, some of which the Company considers to be structural changes. Refer to the heading "Structural Changes, Acquired Brands and Newly Licensed Brands" above for additional information related to the structural changes.
"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 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 — favorably impactedfavorable price mix across most markets and the timing of concentrate shipments as a result of pricing initiatives, product and package mix, partially offset by geographic mix;certain bottlers increasing their concentrate inventories due to uncertainties related to Brexit;
Latin America — favorable price mix in all four of the segment'sMexico and Brazil business units and the impact of inflationary environments in certain markets, partially offset by geographic mix;markets;
North America — favorably impacted as a result offavorable pricing initiatives and product and package mix;initiatives;
Asia Pacific — favorable product and package mix, offset byunfavorable geographic mix; and
Bottling Investments — favorably impacted as a result of pricing initiatives andfavorable price, product and package mix in North America.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 16 percent. This unfavorable impact was primarily due to a stronger U.S. dollar compared to certain foreign currencies, including the U.K.euro, British pound sterling, Japanese yen, ArgentineMexican peso, Brazilian real, South African rand and Mexican peso,Australian dollar, which had an unfavorable impact on all of our Europe, Middle East and Africa, Asia Pacific and Latin America operating segments. The unfavorable impact of a stronger U.S. dollar compared to the currencies listed above was partially offset by the impact of a weaker U.S. dollar compared to certain other foreign currencies, including the euro, South African rand, Australian dollar and Brazilian real, which had a favorable impact on our Europe, Middle East and Africa, Asia Pacific and Latin America operating segments.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 an 18a favorable impact of 7 percent unfavorable impact on 20172019 full year net operating revenues. Based on current spot rates and our hedging coverage in place, we expect currencies will have a slight favorablean unfavorable impact on net operating revenues inthrough the fourth quarterend of 2017.the year.





Gross Profit Margin
As a result of our finished goods operations, which are primarily included in our North America and Bottling Investments operating segments, the following inputs represent a substantial portion of the Company's total cost of goods sold: (1) sweeteners, (2) metals, (3) juices and (4) polyethylene terephthalate ("PET"). The Company enters into hedging activities related to certain commodities in order to mitigate a portion of the price risk associated with forecasted purchases. Many of the derivative financial instruments used by the Company to mitigate the risk associated with these commodity exposures, including any related foreign currency exposure, do not qualify for hedge accounting. As a result, the changes in fair value of these derivative instruments have been, and will continue to be, included as a component of net income in each reporting period. During the three and nine months ended September 29, 2017, the Company recorded a net loss of $15 million and a net gain of $13 million, respectively, in the line item cost of goods sold in our condensed consolidated statement of income related to the changes in the fair value of these derivative instruments. Refer to Note 5 of Notes to Condensed Consolidated Financial Statements.
Our gross profit margin increaseddecreased to 62.660.8 percent for the three months ended September 29, 2017,June 28, 2019, compared to 61.162.4 percent for the three months ended September 30, 2016. The increase wasJune 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 acquisitions and divestitures, partially offset by timing of commodity costs favorability in the prior year. Our gross profit margin increased to 62.1 percent for the nine months ended September 29, 2017, compared to 61.0 percent for the nine months ended September 30, 2016. The increase was primarily due to the impact of acquisitions and divestitures, partially offset bystructural 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 significant components of selling, general and administrative expenses (in millions):
 Three Months Ended Nine Months Ended
 September 29,
2017

September 30,
2016

 September 29,
2017

September 30,
2016

Stock-based compensation expense$53
$72
 $167
$191
Advertising expenses1,018
1,157
 2,901
3,062
Selling and distribution expenses1
794
1,253
 2,713
4,004
Other operating expenses1,338
1,527
 3,879
4,425
Total$3,203
$4,009
 $9,660
$11,682
1 Includes operating expenses as well as general and administrative expenses primarily related to our Bottling Investments operating segment.
 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 expenses1,165
1,181
 2,118
2,167
Selling and distribution expenses713
643
 1,388
1,235
Other operating expenses1,070
1,014
 2,169
2,103
Selling, general and administrative expenses$2,996
$2,887
 $5,763
$5,626
During the three and ninesix months ended September 29, 2017,June 28, 2019, selling, general and administrative expenses decreased $806increased $109 million, or 204 percent, and $2,022$137 million, or 172 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 September 29, 2017,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 on total selling, general and administrative expenses was even. During the nine months ended September 29, 2017, fluctuations in foreign currency exchange rates decreased total selling, general and administrative expenses by 1 percent.fluctuations.
The decrease in selling and distribution expenses and advertising expenses during the three and nine months ended September 29, 2017 reflects the impact of divestitures. Additionally, the decrease in selling and distribution expenses and advertising expenses during the nine months ended September 29, 2017, was impacted by having two fewer days during the first quarter of 2017 when compared to the first quarter of 2016. Advertising expenses during the nine months ended September 29, 2017 also decreased 1 percent as a result of foreign currency exchange rate fluctuations. The decreaseincrease in other operating expenses during the three and six months ended September 29, 2017 reflects timingJune 28, 2019 was primarily due to the impact of expenses as well asstructural changes, partially offset by savings from our productivity and reinvestment initiatives. The decrease in other operating expenses during the nine months ended September 29, 2017 reflects the impact of fluctuations in foreign currency exchange rates, timing of expenses and savings from our productivity and reinvestment initiatives. Foreign currency exchange rate fluctuations have a more significant impact on both advertising and other operating expenses as compared to our selling and distribution expenses since they are generally transacted in local currency. Our selling and distribution expenses are primarily related to our Company-owned bottling operations, of which the majority of expenses are attributable to CCR and are primarily denominated in U.S. dollars. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information related to divestitures.
During the nine months ended September 29, 2017, the Company contributed $88 million to our pension plans, and we anticipate making additional contributions of approximately $85 million to our pension plans during the remainder of 2017. During the year ended December 31, 2016, the Company's total pension expense related to defined benefit plans was $238 million, which primarily included $86 million of net periodic benefit cost and $155 million of settlement charges and special termination benefits. We expect our total 2017 pension expense to be $350 million, which includes $27 million of net


periodic benefit cost and $323 million of estimated settlement charges, curtailment charges and special termination benefits. During the nine months ended September 29, 2017, we have incurred $251 million of pension expense, which includes $27 million of net periodic benefit cost and $224 million of settlement charges, curtailment charges and special termination benefits. The decrease in 2017 expected net periodic benefit cost is due to favorable asset performance in 2016 compared to our expected return, partially offset by a decrease in the expected long-term rate of return on assets for the U.S. plans and a decrease in the weighted-average discount rate.
As of September 29, 2017,June 28, 2019, we had $240$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 1.32.4 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 Nine Months EndedThree Months Ended Six Months Ended
September 29,
2017

September 30,
2016

 September 29,
2017

September 30,
2016

June 28,
2019

June 29,
2018

 June 28,
2019

June 29,
2018

Europe, Middle East & Africa$6
$2
 $2
$6
$
$
 $1
$2
Latin America2
75
 3
74

1
 
3
North America47
22
 131
80
13
47
 30
99
Asia Pacific1

 4
1

1
 
1
Global Ventures

 

Bottling Investments229
95
 1,092
479
30
106
 43
547
Corporate75
28
 259
190
49
70
 145
109
Total$360
$222
 $1,491
$830
$92
$225
 $219
$761


