2 unchanged sentences
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
−Removed: Recoverability of Current and Noncurrent Assets
+Added: Recoverability of Equity Method Investments and Indefinite-Lived Intangible Assets
Our Company faces many uncertainties and risks related to various economic, political and regulatory environments in the countries and territories in which we operate, particularly in developing and emerging markets.
Refer to the headings “Item 1A.
−Removed: Risk Factors” in Part I and “Our Business — Challenges and Risks” in Part II of our Annual Report on Form 10-K for the year ended December 31, 2022.
−Removed: As a result, management must make numerous assumptions, which involve a significant amount of judgment, when performing recoverability and impairment tests of current and noncurrent assets in various regions around the world.
−Removed: We perform recoverability and impairment tests of current and noncurrent assets in accordance with accounting principles generally accepted in the United States (“U.S.
−Removed: For certain assets, recoverability and/or impairment tests are required only when conditions exist that indicate the carrying value may not be recoverable.
−Removed: For other assets, impairment tests are required at least annually, or more frequently if events or circumstances indicate that an asset may be impaired.
−Removed: The performance of recoverability and impairment tests of current and noncurrent assets involves critical accounting estimates.
−Removed: These estimates require significant management judgment, include inherent uncertainties and are often interdependent;
−Removed: therefore, they do not change in isolation.
−Removed: Factors that management must estimate include, among others, the economic lives of the assets, sales volume, pricing, royalty rates, cost of raw materials, delivery costs, the impact of any supply chain disruptions, inflation, long-term growth rates, discount rate, marketing spending, foreign currency exchange rates, tax rates, capital spending, proceeds from the sale of assets and customers’ financial condition.
+Added: Risk Factors” in Part I and “Our Business — Challenges and Risks” in Part II of our Annual Report on Form 10-K for the year ended December 31, 2023, as well as the heading “Operations Review” below for additional information related to our present business environment.
+Added: As a result, management must make numerous assumptions, which involve a significant amount of judgment, when performing impairment tests of equity method investments and indefinite-lived intangible assets in various regions around the world.
+Added: The performance of impairment tests involves critical accounting estimates.
+Added: These estimates require significant management judgment and include inherent uncertainties.
+Added: Factors that management must estimate include, among others, the economic lives of the assets, sales volume, pricing, royalty rates, cost of raw materials, delivery costs, long-term growth rates, discount rates, marketing spending, foreign currency exchange rates, tax rates, capital spending and proceeds from the sale of assets.
The variability of these factors depends on a number of conditions, and thus our accounting estimates may change from period to period.
−Removed: The estimates we use when performing recoverability tests of assets are consistent with those we use in our internal planning.
−Removed: When performing impairment tests, we estimate the fair values of the assets using management’s best assumptions, which we believe are consistent with those a market participant would use.
−Removed: The Company has certain intangible and other long-lived assets that are more dependent on cash flows generated in away-from-home channels and/or that generate cash flows in geographic areas which are more heavily impacted by the COVID-19 pandemic, and therefore these assets are more susceptible to impairment.
−Removed: In addition, intangible and other long-lived assets we acquired in recent transactions are naturally more susceptible to impairment, because they are recorded at fair value based on recent operating plans and macroeconomic conditions at the time of acquisition.
−Removed: If we had used other assumptions and estimates when impairment tests were performed, impairment charges could have resulted.
−Removed: Furthermore, if management uses different assumptions in future periods, or if different conditions exist in future periods, impairment charges could result.
−Removed: The total future impairment charges we may be required to record could be material.
+Added: These factors are even more difficult to estimate when global financial markets are highly volatile.
+Added: As these factors are often interdependent and may not change in isolation, we do not believe it is practicable or meaningful to present the impact of changing a single factor.
In November 2021, the Company acquired the remaining 85% ownership interest in, and now owns 100% of, BA Sports Nutrition, LLC (“BodyArmor”), which offers a line of sports performance and hydration beverages.
−Removed: The Company allocated $4.2 billion of the purchase price to the BodyArmor trademark.
−Removed: As of September 29, 2023, the fair value of this trademark approximates its carrying value.
−Removed: If the near-term operating results of this trademark do not achieve our current financial projections, or if the macroeconomic conditions change causing the discount rate to increase without an offsetting increase in the operating results, it is likely that we would be required to recognize an impairment charge.
+Added: During 2021, in conjunction with acquiring the remaining ownership interest, we recognized a noncash gain of $834 million resulting from the remeasurement of our previously held equity interest in BodyArmor to fair value.
+Added: The Company allocated $4.2 billion of the $5.6 billion purchase price to the BodyArmor trademark.
+Added: As of December 31, 2023, the fair value of the trademark approximated its carrying value.
+Added: During the three months ended March 29, 2024, the operating results related to the trademark were lower than expected.
+Added: Therefore, the Company revised its projections of the future operating results related to the trademark which triggered the need to update its impairment analysis.
+Added: As a result, the Company concluded that the fair value of the trademark was less than its carrying value and recorded an impairment charge of $760 million.
+Added: The decrease in fair value was primarily driven by the revised projections of future operating results as well as higher discount rates resulting from changes in macroeconomic conditions since the acquisition date.
+Added: If the near-term operating results of this trademark do not achieve our revised financial projections, or if the macroeconomic conditions change causing the discount rate to increase without an offsetting increase in the operating results, it is likely that we would be required to recognize an additional impairment charge.
Management will continue to monitor the fair value of this trademark in future periods.
−Removed: Our equity method investees also perform such recoverability and impairment tests.
