ko-20240329

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 29, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-02217

COCA COLA CO

(Exact name of Registrant as specified in its charter)


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

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

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.25 Par Value	KO	New York Stock Exchange
1.875% Notes Due 2026	KO26	New York Stock Exchange
0.750% Notes Due 2026	KO26C	New York Stock Exchange
1.125% Notes Due 2027	KO27	New York Stock Exchange
0.125% Notes Due 2029	KO29A	New York Stock Exchange
0.125% Notes Due 2029	KO29B	New York Stock Exchange
0.400% Notes Due 2030	KO30B	New York Stock Exchange
1.250% Notes Due 2031	KO31	New York Stock Exchange
0.375% Notes Due 2033	KO33	New York Stock Exchange
0.500% Notes Due 2033	KO33A	New York Stock Exchange
1.625% Notes Due 2035	KO35	New York Stock Exchange
1.100% Notes Due 2036	KO36	New York Stock Exchange
0.950% Notes Due 2036	KO36A	New York Stock Exchange
0.800% Notes Due 2040	KO40B	New York Stock Exchange
1.000% Notes Due 2041	KO41	New York Stock Exchange

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

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

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

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


Class of Common Stock						Shares Outstanding as of April 30, 2024
$0.25 Par Value						4,307,955,307

THE COCA-COLA COMPANY AND SUBSIDIARIES

Table of Contents


		Page
	Forward-Looking Statements	1

	Part I. Financial Information

Item 1.	Financial Statements	2

	Consolidated Statements of Income — Three Months Ended March 29, 202 4 and March 31, 2023	2

	Consolidated Statements of Comprehensive Income — Three Months Ended March 29, 202 4 and March 3 1, 2023	3

	Consolidated Balance Sheets — March 29, 202 4 and December 31, 202 3	4

	Consolidated Statements of Cash Flows — Three Months Ended March 29, 202 4 and March 31, 2023	5

	Notes to Consolidated Financial Statements	6

Item 2.	Management ’s Discussion and Analysis of Financial Condition and Results of Operations	27

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39

Item 4.	Controls and Procedures	39

	Part II. Other Information

Item 1.	Legal Proceedings	40

Item 1A.	Risk Factors	41

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42

Item 5.	Other Information	42

Item 6.	Exhibits	42

	Signatures	46

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 net income per share growth, and statements expressing general views about future operating results — are forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. Our Company undertakes 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 our Company’s actual results to differ materially from historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, the possibility that the assumptions used to calculate our estimated aggregate incremental tax and interest liability related to the potential unfavorable outcome of the ongoing tax dispute with the U.S. Internal Revenue Service could significantly change; 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, 2023; 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

THE COCA-COLA COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In millions except per share data)


	Three Months Ended
		March 29, 2024		March 31, 2023
Net Operating Revenues		$	11,300	$	10,980
Cost of goods sold		4,235		4,317
Gross Profit		7,065		6,663
Selling, general and administrative expenses		3,351		3,185
Other operating charges		1,573		111
Operating Income		2,141		3,367
Interest income		246		168
Interest expense		382		372
Equity income (loss) — net		354		275
Other income (loss) — net		1,513		615
Income Before Income Taxes		3,872		4,053
Income taxes		687		940
Consolidated Net Income		3,185		3,113
Less: Net income (loss) attributable to noncontrolling interests		8		6
Net Income Attributable to Shareowners of The Coca-Cola Company		$	3,177	$	3,107
Basic Net Income Per Share1		$	0.74	$	0.72
Diluted Net Income Per Share1		$	0.74	$	0.72
Average Shares Outstanding — Basic		4,310		4,326
Effect of dilutive securities		12		19
Average Shares Outstanding — Diluted		4,322		4,345

1 Calculated based on net income attributable to shareowners of The Coca-Cola Company.

Refer to Notes to Consolidated Financial Statements.

THE COCA-COLA COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)


	Three Months Ended
		March 29, 2024		March 31, 2023
Consolidated Net Income		$	3,185	$	3,113
Other Comprehensive Income:
Net foreign currency translation adjustments		(303)		549
Net gains (losses) on derivatives		49		(70)
Net change in unrealized gains (losses) on available-for-sale debt securities		5		8
Net change in pension and other postretirement benefit liabilities		(4)		11
Total Comprehensive Income		2,932		3,611
Less: Comprehensive income (loss) attributable to noncontrolling interests		(16)		(69)
Total Comprehensive Income Attributable to Shareowners of The Coca-Cola Company		$	2,948	$	3,680

Refer to Notes to Consolidated Financial Statements.

THE COCA-COLA COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions except par value)


	March 29, 2024		December 31, 2023
ASSETS
Current Assets
Cash and cash equivalents	$	10,443	$	9,366
Short-term investments	4,760		2,997
Total Cash, Cash Equivalents and Short-Term Investments	15,203		12,363
Marketable securities	1,716		1,300
Trade accounts receivable, less allowances of $504 and $502, respectively	4,244		3,410
Inventories	4,961		4,424
Prepaid expenses and other current assets	3,338		5,235
Total Current Assets	29,462		26,732
Equity method investments	19,495		19,671
Other investments	147		118
Other noncurrent assets	7,291		7,162
Deferred income tax assets	1,457		1,561
Property, plant and equipment, less accumulated depreciation of $9,359 and $9,233, respectively	9,306		9,236
Trademarks with indefinite lives	13,532		14,349
Goodwill	18,210		18,358
Other intangible assets	492		516
Total Assets	$	99,392	$	97,703
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and accrued expenses	$	19,425	$	15,485
Loans and notes payable	6,054		4,557
Current maturities of long-term debt	1,392		1,960
Accrued income taxes	1,485		1,569
Total Current Liabilities	28,356		23,571
Long-term debt	35,104		35,547
Other noncurrent liabilities	5,465		8,466
Deferred income tax liabilities	2,521		2,639
The Coca-Cola Company Shareowners’ Equity
Common stock, $0.25 par value; authorized — 11,200 shares; issued — 7,040 shares	1,760		1,760
Capital surplus	19,321		19,209
Reinvested earnings	74,868		73,782
Accumulated other comprehensive income (loss)	(14,504)		(14,275)
Treasury stock, at cost — 2,732 and 2,732 shares, respectively	(55,016)		(54,535)
Equity Attributable to Shareowners of The Coca-Cola Company	26,429		25,941
Equity attributable to noncontrolling interests	1,517		1,539
Total Equity	27,946		27,480
Total Liabilities and Equity	$	99,392	$	97,703

Refer to Notes to Consolidated Financial Statements.