During the three months ended September 29, 2017,June 28, 2019, the Company recorded other operating charges of $360$92 million. These charges primarily consisted of $213$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. In addition, other operating charges included $129 million related to the Company's productivity and reinvestment program and $18 million related to tax litigation expense. Refer to Note 1113 of Notes to Condensed Consolidated Financial Statements for additional information on the Company's productivity integration and restructuring initiatives.reinvestment program. Refer to Note 1517 of Notes to Condensed Consolidated Financial Statements for the impact these charges had on our operating segments.segments and Corporate.
During the ninesix months ended September 29, 2017,June 28, 2019, the Company recorded other operating charges of $1,491$219 million. These charges primarily consisted of $737 million of CCR asset impairments and $355$123 million related to the Company's productivity and reinvestment program. In addition, other operating charges included $314$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, $43operations. Other operating charges also included $22 million related to tax litigation expense and $34 million related to impairments of Venezuelan intangible assets.expense. Refer to Note 19 of Notes to Condensed Consolidated Financial Statements for additional information aboutrelated to the Venezuelan intangible assetstax 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 1416 of Notes to Condensed Consolidated Financial Statements for information on how the Company determined the asset impairment charges. Refer to Note 11 of Notes to Condensed Consolidated Financial Statements for additional information on the Company's productivity, integration and restructuring initiatives. Refer to Note 1517 of Notes to Condensed Consolidated Financial Statements for the impact these charges had on our operating segments.segments and Corporate.
During the threesix months ended September 30, 2016,June 29, 2018, the Company incurredrecorded other operating charges of $222$761 million. These charges primarily consisted of a charge$450 million of $76CCR asset impairments and $206 million duerelated to the write-down we recorded related to our receivables from our bottling partner in Venezuela due to changes in exchange rates,Company's productivity and reinvestment program. In addition, other operating charges of $73included $79 million related to costs incurred to refranchise certain of our North America bottling territories, andoperations. Other operating charges of $59also included $27 million duerelated to the Company's productivity and reinvestment program.tax litigation expense. Refer to Note 19 of Notes to Condensed Consolidated Financial Statements for additional information on the Venezuelan exchange rates, Note 10 of Notes to Condensed Consolidated Financial Statements for additional information on the costs related to the North America refranchising andtax litigation. Refer to Note 1113 of Notes to Condensed Consolidated Financial Statements for additional information on the Company's productivity integration and restructuring initiatives.reinvestment program. Refer to Note 1516 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.
During the nine months ended September 30, 2016, the Company incurred other operating charges of $830 million. These charges primarily consisted of $187 million due to the Company's productivitysegments and reinvestment program, $240 million due to the integration of our German bottling operations and $170 million related to costs incurred to refranchise certain of our North


America bottling territories. The Company also recorded a charge of $100 million related to a cash contribution we made to The Coca-Cola Foundation, a charge of $76 million due to the write-down we recorded related to our receivables from our bottling partner in Venezuela due to changes in exchange rates and charges of $37 million related to noncapitalizable transaction costs associated with pending and closed transactions. Refer to Note 11 of Notes to Condensed Consolidated Financial Statements for additional information on the Company's productivity, integration and restructuring initiatives, Note 10 of Notes to Condensed Consolidated Financial Statements for additional information on costs related to the North America refranchising and Note 1 of Notes to Condensed Consolidated Financial Statements for additional information on the Venezuelan exchange rates. Refer to Note 15 of Notes to Condensed Consolidated Financial Statements for the impact these charges had on our operating segments.
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 bottling operations ("Old CCE").
In February 2014, the Company announced the expansion of our productivity and reinvestment program to drive incremental productivity that will primarily be redirected into increased media investments. Our incremental productivity goal consists of two relatively equal components. First, we will expand savings through global supply chain optimization, data and information technology systems standardization, and resource and cost reallocation. Second, we will increase the effectiveness of our marketing investments by transforming our marketing and commercial model to redeploy resources into more consumer-facing marketing investments to accelerate growth.
In October 2014, the Company announced that we were further expanding our productivity and reinvestment program and extending it through 2019. The expansion of the productivity initiatives will focus 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. The Company expects that the expanded productivity initiatives will generate an incremental $2.0 billion in annualized productivity. This productivity will enable the Company to fund marketing initiatives and innovation required to deliver sustainable net revenue growth and will also support margin expansion and increased returns on invested capital over time. We expect to achieve total annualized productivity of approximately $3.0 billion by 2019 as a result of the initiatives implemented under the 2014 expansions of the program.
In April 2017, the Company announced that we were expanding the current productivity and reinvestment program, with planned initiatives that are expected to generate an incremental $800 million in annualized savings by 2019. We expect to achieve these savings through additional efficiencies in both our supply chain and our marketing expenditures as well as the transition 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 $2,763 million related to this program since it began in 2012. Refer to Note 11 of Notes to Condensed Consolidated Financial Statements for additional information.
Integration of Our German Bottling Operations
In 2008, the Company began the integration of our German bottling operations acquired in 2007. The Company incurred total pretax expenses of $1,367 million as a result of this initiative, primarily related to involuntary terminations, including expenses of $240 million incurred during the nine months ended September 30, 2016. During the year ended December 31, 2016, the Company deconsolidated our German bottling operations.Corporate.











Operating Income and Operating Margin
Information about our operating income contribution by operating segment and Corporate on a percentage basis is as follows:
Three Months Ended Nine Months EndedThree Months Ended Six Months Ended
September 29,
2017

September 30,
2016

 September 29,
2017

September 30,
2016

June 28,
2019

June 29,
2018

 June 28,
2019

June 29,
2018

Europe, Middle East & Africa44.2%40.3% 46.7%39.8%34.7%39.5% 37.2%42.6%
Latin America26.6
19.2
 26.3
20.2
19.7
21.4
 20.0
24.7
North America30.5
29.3
 31.8
27.3
23.8
23.4
 23.9
24.4
Asia Pacific27.2
25.7
 29.7
26.0
24.5
25.4
 23.5
26.8
Global Ventures2.4
1.4
 2.6
1.4
Bottling Investments(10.3)5.4
 (15.9)3.1
4.0
(0.6) 4.0
(7.2)
Corporate(18.2)(19.9) (18.6)(16.4)(9.1)(10.5) (11.2)(12.7)
Total100.0%100.0% 100.0%100.0%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 Nine Months EndedThree Months Ended Six Months Ended
September 29,
2017

September 30,
2016

 September 29,
2017

September 30,
2016

June 28,
2019

June 29,
2018

 June 28,
2019

June 29,
2018

Consolidated23.3%21.4% 22.2%22.4%29.9%29.4% 29.0%26.6%
Europe, Middle East & Africa47.8%49.4% 51.2%54.0%57.5%58.0% 58.6%58.7%
Latin America55.8
45.9
 56.9
52.8
58.6
58.6
 57.1
58.5
North America28.0
40.1
 31.6
41.6
22.5
21.5
 22.2
20.5
Asia Pacific42.9
44.3
 48.2
49.5
54.1
50.3
 52.8
50.5
Global Ventures11.5
17.7
 11.4
16.4
Bottling Investments(9.0)2.6
 (10.6)1.4
5.9
(0.9) 5.7
(9.2)
Corporate*
*
 *
*
* Calculation is not meaningful.
Three Months Ended September 29, 2017June 28, 2019 versus Three Months Ended September 30, 2016June 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 September 29, 2017,June 28, 2019 was unfavorablyfavorably impacted by the refranchisingtiming of bottling territories in North Americaconcentrate shipments, price mix, lower operating expenses as a result of productivity initiatives, lower other operating charges and China, which unfavorably impacted our Bottling Investments operating segment. Refer to Note 2the impact of Notes to Condensed Consolidated Financial Statements for additional information on North Americaacquisitions and China refranchising.divestitures. These favorable impacts were partially offset by the unfavorable impact of foreign currency exchange rate fluctuations.
During the three months ended September 29, 2017,June 28, 2019, fluctuations in foreign currency exchange rates unfavorably impacted consolidated operating income by 210 percent due to a stronger U.S. dollar compared to certain foreign currencies, including the U.K.euro, British pound sterling, Japanese yen, Mexican peso, Brazilian real, South African rand and Argentine peso,Australian dollar, which had an unfavorable impact on all of our Europe, Middle East and Africa, Asia Pacific and Latin America operating segments. The unfavorable impact of a stronger U.S. dollar compared to the currencies listed above was offset by the impact of a weaker U.S. dollar compared to certain other foreign currencies, including the euro, South African rand, Australian dollar, Mexican peso and Brazilian real, which had a favorable impact on our Europe, Middle East and Africa, Asia Pacific and Latin America operating segments.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 $936$1,038 million and $914$1,093 million for the three months ended SeptemberJune 28, 2019 and June 29, 20172018, 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 September 30, 2016, respectively. Operatingfavorable price mix.
Latin America reported operating income of $588 million and $593 million for the segment reflectsthree 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 favorable product mix and a favorable foreign currency exchange rate impact of 1 percent.
Latin America reported operating income of $563 million and $435 million for the three months ended September 29, 2017 and September 30, 2016, respectively. Operating income for the segment reflects favorable price, product and product mix, a favorable foreign currency exchange rate impact of 1 percent and a reduction in other operating charges.geographic mix.
Operating income for North America for the three months ended SeptemberJune 28, 2019 and June 29, 2017 and September 30, 2016,2018 was $646$711 million and $666$648 million, respectively. The decreaseincrease in operating income was primarily driven by the timing of commodity cost favorability in the prior yearfavorable price mix and higherlower other operating charges partially offset by positive price and product mix.charges.