−Removed: If an impairment charge is recorded by one of our equity method investees, the Company records its proportionate share of such charge as a reduction of equity income (loss) — net in our consolidated statement of income.
−Removed: However, the actual amount we record with respect to our proportionate share of such charge may be impacted by items such as basis differences, deferred taxes and deferred gains.
OPERATIONS REVIEW
37 unchanged sentences
We generally do not consider the licensing of a brand to be a structural change.
−Removed: In May 2023 and July 2022, the Company acquired certain brands in Asia Pacific.
+Added: In May 2023, the Company acquired certain brands in Asia Pacific.
The impact of acquiring these brands has been included in acquisitions and divestitures in our analysis of net operating revenues on a consolidated basis as well as for the Asia Pacific operating segment.
−Removed: Also, in August 2022, the Company acquired a controlling interest in a bottling operation in
−Removed: The impact of this acquisition has been included as a structural change in our analysis of net operating revenues on a consolidated basis as well as for the Bottling Investments operating segment.
−Removed: Additionally, the Company refranchised our bottling operations in Cambodia and Vietnam in November 2022 and January 2023, respectively, the impact of which has been included as a structural change in our analysis of net operating revenues on a consolidated basis as well as for the Bottling Investments and Asia Pacific operating segments.
+Added: Additionally, in January 2023, the Company refranchised our bottling operations in Vietnam.
+Added: In January and February 2024, the Company refranchised our bottling operations in certain territories in India, and in February 2024, the Company refranchised our bottling operations in Bangladesh and the Philippines.
+Added: The impact of each of these refranchisings has been included as a structural change in our analysis of net operating revenues on a consolidated basis as well as for the Bottling Investments and Asia Pacific operating segments for the three months ended March 29, 2024.
Beverage Volume
10 unchanged sentences
Concentrate sales volume represents the amount of concentrates, syrups, source waters and powders/minerals (in all instances expressed in unit case equivalents) sold by, or used in finished beverages sold by, the Company to its bottling partners or other customers.
−Removed: For Costa non-ready-to-drink beverage products, concentrate sales volume represents the amount of beverages, primarily measured in number of transactions (in all instances expressed in unit case equivalents), sold by the Company to customers or consumers.
+Added: For Costa non-ready-to-drink beverage products, concentrate sales volume represents the amount of beverages, primarily measured in number of transactions (in all instances expressed in
+Added: unit case equivalents), sold by the Company to customers or consumers.
Unit case volume and concentrate sales volume growth rates are not necessarily equal during any given period.
4 unchanged sentences
Three Months Ended
−Removed: September 29, 2023 Nine Months Ended
−Removed: September 29, 2023
−Removed: Unit Cases 1,2,3
−Removed: Concentrate Sales 4
+Added: March 29, 2024
Unit Cases 1,2,3
16 unchanged sentences
Each of our quarters, other than the fourth quarter, ends on the Friday closest to the last day of the corresponding quarterly calendar period.
−Removed: As a result, the first quarter of 2023 had one less day when compared to the first quarter of 2022, and the fourth quarter of 2023 will have one additional day when compared to the fourth quarter of 2022.
−Removed: 5 After considering the impact of structural changes, unit case volume for Bottling Investments for the three and nine months ended September 29, 2023 grew 10% and 6%, respectively.
−Removed: 6 After considering the impact of structural changes, worldwide concentrate sales volume for the three and nine months ended September 29, 2023 grew 2% and 1%, respectively.
−Removed: 7 After considering the impact of structural changes, concentrate sales volume for Asia Pacific for the nine months ended September 29, 2023 declined 1%.
+Added: As a result, the first quarter of 2024 had one less day when compared to the first quarter of 2023, and the fourth quarter of 2024 will have two additional days when compared to the fourth quarter of 2023.
+Added: 5 After considering the impact of structural changes, unit case volume for Bottling Investments for the three months ended March 29, 2024 grew 8%.
+Added: 6 After considering the impact of structural changes, concentrate sales volume for Asia Pacific for the three months ended March 29, 2024 declined 1%.
Unit Case Volume
Although a significant portion of our Company’s net operating revenues is not based directly on unit case volume, we believe unit case volume performance is one of the indicators of the underlying strength of the Coca-Cola system because it measures demand for our products at the consumer level.
−Removed: Three Months Ended September 29, 2023 versus Three Months Ended September 30, 2022
−Removed: Unit case volume in Europe, Middle East and Africa decreased 1%, which included a 2% decline in Trademark Coca-Cola, a 1% decline in sparkling flavors and a 5% decline in juice, value-added dairy and plant-based beverages, partially offset by 3% growth in water, sports, coffee and tea.
−Removed: The operating segment reported a decline in unit case volume of 7% in the Europe operating unit, partially offset by growth of 7% in the Africa operating unit and growth of 2% in the Eurasia and Middle East operating unit.
−Removed: The decline in unit case volume in Europe, Middle East and Africa was primarily due to the suspension of the Company’s business in Russia in 2022.
−Removed: Unit case volume in Latin America increased 7%, which included 7% growth in Trademark Coca-Cola, 10% growth in water, sports, coffee and tea, 4% growth in sparkling flavors and 6% growth in juice, value-added dairy and plant-based beverages.
−Removed: The operating segment’s volume performance included 9% growth in Mexico and 4% growth in Brazil.
−Removed: Unit case volume in North America was even, which included 2% growth in both sparkling flavors and juice, value-added dairy and plant-based beverages, offset by a 4% decline in water, sports, coffee and tea.
−Removed: Unit case volume in Trademark Coca-Cola was even.
