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 April 2, 2021

OR

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

For the transition period from                                    to                                     

Commission File Number 001-02217

COCA COLA CO

(Exact name of Registrant as specified in its charter)

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

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

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.25 Par Value	KO	New York Stock Exchange
0.500% Notes Due 2024	KO24	New York Stock Exchange
1.875% Notes Due 2026	KO26	New York Stock Exchange
0.750% Notes Due 2026	KO26C	New York Stock Exchange
1.125% Notes Due 2027	KO27	New York Stock Exchange
0.125% Notes Due 2029	KO29A	New York Stock Exchange
0.125% Notes Due 2029	KO29B	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
0.800% 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 23, 2021
$0.25 Par Value	4,311,680,667

THE COCA-COLA COMPANY AND SUBSIDIARIES

Table of Contents

		Page
	Forward-Looking Statements	1
	Part I. Financial Information
Item 1.	Financial Statements (Unaudited)	2
	Condensed Consolidated Statements of Income Three Months Ended April 2, 2021 and March 27, 2020	2
	Condensed Consolidated Statements of Comprehensive Income Three Months Ended April 2, 2021 and March 27, 2020	3
	Condensed Consolidated Balance Sheets April 2, 2021 and December 31, 2020	4
	Condensed Consolidated Statements of Cash Flows Three Months Ended April 2, 2021 and March 27, 2020	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41
	Part II. Other Information
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 6.	Exhibits	45
	Signatures	49

FORWARD-LOOKING STATEMENTS

This report contains information that may constitute “forward-looking statements.” Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will” and similar expressions identify forward-looking statements, which generally are not historical in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future — including statements relating to volume growth, share of sales and earnings per share growth, and statements expressing general views about future operating results — are forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. Our Company undertakes 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, 2020; and those described from time to time in our future reports filed with the Securities and Exchange Commission.

1

Part I. Financial Information

Item 1.  Financial Statements (Unaudited)

THE COCA-COLA COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(In millions except per share data)

	Three Months Ended
	April 2, 2021		March 27, 2020
Net Operating Revenues	$	9,020	$	8,601
Cost of goods sold	3,505		3,371
Gross Profit	5,515		5,230
Selling, general and administrative expenses	2,669		2,648
Other operating charges	124		202
Operating Income	2,722		2,380
Interest income	66		112
Interest expense	442		193
Equity income (loss) — net	279		167
Other income (loss) — net	138		544
Income Before Income Taxes	2,763		3,010
Income taxes	508		215
Consolidated Net Income	2,255		2,795
Less: Net income (loss) attributable to noncontrolling interests	10		20
Net Income Attributable to Shareowners of The Coca-Cola Company	$	2,245	$	2,775
Basic Net Income Per Share1	$	0.52	$	0.65
Diluted Net Income Per Share1	$	0.52	$	0.64
Average Shares Outstanding — Basic	4,307		4,289
Effect of dilutive securities	23		36
Average Shares Outstanding — Diluted	4,330		4,325

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

Refer to Notes to Condensed Consolidated Financial Statements.

2

THE COCA-COLA COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(In millions)

	Three Months Ended
	April 2, 2021		March 27, 2020
Consolidated Net Income	$	2,255	$	2,795
Other Comprehensive Income:
Net foreign currency translation adjustments	4		(2,621)
Net gains (losses) on derivatives	104		16
Net change in unrealized gains (losses) on available-for-sale debt securities	(60)		(8)
Net change in pension and other postretirement benefit liabilities	420		6
Total Comprehensive Income	2,723		188
Less: Comprehensive income (loss) attributable to noncontrolling interests	10		(435)
Total Comprehensive Income Attributable to Shareowners of The Coca-Cola Company	$	2,713	$	623

Refer to Notes to Condensed Consolidated Financial Statements.