Asia Pacific's operating income for the three months ended SeptemberJune 28, 2019 and June 29, 2017 and September 30, 2016,2018 was $577$731 million and $583$703 million, respectively. OperatingThe increase in operating income for the segment reflects favorable product mixconcentrate sales volume growth of 8 percent, partially offset by unfavorable geographic mix and an unfavorable foreign currency exchange rate impact of 73 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 lossincome for our Bottling Investments segment for the three months ended September 29, 2017,June 28, 2019 was $217$119 million compared to an operating incomeloss of $124$17 million for the three months ended September 30, 2016. The segmentJune 29, 2018. Operating income in 2019 was unfavorably


impacted by acquisitionslower other operating charges, strong performance in India and divestitures, partially offset by a 1 percentSouth Africa, and the favorable impact due to fluctuations in foreign currency exchange rates.of the acquisition of the Philippine bottling operations.
Corporate's operating loss for the three months ended SeptemberJune 28, 2019 and June 29, 2017 and September 30, 2016,2018 was $385$272 million and $451$291 million, respectively. Operating loss in 20172019 was favorably impacted by lower expenses primarily resultingother operating charges and savings from our productivity initiatives, partially offset byinitiatives.
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 in other operating charges.
Nine Months Ended September 29, 2017 versus Nine Months Ended September 30, 2016
of $710 million, or 15 percent. Operating income for the ninesix months ended September 29, 2017,June 28, 2019 was unfavorablyfavorably impacted by two fewer daysconcentrate sales volume growth of 3 percent, favorable price, product and geographic mix, lower other operating charges and a reduction in the first quarter of 2017 when compared to the first quarter of 2016. During the nine months ended September 29, 2017, the Company's operating income was also unfavorably impactedexpenses resulting from productivity initiatives. These favorable impacts were partially offset by the refranchisingunfavorable impact of bottling territories in North America and China, which unfavorably impacted our Bottling Investments operating segment. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information on North America and China refranchising.foreign currency exchange rate fluctuations.
During the ninesix months ended September 29, 2017,June 28, 2019, fluctuations in foreign currency exchange rates unfavorably impacted consolidated operating income by 311 percent due to a stronger U.S. dollar compared to certain foreign currencies, including the U.K.euro, British pound sterling, Japanese yen, ArgentineMexican peso, Brazilian real, South African rand and Mexican peso,Australian dollar, which had an unfavorable impact on all of our Europe, Middle East and Africa, Asia Pacific and Latin America operating segments. The unfavorable impact of a stronger U.S. dollar compared to the currencies listed above was partially offset by the impact of a weaker U.S. dollar compared to certain other foreign currencies, including the euro, South African rand, Australian dollar and Brazilian real, which had a favorable impact on our Europe, Middle East and Africa, Asia Pacific and Latin America operating segments.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 $2,884$2,016 million and $2,897$2,007 million for the ninesix months ended SeptemberJune 28, 2019 and June 29, 2017 and September 30, 2016,2018, 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 and unfavorable geographic mix, partially offset by concentrate sales volume growth and favorable product mix.percent.
Latin America reportedGlobal Ventures' operating income of $1,625for the six months ended June 28, 2019 and June 29, 2018 was $139 million and $1,470$66 million, for the nine months ended September 29, 2017 and September 30, 2016, respectively. Operating income for the segment reflects favorable price and product mix and a reduction in other operating charges.
Operating income for North America forwas favorably impacted by the nine months ended September 29, 2017 and September 30, 2016, was $1,967 million and $1,982 million, respectively. The decrease in operating income was primarily due to higher other operating charges, timingacquisition of commodity cost favorability in the prior year andCosta, partially offset by an unfavorable foreign currency exchange rate impact of 16 percent.
Asia Pacific's operating income for the nine months ended September 29, 2017 and September 30, 2016, was $1,835 million and $1,892 million, respectively. Operating income for the segment reflects an unfavorable foreign currency exchange rate impact of 5 percent and unfavorable geographic mix.
Operating loss for our Bottling Investments segment for the ninesix months ended September 29, 2017,June 28, 2019 was $979$219 million compared to an operating incomeloss of $222$342 million for the ninesix months ended September 30, 2016. The segmentJune 29, 2018. Operating income in 2019 was unfavorably impacted by acquisitionslower other operating charges, strong performance in India and divestitures and $737 millionthe favorable impact of asset impairment charges related to CCR.the acquisition of the Philippine bottling operations.
Corporate's operating loss for the ninesix months ended SeptemberJune 28, 2019 and June 29, 2017 and September 30, 2016,2018 was $1,152$605 million and $1,192$598 million, respectively. Operating loss in 20172019 was favorablyunfavorably impacted by lower expenses resulting from productivity initiatives and a 2 percent favorable impact resulting from fluctuations in foreign currency exchange rates, partially offset by higher other operating charges.charges, partially offset by savings from our productivity initiatives.


Based on current spot rates and our hedging coverage in place, we expect currencies will have a favorablean unfavorable impact on operating income inthrough the fourth quarterend of 2017.the year.        
Interest Income
During the three months ended September 29, 2017,June 28, 2019, interest income was $175$142 million, compared to $164$173 million during the three months ended September 30, 2016, an increaseJune 29, 2018, a decrease of $11$31 million, or 618 percent. During the ninesix months ended September 29, 2017,June 28, 2019, interest income was $495$275 million, compared to $472$339 million during the ninesix months ended September 30, 2016, an increaseJune 29, 2018, a decrease of $23$64 million, or 519 percent. These increasesdecreases were primarily reflectdriven 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 investmentcash balances in certain of our international locations, partially offset by lower interest rates earned on certain of those investments.