−Removed: Unit case volume in Asia Pacific was even, which included 4% growth in Trademark Coca-Cola, 1% growth in sparkling flavors and 3% growth in juice, value-added dairy and plant-based beverages, offset by a 4% decline in water, sports, coffee and tea.
−Removed: The operating segment reported growth in unit case volume of 8% in the India and Southwest Asia operating unit, 6% in the ASEAN and South Pacific operating unit, and 5% in the Japan and South Korea operating unit, offset by a decline of 6% in the Greater China and Mongolia operating unit.
−Removed: Unit case volume for Global Ventures increased 5%, driven by 4% growth in water, sports, coffee and tea, 1% growth in juice, value-added dairy and plant-based beverages, and growth in energy drinks.
−Removed: Unit case volume for Bottling Investments increased 2%, driven by growth in unit case volume in India, the Philippines and South Africa, partially offset by the impact of refranchising our bottling operations in Vietnam and Cambodia.
−Removed: Nine Months Ended September 29, 2023 versus Nine Months Ended September 30, 2022
−Removed: Unit case volume in Europe, Middle East and Africa decreased 3%, which included a 20% decline in juice, value-added dairy and plant-based beverages, a 4% decline in sparkling flavors, a 1% decline in Trademark Coca-Cola and a 3% decline in water, sports, coffee and tea.
−Removed: The operating segment reported a decline in unit case volume of 7% in the Europe operating unit, partially offset by growth of 2% in the Africa operating unit and 1% in the Eurasia and Middle East operating unit.
−Removed: The decline in unit case volume in Europe, Middle East and Africa was primarily due to the suspension of the Company’s business in Russia in 2022.
−Removed: Unit case volume in Latin America increased 5%, which included 4% growth in Trademark Coca-Cola, 10% growth in water, sports, coffee and tea, 3% growth in sparkling flavors and 5% growth in juice, value-added dairy and plant-based beverages.
−Removed: The operating segment’s volume performance included 6% growth in Mexico and 5% growth in Brazil.
−Removed: Unit case volume in North America was even, which included 3% growth in juice, value-added dairy and plant-based beverages and 1% growth in sparkling flavors, offset by a 4% decline in water, sports, coffee and tea.
+Added: Unit case volume in Europe, Middle East and Africa increased 2%, which included 9% growth in water, sports, coffee and tea, and 2% growth in both sparkling flavors and juice, value-added dairy and plant-based beverages.
Unit case volume in Trademark Coca-Cola was even.
−Removed: Unit case volume in Asia Pacific increased 4%, which included 4% growth in both sparkling flavors and Trademark Coca-Cola, 10% growth in juice, value-added dairy and plant-based beverages, and 1% growth in water, sports, coffee and tea.
−Removed: The operating segment reported growth in unit case volume of 11% in the India and Southwest Asia operating unit and growth of 2% in each of the Greater China and Mongolia, ASEAN and South Pacific, and Japan and South Korea operating units.
−Removed: Unit case volume for Global Ventures increased 5%, driven by 3% growth in water, sports, coffee and tea along with growth in energy drinks, partially offset by a 2% decline in juice, value-added dairy and plant-based beverages.
−Removed: Unit case volume for Bottling Investments was even, which included growth in unit case volume in India and South Africa, offset by the impact of refranchising our bottling operations in Vietnam and Cambodia.
+Added: The operating segment reported an increase in unit case volume of 9% in the Africa operating unit, partially offset by a decline of 4% in the Eurasia and Middle East operating unit.
+Added: Unit case volume in the Europe operating unit was even.
+Added: Unit case volume in Latin America increased 4%, which included 5% growth in Trademark Coca-Cola, 4% growth in water, sports, coffee and tea, and 1% growth in sparkling flavors, partially offset by a 1% decline in juice, value-added dairy and plant-based beverages.
+Added: The operating segment’s volume performance included 9% growth in Brazil and 4% growth in Mexico, partially offset by a 23% decline in Argentina.
+Added: Unit case volume in North America was even, which included 5% growth in juice, value-added dairy and plant-based beverages and 1% growth in Trademark Coca-Cola, offset by a 5% decline in water, sports, coffee and tea.
+Added: Unit case volume in sparkling flavors was even.
+Added: Unit case volume in Asia Pacific decreased 2%, which included a 9% decline in water, sports, coffee and tea and a 1% decline in sparkling flavors, partially offset by 2% growth in Trademark Coca-Cola and 1% growth in juice, value-added dairy and plant-based beverages.
+Added: The operating segment reported a decline in unit case volume of 11% in the Greater China and Mongolia operating unit, partially offset by 7% growth in the ASEAN and South Pacific operating unit, 2% growth in the India and Southwest Asia operating unit and 1% growth in the Japan and South Korea operating unit.
+Added: Unit case volume for Global Ventures increased 1%, driven by 1% growth in juice, value-added dairy and plant-based beverages along with growth in energy drinks, partially offset by a 6% decline in water, sports, coffee and tea.
+Added: Unit case volume for Bottling Investments decreased 7%, driven by the impact of refranchising our bottling operations in the Philippines, Bangladesh and certain territories in India.
Concentrate Sales Volume
−Removed: During the three months ended September 29, 2023, worldwide concentrate sales volume increased 3% and unit case volume increased 2% compared to the three months ended September 30, 2022.
−Removed: During the nine months ended September 29, 2023, worldwide concentrate sales volume and unit case volume both increased 2% compared to the nine months ended September 30, 2022.
+Added: During the three months ended March 29, 2024, worldwide concentrate sales volume declined 2% and unit case volume increased 1% compared to the three months ended March 31, 2023.