THE COCA-COLA COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)


	Three Months Ended
	March 29, 2024		March 31, 2023
Operating Activities
Consolidated net income	$	3,185	$	3,113
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization	262		286
Stock-based compensation expense	68		58
Deferred income taxes	(173)		260
Equity (income) loss — net of dividends	(58)		(249)
Foreign currency adjustments	17		25
Significant (gains) losses — net	(1,401)		(442)
Other operating charges	1,532		88
Other items	(59)		(102)
Net change in operating assets and liabilities	(2,845)		(2,877)
Net Cash Provided by Operating Activities	528		160
Investing Activities
Purchases of investments	(2,552)		(739)
Proceeds from disposals of investments	444		815
Acquisitions of businesses, equity method investments and nonmarketable securities	(8)		(20)
Proceeds from disposals of businesses, equity method investments and nonmarketable securities	2,893		319
Purchases of property, plant and equipment	(370)		(276)
Proceeds from disposals of property, plant and equipment	14		21
Collateral (paid) received associated with hedging activities — net	(105)		18
Other investing activities	14		(21)
Net Cash Provided by (Used in) Investing Activities	330		117
Financing Activities
Issuances of loans, notes payable and long-term debt	2,285		4,074
Payments of loans, notes payable and long-term debt	(1,366)		(1,174)
Issuances of stock	290		229
Purchases of stock for treasury	(702)		(848)
Dividends	(99)		(101)
Other financing activities	(2)		(115)
Net Cash Provided by (Used in) Financing Activities	406		2,065
Effect of Exchange Rate Changes on Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	(138)		113
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents during the period	1,126		2,455
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period	9,692		9,825
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents at End of Period	10,818		12,280
Less: Restricted cash and restricted cash equivalents at end of period	375		276
Cash and Cash Equivalents at End of Period	$	10,443	$	12,004

Refer to Notes to Consolidated Financial Statements.

THE COCA-COLA COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited 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, 2023.

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 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 months ended March 29, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. Sales of our ready-to-drink beverages are somewhat seasonal, with the second and third calendar quarters typically accounting for the highest sales volumes. The volume of sales in the beverage business may be affected by weather conditions.

Each of our quarterly reporting periods, other than the fourth quarter, ends on the Friday closest to the last day of the corresponding quarterly calendar period. The first quarter of 2024 and the first quarter of 2023 ended on March 29, 2024 and March 31, 2023, respectively. Our fourth quarter and our fiscal year end on December 31 regardless of the day of the week on which December 31 falls.

Advertising Costs

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

For quarterly reporting purposes, we allocate our estimated full year marketing expenditures that benefit multiple quarters to each of those quarters. We use the proportion of each quarter’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 quarter, we review our estimated full year unit case volume and our estimated full year marketing expenditures that benefit multiple quarters in order to evaluate if a change in estimate is necessary. The impact of any change in the full year estimate is recognized in the quarter in which the change in estimate occurs. Our full year marketing expenditures are not impacted by this interim accounting policy.

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents

We classify time deposits and other investments that are highly liquid and have maturities of three months or less at the date of purchase as cash equivalents or restricted cash equivalents, as applicable. Restricted cash and restricted cash equivalents generally consist of amounts held by our captive insurance companies, which are included in the line item other noncurrent assets in our consolidated balance sheet, and when applicable, cash and cash equivalents related to assets held for sale are included in the line item prepaid expenses and other current assets in our consolidated balance sheets. 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. Refer to Note 2 for additional information on our assets held for sale and Note 4 for additional information on our captive insurance companies.

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


	March 29, 2024		December 31, 2023
Cash and cash equivalents	$	10,443	$	9,366
Restricted cash and restricted cash equivalents	375		326
Cash, cash equivalents, restricted cash and restricted cash equivalents	$	10,818	$	9,692


	March 31, 2023		December 31, 2022
Cash and cash equivalents	$	12,004	$	9,519
Restricted cash and restricted cash equivalents	276		306
Cash, cash equivalents, restricted cash and restricted cash equivalents	$	12,280	$	9,825

Recently Issued Accounting Guidance

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. The expanded annual disclosures are effective for the year ending December 31, 2024, and the expanded interim disclosures are effective in 2025 and will be applied retrospectively to all prior periods presented. The Company is currently evaluating the impact that ASU 2023-07 will have on our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires, among other things, additional disclosures primarily related to the income tax rate reconciliation and income taxes paid. The expanded annual disclosures are effective for the year ending December 31, 2025. The Company is currently evaluating the impact that ASU 2023-09 will have on our consolidated financial statements and whether we will apply the standard prospectively or retrospectively.

NOTE 2: ACQUISITIONS AND DIVESTITURES

Acquisitions

Our Company’s acquisitions of businesses, equity method investments and nonmarketable securities totaled $8 million and $20 million during the three months ended March 29, 2024 and March 31, 2023, respectively.

Divestitures

Proceeds from disposals of businesses, equity method investments and nonmarketable securities during the three months ended March 29, 2024 totaled $2,893 million, which primarily related to the refranchising of the Company’s bottling operations that were classified as held for sale as of December 31, 2023. Also included was the sale of our ownership interest in an equity method investee in Thailand for which we received cash proceeds of $728 million and recognized a net gain of $516 million, which was recorded in the line item other income (loss) — net in our consolidated statement of income.

Proceeds from disposals of businesses, equity method investments and nonmarketable securities during the three months ended March 31, 2023 totaled $319 million, which primarily related to the sale of our ownership interest in an equity method investee in Indonesia to Coca-Cola Europacific Partners plc (“CCEP”), an equity method investee, for which we received cash proceeds of $302 million and recognized a net gain of $12 million. The Company also refranchised its bottling operations in Vietnam in January 2023 and recognized a net gain of $439 million as a result of the sale. The Company received the related cash proceeds of $823 million in December 2022. These gains were recorded in the line item other income (loss) — net in our consolidated statement of income.

Assets and Liabilities Held for Sale

As of December 31, 2023, the Company’s bottling operations in the Philippines, Bangladesh and certain territories in India met the criteria to be classified as held for sale. As a result, we were required to record the related assets and liabilities at the lower of carrying value or fair value less any costs to sell. As the fair values less any costs to sell exceeded the carrying values, the related assets and liabilities were recorded at their carrying values. These assets and liabilities were included in the Bottling Investments operating segment.

The Company refranchised its bottling operations in certain territories in India in January and February of 2024, for which we received net cash proceeds of $476 million and recognized a net gain of $293 million. The Company refranchised its bottling operations in Bangladesh to Coca-Cola İçecek A.Ş. (“CCI”), an equity method investee, in February 2024, for which we received net cash proceeds of $27 million and a note receivable of $29 million and recognized a net loss of $18 million, primarily due to the related reversal of cumulative translation adjustments. Additionally, in February 2024, the Company refranchised its bottling operations in the Philippines to CCEP and a local business partner, for which we received net cash proceeds of $1,656 million and recognized a net gain of $599 million. These gains and losses were recorded in the line item other income (loss) — net in our consolidated statement of income.