Interest Expense
During the three months ended September 29, 2017, interest expense was $208 million, compared to $182 million during the three months ended September 30, 2016, an increase of $26 million, or 15 percent. During the nine months ended September 29, 2017, interest expense was $631 million, compared to $485 million during the nine months ended September 30, 2016, an increase of $146 million, or 30 percent. These increases primarily reflect the impact of short-term U.S. interest rates and longer debt maturities, both of which resulted in higher interest rates on the Company’s debt portfolio. In addition, during the nine months ended September 29, 2017, the Company recorded a net charge of $38 million due to the extinguishment of certain long-term debt. This net charge included the difference between the reacquisition price and the net carrying amount of the debt extinguished. Refer to the heading "Liquidity, Capital Resources and Financial Position — Cash Flows from Financing Activities" below for additional information related to the Company's long-term debt.
Equity Income (Loss) — Net
Three Months Ended September 29, 2017 versus Three Months Ended September 30, 2016
During the three months ended September 29, 2017, equity income was $358 million, compared to equity income of $281 million during the three months ended September 30, 2016, an increase of $77 million, or 28 percent. This increase reflects, among other items, more favorable operating results reported by several of our equity method investees as well as an equity investment that the Company recently acquired in AC Bebidas, S. de R.L. de C.V. ("AC Bebidas"), a subsidiary of Arca Continental, S.A.B. de C.V. ("Arca").locations. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information oninformation.
Interest Expense
During the Company's investmentthree 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 AC Bebidas.
TheCorporación 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 $16$26 million and $14$33 million in the line item equity income (loss) — net during the three months ended SeptemberJune 28, 2019 and June 29, 2017 and September 30, 2016,2018, respectively. These amounts represent the Company's proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees.
NineSix Months Ended September 29, 2017June 28, 2019 versus NineSix Months Ended September 30, 2016June 29, 2018
During the ninesix months ended September 29, 2017,June 28, 2019, equity income was $883$462 million, compared to equity income of $678$465 million during the ninesix months ended September 30, 2016, an increaseJune 29, 2018, a decrease of $205$3 million, or 301 percent. This increasedecrease reflects, among other items, more favorable operating results reported by severalthings, 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, investees as well as equity investments that the Company recently acquired in CCEP, CCBA and CCBA's South African subsidiary, and AC Bebidas. The favorableunfavorable impact of these items was partially offset byforeign currency exchange rate fluctuations. In addition, the derecognition of the Company's former equity method investment in South Africa. Refer to the heading "Structural Changes, Acquired Brands and Newly Licensed Brands" above for additional information on the deconsolidation of both our German and South African bottling operations. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information on the Company's investment in AC Bebidas.
The Company recorded net charges of $37$68 million and $35$84 million in the line item equity income (loss) — net during the ninesix months ended SeptemberJune 28, 2019 and June 29, 2017 and September 30, 2016,2018, 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 securities; and other-than-temporary impairments of available-for-saledebt 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 sheets.sheet. Refer to Note 56 of Notes to Condensed Consolidated Financial Statements.
Three Months Ended September 29, 2017 versus Three Months Ended September 30, 2016
During the three months ended September 29, 2017,June 28, 2019, other income (loss) — net was a loss of $771$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


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 $762$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 $72$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. The Company also recorded an other-than-temporary impairment charge of $50 million related to one of our international equity method investees, primarily driven by foreign currency exchange rate fluctuations. These charges were partially offset by a net gain of $79$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 refranchisingsale of a portion of our remaining China bottling operations and related cost method investment.equity ownership interest in Andina. Other income (loss) — net also included net gainsincome of $14$51 million related to trading securitiesthe non-service cost components of net periodic benefit cost and the sale of available-for-sale securities and


$10$40 million of dividend income, partially offset by net foreign currency exchange losses of $5$61 million. None of the other items included in other income (loss) — net during the threesix months ended September 29, 2017,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 China bottling operations, North America refranchising and the conversion payments.equity ownership interest in Andina. Refer to Note 154 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.segments and Corporate.
During the threesix months ended September 30, 2016,June 29, 2018, other income (loss) — net was a loss of $1,106$147 million. This loss included lossesDuring the six months ended June 29, 2018, the Company recorded charges of $1,089$86 million related to pension settlements and net charges of $104 million due to the refranchising of certain bottling territories in North America and a lossAmerica. The Company also recorded an other-than-temporary impairment charge of $21 million due to the deconsolidation of our South African bottling operations and disposal of the related equity method investment in exchange for investments in CCBA and CCBA's South African subsidiary. Additionally, the Company incurred net foreign currency exchange losses of $25 million and charges of $17$52 million related to payments made to convert the bottling agreements for certain North America bottling partners' territories toone of our equity method investees and a single formnet loss of CBA with additional requirements. Other income (loss) — net also included net gains of $24$49 million related to tradingrealized 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 of Notes to Condensed Consolidated Financial Statements for additional information onAdditionally, the North America refranchising, the deconsolidation of our South African bottling operations and the conversion payments. Refer to Note 15 of Notes to Condensed Consolidated Financial Statements for the impact these items had on our operating segments.
Nine Months Ended September 29, 2017 versus Nine Months Ended September 30, 2016
During the nine months ended September 29, 2017, other income (loss) — net was a loss of $1,122 million. The Company recognized a net chargeloss of $1,473$33 million dueprimarily related to the refranchisingreversal of certain bottling territories in North Americathe cumulative translation adjustments resulting from the substantial liquidation of the Company's former Russian juice operations and charges of $287$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. The Company also recorded an other-than-temporary impairment charge of $50 million related to one of our international equity method investees, primarily driven by foreign currency exchange rate fluctuations. Additionally, the Company incurred a charge of $26 million related to our former German bottling operations. These charges were partially offset by a net gain of $445 million related to the integration of Coca-Cola West Co., Ltd. ("CCW") and Coca-Cola East Japan Co., Ltd. ("CCEJ") to establish Coca-Cola Bottlers Japan Inc. ("CCBJI"). In exchange for our previously existing equity interests in CCW and CCEJ, we received an approximate 17 percent equity interest in CCBJI. The Company also recognized a gain of $88$36 million related to the refranchising of our ChinaLatin American bottling operations and related cost method investment and a gain of $25 million as a result of Coca-Cola FEMSA, an equity method investee, issuing additional shares of its stock during the period at a per share amount greater than the carrying value of the Company's per share investment.operations. Other income (loss) — net also included net gainsincome of $69$117 million related to trading securitiesthe non-service cost components of net periodic benefit cost and the sale of available-for-sale securities and $62$46 million of dividend income, partially offset by net foreign currency exchange losses of $16$40 million. None of the other items included in other income (loss) — net during the ninesix months ended September 29, 2017,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


Note 2 of Notes to Condensed Consolidated Financial Statements for additional information on therefranchising activities and North America refranchising, the conversion payments and the refranchising of our China bottling operations.payments. Refer to Note 15 of Notes to Condensed Consolidated Financial Statements for the impact these items had on our operating segments.
During the nine months ended September 30, 2016, other income (loss) — net was a loss of $315 million. This loss included losses of $1,657 million due to the refranchising of certain bottling territories in North America and a loss of $21 million due to the deconsolidation of our South African bottling operations and disposal of the related equity method investment in exchange for investments in CCBA and CCBA's South African subsidiary. Additionally, the Company incurred net foreign currency exchange losses of $106 million and charges of $17 million related to payments made to convert the bottling agreements for certain North America bottling partners' territories to a single form of CBA with additional requirements. These losses were partially offset by a gain of $1,323 million due to the deconsolidation of our German bottling operations, dividend income of $45 million, net gains of $69 million related to trading securities and available-for-sale securities and a gain of $18 million resulting from the Company's disposal of its investment in Keurig Green Mountain, Inc. ("Keurig"). Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information on the North America refranchising, the deconsolidation of our South African bottling operations, the conversion payments, the deconsolidation of our German bottling operations and the Keurig investment disposal. Refer to Note 1516 of Notes to Condensed Consolidated Financial Statements for the impact these items had on our operating segments.
Income Taxes
OurThe 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 reflectsof 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 which are generally taxed at rates lower than the U.S. statutory rate of 35.0 percent. As a result of employment actions and capital investments made by the Company, certain tax jurisdictions provide income tax incentive grants, including Brazil, Costa Rica, Singapore and Swaziland. The terms of these grants expire from 2017 to 2036. We anticipate that we will be able to extend or renew the grants in these locations. In addition, our effective tax rate reflects the benefits of having 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. statutory 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 estimated effective tax rate for 2017in 2019 is 24.0 percent. However, in arriving at this estimate we do not includeexpected to be 19.5 percent before considering the estimatedpotential impact of any significant operating and nonoperating items whichthat may cause significant variations in the customary relationship between income tax expense and income before income taxes.
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 7 of Notes to Condensed Consolidated Financial Statements.
The Company recorded income tax expense of $230 million (13.7 percentaffect our effective tax rate) and $378 million (26.5 percent effective tax rate) during the three months ended September 29, 2017 and September 30, 2016, respectively. The Company recorded income tax expense of $1,805 million (31.1 percent effective tax rate) and $1,618 million (21.2 percent effective tax rate) during the nine months ended September 29, 2017 and September 30, 2016, respectively.
The following table illustrates the income tax expense (benefit) associated with significant operating and nonoperating items for the interim periods presented (in millions):
 Three Months Ended Nine Months Ended 
 September 29,
2017