3

THE COCA-COLA COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In millions except par value)

	April 2, 2021		December 31, 2020
ASSETS
Current Assets
Cash and cash equivalents	$	8,484	$	6,795
Short-term investments	1,871		1,771
Total Cash, Cash Equivalents and Short-Term Investments	10,355		8,566
Marketable securities	2,234		2,348
Trade accounts receivable, less allowances of $527 and $526, respectively	3,762		3,144
Inventories	3,356		3,266
Prepaid expenses and other assets	2,225		1,916
Total Current Assets	21,932		19,240
Equity method investments	18,966		19,273
Other investments	806		812
Other assets	6,494		6,184
Deferred income tax assets	2,332		2,460
Property, plant and equipment, less accumulated depreciation of $9,186 and $8,923, respectively	10,673		10,777
Trademarks with indefinite lives	10,584		10,395
Goodwill	17,618		17,506
Other intangible assets	588		649
Total Assets	$	89,993	$	87,296
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and accrued expenses	$	10,929	$	11,145
Loans and notes payable	1,933		2,183
Current maturities of long-term debt	2,880		485
Accrued income taxes	744		788
Total Current Liabilities	16,486		14,601
Long-term debt	40,170		40,125
Other liabilities	8,558		9,453
Deferred income tax liabilities	2,447		1,833
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	17,630		17,601
Reinvested earnings	67,009		66,555
Accumulated other comprehensive income (loss)	(14,133)		(14,601)
Treasury stock, at cost — 2,729 and 2,738 shares, respectively	(51,911)		(52,016)
Equity Attributable to Shareowners of The Coca-Cola Company	20,355		19,299
Equity attributable to noncontrolling interests	1,977		1,985
Total Equity	22,332		21,284
Total Liabilities and Equity	$	89,993	$	87,296

Refer to Notes to Condensed Consolidated Financial Statements.

4

THE COCA-COLA COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In millions)

	Three Months Ended
	April 2, 2021		March 27, 2020
Operating Activities
Consolidated net income	$	2,255	$	2,795
Depreciation and amortization	366		367
Stock-based compensation expense	58		(5)
Deferred income taxes	377		(122)
Equity (income) loss — net of dividends	(250)		(157)
Foreign currency adjustments	(20)		(59)
Significant (gains) losses — net	1		(919)
Other operating charges	69		190
Other items	157		235
Net change in operating assets and liabilities	(1,377)		(1,769)
Net Cash Provided by Operating Activities	1,636		556
Investing Activities
Purchases of investments	(1,466)		(1,455)
Proceeds from disposals of investments	1,375		1,603
Acquisitions of businesses, equity method investments and nonmarketable securities	(4)		(984)
Proceeds from disposals of businesses, equity method investments and nonmarketable securities	2		36
Purchases of property, plant and equipment	(216)		(327)
Proceeds from disposals of property, plant and equipment	11		91
Other investing activities	17		(48)
Net Cash Provided by (Used in) Investing Activities	(281)		(1,084)
Financing Activities
Issuances of debt	5,588		12,563
Payments of debt	(3,044)		(4,833)
Issuances of stock	183		413
Purchases of stock for treasury	(104)		(94)
Dividends	(1,810)		—
Other financing activities	(449)		(239)
Net Cash Provided by (Used in) Financing Activities	364		7,810
Effect of Exchange Rate Changes on Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	(18)		(54)
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	1,701		7,228
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period	7,110		6,737
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents at End of Period	8,811		13,965
Less: Restricted cash and restricted cash equivalents at end of period	327		404
Cash and Cash Equivalents at End of Period	$	8,484	$	13,561

Refer to Notes to Condensed Consolidated Financial Statements.

5

THE COCA-COLA COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and notes required by U.S. GAAP for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the Notes to Consolidated Financial Statements included in the Annual Report on Form 10-K of The Coca-Cola Company for the year ended December 31, 2020.

When used in these notes, the terms “The Coca-Cola Company,” “Company,” “we,” “us” and “our” mean The Coca-Cola Company and all entities included in our condensed consolidated financial statements. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended April 2, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. Sales of our nonalcoholic ready-to-drink beverages are somewhat seasonal, with the second and third calendar quarters typically accounting for the highest sales volumes. The volume of sales in the beverage business may be affected by weather conditions.