The following table presents information related to the major classes of assets and liabilities that were classified as held for sale and were included in the line items prepaid expenses and other current assets and accounts payable and accrued expenses, respectively, in our consolidated balance sheet (in millions):


	December 31, 2023
Cash, cash equivalents and short-term investments	$	37
Marketable securities	8
Trade accounts receivable, less allowances	95
Inventories	299
Prepaid expenses and other current assets	60
Equity method investments	4
Other noncurrent assets	51
Deferred income tax assets	28
Property, plant and equipment — net	1,267
Goodwill	231
Other intangible assets	14
Assets held for sale	$	2,094
Accounts payable and accrued expenses	$	464
Loans and notes payable	63
Accrued income taxes	24
Long-term debt	2
Other noncurrent liabilities	108
Deferred income tax liabilities	58
Liabilities held for sale	$	719

NOTE 3: NET OPERATING REVENUES

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


	United States		International		Total
Three Months Ended March 29, 2024
Concentrate operations	$	2,125	$	4,530	$	6,655
Finished product operations	1,993		2,652		4,645
Total	$	4,118	$	7,182	$	11,300
Three Months Ended March 31, 2023
Concentrate operations	$	1,989	$	4,344	$	6,333
Finished product operations	1,860		2,787		4,647
Total	$	3,849	$	7,131	$	10,980

Refer to Note 17 for disclosures of net operating revenues by operating segment and Corporate.

NOTE 4: INVESTMENTS

Equity Securities

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


	Fair Value with Changes Recognized in Income		Measurement Alternative — No Readily Determinable Fair Value
March 29, 2024

Marketable securities	$	373	$	—
Other investments	105		42
Other noncurrent assets	1,628		—
Total equity securities	$	2,106	$	42
December 31, 2023

Marketable securities	$	345	$	—
Other investments	76		42
Other noncurrent assets	1,585		—
Total equity securities	$	2,006	$	42

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
	March 29, 2024		March 31, 2023
Net gains (losses) recognized during the period related to equity securities	$	183	$	125
Less: Net gains (losses) recognized during the period related to equity securities sold during the period	49		1
Net unrealized gains (losses) recognized during the period related to equity securities still held at the end of the period	$	134	$	124

Debt Securities

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


			Gross Unrealized				Estimated Fair Value
	Cost		Gains		Losses
March 29, 2024
Trading securities	$	45	$	1	$	(2)	$	44
Available-for-sale securities	1,516		29		(25)		1,520
Total debt securities	$	1,561	$	30	$	(27)	$	1,564
December 31, 2023
Trading securities	$	43	$	—	$	(2)	$	41
Available-for-sale securities	1,136		26		(28)		1,134
Total debt securities	$	1,179	$	26	$	(30)	$	1,175

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


	March 29, 2024				December 31, 2023
	Trading Securities		Available-for-Sale Securities		Trading Securities		Available-for-Sale Securities

Marketable securities	$	44	$	1,299	$	41	$	914
Other noncurrent assets	—		221		—		220
Total debt securities	$	44	$	1,520	$	41	$	1,134

The contractual maturities of these available-for-sale debt securities as of March 29, 2024 were as follows (in millions):


	Cost		Estimated Fair Value
Within 1 year	$	224	$	224
After 1 year through 5 years	1,075		1,080
After 5 years through 10 years	45		57
After 10 years	172		159
Total	$	1,516	$	1,520

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

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


	Three Months Ended
		March 29, 2024		March 31, 2023
Gross gains		$	1	$	—
Gross losses		(7)		(3)
Proceeds		383		68

Captive Insurance Companies

In accordance with local insurance regulations, our consolidated captive insurance companies are required to meet and maintain minimum solvency capital requirements. The Company elected to invest a majority of its solvency capital in a portfolio of marketable equity and debt securities. These securities are included in the disclosures above. The Company uses one of our consolidated captive insurance companies to reinsure group annuity insurance contracts that cover the obligations of certain of our European and Canadian pension plans. This captive’s solvency capital funds included total equity and debt securities of $1,679 million and $1,643 million as of March 29, 2024 and December 31, 2023, respectively, which were classified in the line item other noncurrent assets in our consolidated balance sheets because the assets were not available to satisfy our current obligations.

NOTE 5: INVENTORIES

Inventories consisted of the following (in millions):


	March 29, 2024		December 31, 2023
Raw materials and packaging	$	2,924	$	2,618
Finished goods	1,675		1,449
Other	362		357
Total inventories	$	4,961	$	4,424

NOTE 6: HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS

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


		Fair Value1,2
Derivatives Designated as Hedging Instruments	Balance Sheet Location1	March 29, 2024		December 31, 2023
Assets:
Foreign currency contracts	Prepaid expenses and other current assets	$	140	$	109
Foreign currency contracts	Other noncurrent assets	27		13


Interest rate contracts	Other noncurrent assets	5		50
Total assets		$	172	$	172
Liabilities:
Foreign currency contracts	Accounts payable and accrued expenses	$	107	$	111
Foreign currency contracts	Other noncurrent liabilities	33		40
Commodity contracts	Accounts payable and accrued expenses	1		3
Interest rate contracts	Accounts payable and accrued expenses	—		5
Interest rate contracts	Other noncurrent liabilities	1,217		1,113
Total liabilities		$	1,358	$	1,272

1All of the Company’s derivative instruments are carried at fair value in our consolidated balance sheets after considering the impact of legally enforceable master netting agreements and cash collateral held or placed with the same counterparties, as applicable. Current disclosure requirements mandate that derivatives must also be disclosed without reflecting the impact of master netting agreements and cash collateral. Refer to Note 16 for the net presentation of the Company’s derivative instruments.

2Refer to Note 16 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
Derivatives Not Designated as Hedging Instruments	Balance Sheet Location1	March 29, 2024		December 31, 2023
Assets:
Foreign currency contracts	Prepaid expenses and other current assets	$	94	$	91
Foreign currency contracts	Other noncurrent assets	1		3
Commodity contracts	Prepaid expenses and other current assets	7		5

Other derivative instruments	Prepaid expenses and other current assets	1		4

Total assets		$	103	$	103
Liabilities:
Foreign currency contracts	Accounts payable and accrued expenses	$	30	$	106
Foreign currency contracts	Other noncurrent liabilities	3		3
Commodity contracts	Accounts payable and accrued expenses	51		62
Commodity contracts	Other noncurrent liabilities	1		1


Other derivative instruments	Accounts payable and accrued expenses	2		4

Total liabilities		$	87	$	176

2Refer to Note 16 for additional information related to the estimated fair value.