Concentrate sales volume growth is calculated based on the amount sold during the reporting periods, which is impacted by the number of days.
1 unchanged sentence
The differences between concentrate sales volume and unit case volume growth rates for the operating segments were primarily due to the timing of concentrate shipments.
−Removed: In addition, the first quarter of 2023 had one less day when compared to the first quarter of 2022, which also contributed to the differences between concentrate sales volume and unit case volume growth rates for the individual operating segments during the nine months ended September 29, 2023.
+Added: In addition, the first quarter of 2024 had one less day when compared to the first quarter of 2023, which also contributed to the differences between concentrate sales volume and unit case volume growth rates on a consolidated basis and for the individual operating segments.
We expect the differences between concentrate sales volume and unit case volume growth rates to lessen over the remainder of the year.
Net Operating Revenues
−Removed: Three Months Ended September 29, 2023 versus Three Months Ended September 30, 2022
−Removed: During the three months ended September 29, 2023, net operating revenues were $11,953 million, compared to $11,063 million during the three months ended September 30, 2022, an increase of $890 million, or 8%.
+Added: During the three months ended March 29, 2024, net operating revenues were $11,300 million, compared to $10,980 million during the three months ended March 31, 2023, an increase of $320 million, or 3%.
The following table illustrates, on a percentage basis, the estimated impact of the factors resulting in the increase (decrease) in net operating revenues on a consolidated basis and for each of our operating segments:
20 unchanged sentences
(1) pricing actions taken by the Company and, where applicable, our bottling partners;
−Removed: (2) changes in the mix of products and packages sold;
+Added: (2) changes in the mix of products and packages
(3) changes in the mix of channels where products were sold;
3 unchanged sentences
Price, product and geographic mix was impacted by a variety of factors and events including, but not limited to, the following:
−Removed: • Europe, Middle East and Africa — favorable pricing initiatives, including inflationary pricing in Türkiye and Zimbabwe, partially offset by unfavorable geographic mix;
−Removed: • Latin America — favorable pricing initiatives, including inflationary pricing in Argentina, along with favorable channel and product mix, partially offset by unfavorable geographic mix;
−Removed: • North America — favorable pricing initiatives and favorable channel, package and product mix;
−Removed: • Asia Pacific — favorable pricing initiatives;
−Removed: • Global Ventures — favorable pricing initiatives and favorable channel mix, primarily due to the favorable performance of Costa in the United Kingdom;
−Removed: • Bottling Investments — favorable pricing initiatives across most markets and favorable product mix, partially offset by unfavorable geographic mix.
+Added: • Europe, Middle East and Africa — favorable pricing initiatives, including inflationary pricing primarily in Nigeria, Türkiye and Zimbabwe, and favorable geographic mix;
+Added: • Latin America — favorable pricing initiatives, including inflationary pricing in Argentina, partially offset by unfavorable category mix;
+Added: • North America — favorable pricing initiatives and favorable category mix, partially offset by unfavorable channel mix;
+Added: • Asia Pacific — favorable pricing initiatives, as well as favorable category, package and geographic mix;
+Added: • Global Ventures — unfavorable product mix, partially offset by favorable pricing initiatives;
+Added: • Bottling Investments — favorable pricing initiatives across most markets and favorable product and package mix, partially offset by unfavorable geographic mix.
Fluctuations in foreign currency exchange rates decreased our consolidated net operating revenues by 6%.
This unfavorable impact was primarily due to a stronger U.S.
−Removed: dollar compared to certain foreign currencies, including the Argentine peso, Zimbabwean dollar, Turkish lira, Nigerian naira and South African rand, which had an unfavorable impact on our Latin America;
−Removed: Europe, Middle East and Africa;
−Removed: and Bottling Investments operating segments.
+Added: dollar compared to certain foreign currencies, including the Argentine peso, Nigerian naira, Zimbabwean dollar and Turkish lira, which had an unfavorable impact on our Latin America and Europe, Middle East and Africa operating segments.
The unfavorable impact of a stronger U.S.
dollar compared to the currencies listed above was partially offset by the impact of a weaker U.S.
−Removed: dollar compared to certain other foreign currencies, including the Mexican peso, which had a favorable impact on our Latin America operating segment.
+Added: dollar compared to certain other foreign currencies, including the Mexican peso, Brazilian real, British pound and euro, which had a favorable impact on our Latin America, Global Ventures and Europe, Middle East and Africa operating segments.
Refer to the heading “Liquidity, Capital Resources and Financial Position — Foreign Exchange” below.
4 unchanged sentences
Refer to the heading “Structural Changes, Acquired Brands and Newly Licensed Brands” above for additional information related to acquisitions and divestitures.
−Removed: Nine Months Ended September 29, 2023 versus Nine Months Ended September 30, 2022
−Removed: During the nine months ended September 29, 2023, net operating revenues were $34,905 million, compared to $32,879 million during the nine months ended September 30, 2022, an increase of $2,026 million, or 6%.
−Removed: The following table illustrates, on a percentage basis, the estimated impact of the factors resulting in the increase (decrease) in net operating revenues on a consolidated basis and for each of our operating segments:
−Removed: Percent Change 2023 versus 2022
−Removed: Price, Product & Geographic Mix Foreign Currency Fluctuations Acquisitions & Divestitures 2
−Removed: Consolidated 1 % 10 % (4) % (1) % 6 %
−Removed: Europe, Middle East & Africa (1) % 18 % (11) % — % 6 %
−Removed: Latin America 4 17 (1) — 20
−Removed: North America — 8 — — 8
−Removed: Asia Pacific (1) 4 (6) 1 (1)
−Removed: Global Ventures 6 2 (1) — 7
−Removed: Bottling Investments 6 9 (8) (8) (1)
−Removed: Certain rows may not add due to rounding.