 September 30,
2016

 September 29,
2017

 September 30,
2016

 
Asset impairments$
1 
$

$(164)
1 
$

Productivity and reinvestment program(44)
2 
(20)
9 
(127)
2 
(65)
9 
Other productivity, integration and restructuring initiatives






10 
Transaction gains and losses(361)
3 
(246)
11 
172
4 
(363)
12 
Certain tax matters(40)
5 
7
13 
(110)
6 
84
13 
Other — net(12)
7 
8
14 
(41)
8 
(38)
15 
1
Related to charges of $50 million and $821 million during the three and nine months ended September 29, 2017, respectively, due to the impairment of certain assets. Refer to Note 10 and Note 14 of Notes to Condensed Consolidated Financial Statements.
2
Related to charges of $129 million and $355 million during the three and nine months ended September 29, 2017, respectively. These charges were due to the Company's productivity and reinvestment program. Refer to Note 11 of Notes to Condensed Consolidated Financial Statements.
3
Related to a net charge of $968 million which primarily consisted of $762 million of charges as a result of the refranchising of certain bottling territories in North America, $213 million related to costs incurred to refranchise certain of our bottling operations and $72 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 $79 million gain related to the refranchising of our remaining China bottling operations and related cost method investment. Refer to Note 2 and Note 10 of Notes to Condensed Consolidated Financial Statements.
4
Related to a net charge of $1,551 million which primarily consisted of $1,473 million of net charges as a result of the refranchising of certain bottling territories in North America, $314 million of charges related to costs incurred to refranchise certain of our bottling operations, $287 million of charges 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 and a $26 million charge related to our former German bottling operations. These charges were partially offset by a $445 million gain related to the merger of CCW and CCEJ, an $88 million gain related to the refranchising of our China bottling operations and related cost method investment and a $25 million gain related to Coca-Cola FEMSA, an equity method investee, issuing additional shares of its stock. Refer to Note 2 and Note 10 of Notes to Condensed Consolidated Financial Statements.
5
Related to $40 millionof excess tax benefits associated with the Company's share-based compensation arrangements.
6 Related to $122 million of excess tax benefits associated with the Company's share-based compensation arrangements and the tax benefit associated with the reversal of valuation allowances in certain of the Company's foreign jurisdictions, both of which were partially offset by changes to our uncertain tax positions, including interest and penalties.
7 Related to charges of $35 million which primarily consisted of an $18 million charge related to tax litigation expense and a $16 million net charge due to our proportionate share of unusual or infrequent items recorded by certain of our equity method investees. Refer to Note 10 of Notes to Condensed Consolidated Financial Statements.
8 Related to charges of $121 million which primarily consisted of a net charge of $38 million related to the extinguishment of long-term debt, a $43 million charge related to tax litigation expense and a net charge of $37 million due to our proportionate share of unusual or infrequent items recorded by certain of our equity method investees. Refer to Note 10 of Notes to Condensed Consolidated Financial Statements.
9 Related to charges of $59 million and $187 million during the three and nine months ended September 30, 2016, respectively. These charges were due to the Company's productivity and reinvestment program. Refer to Note 10 and Note 11 of Notes to Condensed Consolidated Financial Statements.


10 Related to charges of $240 million during the nine months ended September 30, 2016. These charges were due to the integration of our German bottling operations. Refer to Note 10 and Note 11 of Notes to Condensed Consolidated Financial Statements.
11 Related to charges of $1,204 million which primarily consisted of $1,089 million of charges due to the refranchising of bottling territories in North America, $73 million related to costs incurred to refranchise our North America bottling territories, charges of $17 million  related to payments made to convert the bottling agreements for certain North America bottling partners' territories to a single form of CBA with additional requirements, a loss of $21 million related to the deconsolidation of our South African bottling operations and the $80 million tax impact resulting from the accrual of tax on temporary differences related to the investment in foreign subsidiaries that are now expected to reverse in the foreseeable future. Refer to Note 2 and Note 10 of Notes to Condensed Consolidated Financial Statements.
12 Related to a net charge of $561 million which primarily consisted of $1,657 million of charges due to the refranchising of bottling territories in North America, $170 million related to costs incurred to refranchise our North America bottling territories, charges of $17 million  related to payments made to convert the bottling agreements for certain North America bottling partners' territories to a single form of CBA with additional requirements, a loss of $21 million related to the deconsolidation of our South African bottling operations and the $80 million tax impact resulting from the accrual of tax on temporary differences related to the investment in foreign subsidiaries that are now expected to reverse in the foreseeable future. These charges were partially offset by a $1,288 million net gain related to the deconsolidation of our German bottling operations and an $18 million net gain related to the disposal of our investment in Keurig. Refer to Note 2 and Note 10 of Notes to Condensed Consolidated Financial Statements.
13 Primarily related to changes to our uncertain tax positions, including interest and penalties. The components of the net change in uncertain tax positions were individually insignificant.
14 Related to charges of $99 million which included a $76 million write-down we recorded related to receivables from our bottling partner in Venezuela, a $14 million charge due to our proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees and a $9 million charge due to tax litigation expense. Refer to Note 10 of Notes to Condensed Consolidated Financial Statements.
15 Related to charges of $230 million which included a $100 million cash contribution to The Coca-Cola Foundation, a $76 million charge due to the write-down we recorded related to receivables from our bottling partner in Venezuela, a $35 million net charge due to our proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees and a $19 million charge due to tax litigation expense. Refer to Note 10 of Notes to Condensed Consolidated Financial Statements.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 2017.2019. 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 continue to have the ability to borrow funds domesticallyinternationally at reasonable interest rates. In addition, our domestic entities have recently borrowedrates, and continuewe expect to havebe able to do so in the ability to borrow funds in international markets at reasonable interest rates.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 the Company's cash balances,these funds, our commercial paper program and our ability to issue long-term debt, we also had $8,265$8,600 million in lines of credit available for general corporate purposes as of September 29, 2017.June 28, 2019. These backup lines of credit expire at various times between 2017 andfrom 2019 through 2022.
We have significant operations outside the United States. Unit case volume outside the United States represented 82 percent of the Company's worldwide unit case volume for the nine months ended September 29, 2017. We earn a substantial amount of our consolidated operating income and income before income taxes in foreign subsidiaries that either sell concentrates and syrups to our local bottling partners or, in certain instances, sell finished products directly to our customers to fulfill the demand for Company beverage products outside the United States. A significant portion of these foreign earnings is considered to be indefinitely reinvested in foreign jurisdictions where the Company has made, and will continue to make, substantial investments to support the ongoing development and growth of our international operations. Accordingly, no U.S. federal and state income taxes have been provided on the portion of our foreign earnings that is considered to be indefinitely reinvested in foreign jurisdictions. The Company's cash, cash equivalents, short-term investments and marketable securities held by our foreign subsidiaries totaled $24.7 billion as of September 29, 2017.
Net operating revenues in the United States were $11.9 billion for the nine months ended September 29, 2017, or 43 percent of the Company's consolidated net operating revenues. We expect existing domestic cash, cash equivalents, short-term investments, marketable securities, cash flows from operations and the issuance of debt to continue to be sufficient to fund our domestic operating activities and cash commitments for investing and financing activities. In addition, we expect existing