Credit Risk Associated with Derivatives

We have established strict counterparty credit guidelines and enter into transactions only with financial institutions of investment grade or better. We monitor counterparty exposures regularly and review any downgrade in credit rating immediately. If a downgrade in the credit rating of a counterparty were to occur, we have provisions requiring collateral for substantially all of our transactions. To mitigate presettlement risk, minimum credit standards become more stringent as the duration of the derivative financial instrument increases. In addition, the Company’s master netting agreements reduce credit risk by permitting the Company to net settle for transactions with the same counterparty. To minimize the concentration of credit risk, we enter into derivative transactions with a portfolio of financial institutions. Furthermore, for certain derivative financial instruments, the Company has agreements with counterparties that require collateral to be exchanged based on changes in the fair value of the instruments. The Company classifies collateral payments and receipts as investing cash flows when the collateral account is in an asset position and as financing cash flows when the collateral account is in a liability position. As a result of 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 accumulated other comprehensive income (loss) (“AOCI”) and are reclassified into the line item in our consolidated statement of income in which the hedged items are recorded in the same period the hedged items affect earnings. The changes in the fair values of hedges that are determined to be ineffective are immediately reclassified from AOCI into earnings. The maximum length of time for which the Company hedges its exposure to the variability in future cash flows is typically three years.

The Company maintains a foreign currency cash flow hedging program to reduce the risk that our U.S. dollar net cash inflows from sales outside the United States and U.S. dollar net cash outflows from procurement activities will be adversely affected by fluctuations in foreign currency exchange rates. We enter into forward contracts and purchase foreign currency options and collars (principally euro, British pound and Japanese yen) 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 qualified for the Company’s foreign currency cash flow hedging program were $9,145 million and $9,408 million as of March 29, 2024 and December 31, 2023, 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 fluctuations in foreign currency exchange rates. For this hedging program, the Company recognizes in earnings each period the changes in carrying values of these foreign currency denominated assets and liabilities due to fluctuations in exchange rates. The changes in fair values of the cross-currency swap derivatives are recorded in AOCI with an immediate reclassification into earnings for the changes in fair values attributable to fluctuations in foreign currency exchange rates. The total notional value of derivatives that were designated as cash flow hedges for the Company’s foreign currency denominated assets and liabilities was $958 million as of both March 29, 2024 and December 31, 2023.

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 were designated 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 were designated and qualified for this program were $32 million and $54 million as of March 29, 2024 and December 31, 2023, respectively.

Our Company monitors our mix of short-term debt and long-term debt regularly. We manage our risk to interest rate fluctuations through the use of derivative financial instruments. From time to time, the Company has entered into interest rate swap agreements and has designated these instruments as part of the Company’s interest rate cash flow hedging program. The objective of this hedging program is to mitigate the risk of adverse changes in benchmark interest rates on the Company’s future interest payments. The total notional values of derivatives that were designated and qualified for this program were $1,150 million and $750 million as of March 29, 2024 and December 31, 2023, respectively.

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


	Gain (Loss) Recognized in OCI		Location of Gain (Loss) Recognized in Income	Gain (Loss) Reclassified from AOCI into Income
Three Months Ended March 29, 2024
Foreign currency contracts	$	48	Net operating revenues	$	(17)
Foreign currency contracts	11		Cost of goods sold	3
Foreign currency contracts	—		Interest expense	(1)
Foreign currency contracts	(15)		Other income (loss) — net	(28)
Commodity contracts	1		Cost of goods sold	(1)
Interest rate contracts	1		Interest expense	—
Total	$	46		$	(44)
Three Months Ended March 31, 2023
Foreign currency contracts	$	(36)	Net operating revenues	$	1
Foreign currency contracts	4		Cost of goods sold	4
Foreign currency contracts	—		Interest expense	(1)
Foreign currency contracts	(13)		Other income (loss) — net	—

Commodity contracts	(2)		Cost of goods sold	(3)
Total	$	(47)		$	1

As of March 29, 2024, the Company estimates that it will reclassify into earnings during the next 12 months net losses of $17 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 result 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 fluctuations in foreign currency exchange rates and benchmark interest rates. The changes in the fair values of derivatives designated as fair value hedges and the offsetting changes in the fair values of the hedged items are recognized in earnings. As a result, any difference is reflected in earnings as ineffectiveness. 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 or has been extinguished. The total notional values of derivatives that were designated and qualified as fair value hedges of this type were $12,958 million and $13,693 million as of March 29, 2024 and December 31, 2023, respectively.

The following table summarizes 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
		March 29, 2024		March 31, 2023
Interest rate contracts	Interest expense	$	(145)	$	208
Fixed-rate debt	Interest expense	147		(222)




Net impact of fair value hedging instruments		$	2	$	(14)

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


					Cumulative Amount of Fair Value Hedging Adjustments1
	Carrying Values of Hedged Items				Included in the Carrying Values of Hedged Items				Remaining for Which Hedge Accounting Has Been Discontinued
Balance Sheet Location of Hedged Items	March 29, 2024		December 31, 2023		March 29, 2024		December 31, 2023		March 29, 2024		December 31, 2023


Current maturities of long-term debt	$	—	$	552	$	—	$	1	$	—	$	—
Long-term debt	11,853		12,186		(1,236)		(1,135)		155		162

1Cumulative amount of fair value hedging adjustments does not include changes due to foreign currency exchange rate fluctuations.

In June 2023, the Company amended the terms of its interest rate swap agreements to implement a forward-looking interest rate based on the Secured Overnight Financing Rate (“SOFR”) in place of the London Interbank Offered Rate (“LIBOR”). Since the interest rate swap agreements were affected by reference rate reform, the Company applied the expedients and exceptions provided to preserve the past presentation of its derivatives without de-designating the existing hedging relationships. All amendments to interest rate swap agreements were executed with the existing counterparties and did not change the notional amounts, maturity dates or other critical terms of the hedging relationships.

Hedges of Net Investments in Foreign Operations Strategy

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

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


	Notional Values					Gain (Loss) Recognized in OCI
	as of				Three Months Ended
	March 29, 2024		December 31, 2023			March 29, 2024		March 31, 2023
Foreign currency contracts	$	—	$	150		$	2	$	—
Foreign currency denominated debt	11,624		12,437			272		(154)
Total	$	11,624	$	12,587		$	274	$	(154)

The Company reclassified a gain of $3 million related to net investment hedges from AOCI into earnings during the three months ended March 29, 2024. The Company did not reclassify any gains or losses during the three months ended March 31, 2023. In addition, the Company did not have any ineffectiveness related to net investment hedges during the three months ended March 29, 2024 and March 31, 2023. 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 consolidated statement of cash flows.

Economic (Non-Designated) Hedging Strategy

In addition to derivative instruments that have been 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 values of economic hedges are immediately recognized in earnings.

The Company uses foreign currency economic hedges to offset the earnings impact that fluctuations in foreign currency exchange rates have on certain monetary assets and liabilities denominated in nonfunctional currencies. The changes in the fair values of economic hedges used to offset those monetary assets and liabilities are immediately recognized in earnings in the line item other income (loss) — net in our consolidated statement of income. In addition, we use foreign currency economic hedges to minimize the variability in cash flows associated with fluctuations in foreign currency exchange rates, including those related

to certain acquisition and divestiture activities. The changes in the fair values of economic hedges used to offset the variability in U.S. dollar net cash flows are immediately recognized in earnings in the line items net operating revenues, cost of goods sold or other income (loss) — net in our consolidated statement of income, as applicable. The total notional values of derivatives related to our foreign currency economic hedges were $6,023 million and $6,989 million as of March 29, 2024 and December 31, 2023, respectively.