Each of our interim reporting periods, other than the fourth interim reporting period, ends on the Friday closest to the last day of the corresponding quarterly calendar period. The first quarter of 2021 and the first quarter of 2020 ended on April 2, 2021 and March 27, 2020, 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.

Advertising Costs

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

For interim reporting purposes, we allocate our estimated full year marketing expenditures that benefit multiple interim periods to each of our interim reporting periods. We use the proportion of each interim period’s actual unit case volume to the estimated full year unit case volume as the basis for the allocation. This methodology results in our marketing expenditures being recognized at a standard rate per unit case. At the end of each interim reporting period, we review our estimated full year unit case volume and our estimated full year marketing expenditures that benefit multiple interim periods in order to evaluate if a change in estimate is necessary. The impact of any change in the full year estimate 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.

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents

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

6

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

	April 2, 2021		December 31, 2020
Cash and cash equivalents	$	8,484	$	6,795
Restricted cash and restricted cash equivalents included in other assets1	327		315
Cash, cash equivalents, restricted cash and restricted cash equivalents	$	8,811	$	7,110

1 Amounts represent restricted cash and restricted cash equivalents in our solvency capital portfolio set aside primarily to cover pension obligations in certain of our European and Canadian pension plans. Refer to Note 4.

	March 27, 2020		December 31, 2019
Cash and cash equivalents	$	13,561	$	6,480
Restricted cash and restricted cash equivalents included in other assets1	404		257
Cash, cash equivalents, restricted cash and restricted cash equivalents	$	13,965	$	6,737

1 Amounts represent restricted cash and restricted cash equivalents in our solvency capital portfolio set aside primarily to cover pension obligations in certain of our European and Canadian pension plans. Refer to Note 4.

NOTE 2: ACQUISITIONS AND DIVESTITURES

Acquisitions

Our Company's acquisitions of businesses, equity method investments and nonmarketable securities totaled $4 million and $984 million during the three months ended April 2, 2021 and March 27, 2020, respectively. In 2020, we acquired the remaining ownership interest in fairlife, LLC (“fairlife”).

fairlife, LLC

In January 2020, the Company acquired the remaining 57.5 percent ownership interest in, and now owns 100 percent of, fairlife. fairlife offers a broad portfolio of products in the value-added dairy category across North America. Upon consolidation, we recognized a gain of $902 million resulting from the remeasurement of our previously held equity interest in fairlife to fair value. The fair value of our previously held equity interest was determined using a discounted cash flow model based on Level 3 inputs. The gain was recorded in the line item other income (loss) — net in our condensed consolidated statement of income. We acquired the remaining ownership interest in exchange for $979 million of cash, net of cash acquired, and effectively settled our $306 million note receivable from fairlife at the recorded amount. Under the terms of the agreement, we are subject to making future milestone payments which are contingent on fairlife achieving certain financial targets through 2024 and, if achieved, are payable in 2021, 2023 and 2025. These milestone payments are based on agreed-upon formulas related to fairlife’s operating results, the resulting values of which are not subject to a ceiling. Under the applicable accounting guidance, we recorded a $270 million liability representing our best estimate of the fair value of this contingent consideration as of the acquisition date. The fair value of this contingent consideration was determined using a Monte Carlo valuation model based on Level 3 inputs. We are required to remeasure this liability to fair value quarterly, with any changes in the fair value recorded in income until the final milestone payment is made. Upon finalization of purchase accounting, $1.3 billion of the purchase price was allocated to the fairlife trademark and $0.8 billion was allocated to goodwill. The goodwill recognized as part of this acquisition is primarily related to synergistic value created from the opportunity for additional expansion. 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 North America operating segment.