foreign cash, cash equivalents, short-term investments, marketable securities and cash flows from operations to continue to be sufficient to fund our foreign operating activities and cash commitments for investing activities.
In the future, should we require more capital to fund significant discretionary activities in the United States than is generated by our domestic operations and is available through the issuance of domestic debt, we could elect to repatriate future periods' earnings from foreign jurisdictions. This alternative could result in a higher effective tax rate in the future. While the likelihood is remote, the Company could also elect to repatriate earnings from foreign jurisdictions that have previously been considered to be indefinitely reinvested. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to additional U.S. income taxes (net of an adjustment for foreign tax credits) and withholding taxes payable to various foreign jurisdictions, where applicable. This alternative could also result in a higher effective tax rate in the period in which such a determination is made to repatriate prior period foreign earnings.
Based on all of the aforementioned factors, the Company believes its current liquidity position is strong and we will continue to meet all ofbe sufficient to fund our financialoperating 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 ninesix months ended SeptemberJune 28, 2019 and June 29, 2017 and September 30, 2016,2018 was $5,918$4,501 million and $6,723$2,686 million, respectively, a decreasean increase of $805$1,815 million, or 1268 percent. This decreaseincrease was primarily driven by unfavorable impacts resulting from changesoperating income growth, the acquisition of Costa in January 2019, the efficient management of working capital and the timing of $487 million, two fewer days intax payments, partially offset by the first quarterimpact of 2017 compared to the first quarter of 2016, the refranchising of certain bottling operations and the unfavorable impact of foreign currency exchange rate fluctuations. Included in the changes in working capital is an unfavorable impact resulting from additional income tax payments which was partially offset by favorable impacts resulting from hedging activities and reduced pension contributions compared to the prior year comparable period.


Cash Flows from Investing Activities
Net cash provided byused in investing activities for the ninesix months ended September 29, 2017June 28, 2019 was $244$5,362 million, compared to net cash used inprovided by investing activities of $1,333$2,254 million during the prior year comparable period.
Purchases of Investments and Proceeds from Disposals of Investments
During the ninesix months ended September 29, 2017,June 28, 2019, purchases of investments were $12,925$2,935 million and proceeds from disposals of investments were $12,161$3,395 million, resulting in a net cash outflowinflow of $764$460 million. TheDuring 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 primarily represents the purchases of and proceeds fromrelated to our short-term investments that were made as part of the Company's overall cash management strategy.strategy as well as our insurance captive investments. Refer to Note 34 of Notes to Condensed Consolidated Financial Statements for additional information.
During the nine months ended September 30, 2016, purchases of investments were $12,733 million and proceeds from disposals of investments were $13,210 million, resulting in a net cash inflow of $477 million. The proceeds during the nine months ended September 30, 2016 included the disposal of the Company's investment in Keurig. The remaining activity primarily represents the purchases of and proceeds from short-term investments that were made as part of the Company's overall cash management strategy. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information on our investment in Keurig.
Acquisitions of Businesses, Equity Method Investments and Nonmarketable Securities
During the ninesix months ended September 29, 2017,June 28, 2019, the Company's acquisitions of businesses, equity method investments and nonmarketable securities totaled $538$5,353 million, which primarily related to the acquisitionacquisitions of AdeS, a plant-based beverage business, byCosta and the Company and several of its bottling partners in Latin America. Additionally, in conjunction with the refranchising of CCR's Southwest operating unit ("Southwest Transaction"), we obtained an equityremaining interest in AC Bebidas.CHI. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information.
On October 4, 2017, the Company and AB InBev completed the transition of AB InBev’s 54.5 percent majority interest in CCBA to the Company for $3.15 billion. Refer to Note 16 of Notes to Condensed Consolidated Financial Statements for additional information.
During the ninesix months ended September 30, 2016,June 29, 2018, the Company's acquisitions of businesses, equity method investments and nonmarketable securities totaled $767$218 million, which primarily related to ourthe acquisition of Xiamen Culiangwang Beverage Technology Co., Ltd. ("China Green"), a makeradditional interests in the Company’s franchise bottlers in the United Arab Emirates and in Oman, both of plant-based protein beverages in China, and a minority investment in CHI Limited ("CHI"), a Nigerian producer of value-added dairy and juice beverages, which is accounted for under thewere equity method of accounting. Under the termsinvestees. As a result of the agreement related to our investmentadditional interest in CHI, the Company is obligated to acquire the remaining ownershipOman bottler, we obtained a controlling interest, from the existing shareownersresulting in 2019 based on an agreed-upon formula.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 ninesix months ended September 29, 2017,June 28, 2019, proceeds from disposals of businesses, equity method investments and nonmarketable securities were $2,790$265 million, which primarily related to the proceeds from the refranchisingsale of certain bottling territories in North America and the refranchisinga portion of our China bottling operations and related cost method investment. equity ownership interest in Andina.
During the ninesix months ended September 30, 2016,June 29, 2018, proceeds from disposals of businesses, equity method investments and nonmarketable securities were $745$304 million, primarilywhich related to proceeds from the refranchising of certainour Latin American bottling territories in North America.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 ninesix months ended SeptemberJune 28, 2019 and June 29, 2017,2018 were $1,122 million. $724 million and $626 million, respectively.
The Company currently expects our 20172019 full year capital expenditures net of disposals to be approximately $2.0$2.4 billion primarilyas we continue to make investments to enable growth in our Bottling Investments operating segment.
During the nine months ended September 30, 2016, cash outflows for investing activities included purchases of property, plantbusiness and equipment net of disposals of $1,469 million.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 ninesix months ended SeptemberJune 28, 2019 and June 29, 2017 and September 30, 2016 totaled $2,4992018 was $1,432 million and $1,783$2,835 million, respectively, an increasea decrease of $716 million, or 40 percent.$1,403 million.
Debt Financing
Issuances and payments of debt included both short-term and long-term financing activities. During the ninesix months ended September 29, 2017,June 28, 2019, the Company had issuances of debt of $24,899$14,518 million, which included $21,266$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 long-term debt of $3,633$3,922 million, net of related discounts and issuance costs.
The Company made payments of debt of $22,424$14,278 million during the ninesix months ended September 29, 2017,June 28, 2019, which included $1,029 million of payments of commercial paper and short-term debt with maturities of 90 days or less, $18,607$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 $2,788$2,704 million. Refer below for additional details on our long-term debt issuances and payments.
During the ninesix months ended September 29, 2017,June 28, 2019, the Company issued U.S. dollar- and euro-denominated debt totaling €3,500 million. The carrying value of $1,000 million and €2,500 million, respectively.this debt as of June 28, 2019 was $3,956 million. The general terms of the notes issued are as follows:
$500€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 25, 2022,30, 2019, at a fixed interest rate of 2.20 percent;
$500 million total principal amount of notes due May 25, 2027, at a fixed interest rate of 2.90 percent;
€1,5001.375 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 Euro Interbank Offered Rate ("EURIBOR")three month EURIBOR plus 0.25 percent;
€500 million total principal amount of notes due March 9, 2021, at a fixed interest rate of 0.00 percent; and
€500 million total principal amount of notes due March 8, 2024, at a fixed interest rate of 0.50 percent.
During the nine months ended September 29, 2017, the Company retired upon maturity $206 million total principal amount of notes due August 1, 2017, at a fixed interest rate of 7.125 percent and €2,000 million total principal amount of notes due March 9, 2017, at a variable interest rate equal to the three-month EURIBOR plus 0.15 percent. The Company also extinguished a portion of the long-term debt that was assumed in connection with our acquisition of Old CCE. The extinguished notes had a carrying value of $417 million, which included fair value adjustments recorded as part of purchase accounting. The general terms of the notes extinguished were as follows:
$95.6 million total principal amount of notes due August 15, 2019, at a fixed interest rate of 4.50 percent;
$38.6 million total principal amount of notes due February 1, 2022, at a fixed interest rate of 8.50 percent;
$11.7 million total principal amount of notes due September 15, 2022, at a fixed interest rate of 8.00 percent;
$36.5 million total principal amount of notes due September 15, 2023, at a fixed interest rate of 6.75 percent;
$9.9 million total principal amount of notes due October 1, 2026, at a fixed interest rate of 7.00 percent;
$53.8 million total principal amount of notes due November 15, 2026, at a fixed interest rate of 6.95 percent;
$41.3 million total principal amount of notes due September 15, 2028, at a fixed interest rate of 6.75 percent;
$32.0 million total principal amount of notes due October 15, 2036, at a fixed interest rate of 6.70 percent;