−Removed: 1 Represents the percent change in net operating revenues attributable to the increase (decrease) in concentrate sales volume for our geographic operating segments and our Global Ventures operating segment (expressed in unit case equivalents) after considering the impact of acquisitions and divestitures, if any.
−Removed: For our Bottling Investments operating segment, this represents the percent change in net operating revenues attributable to the increase (decrease) in unit case volume computed by comparing the total sales (rather than the average daily sales) in each of the corresponding periods after considering the impact of structural changes, if any.
−Removed: Our Bottling Investments operating segment data reflects unit case volume growth for consolidated bottlers only after considering the impact of structural changes, if any.
−Removed: Refer to the heading “Beverage Volume” above.
−Removed: 2 Includes structural changes, if any.
−Removed: Refer to the heading “Structural Changes, Acquired Brands and Newly Licensed Brands” above.
−Removed: Refer to the heading “Beverage Volume” above for additional information related to changes in our unit case and concentrate sales volumes.
−Removed: Price, product and geographic mix had a 10% favorable impact on our consolidated net operating revenues.
−Removed: Price, product and geographic mix was impacted by a variety of factors and events including, but not limited to, the following:
−Removed: • Europe, Middle East and Africa — favorable pricing initiatives, including inflationary pricing in Türkiye and Zimbabwe, partially offset by unfavorable geographic mix;
−Removed: • Latin America — favorable pricing initiatives, including inflationary pricing in Argentina, along with favorable channel and package mix;
−Removed: • North America — favorable pricing initiatives and favorable channel, package and product mix;
−Removed: • Asia Pacific — favorable pricing initiatives, partially offset by unfavorable geographic mix;
−Removed: • Global Ventures — favorable pricing initiatives and favorable channel mix, primarily due to the favorable performance of Costa in the United Kingdom, offset by unfavorable product mix and the impact of no longer receiving COVID-related incentives in the current year;
−Removed: • Bottling Investments — favorable pricing initiatives across most markets and favorable product mix, partially offset by unfavorable geographic mix.
−Removed: Fluctuations in foreign currency exchange rates decreased our consolidated net operating revenues by 4%.
−Removed: This unfavorable impact was primarily due to a stronger U.S.
−Removed: dollar compared to certain foreign currencies, including the Argentine peso, South African rand, Zimbabwean dollar, Turkish lira, Nigerian naira, Japanese yen and Indian rupee, which had an unfavorable impact on our Latin America;
−Removed: Europe, Middle East and Africa;
−Removed: Bottling Investments;
−Removed: and Asia Pacific operating segments.
−Removed: The unfavorable impact of a stronger U.S.
−Removed: dollar compared to the currencies listed above was partially offset by the impact of a weaker U.S.
−Removed: dollar compared to certain other foreign currencies, including the Mexican peso, which had a favorable impact on our Latin America operating segment.
−Removed: Refer to the heading “Liquidity, Capital Resources and Financial Position — Foreign Exchange” below.
Net operating revenue growth rates are impacted by sales volume;
8 unchanged sentences
Management uses this measure in making financial, operating and planning decisions and in evaluating the Company’s performance.
−Removed: Our gross profit margin increased to 61.0% for the three months ended September 29, 2023, compared to 58.7% for the three months ended September 30, 2022.
−Removed: Our gross profit margin increased to 60.2% for the nine months ended September 29, 2023, compared to 59.0% for the nine months ended September 30, 2022.
−Removed: These increases were primarily due to the impact of favorable pricing initiatives, favorable channel and package mix, and structural changes, partially offset by the unfavorable impact of foreign currency exchange rate fluctuations and increased commodity costs.
−Removed: We expect commodity costs to continue to have an unfavorable impact on our gross profit margin during the remainder of 2023, and we will continue to proactively take actions in an effort to mitigate the impact of these incremental costs.
+Added: Our gross profit margin increased to 62.5% for the three months ended March 29, 2024, compared to 60.7% for the three months ended March 31, 2023.
+Added: The increase was primarily due to the impact of favorable pricing initiatives and structural changes, partially offset by the unfavorable impact of foreign currency exchange rate fluctuations and higher commodity costs.
Selling, General and Administrative Expenses
The following table sets forth the components of selling, general and administrative expenses (in millions):
−Removed: Three Months Ended Nine Months Ended
−Removed: September 29,
−Removed: 2023 September 30,
−Removed: 2022 September 29,
−Removed: 2023 September 30,
+Added: Three Months Ended
+Added: 2024 March 31,
Selling and distribution expenses $ 621 $ 654
3 unchanged sentences
Selling, general and administrative expenses $ 3,351 $ 3,185
−Removed: During the three and nine months ended September 29, 2023, selling, general and administrative expenses increased $388 million, or 12%, and increased $724 million, or 8%, respectively, versus the prior year.
−Removed: The increases were primarily due to higher advertising and other marketing expenses as well as higher annual incentive expenses, partially offset by a decrease in stock-based compensation expense.
−Removed: During the three and nine months ended September 29, 2023, foreign currency exchange rate fluctuations decreased selling, general and administrative expenses by 1% and 3%, respectively.
−Removed: As of September 29, 2023, we had $312 million of total unrecognized compensation cost related to nonvested stock-based compensation awards granted under our plans, which we expect to recognize over a weighted-average period of 1.8 years as stock-based compensation expense.