During the three months ended April 2, 2021 and March 27, 2020, we recorded charges of $4 million and $11 million, respectively, related to the remeasurement of the contingent consideration liability to fair value in the line item other operating charges in our condensed consolidated statements of income. During the three months ended April 2, 2021, we made the first milestone payment of $100 million based on fairlife meeting its financial targets in 2020.

Divestitures

Proceeds from disposals of businesses, equity method investments and nonmarketable securities during the three months ended April 2, 2021 and March 27, 2020 totaled $2 million and $36 million, respectively. In 2020, we sold a portion of our ownership interest in one of our equity method investments and recognized a net gain of $18 million, which was recorded in the line item other income (loss) — net in our condensed consolidated statement of income.

7

NOTE 3: REVENUE RECOGNITION

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 April 2, 2021
Concentrate operations	$	1,410	$	3,572	$	4,982
Finished product operations	1,483		2,555		4,038
Total	$	2,893	$	6,127	$	9,020
Three Months Ended March 27, 2020
Concentrate operations	$	1,324	$	3,465	$	4,789
Finished product operations	1,483		2,329		3,812
Total	$	2,807	$	5,794	$	8,601

Refer to Note 16 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 condensed consolidated balance sheets (in millions):

	Fair Value with Changes Recognized in Income		Measurement Alternative — No Readily Determinable Fair Value
April 2, 2021
Marketable securities	$	345	$	—
Other investments	755		51
Other assets	1,441		—
Total equity securities	$	2,541	$	51
December 31, 2020
Marketable securities	$	330	$	—
Other investments	762		50
Other assets	1,282		—
Total equity securities	$	2,374	$	50

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
	April 2, 2021		March 27, 2020
Net gains (losses) recognized during the period related to equity securities	$	155	$	(396)
Less: Net gains (losses) recognized during the period related to equity securities sold    during the period	14		(16)
Net unrealized gains (losses) recognized during the period related to equity securities    still held at the end of the period	$	141	$	(380)

8

Debt Securities

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

			Gross Unrealized				Estimated Fair Value
	Cost		Gains		Losses
April 2, 2021
Trading securities	$	37	$	2	$	—	$	39
Available-for-sale securities	2,180		33		(85)		2,128
Total debt securities	$	2,217	$	35	$	(85)	$	2,167
December 31, 2020
Trading securities	$	36	$	2	$	—	$	38
Available-for-sale securities	2,227		51		(13)		2,265
Total debt securities	$	2,263	$	53	$	(13)	$	2,303

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

	April 2, 2021				December 31, 2020
	Trading Securities		Available-for-Sale Securities		Trading Securities		Available-for-Sale Securities
Cash and cash equivalents	$	—	$	—	$	—	$	—
Marketable securities	39		1,850		38		1,980
Other assets	—		278		—		285
Total debt securities	$	39	$	2,128	$	38	$	2,265

The contractual maturities of these available-for-sale debt securities as of April 2, 2021 were as follows (in millions):

	Cost		Estimated Fair Value
Within 1 year	$	684	$	691
After 1 year through 5 years	1,205		1,143
After 5 years through 10 years	92		101
After 10 years	199		193
Total	$	2,180	$	2,128

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
	April 2, 2021		March 27, 2020
Gross gains	$	1	$	8
Gross losses	(4)		(2)
Proceeds	158		906

Captive Insurance Companies

In accordance with local insurance regulations, our captive insurance companies are required to meet and maintain minimum solvency capital requirements. The Company elected to invest a majority of its solvency capital in a portfolio of marketable equity and debt securities. These securities are included in the disclosures above. The Company uses one of its consolidated captive insurance companies to reinsure group annuity insurance contracts that cover the pension obligations of certain of our European and Canadian pension plans. This captive’s solvency capital funds included equity and debt securities of $1,534 million and $1,389 million as of April 2, 2021 and December 31, 2020, respectively, 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.