$3.4 million total principal amount of notes due March 18, 2037, at a fixed interest rate of 5.71 percent;
$24.3 million total principal amount of notes due January 15, 2038, at a fixed interest rate of 6.75 percent; and
$4.7 million total principal amount of notes due May 15, 2098, at a fixed interest rate of 7.00 percent.
As of September 29, 2017,June 28, 2019, the carrying value of the Company's long-term debt included $269$199 million of fair value adjustments related to the remaining debt assumed in connection with our acquisition of Old CCE.Coca‑Cola Enterprises Inc.'s former North America business. These fair value adjustments will be amortized over a weighted-average period of approximately 2419 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 ninesix months ended September 29, 2017,June 28, 2019, the Company received cash proceeds from issuances of stock of $1,320$602 million, an increase of $25$2 million when compared to cash proceeds of $1,295 million from issuances of stock of $600 million during the ninesix months ended September 30, 2016. This increase is primarily due to an increase in the exercise of stock options by Company employees.June 29, 2018.
Share Repurchases
During the ninesix months ended September 29, 2017,June 28, 2019, the Company repurchased 68.813.7 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 $43.76$46.40 per share, for a total cost of $3,012$635 million. However, due to the timing of settlements, the total cash outflow for treasury stock purchases was $3,087$689 million during the ninesix months ended September 29, 2017.June 28, 2019. The total cash outflow for treasury stock during the first ninesix months of 20172019 includes treasury stock that was purchased and settled during the ninesix months ended September 29, 2017, as well as stock purchased in December 2016 that settled in early 2017;June 28, 2019; however, it does not include treasury stock that was purchased but did not settle during the ninesix months ended September 29, 2017.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 ninesix months ended September 29, 2017,June 28, 2019 resulted in a net cash outflow of $1,767$87 million. WeIn 2019, we expect to repurchase approximately $2.0 billion of our stock during 2017, net of proceedsshares to offset dilution resulting from the issuance of treasury stock due to the exercise of employee stock options.
During the nine months ended September 30, 2016, the Company repurchased 55.4 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 $44.71 per share, for a total cost of $2,475 million. However, due to the timing of settlements, the total cash outflow for treasury stock purchases was $2,509 million during the nine months ended September 30, 2016. The total cash outflow for treasury stock during the first nine months of 2016 includes treasury stock that was purchased and settled during the nine months ended September 30, 2016, as well as stock purchased in December 2015 that settled in early 2016; however, it does not include treasury stock that was purchased but did not settle during the nine months ended September 30, 2016. In addition, the cash flow impact of the Company's treasury stock activity also includes shares surrendered to the Company to satisfy minimum 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 impact of the Company's issuances of stock and share repurchases during the nine months ended September 30, 2016, resulted in a net cash outflow of $1,214 million.stock-based compensation plans.
Dividends
During the ninesix months ended SeptemberJune 28, 2019 and June 29, 2017,2018, the Company paid dividends of $3,165 million.$1,709 million and $1,662 million, respectively. The Company paid the thirdsecond quarter dividend in both 2019 and 2018 during the first week of October 2017. During the nine months ended September 30, 2016, the Company paid dividends of $3,028 million.July.
Our Board of Directors approved the Company's regular quarterly dividend of $0.37$0.40 per share at its October 2017July 2019 meeting. This dividend is payable on December 15, 2017,October 1, 2019 to shareowners of record as of December 1, 2017.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 andas well as to fluctuations in foreign currencies.
Our Company conducts business in more than 200 countries.countries and territories. Due to the geographic diversity of our operations, weakness in some foreign currencies may be offset by strength in others. Our foreign currency management program is designed to mitigate,


over time, a portion of the potentially unfavorable impact of exchange rate changes on net income and earnings per share. Taking into account the effects of our hedging activities, the impact of changes in foreign currency exchange rates decreased our operating income for the three and nine months ended September 29, 2017June 28, 2019 by 2 percent and 3 percent, respectively. 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 a favorablean unfavorable impact on our results inoperating income and cash flows from operations through the fourth quarter of 2017.
Hyperinflationary Economies
A hyperinflationary economy is one that has cumulative inflation of 100 percent or more over a three-year period. In accordance with U.S. GAAP, local subsidiaries in hyperinflationary economies are required to use the U.S. dollar as their functional currency and remeasure the monetary assets and liabilities not denominated in U.S. dollars using the rate applicable to conversion of a currency for purposes of dividend remittances. All exchange gains and losses resulting from remeasurement are recognized currently in income.
Venezuela has been designated as a hyperinflationary economy. During the nine months ended September 30, 2016, the Venezuelan government devalued its currency and changed its official and most preferential exchange rate, which should be used for purchases of certain essential goods, to 10 bolivars per U.S. dollar from 6.3. The official and most preferential rate is now known as DIPRO. The Venezuelan government also announced a new rate known as DICOM, which is allowed to float freely and is expected to fluctuate based on supply and demand. Management determined that the DICOM rate was the most appropriate legally available rate to remeasure the net monetary assets of our Venezuelan subsidiary.
In addition to the foreign currency exchange exposure related to our Venezuelan subsidiary's net monetary assets, we also sell concentrate to our bottling partner in Venezuela from outside the country. These sales are denominated in U.S. dollars. As a resultend of the continued lack of liquidity and our revised assessment of the U.S. dollar value we expected to realize upon the conversion of Venezuelan bolivars into U.S. dollars by our bottling partner to pay our concentrate sales receivables, we recorded a write-down of $76 million during the three and nine months ended September 30, 2016 in the line item other operating charges in our condensed consolidated statements of income.
We also have certain U.S. dollar-denominated intangible assets associated with products sold in Venezuela. As a result of weaker sales and the volatility of foreign currency exchange rates resulting from continued political instability, we recorded impairment charges of $34 million during the nine months ended September 29, 2017 in the line item other operating charges in our condensed consolidated statement of income. As a result of these impairment charges, the remaining carrying value of all U.S. dollar-denominated intangible assets associated with products sold in Venezuela is zero.year.