+Added: During the three months ended March 29, 2024, selling, general and administrative expenses increased $166 million, or 5%, versus the prior year.
+Added: The increase was primarily due to higher advertising expenses, partially offset by a decrease in selling and distribution expenses.
+Added: The decrease in selling and distribution expenses was primarily due to the refranchising of our bottling operations in the Philippines, Bangladesh and certain territories in India.
+Added: During the three months ended March 29, 2024, foreign currency exchange rate fluctuations decreased selling, general and administrative expenses by 5%.
+Added: As of March 29, 2024, we had $389 million of total unrecognized compensation cost related to nonvested stock-based compensation awards granted under our plans, which we expect to recognize over a weighted-average period of 1.9 years as stock-based compensation expense.
This expected cost does not include the impact of any future stock-based compensation awards.
1 unchanged sentence
Other operating charges incurred by operating segment and Corporate were as follows (in millions):
−Removed: Three Months Ended Nine Months Ended
−Removed: September 29,
−Removed: 2023 September 30,
−Removed: 2022 September 29,
−Removed: 2023 September 30,
+Added: Three Months Ended
+Added: 2024 March 31,
Europe, Middle East & Africa $ — $ —
6 unchanged sentences
Total $ 1,573 $ 111
−Removed: During the three months ended September 29, 2023, the Company recorded other operating charges of $359 million.
−Removed: These charges consisted of $296 million related to the remeasurement of our contingent consideration liability to fair value in conjunction with our acquisition of fairlife, LLC (“fairlife”) in 2020, $58 million related to the Company’s productivity and reinvestment program, $4 million for the amortization of noncompete agreements related to the BodyArmor acquisition in 2021 and $1 million related to tax litigation expense.
−Removed: During the nine months ended September 29, 2023, the Company recorded other operating charges of $1,808 million.
−Removed: These charges consisted of $1,620 million related to the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition, $109 million related to the Company’s productivity and reinvestment program and $35 million related to the discontinuation of certain manufacturing operations in Asia Pacific.
−Removed: In addition, other operating charges included $26 million related to the restructuring of our North America operating unit, $11 million for the amortization of noncompete agreements related to the BodyArmor acquisition and $7 million related to tax litigation expense.
−Removed: During the three months ended September 30, 2022, the Company recorded other operating charges of $130 million.
−Removed: These charges primarily consisted of $57 million related to the impairment of a trademark in Asia Pacific, $32 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 $15 million related to the BodyArmor acquisition, which included various transition and transaction costs, employee retention costs and the amortization of noncompete agreements.
−Removed: During the nine months ended September 30, 2022, the Company recorded other operating charges of $1,109 million.
−Removed: These charges primarily consisted of $971 million related to the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition, $57 million related to the impairment of a trademark in Asia Pacific and $56 million related to the Company’s productivity and reinvestment program.
−Removed: In addition, other operating charges included $23 million related to the BodyArmor acquisition, which included various transition and transaction costs, employee retention costs and the amortization of noncompete agreements, net of the reimbursement of distributor termination fees recorded in 2021.
+Added: During the three months ended March 29, 2024, the Company recorded other operating charges of $1,573 million.
+Added: 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.
+Added: In addition, other operating charges included $7 million of 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 BodyArmor acquisition and $1 million related to tax litigation expense.
+Added: During the three months ended March 31, 2023, the Company recorded other operating charges of $111 million.
+Added: 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.
+Added: In addition, other operating charges included $4 million for the amortization of noncompete agreements related to the BodyArmor acquisition.
+Added: Refer to Note 2 of Notes to Consolidated Financial Statements for additional information on the refranchising of our bottling operations in certain territories in India.
Refer to Note 9 of Notes to Consolidated Financial Statements for additional information on the tax litigation.
Refer to Note 13 of Notes to Consolidated Financial Statements for additional information on the Company’s restructuring initiatives.
−Removed: Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the fairlife acquisition and on the impairment charge.
+Added: Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the fairlife acquisition and the BodyArmor impairment.
Refer to Note 17 of Notes to Consolidated Financial Statements for the impact these charges had on our operating segments and Corporate.
1 unchanged sentence
Information about our operating income contribution by operating segment and Corporate on a percentage basis is as follows:
−Removed: Three Months Ended Nine Months Ended
−Removed: September 29,
−Removed: 2023 September 30,
−Removed: 2022 September 29,
−Removed: 2023 September 30,
+Added: Three Months Ended
+Added: 2024 March 31,
Europe, Middle East & Africa 50.4 % 33.7 %
10 unchanged sentences
Information about our operating margin on a consolidated basis and for each of our operating segments and Corporate is as follows:
−Removed: Three Months Ended Nine Months Ended
−Removed: September 29,
−Removed: 2023 September 30,
−Removed: 2022 September 29,
−Removed: 2023 September 30,
+Added: Three Months Ended
+Added: 2024 March 31,
Consolidated 18.9 % 30.7 %
7 unchanged sentences
* Calculation is not meaningful.
−Removed: Three Months Ended September 29, 2023 versus Three Months Ended September 30, 2022
−Removed: During the three months ended September 29, 2023, operating income was $3,270 million, compared to $3,088 million during the three months ended September 30, 2022, an increase of $182 million, or 6%.
−Removed: The increase was driven by concentrate sales volume growth of 2% and favorable pricing initiatives.
−Removed: These items were partially offset by higher commodity costs;
−Removed: higher selling, general and administrative expenses;
−Removed: higher other operating charges;
−Removed: and an unfavorable foreign currency exchange rate impact.