9

NOTE 5: INVENTORIES

Inventories consisted of the following (in millions):

	April 2, 2021		December 31, 2020
Raw materials and packaging	$	2,097	$	2,106
Finished goods	877		791
Other	382		369
Total inventories	$	3,356	$	3,266

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	April 2, 2021		December 31, 2020
Assets:
Foreign currency contracts	Prepaid expenses and other assets	$	47	$	26
Foreign currency contracts	Other assets	116		74
Commodity contracts	Prepaid expenses and other assets	—		2
Interest rate contracts	Prepaid expenses and other assets	6		—
Interest rate contracts	Other assets	520		659
Total assets		$	689	$	761
Liabilities:
Foreign currency contracts	Accounts payable and accrued expenses	$	31	$	29
Foreign currency contracts	Other liabilities	1		—
Interest rate contracts	Accounts payable and accrued expenses	—		5
Interest rate contracts	Other liabilities	247		—
Total liabilities		$	279	$	34

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 15 for the net presentation of the Company’s derivative instruments.

2 Refer to Note 15 for additional information related to the estimated fair value.

10

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	April 2, 2021		December 31, 2020
Assets:
Foreign currency contracts	Prepaid expenses and other assets	$	26	$	28
Foreign currency contracts	Other assets	3		1
Commodity contracts	Prepaid expenses and other assets	140		76
Commodity contracts	Other assets	13		9
Other derivative instruments	Prepaid expenses and other assets	18		20
Other derivative instruments	Other assets	—		3
Total assets		$	200	$	137
Liabilities:
Foreign currency contracts	Accounts payable and accrued expenses	$	40	$	41
Commodity contracts	Accounts payable and accrued expenses	4		15
Commodity contracts	Other liabilities	2		1
Total liabilities		$	46	$	57

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 15 for the net presentation of the Company’s derivative instruments.

2 Refer to Note 15 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 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 four years.

The Company maintains a foreign currency cash flow hedging program to reduce the risk that our eventual U.S. dollar net cash inflows from sales outside the United States and U.S. dollar net cash outflows from procurement activities will be adversely affected by fluctuations in foreign currency exchange rates. We enter into forward contracts and purchase foreign currency options and collars (principally euro, British pound sterling 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 qualify for the Company’s foreign currency cash flow hedging program were $9,327 million and $7,785 million as of April 2, 2021 and December 31, 2020, 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

11

Company records the changes in carrying values of these foreign currency denominated assets and liabilities due to changes in exchange rates into earnings each period. 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 values of derivatives that have been designated as cash flow hedges for the Company’s foreign currency denominated assets and liabilities were $2,700 million as of April 2, 2021 and December 31, 2020.

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 $18 million and $11 million as of April 2, 2021 and December 31, 2020, respectively.

Our Company monitors our mix of short-term debt and long-term debt regularly. From time to time, we manage our risk to interest rate fluctuations through the use of derivative financial instruments. The Company has entered into interest rate swap agreements and has designated these instruments as part of the Company’s interest rate cash flow hedging program. The objective of this hedging program is to mitigate the risk of adverse changes in benchmark interest rates on the Company’s future interest payments. The total notional value of these interest rate swap agreements that were designated and qualified for the Company’s interest rate cash flow hedging program was $1,233 million as of December 31, 2020. As of April 2, 2021, we did not have any interest rate swaps designated as a cash flow hedge.

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 April 2, 2021
Foreign currency contracts	$	(23)	Net operating revenues	$	(23)
Foreign currency contracts	(5)		Cost of goods sold	(1)
Foreign currency contracts	—		Interest expense	(1)
Foreign currency contracts	87		Other income (loss) — net	66
Interest rate contracts	121		Interest expense	(5)
Total	$	180		$	36
Three Months Ended March 27, 2020
Foreign currency contracts	$	103	Net operating revenues	$	(4)
Foreign currency contracts	11		Cost of goods sold	1
Foreign currency contracts	—		Interest expense	(2)
Foreign currency contracts	(90)		Other income (loss) — net	15
Interest rate contracts	8		Interest expense	(11)
Total	$	32		$	(1)

As of April 2, 2021, the Company estimates that it will reclassify into earnings during the next 12 months net losses of $60 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 values of foreign currency denominated debt relating to changes in foreign currency exchange rates and benchmark interest rates. The changes in the fair values of derivatives designated as fair value hedges and the offsetting changes in 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 been extinguished. The total notional values of derivatives related to fair value hedges of this type were $17,677 million and $10,215 million as of April 2, 2021 and December 31, 2020, respectively.