The Company uses interest rate contracts as economic hedges to minimize exposure to changes in the fair value of fixed-rate debt that result from fluctuations in benchmark interest rates. As of March 29, 2024 and December 31, 2023, we did not have any interest rate contracts used as economic hedges.

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 vehicle fuel. The changes in the fair values of these economic hedges are immediately recognized in earnings in the line items net operating revenues, cost of goods sold, or selling, general and administrative expenses in our consolidated statement of income, as applicable. The total notional values of derivatives related to our economic hedges of this type were $305 million and $325 million as of March 29, 2024 and December 31, 2023, respectively.

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 Instruments	Location of Gain (Loss) Recognized in Income	Gain (Loss) Recognized in Income
		Three Months Ended
		March 29, 2024		March 31, 2023
Foreign currency contracts	Net operating revenues	$	61	$	(7)
Foreign currency contracts	Cost of goods sold	14		28
Foreign currency contracts	Other income (loss) — net	38		(11)


Commodity contracts	Cost of goods sold	(19)		(46)

Other derivative instruments	Selling, general and administrative expenses	6		3

Total		$	100	$	(33)

NOTE 7: SUPPLY CHAIN FINANCE PROGRAM

Our current payment terms with the majority of our suppliers are 120 days. Two global financial institutions offer a voluntary supply chain finance (“SCF”) program, which enables our suppliers, at their sole discretion, to sell their receivables from the Company to these financial institutions on a non-recourse basis at a rate that leverages our credit rating and thus may be more beneficial to them. The SCF program is available to suppliers of goods and services included in cost of goods sold and selling, general and administrative expenses in our consolidated statement of income. The Company and our suppliers agree on contractual terms for the goods and services we procure, including prices, quantities and payment terms, regardless of whether the supplier elects to participate in the SCF program. The suppliers sell goods or services, as applicable, to the Company and issue the associated invoices to the Company based on the agreed-upon contractual terms. Then, if they are participating in the SCF program, our suppliers, at their sole discretion, determine which invoices, if any, they want to sell to the financial institutions. Our suppliers’ voluntary inclusion of invoices in the SCF program has no bearing on our payment terms. No guarantees are provided by the Company or any of our subsidiaries under the SCF program. We have no economic interest in a supplier’s decision to participate in the SCF program, and we have no direct financial relationship with the financial institutions, as it relates to the SCF program. Accordingly, amounts due to our suppliers that elected to participate in the SCF program are included in the line item accounts payable and accrued expenses in our consolidated balance sheet. All activity related to amounts due to suppliers that elected to participate in the SCF program is reflected within the operating activities section of our consolidated statement of cash flows. As of March 29, 2024 and December 31, 2023, the amount of obligations outstanding that the Company has confirmed as valid to the financial institutions under the SCF program was $1,181 million and $1,421 million, respectively.

NOTE 8: DEBT AND BORROWING ARRANGEMENTS

Loans and notes payable consist primarily of commercial paper issued in the United States. As of March 29, 2024 and December 31, 2023, we had $5,722 million and $4,209 million, respectively, in outstanding commercial paper borrowings.

NOTE 9: COMMITMENTS AND CONTINGENCIES

Guarantees

As of March 29, 2024, we were contingently liable for guarantees of indebtedness owed by third parties of $762 million, of which $85 million was related to variable interest entities. Our guarantees are primarily related to third-party customers, bottlers and vendors and have arisen through the normal course of business. These guarantees have various terms, and none of these guarantees is individually significant. These amounts represent the maximum potential future payments that we could be required to make under the guarantees. However, management has concluded that the likelihood of any significant amounts being paid by our Company under these guarantees is not probable.

Concentrations of Credit Risk

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

Legal Contingencies

The Company is involved in various legal proceedings. We establish reserves for specific legal proceedings when we determine that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated. Management has also identified certain other legal matters where we believe an unfavorable outcome is reasonably possible and/or for which no estimate of possible losses can be made. Management believes that the total liabilities of the Company that may arise as a result of currently pending legal proceedings (excluding tax audit claims) 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. These uncertain tax matters may result in the assessment of additional taxes.

On September 17, 2015, the Company received a Statutory Notice of Deficiency (“Notice”) from the United States Internal Revenue Service (“IRS”) seeking approximately $3.3 billion of additional federal income tax for years 2007 through 2009. In the Notice, the IRS stated its intent to reallocate over $9 billion of income to the U.S. parent company from certain of its foreign affiliates that the U.S. parent company licensed to manufacture, distribute, sell, market and promote its products in certain non-U.S. markets.

The Notice concerned the Company’s transfer pricing between its U.S. parent company and certain of its foreign affiliates. IRS rules governing transfer pricing require arm’s-length pricing of transactions between related parties such as the Company’s U.S. parent and its foreign affiliates.

To resolve the same transfer pricing issue for the tax years 1987 through 1995, the Company and the IRS had agreed in 1996 on an arm’s-length methodology for determining the amount of U.S. taxable income that the U.S. parent company would report as compensation from its foreign licensees. The Company and the IRS memorialized this accord in a closing agreement resolving that dispute (“Closing Agreement”). The Closing Agreement provided that, absent a change in material facts or circumstances or relevant federal tax law, in calculating the Company’s income taxes going forward, the Company would not be assessed penalties by the IRS for using the agreed-upon tax calculation methodology that the Company and the IRS agreed would be used for the 1987 through 1995 tax years.

The IRS audited and confirmed the Company’s compliance with the agreed-upon Closing Agreement methodology in five successive audit cycles for tax years 1996 through 2006.

The September 17, 2015 Notice from the IRS retroactively rejected the previously agreed-upon methodology for the 2007 through 2009 tax years in favor of an entirely different methodology, without prior notice to the Company. Using the new tax calculation methodology, the IRS reallocated over $9 billion of income to the U.S. parent company from its foreign licensees for tax years 2007 through 2009. Consistent with the Closing Agreement, the IRS did not assert penalties, and it has yet to do so.

The IRS designated the Company’s matter for litigation on October 15, 2015. Litigation designation is an IRS determination that forecloses to a company any and all alternative means for resolution of a tax dispute. As a result of the IRS’ designation of the Company’s matter for litigation, the Company was forced to either accept the IRS’ newly imposed tax assessment and pay the full amount of the asserted tax or litigate the matter in the federal courts. The matter remains subject to the IRS’ litigation designation, preventing the Company from any attempt to settle or otherwise mutually resolve the matter with the IRS.

The Company consequently initiated litigation by filing a petition in the U.S. Tax Court (“Tax Court”) in December 2015, challenging the tax adjustments enumerated in the Notice.