−Removed: During the three months ended September 29, 2023, fluctuations in foreign currency exchange rates unfavorably impacted consolidated operating income by 4% due to a stronger U.S.
−Removed: dollar compared to certain foreign currencies, including the Argentine peso, Zimbabwean dollar, and Turkish lira, which had an unfavorable impact on our Latin America and Europe, Middle East and Africa operating segments.
−Removed: The unfavorable impact of a stronger U.S.
−Removed: dollar compared to the currencies listed above was partially offset by the impact of a weaker U.S.
−Removed: dollar compared to certain other foreign currencies, including the Mexican peso, which had a favorable impact on our Latin America operating segment.
−Removed: Refer to the heading “Liquidity, Capital Resources and Financial Position — Foreign Exchange” below.
−Removed: The Europe, Middle East and Africa operating segment reported operating income of $1,136 million and $1,046 million for the three months ended September 29, 2023 and September 30, 2022, respectively.
−Removed: The increase in operating income was primarily driven by an increase in concentrate sales volume of 2% and favorable pricing initiatives, partially offset by higher commodity costs, increased marketing spending and an unfavorable foreign currency exchange rate impact of 13%.
−Removed: Latin America reported operating income of $985 million and $712 million for the three months ended September 29, 2023 and September 30, 2022, respectively.
−Removed: The increase in operating income was primarily driven by concentrate sales volume growth of 5%, favorable pricing initiatives and a favorable foreign currency exchange rate impact of 7%, partially offset by increased marketing spending and higher operating expenses.
−Removed: Operating income for North America for the three months ended September 29, 2023 and September 30, 2022 was $1,276 million and $1,082 million, respectively.
−Removed: The increase in operating income was primarily driven by concentrate sales volume growth of 1% and favorable pricing initiatives, partially offset by increased marketing spending.
−Removed: Asia Pacific’s operating income for the three months ended September 29, 2023 and September 30, 2022 was $491 million and $589 million, respectively.
−Removed: The decrease in operating income was primarily driven by higher commodity costs, increased marketing spending and an unfavorable foreign currency exchange rate impact of 6%, partially offset by concentrate sales volume growth of 1%, favorable pricing initiatives, lower other operating charges and the impact of acquired brands.
−Removed: Global Ventures’ operating income for the three months ended September 29, 2023 and September 30, 2022 was $81 million and $67 million, respectively.
−Removed: The increase in operating income was primarily driven by concentrate sales volume growth of 3%, favorable pricing initiatives and a favorable foreign currency exchange rate impact of 5%, partially offset by higher commodity costs and higher operating expenses.
−Removed: Bottling Investments’ operating income for the three months ended September 29, 2023 and September 30, 2022 was $132 million and $46 million, respectively.
−Removed: The increase in operating income was primarily driven by unit case volume growth of 10% and favorable pricing initiatives, partially offset by higher commodity costs, an unfavorable foreign currency exchange rate impact of 12% and the refranchising of our bottling operations in Vietnam and Cambodia.
−Removed: Corporate’s operating loss for the three months ended September 29, 2023 and September 30, 2022 was $831 million and $454 million, respectively.
−Removed: Operating loss in 2023 increased primarily as a result of higher other operating charges due to the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition.
−Removed: Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the fairlife acquisition.
−Removed: Nine Months Ended September 29, 2023 versus Nine Months Ended September 30, 2022
−Removed: During the nine months ended September 29, 2023, operating income was $9,038 million, compared to $8,834 million during the nine months ended September 30, 2022, an increase of $204 million, or 2%.
−Removed: The increase was driven by concentrate sales volume growth of 1% and favorable pricing initiatives.
−Removed: These items were partially offset by higher commodity costs;
+Added: During the three months ended March 29, 2024, operating income was $2,141 million, compared to $3,367 million during the three months ended March 31, 2023, a decrease of $1,226 million, or 36%.
+Added: The decrease was driven by a decline in concentrate sales volume of 2%;
+Added: higher commodity costs;
higher selling, general and administrative expenses;
higher other operating charges;
−Removed: and an unfavorable foreign currency exchange rate impact.
−Removed: During the nine months ended September 29, 2023, fluctuations in foreign currency exchange rates unfavorably impacted consolidated operating income by 7% due to a stronger U.S.
−Removed: dollar compared to certain foreign currencies, including the Argentine peso, Zimbabwean dollar, Turkish lira, euro, and Japanese yen, which had an unfavorable impact on our Latin America;
+Added: and an unfavorable foreign currency exchange rate impact of 7%.
+Added: These items were partially offset by favorable pricing initiatives.
+Added: During the three months ended March 29, 2024, fluctuations in foreign currency exchange rates unfavorably impacted consolidated operating income by 7% due to a stronger U.S.
+Added: dollar compared to certain foreign currencies, including the Argentine peso, Zimbabwean dollar, Turkish lira, and Japanese yen, which had an unfavorable impact on our Latin America;
Europe, Middle East and Africa;
2 unchanged sentences
dollar compared to the currencies listed above was partially offset by the impact of a weaker U.S.
−Removed: dollar compared to certain other foreign currencies, including the Mexican peso, which had a favorable impact on our Latin America operating segment.
+Added: dollar compared to certain other foreign currencies, including the Mexican peso, Brazilian real, and euro which had a favorable impact on our Latin America and Europe, Middle East and Africa operating segments.
Refer to the heading “Liquidity, Capital Resources and Financial Position — Foreign Exchange” below.
−Removed: The Europe, Middle East and Africa operating segment reported operating income of $3,404 million and $3,344 million for the nine months ended September 29, 2023 and September 30, 2022, respectively.