12

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
		April 2, 2021		March 27, 2020
Interest rate contracts	Interest expense	$	(395)	$	112
Fixed-rate debt	Interest expense	396		(103)
Net impact to interest expense		$	1	$	9
Net impact of fair value hedging instruments		$	1	$	9

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

	Carrying Values of Hedged Items				Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Values of Hedged Items1
Balance Sheet Location of Hedged Items	April 2, 2021		December 31, 2020		April 2, 2021		December 31, 2020
Current maturities of long-term debt	$	1,245	$	—	$	6	$	—
Long-term debt	16,638		11,129		462		646

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

Hedges of Net Investments in Foreign Operations Strategy

The Company uses forward contracts and a portion of its foreign currency denominated debt, a non-derivative financial instrument, to protect the value of our net investments in a number of foreign operations. For derivative instruments that are designated and qualify as hedges of net investments in foreign operations, the changes in the fair values of the derivative instruments are recognized in net foreign currency translation adjustments, a component of AOCI, to offset the changes in the values of the net investments being hedged. For non-derivative financial instruments that are designated and qualify as hedges of net investments in foreign operations, the changes in the carrying values of the designated portion of the non-derivative financial instrument 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
	April 2, 2021		December 31, 2020		April 2, 2021		March 27, 2020
Foreign currency contracts	$	1,049	$	451	$	(8)	$	(3)
Foreign currency denominated debt	13,000		13,336		483		79
Total	$	14,049	$	13,787	$	475	$	76

The Company did not reclassify any gains or losses related to net investment hedges from AOCI into earnings during the three months ended April 2, 2021 and March 27, 2020. In addition, the Company did not have any ineffectiveness related to net investment hedges during the three months ended April 2, 2021 and March 27, 2020. The cash inflows and outflows associated with the Company’s derivative contracts designated as net investment hedges are classified in the line item other investing activities in our condensed consolidated statement of cash flows.

13

Economic (Non-Designated) Hedging Strategy

In addition to derivative instruments that are designated and qualify for hedge accounting, the Company also uses certain derivatives as economic hedges of foreign currency, interest rate and commodity exposure. Although these derivatives were not designated and/or did not qualify for hedge accounting, they are effective economic hedges. The changes in the fair 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 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 $6,370 million and $5,727 million as of April 2, 2021 and December 31, 2020, 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. The total notional values of derivatives related to our economic hedges of this type were $200 million as of April 2, 2021 and December 31, 2020.

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 $1,057 million and $715 million as of April 2, 2021 and December 31, 2020, 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
		April 2, 2021		March 27, 2020
Foreign currency contracts	Net operating revenues	$	(1)	$	24
Foreign currency contracts	Cost of goods sold	(8)		14
Foreign currency contracts	Other income (loss) — net	(28)		(91)
Interest rate contracts	Interest expense	(187)		—
Commodity contracts	Cost of goods sold	82		(85)
Other derivative instruments	Selling, general and administrative expenses	8		(56)
Other derivative instruments	Other income (loss) — net	(3)		(57)
Total		$	(137)	$	(251)

NOTE 7: DEBT AND BORROWING ARRANGEMENTS

During the three months ended April 2, 2021, the Company issued U.S. dollar- and euro-denominated debt of $2,500 million and €2,000 million, respectively. The carrying value of this debt as of April 2, 2021 was $4,775 million. The general terms of the notes issued are as follows:

•$750 million total principal amount of notes due March 5, 2028, at a fixed interest rate of 1.500 percent;

•€700 million total principal amount of notes due March 9, 2029, at a fixed interest rate of 0.125 percent;

•$750 million total principal amount of notes due March 5, 2031, at a fixed interest rate of 2.000 percent;

•€650 million total principal amount of notes due March 9, 2033, at a fixed interest rate of 0.500 percent;

•€650 million total principal amount of notes due March 9, 2041, at a fixed interest rate of 1.000 percent; and

•$1,000 million total principal amount of notes due March 5, 2051, at a fixed interest rate of 3.000 percent.