Prior to trial, the IRS increased its transfer pricing adjustment by $385 million, resulting in an additional tax adjustment of $135 million. The Company obtained a summary judgment in its favor on a different matter related to Mexican foreign tax credits, which thereafter effectively reduced the IRS’ potential tax adjustment by $138 million.

The trial was held in the Tax Court from March through May 2018, and final post-trial briefs were filed and exchanged in April 2019.

On November 18, 2020, the Tax Court issued an opinion (“Opinion”) in which it predominantly sided with the IRS but agreed with the Company that dividends previously paid by the foreign licensees to the U.S. parent company in reliance upon the Closing Agreement should continue to be allowed to offset royalties, including those that would become payable to the Company in accordance with the Opinion. On November 8, 2023, the Tax Court issued a supplemental opinion (together with the original Tax Court opinion, “Opinions”), siding with the IRS in concluding both that the blocked-income regulations apply to the Company’s operations and that the Tax Court opinion in 3M Co. & Subs. v. Commissioner (February 9, 2023) controlled as to the validity of those regulations.

The Company believes that the IRS and the Tax Court misinterpreted and misapplied the applicable regulations in reallocating income earned by the Company’s foreign licensees to increase the Company’s U.S. tax. Moreover, the Company believes that the retroactive imposition of such tax liability using a calculation methodology different from that previously agreed upon by the IRS and the Company, and audited by the IRS for over a decade, is unconstitutional. The Company intends to assert its claims on appeal and vigorously defend its position.

In determining the amount of tax reserve to be recorded as of December 31, 2020, the Company completed the required two-step evaluation process prescribed by Accounting Standards Codification 740, Accounting for Income Taxes. In doing so, we consulted with outside advisors, and we reviewed and considered relevant laws, rules, and regulations, including, but not limited to, the Opinions and relevant caselaw. We also considered our intention to vigorously defend our positions and assert our various well-founded legal claims via every available avenue of appeal. We concluded, based on the technical and legal merits of the Company’s tax positions, that it is more likely than not the Company’s tax positions will ultimately be sustained on appeal. In addition, we considered a number of alternative transfer pricing methodologies, including the methodology asserted by the IRS and affirmed in the Opinions (“Tax Court Methodology”), that could be applied by the courts upon final resolution of the litigation. Based on the required probability analysis, we determined the methodologies we believe the federal courts could ultimately order to be used in calculating the Company’s tax. As a result of this analysis, we recorded a tax reserve of $438 million during the year ended December 31, 2020 related to the application of the resulting methodologies as well as the different tax treatment applicable to dividends originally paid to the U.S. parent company by its foreign licensees, in reliance upon the Closing Agreement, that would be recharacterized as royalties in accordance with the Opinions and the Company’s analysis.

The Company’s conclusion that it is more likely than not the Company’s tax positions will ultimately be sustained on appeal is unchanged as of March 29, 2024. However, we updated our calculation of the methodologies we believe the federal courts could ultimately order to be used in calculating the Company’s tax. As a result of the application of the required probability analysis to these updated calculations and the accrual of interest through the current reporting period, we updated our tax reserve as of March 29, 2024 to $447 million.

While the Company strongly disagrees with the IRS’ positions and the portions of the Opinions affirming such positions, it is possible that some portion or all of the adjustment proposed by the IRS and sustained by the Tax Court could ultimately be upheld. In that event, the Company would likely be subject to significant additional liabilities for tax years 2007 through 2009, and potentially also for subsequent years, which could have a material adverse impact on the Company’s financial position, results of operations and cash flows.

The Company calculated the potential impact of applying the Tax Court Methodology to reallocate income from foreign licensees potentially covered within the scope of the Opinions, assuming such methodology were to be ultimately upheld by the courts, and the IRS were to decide to apply that methodology to subsequent years, with consent of the federal courts. This impact would include taxes and interest accrued through December 31, 2023 for the 2007 through 2009 litigated tax years and for subsequent tax years from 2010 through 2023. The calculations incorporated the estimated impact of correlative adjustments to the previously accrued transition tax payable under the 2017 Tax Cuts and Jobs Act. The Company estimates that the potential aggregate incremental tax and interest liability could be approximately $16 billion as of December 31, 2023. Additional income tax and interest would continue to accrue until the time any such potential liability, or portion thereof, were to be paid. The Company estimates the impact of the continued application of the Tax Court Methodology for the three months ended March 29, 2024 would increase the potential aggregate incremental tax and interest liability by approximately $500 million. We currently project the continued application of the Tax Court Methodology in future years, assuming similar facts and circumstances as of December 31, 2023, would result in an incremental annual tax liability that would increase the Company’s effective tax rate by approximately 3.5%.

The Company and the IRS are now in the process of agreeing on the tax impacts of the Opinions. Subsequent to the completion of this process, the Tax Court will render a decision in the case. The Company will have 90 days thereafter to file a notice of appeal to the U.S. Court of Appeals for the Eleventh Circuit. The IRS will then seek to collect, and the Company expects to pay, any additional tax related to the 2007 through 2009 tax years reflected in the Tax Court decision (and interest thereon). The Company currently estimates that the payment to be made at that time related to the 2007 through 2009 tax years, which is included in the above estimate of the potential aggregate incremental tax and interest liability, would be approximately $5.9 billion (including interest accrued through March 29, 2024), plus any additional interest accrued through the time of payment. Some or all of this amount, plus accrued interest, would be refunded if the Company were to prevail on appeal.

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 claims history. Our self-insurance reserves totaled $187 million and $197 million as of March 29, 2024 and December 31, 2023, respectively.

NOTE 10: OTHER COMPREHENSIVE INCOME

AOCI attributable to shareowners of The Coca-Cola Company is separately presented in our consolidated balance sheet as a component of 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 consolidated balance sheet as part of the line item equity attributable to noncontrolling interests.

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


	March 29, 2024		December 31, 2023
Net foreign currency translation adjustments	$	(13,005)	$	(12,726)
Accumulated net gains (losses) on derivatives	(105)		(154)
Unrealized net gains (losses) on available-for-sale debt securities	4		(1)
Adjustments to pension and other postretirement benefit liabilities	(1,398)		(1,394)
Accumulated other comprehensive income (loss)	$	(14,504)	$	(14,275)

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


	Three Months Ended March 29, 2024
	Shareowners of The Coca-Cola Company		Noncontrolling Interests		Total
Consolidated net income	$	3,177	$	8	$	3,185
Other comprehensive income:
Net foreign currency translation adjustments	(279)		(24)		(303)
Net gains (losses) on derivatives1	49		—		49
Net change in unrealized gains (losses) on available-for-sale debt securities2	5		—		5
Net change in pension and other postretirement benefit liabilities	(4)		—		(4)

Total comprehensive income (loss)	$	2,948	$	(16)	$	2,932

1Refer to Note 6 for additional information related to the net gains or losses on derivative instruments.