Overview of Financial Position
The following table illustrates the change in the individual line items of the Company's condensed consolidated balance sheet (in millions):
September 29,
2017

December 31, 2016
Increase
(Decrease)

 
Percent
Change

June 28,
2019

December 31, 2018
Increase
(Decrease)

 
Percent
Change

Cash and cash equivalents$12,528
$8,555
$3,973
 46 %$6,731
$9,077
$(2,346) (26)%
Short-term investments9,691
9,595
96
 1
2,572
2,025
547
 27
Marketable securities5,138
4,051
1,087
 27
4,058
5,013
(955) (19)
Trade accounts receivable — net3,664
3,856
(192) (5)4,888
3,685
1,203
 33
Inventories2,608
2,675
(67) (3)3,453
3,071
382
 12
Prepaid expenses and other assets2,993
2,481
512
 21
2,658
2,059
599
 29
Assets held for sale1,782
2,797
(1,015) (36)
Equity method investments21,644
16,260
5,384
 33
19,418
19,412
6
 
Other investments1,117
989
128
 13
894
867
27
 3
Other assets4,480
4,248
232
 5
5,596
4,148
1,448
 35
Deferred income tax assets2,559
2,674
(115) (4)
Property, plant and equipment — net8,306
10,635
(2,329) (22)10,254
9,598
656
 7
Trademarks with indefinite lives6,575
6,097
478
 8
9,313
6,682
2,631
 39
Bottlers' franchise rights with indefinite lives138
3,676
(3,538) (96)110
51
59
 116
Goodwill9,473
10,629
(1,156) (11)16,840
14,109
2,731
 19
Other intangible assets378
726
(348) (48)652
745
(93) (12)
Total assets$90,515
$87,270
$3,245
 4 %$89,996
$83,216
$6,780
 8 %
Accounts payable and accrued expenses$10,212
$9,490
$722
 8 %$12,819
$9,533
$3,286
 34 %
Loans and notes payable13,398
12,498
900
 7
13,030
13,835
(805) (6)
Current maturities of long-term debt3,231
3,527
(296) (8)2,749
5,003
(2,254) (45)
Accrued income taxes355
307
48
 16
784
411
373
 91
Liabilities held for sale437
710
(273) (38)
Long-term debt32,471
29,684
2,787
 9
29,296
25,376
3,920
 15
Other liabilities3,946
4,081
(135) (3)8,336
7,646
690
 9
Deferred income taxes4,313
3,753
560
 15
Deferred income tax liabilities2,687
2,354
333
 14
Total liabilities$68,363
$64,050
$4,313
 7 %$69,701
$64,158
$5,543
 9 %
Net assets$22,152
$23,220
$(1,068)
1 
(5)%$20,295
$19,058
$1,237
1 
6 %
1 Includes an increase in net assets of $1,511$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:
MarketableCash 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 purchaseCompany's issuances of debt securities as parteuro-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.


Refer to Note 1 of Notes to Condensed Consolidated Financial Statements for additional information on our overall cash management strategy.
Assets held for sale and liabilities held for sale decreased primarily due to North America and China bottling refranchising activities.adoption of the new leases standard. Refer to Note 2 of Notes to Condensed Consolidated Financial Statements for additional information.information on the acquisition of Costa.
Equity method investments increased primarily due to our new investments in AC Bebidas and CCBJI. Refer to Note 2 and Note 10 of Notes to Condensed Consolidated Financial Statements for additional information.
Property, plant and equipment, bottlers' franchise rights with indefinite lives and goodwill decreased primarily as a result of additional North America bottling territories being refranchised or reclassified as held for sale as well as impairment charges recorded. Refer to Note 2 and Note 14 of Notes to Condensed Consolidated Financial Statements for additional information.



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, 2016.2018.
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 September 29, 2017June 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 September 29, 2017,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, 2016.2018, 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 claimsclaimed 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.

TheDuring the 2007-2009 audit period, the Company has 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 providesprovided prospective penalty protection as long asconditioned on the Company followsCompany's continued adherence to the prescribed methodology andabsent a change in material facts andor circumstances andor relevant federal tax law have not changed. On February 11, 2016,law. Although the IRS notified the Company,subsequently asserted, without further explanation, that the IRS has determined that material facts and circumstances and relevant federal tax law havehad changed, and that it may asserthas not asserted penalties. The Company does not agree with this determination. The Company's compliance with the closing agreement was audited and confirmed by the IRS in five successive audit cycles covering the subsequent 11 years through 2006, with the last audit concluding as recently as 2009.

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


The Company firmly believes that the IRS' claims are without merit and plansis pursuing, and will continue to pursue, all available administrative and judicial remedies necessary to resolve this matter.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 potential tax liabilityadjustment of $135 million. This increases the potential additional federal income tax liability to approximately $3.4 billion for the period, plus interest. A trial date has been set for March 5, 2018.
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. ThatOn December 14, 2017, the U.S. Tax Court issued a decision on the summary judgment motion is still pending.

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 intendsand the IRS filed and exchanged final post-trial briefs in April 2019. It is not known how much time will elapse thereafter prior to vigorously defend itsthe 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 confidentengaged in its ability to prevailsettlement discussions regarding the allegations in the NOV. The Company believes that any monetary sanctions that may be imposed on the merits.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, 20162018, 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.


Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
The following table presents information with respect to purchases of common stock of the Company made during the three months endedSeptember 29, 2017,June 28, 2019 by The Coca-Colathe Company or any "affiliated purchaser" of The Coca-Colathe Company as defined in Rule 10b-18(a)(3) under the Exchange Act:
Period
Total Number
of Shares
Purchased1

Average
Price Paid
Per Share

Total Number
of Shares
Purchased as
Part of the
Publicly
Announced
Plan2

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

July 1, 2017 through July 28, 20175,090,332
$44.87
5,085,523
96,517,216
July 29, 2017 through August 25, 20176,229,283
$45.76
5,626,668
90,890,548
August 26, 2017 through September 29, 20177,378,095
$45.78
7,378,095
83,512,453
Total18,697,710
$45.53
18,090,286
 
Period
Total Number
of Shares
Purchased1

Average
Price Paid
Per Share

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

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

March 30, 2019 through April 26, 20192,984,973
$46.80
2,986,993
170,337,162
April 27, 2019 through May 24, 20192,006,851
48.40
2,001,841
168,335,321
May 25, 2019 through June 28, 20191,252,885
51.47

168,335,321
Total6,244,709
$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;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, totaling 4,809 shares and 602,615 shares for the fiscal months of July and August, respectively.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 time periods (including shares purchased pursuant to the terms of preset trading plans meeting the requirements of Rule 10b5-1 under the Exchange Act).
3 On February 21, 2019, 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).


4.1As 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.
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15
4.16
4.17
4.18
4.19


4.20
4.21
4.22
4.23
4.24
4.25
4.26
4.27
4.28
4.29
4.30
4.31


4.32
4.33
4.34
4.31Indenture, 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.
4.354.32First Supplemental Indenture, dated as of January 29, 1992, to the Indenture, dated as of July 30, 1991, between the 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.
4.36
4.37
12.1


101
The following financial information from The Coca-Cola Company's Quarterly Report on Form 10-Q for the quarter ended September 29, 2017,June 28, 2019, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Income for the three and ninesix months ended SeptemberJune 28, 2019 and June 29, 2017 and September 30, 2016,2018, (ii) Condensed Consolidated Statements of Comprehensive Income for the three and ninesix months ended SeptemberJune 28, 2019 and June 29, 2017 and September 30, 2016,2018, (iii) Condensed Consolidated Balance Sheets as of September 29, 2017June 28, 2019 and December 31, 2016,2018, (iv) Condensed Consolidated Statements of Cash Flows for the ninesix months ended SeptemberJune 28, 2019 and June 29, 2017 and September 30, 2016,2018, 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.




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)(Registrant)
   
  /s/ LARRY M. MARK
Date:October 26, 2017July 25, 2019
Larry M. Mark
Vice President and Controller
(On behalf of the Registrant)
   
  /s/ MARK RANDAZZA
Date:October 26, 2017July 25, 2019
Mark Randazza
Vice President, Assistant Controller and Chief Accounting Officer
(As Principal Accounting Officer)




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