14

During the three months ended April 2, 2021, the Company retired upon maturity €371 million total principal amount of notes due March 8, 2021, at a variable interest rate equal to the three-month Euro Interbank Offered Rate (“EURIBOR”) plus 0.200 percent.

During the three months ended April 2, 2021, the Company extinguished prior to maturity U.S. dollar- and euro-denominated debt of $751 million and €633 million, respectively, resulting in associated charges of $58 million recorded in the line item interest expense in our condensed consolidated statement of income. These charges included the difference between the reacquisition price and the net carrying value of the debt extinguished, including the impact of the related fair value hedging relationships. The general terms of the notes that were extinguished are as follows:

•€633 million total principal amount of notes due March 9, 2023, at a fixed interest rate of 0.750 percent;

•$358 million total principal amount of notes due April 1, 2023, at a fixed interest rate of 2.500 percent; and

•$393 million total principal amount of notes due November 1, 2023, at a fixed interest rate of 3.200 percent.

NOTE 8: COMMITMENTS AND CONTINGENCIES

Guarantees

As of April 2, 2021, we were contingently liable for guarantees of indebtedness owed by third parties of $510 million, of which $110 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, we do not consider it probable that we will be required to satisfy these guarantees.

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

Legal Contingencies

The Company is involved in various legal proceedings. We establish reserves for specific legal proceedings when we determine that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated. Management has also identified certain other legal matters where we believe an unfavorable outcome is reasonably possible and/or for which no estimate of possible losses can be made. Management believes that the total liabilities of the Company that may arise as a result of currently pending legal proceedings (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. We establish reserves to remove some or all of the tax benefit of any of our tax positions at the time we determine that it becomes uncertain based upon one of the following conditions: (1) the tax position is not “more likely than not” to be sustained; (2) the tax position is “more likely than not” to be sustained but for a lesser amount; or (3) the tax position is “more likely than not” to be sustained but not in the financial period in which the tax position was originally taken. For purposes of evaluating whether or not a tax position is uncertain, (1) we presume the tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information; (2) the technical merits of a tax position are derived from authorities, such as legislation and statutes, legislative intent, regulations, rulings and caselaw and their applicability to the facts and circumstances of the tax position; and (3) each tax position is evaluated without consideration of the possibility of offset or aggregation with other tax positions taken. A number of years may elapse before a particular uncertain tax position is audited and finally resolved. The number of years subject to tax audits or tax assessments varies depending on the tax jurisdiction. The tax benefit that has been previously reserved because of a failure to meet the “more likely than not” recognition threshold would be recognized in income tax expense in the first interim period when the uncertainty disappears under any one of the following conditions: (1) the tax position is “more likely than not” to be sustained; (2) the tax position, amount, and/or timing is ultimately settled through negotiation or litigation; or (3) the statute of limitations for the tax position has expired. Refer to Note 14.

On September 17, 2015, the Company received a Statutory Notice of Deficiency (“Notice”) from the U.S. 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.

15

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 approximately $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. The Tax Court reserved ruling on the effect of Brazilian legal restrictions on the payment of royalties by the Company’s licensee in Brazil until after the Tax Court issues its opinion in the separate case of 3M Co. & Subs. v. Commissioner, T.C. Docket No. 5816-13 (filed March 11, 2013). Once the Tax Court issues its opinion in 3M Co. & Subs. v. Commissioner, the Company expects the Tax Court thereafter to render another opinion, and ultimately a final decision, in the Company’s case.