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

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 March 29, 2024	Before-Tax Amount		Income Tax		After-Tax Amount
Foreign currency translation adjustments:
Translation adjustments arising during the period	$	(34)	$	(35)	$	(69)
Reclassification adjustments recognized in net income	103		—		103
Gains (losses) on intra-entity transactions that are of a long-term investment nature	(518)		—		(518)
Gains (losses) on net investment hedges arising during the period1	274		(69)		205

Net foreign currency translation adjustments	$	(175)	$	(104)	$	(279)
Derivatives:
Gains (losses) arising during the period	$	27	$	(11)	$	16
Reclassification adjustments recognized in net income	44		(11)		33
Net gains (losses) on derivatives1	$	71	$	(22)	$	49
Available-for-sale debt securities:

Reclassification adjustments recognized in net income	$	6	$	(1)	$	5
Net change in unrealized gains (losses) on available-for-sale debt securities2	$	6	$	(1)	$	5
Pension and other postretirement benefit liabilities:
Net pension and other postretirement benefit liabilities arising during the period	$	(13)	$	(8)	$	(21)
Reclassification adjustments recognized in net income	22		(5)		17
Net change in pension and other postretirement benefit liabilities	$	9	$	(13)	$	(4)
Other comprehensive income (loss) attributable to shareowners of The Coca-Cola Company	$	(89)	$	(140)	$	(229)

1 Refer to Note 6 for additional information related to the net gains or losses on derivative instruments.

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


Three Months Ended March 31, 2023	Before-Tax Amount		Income Tax		After-Tax Amount
Foreign currency translation adjustments:
Translation adjustments arising during the period	$	437	$	(91)	$	346
Reclassification adjustments recognized in net income	101		—		101
Gains (losses) on intra-entity transactions that are of a long-term investment nature	292		—		292
Gains (losses) on net investment hedges arising during the period1	(154)		39		(115)

Net foreign currency translation adjustments	$	676	$	(52)	$	624
Derivatives:
Gains (losses) arising during the period	$	(76)	$	7	$	(69)
Reclassification adjustments recognized in net income	(1)		—		(1)
Net gains (losses) on derivatives1	$	(77)	$	7	$	(70)
Available-for-sale debt securities:
Unrealized gains (losses) arising during the period	$	9	$	(3)	$	6
Reclassification adjustments recognized in net income	3		(1)		2
Net change in unrealized gains (losses) on available-for-sale debt securities2	$	12	$	(4)	$	8
Pension and other postretirement benefit liabilities:
Net pension and other postretirement benefit liabilities arising during the period	$	(5)	$	(2)	$	(7)
Reclassification adjustments recognized in net income	22		(4)		18
Net change in pension and other postretirement benefit liabilities	$	17	$	(6)	$	11
Other comprehensive income (loss) attributable to shareowners of The Coca-Cola Company	$	628	$	(55)	$	573

1Refer to Note 6 for additional information related to the net gains or losses on derivative instruments.

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

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


		Amount Reclassified from AOCI into Income
Description of AOCI Component	Financial Statement Line Item	Three Months Ended March 29, 2024
Foreign currency translation adjustments:
Divestitures, deconsolidations and other1	Other income (loss) — net	$	103

	Income before income taxes	103
	Income taxes	—
	Consolidated net income	$	103
Derivatives:
Foreign currency contracts	Net operating revenues	$	17
Foreign currency contracts and commodity contracts	Cost of goods sold	(2)
Foreign currency contracts	Interest expense	1

Foreign currency contracts	Other income (loss) — net	28
	Income before income taxes	44
	Income taxes	(11)
	Consolidated net income	$	33
Available-for-sale debt securities:

Sale of debt securities	Other income (loss) — net	$	6
	Income before income taxes	6
	Income taxes	(1)
	Consolidated net income	$	5
Pension and other postretirement benefit liabilities:
Divestitures, deconsolidations and other2	Other income (loss) — net	$	(2)



Recognized net actuarial loss (gain)	Other income (loss) — net	25
Recognized prior service cost (credit)	Other income (loss) — net	(1)

	Income before income taxes	22
	Income taxes	(5)
	Consolidated net income	$	17

1Related to the refranchising of our bottling operations in the Philippines and Bangladesh and the sale of our ownership interest in an equity method investee in Thailand. Refer to Note 2.

2Related to the refranchising of our bottling operations in the Philippines and Bangladesh. Refer to Note 2.

NOTE 11: CHANGES IN EQUITY

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


				Shareowners of The Coca-Cola Company
Three Months Ended March 29, 2024	Common Shares Outstanding	Total		Reinvested Earnings		Accumulated Other Comprehensive Income (Loss)		Common Stock		Capital Surplus		Treasury Stock		Non-controlling Interests
December 31, 2023	4,308	$	27,480	$	73,782	$	(14,275)	$	1,760	$	19,209	$	(54,535)	$	1,539

Comprehensive income (loss)	—	2,932		3,177		(229)		—		—		—		(16)
Dividends paid/payable to shareowners of The Coca-Cola Company ($0.485 per share)	—	(2,091)		(2,091)		—		—		—		—		—
Dividends paid to noncontrolling interests	—	(2)		—		—		—		—		—		(2)


Divestitures, deconsolidations and other	—	(4)		—		—		—		—		—		(4)
Purchases of treasury stock	(10)	(621)		—		—		—		—		(621)		—
Impact related to stock-based compensation plans	10	252		—		—		—		112		140		—

March 29, 2024	4,308	$	27,946	$	74,868	$	(14,504)	$	1,760	$	19,321	$	(55,016)	$	1,517


				Shareowners of The Coca-Cola Company
Three Months Ended March 31, 2023	Common Shares Outstanding	Total		Reinvested Earnings		Accumulated Other Comprehensive Income (Loss)		Common Stock		Capital Surplus		Treasury Stock		Non-controlling Interests
December 31, 2022	4,328	$	25,826	$	71,019	$	(14,895)	$	1,760	$	18,822	$	(52,601)	$	1,721

Comprehensive income (loss)	—	3,611		3,107		573		—		—		—		(69)
Dividends paid/payable to shareowners of The Coca-Cola Company ($0.46 per share)	—	(1,989)		(1,989)		—		—		—		—		—
Dividends paid to noncontrolling interests	—	(4)		—		—		—		—		—		(4)



Purchases of treasury stock	(12)	(749)		—		—		—		—		(749)		—
Impact related to stock-based compensation plans	9	173		—		—		—		70		103		—
Other activities	—	—		—		—		—		(3)		—		3
March 31, 2023	4,325	$	26,868	$	72,137	$	(14,322)	$	1,760	$	18,889	$	(53,247)	$	1,651

NOTE 12: SIGNIFICANT OPERATING AND NONOPERATING ITEMS

Other Operating Charges

During the three months ended March 29, 2024, the Company recorded other operating charges of $1,573 million. These charges primarily consisted of $765 million related to the remeasurement of our contingent consideration liability to fair value in conjunction with our acquisition of fairlife, LLC (“fairlife”) in 2020, $760 million related to the impairment of our BodyArmor trademark and $36 million related to the Company’s productivity and reinvestment program. In addition, other operating charges included $7 million for transaction costs related to the refranchising of our bottling operations in certain territories in India, $4 million for the amortization of noncompete agreements related to the BA Sports Nutrition, LLC (“BodyArmor”) acquisition in 2021 and $1 million related to tax litigation expense.

During the three months ended March 31, 2023, the Company recorded other operating charges of $111 million. These charges primarily consisted of $62 million related to the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition, $27 million related to the Company’s productivity and reinvestment program and $18 million related to the restructuring of our North America operating unit. In addition, other operating charges included $4 million for the amortization of noncompete agreements related to the BodyArmor acquisition.

Refer to Note 2 for additional information on the refranchising of our bottling operations in certain territories in India. Refer to Note 9 for additional information on the tax litigation. Refer to Note 13 for additional information on the Company’s restructuring initiatives. Refer to Note 16 for additional information on the fairlife acquisition and the BodyArmor impairment. Refer to Note 17 for the impact these charges had on our operating segments and Corporate.

Other Nonoperating Items

Equity Income (Loss) — Net

During the three months ended March 29, 2024 and March 31, 2023, the Company recorded net charges of $25 million and $82 million, respectively. These amounts represent the Company’s proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees. Refer to Note 17 for the impact these items had on our operating segments and Corporate.

Other Income (Loss) — Net

During the three months ended March 29, 2024, the Company recognized net gains of $599 million and $293 million related to the refranchising of our bottling operations in the Philippines and certain territories in India, respectively. The Company also recognized a net gain of $516 million related to the sale of our ownership interest in an equity method investee in Thailand. Additionally, the Company recognized a net gain of $178 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. The Company recorded a loss of $7 million related to post-closing adjustments for the refranchising of our bottling operations in Vietnam in 2023.

During the three months ended March 31, 2023, the Company recognized a net gain of $439 million related to the refranchising of our bottling operations in Vietnam. Additionally, the Company recognized a net gain of $113 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 refranchising of our bottling operations, as well as the sale of our ownership interest in an equity method investee in Thailand. Refer to Note 4 for additional information on equity and debt securities. Refer to Note 17 for the impact these items had on our operating segments and Corporate.

NOTE 13: RESTRUCTURING

Productivity and Reinvestment Program

In February 2012, the Company announced a productivity and reinvestment program designed to strengthen our brands and reinvest our resources to drive long-term profitable growth. The program was expanded multiple times, with the last expansion occurring in April 2017. The remaining initiatives included in this program, which are primarily designed to further simplify and standardize our organization, will be completed in 2024.

During the three months ended March 29, 2024 and March 31, 2023, the Company incurred expenses of $36 million and $27 million, respectively, related to our productivity and reinvestment program. These expenses primarily included internal and external costs associated with the implementation of the program’s initiatives and were recorded in the line item other operating charges in our consolidated statements of income. Refer to Note 17 for the impact these expenses had on our operating segments and Corporate. The Company has incurred total pretax expenses of $4,329 million related to this program since it commenced.

North America Operating Unit Restructuring

In November 2022, the Company announced a restructuring program for our North America operating unit designed to better align its operating structure with its customers and bottlers. The evolved operating structure brought together all bottler-related components (franchise leadership, commercial leadership, digital, governance and technical innovation) and helped streamline how we work. During the three months ended March 31, 2023, the Company incurred expenses of $18 million related to this program. These expenses primarily included severance costs and were recorded in the line item other operating charges in our consolidated statement of income. The Company has incurred total pretax expenses of $65 million related to this program since it commenced. This restructuring program was complete as of December 31, 2023.

NOTE 14: PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

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


	Pension Plans				Other Postretirement Benefit Plans
	Three Months Ended
	March 29, 2024		March 31, 2023		March 29, 2024		March 31, 2023
Service cost	$	27	$	24	$	1	$	1
Interest cost	77		81		4		7
Expected return on plan assets1	(118)		(119)		(2)		(4)
Amortization of prior service cost (credit)	—		—		(1)		(1)
Amortization of net actuarial loss (gain)	26		24		(1)		(1)
Net periodic benefit cost (income)	$	12	$	10	$	1	$	2

1The weighted-average expected long-term rates of return on plan assets used in computing 2024 net periodic benefit cost (income) were 7.00% for pension plans and 4.50% for other postretirement benefit plans.

All of the amounts in the table above, other than service cost, were recorded in the line item other income (loss) — net in our consolidated statements of income. During the three months ended March 29, 2024, the Company contributed $6 million to our pension trusts, offset by a $44 million transfer of surplus international plan assets from pension trusts to general assets of the Company. We anticipate making additional contributions of approximately $27 million during the remainder of 2024. The Company contributed $5 million to our pension trusts during the three months ended March 31, 2023.

NOTE 15: INCOME TAXES

The Company recorded income taxes of $687 million (17.7% effective tax rate) and $940 million (23.2% effective tax rate) during the three months ended March 29, 2024 and March 31, 2023, respectively.

The Company’s effective tax rates for the three months ended March 29, 2024 and March 31, 2023 vary from the statutory U.S. federal tax rate of 21.0% primarily due to the tax impact of significant operating and nonoperating items, as described in Note 12, along with the tax benefits of having significant earnings generated outside of the United States and significant earnings generated in investments accounted for under the equity method, both of which are generally taxed at rates lower than the statutory U.S. federal tax rate.

On November 18, 2020, the Tax Court issued the Opinion regarding the Company’s 2015 litigation with the IRS involving transfer pricing tax adjustments in which it predominantly sided with the IRS. On November 8, 2023, the Tax Court issued a supplemental opinion, siding with the IRS in concluding both that the blocked-income regulations apply to the Company’s operations and that the Tax Court opinion in 3M Co. & Subs. v. Commissioner (February 9, 2023) controlled as to the validity of those regulations. The Company strongly disagrees with the Opinions and intends to vigorously defend its position. Refer to Note 9.

NOTE 16: FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

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


March 29, 2024	Level 1		Level 2		Level 3			Other3		Netting Adjustment		4	Fair Value Measurements
Assets:
Equity securities with readily determinable values1	$	1,814	$	197	$	7		$	88	$	—		$	2,106
Debt securities1	—		1,561		3			—		—			1,564
Derivatives2	—		275		—			—		(210)		6	65		8
Total assets	$	1,814	$	2,033	$	10		$	88	$	(210)		$	3,735
Liabilities:
Contingent consideration liability	$	—	$	—	$	3,782	5	$	—	$	—		$	3,782
Derivatives2	1		1,444		—			—		(1,346)		7	99		8
Total liabilities	$	1	$	1,444	$	3,782		$	—	$	(1,346)