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 (“ASC”) 740, Accounting for Income Taxes. In doing so, we consulted with outside advisors and we reviewed and considered relevant laws, rules, and regulations, including, though not limited to, the Opinion 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 Opinion (“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

16

reliance upon the Closing Agreement, that would be recharacterized as royalties in accordance with the Opinion 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 April 2, 2021. 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 April 2, 2021 to $390 million.

While the Company strongly disagrees with the IRS’ positions and the portions of the Opinion 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 the years at issue, and potentially also for subsequent periods, which could have a material adverse impact on the Company’s financial position, results of operations and cash flows.

The Company calculated the potential impact of applying the Tax Court Methodology to reallocate income from foreign licensees potentially covered within the scope of the Opinion, 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, 2020 for the 2007 through 2009 litigated tax years and for subsequent tax years from 2010 to 2020. 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 currently estimates that the potential aggregate incremental tax and interest liability could be approximately $12 billion as of December 31, 2020. 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 April 2, 2021 would increase the potential aggregate incremental tax and interest liability by approximately $250 million. Additionally, we currently project the continued application of the Tax Court Methodology in future years, assuming similar facts and circumstances as of December 31, 2020, would result in an incremental annual tax liability that would increase the Company’s effective tax rate by approximately 3.5 percent.

The Company does not know when the Tax Court will issue its opinion regarding the effect of Brazilian legal restrictions on the payment of royalties by the Company’s licensee in Brazil for the 2007 through 2009 tax years. After the Tax Court issues its opinion on the Company’s Brazilian licensee, the Company and the IRS will be provided time to agree on the tax impact, if any, of both opinions, after which the Tax Court would render a final 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 and pay the tax liability and interest related to the 2007 through 2009 tax period. The Company currently estimates that the payment to be made at that time related to the 2007 through 2009 tax period, which is included in the above estimate of the potential aggregate incremental tax and interest liability, would be approximately $4.7 billion (including interest accrued through April 2, 2021), plus any additional interest accrued through the time of payment. Some or all of this amount 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 $253 million and $265 million as of April 2, 2021 and December 31, 2020, respectively.

NOTE 9: OTHER COMPREHENSIVE INCOME

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

17

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

	April 2, 2021		December 31, 2020
Net foreign currency translation adjustments	$	(12,024)	$	(12,028)
Accumulated net gains (losses) on derivatives	(90)		(194)
Unrealized net gains (losses) on available-for-sale debt securities	(32)		28
Adjustments to pension and other postretirement benefit liabilities	(1,987)		(2,407)
Accumulated other comprehensive income (loss)	$	(14,133)	$	(14,601)

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 April 2, 2021
	Shareowners of The Coca-Cola Company		Noncontrolling Interests		Total
Consolidated net income	$	2,245	$	10	$	2,255
Other comprehensive income:
Net foreign currency translation adjustments	4		—		4
Net gains (losses) on derivatives1	104		—		104
Net change in unrealized gains (losses) on available-for-sale debt    securities2	(60)		—		(60)
Net change in pension and other postretirement benefit liabilities	420		—		420
Total comprehensive income (loss)	$	2,713	$	10	$	2,723

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

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

The following 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 April 2, 2021	Before-Tax Amount		Income Tax		After-Tax Amount
Foreign currency translation adjustments:
Translation adjustments arising during the period	$	624	$	(23)	$	601
Gains (losses) on intra-entity transactions that are of a long-term investment nature	(954)		—		(954)
Gains (losses) on net investment hedges arising during the period1	475		(118)		357
Net foreign currency translation adjustments	$	145	$	(141)	$	4
Derivatives:
Gains (losses) arising during the period	$	174	$	(43)	$	131
Reclassification adjustments recognized in net income	(36)		9		(27)
Net gains (losses) on derivatives1	$	138	$	(34)	$	104
Available-for-sale debt securities:
Unrealized gains (losses) arising during the period	$	(92)	$	30	$	(62)
Reclassification adjustments recognized in net income