−Removed: The increase in operating income was primarily driven by favorable pricing initiatives, partially offset by a decline in concentrate sales volume of 1%, higher commodity costs, increased marketing spending, higher operating expenses and an unfavorable foreign currency exchange rate impact of 13%.
−Removed: Latin America reported operating income of $2,635 million and $2,146 million for the nine months ended September 29, 2023 and September 30, 2022, respectively.
−Removed: The increase in operating income was primarily driven by concentrate sales volume growth of 4% and favorable pricing initiatives, partially offset by higher commodity costs, increased marketing spending, higher operating expenses and an unfavorable foreign currency exchange rate impact of 2%.
−Removed: Operating income for North America for the nine months ended September 29, 2023 and September 30, 2022 was $3,525 million and $2,978 million, respectively.
−Removed: The increase in operating income was primarily driven by favorable pricing initiatives, partially offset by higher commodity costs, increased marketing spending, higher operating expenses and higher other operating charges.
−Removed: Asia Pacific’s operating income for the nine months ended September 29, 2023 and September 30, 2022 was $1,727 million and $2,006 million, respectively.
−Removed: The decrease in operating income was primarily driven by a decline in concentrate sales volume of 1%, higher commodity costs, increased marketing spending, higher operating expenses and an unfavorable foreign currency exchange rate impact of 6%, partially offset by favorable pricing initiatives, lower other operating charges and the impact of acquired brands and structural changes.
−Removed: Global Ventures’ operating income for the nine months ended September 29, 2023 and September 30, 2022 was $210 million and $162 million, respectively.
−Removed: The increase in operating income was primarily driven by concentrate sales volume growth of 6%, favorable pricing initiatives and a favorable foreign currency exchange rate impact of 1%, partially offset by higher commodity costs, higher operating expenses and the impact of no longer receiving COVID-related incentives in the current year.
−Removed: Bottling Investments’ operating income for the nine months ended September 29, 2023 and September 30, 2022 was $393 million and $352 million, respectively.
−Removed: The increase in operating income was primarily driven by unit case volume growth of 6% and favorable pricing initiatives, partially offset by higher commodity costs, an unfavorable foreign currency exchange rate impact of 6% and the refranchising of our bottling operations in Vietnam and Cambodia.
−Removed: Corporate’s operating loss for the nine months ended September 29, 2023 and September 30, 2022 was $2,856 million and $2,154 million, respectively.
−Removed: Operating loss in 2023 increased primarily as a result of higher other operating charges due to the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition.
+Added: The Europe, Middle East and Africa operating segment reported operating income of $1,080 million and $1,135 million for the three months ended March 29, 2024 and March 31, 2023, respectively.
+Added: The decrease in operating income was primarily driven by a decline in concentrate sales volume of 6%, higher commodity costs, increased marketing spending, higher operating expenses and an unfavorable foreign currency exchange rate impact of 15%, partially offset by favorable pricing initiatives.
+Added: Latin America reported operating income of $942 million and $853 million for the three months ended March 29, 2024 and March 31, 2023, respectively.
+Added: The increase in operating income was primarily driven by favorable pricing initiatives, partially
+Added: offset by a decline in concentrate sales volume of 1%, higher commodity costs, increased marketing spending, higher operating expenses and an unfavorable foreign currency exchange rate impact of 7%.
+Added: Operating income for North America for the three months ended March 29, 2024 and March 31, 2023 was $445 million and $1,033 million, respectively.
+Added: The decrease in operating income was primarily driven by higher commodity costs, higher operating expenses and higher other operating charges due to the impairment of our BodyArmor trademark, partially offset by favorable pricing initiatives.
+Added: Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the impairment of our BodyArmor trademark.
+Added: Asia Pacific’s operating income for the three months ended March 29, 2024 and March 31, 2023 was $654 million and $563 million, respectively.
+Added: The increase in operating income was primarily driven by favorable pricing initiatives, lower operating expenses and the impact of acquired brands and structural changes, partially offset by a decline in concentrate sales volume of 1%, higher commodity costs and increased marketing spending.
+Added: Global Ventures’ operating income for the three months ended March 29, 2024 and March 31, 2023 was $55 million and $51 million, respectively.
+Added: The increase in operating income was primarily driven by concentrate sales volume growth of 2%, lower commodity costs and a favorable foreign currency exchange rate impact of 3%, partially offset by higher marketing spending and higher operating expenses.
+Added: Bottling Investments’ operating income for the three months ended March 29, 2024 and March 31, 2023 was $156 million and $139 million, respectively.
+Added: The increase in operating income was primarily driven by unit case volume growth of 6% and favorable pricing initiatives, partially offset by higher commodity costs, higher operating expenses, an unfavorable foreign currency exchange rate impact of 3% and the impact of refranchising our bottling operations in the Philippines, Bangladesh and certain territories in India.
+Added: Corporate’s operating loss for the three months ended March 29, 2024 and March 31, 2023 was $1,191 million and $407 million, respectively.
+Added: Operating loss in 2024 increased primarily as a result of higher operating expenses, higher other operating charges due to the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition, and an unfavorable foreign currency exchange rate impact of 1%.
Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the fairlife acquisition.
1 unchanged sentence
Interest Income
−Removed: During the three months ended September 29, 2023, interest income was $248 million, compared to $128 million during the three months ended September 30, 2022, an increase of $120 million, or 95%.
−Removed: During the nine months ended September 29, 2023, interest income was $640 million, compared to $306 million during the nine months ended September 30, 2022, an increase of $334 million, or 109%.
−Removed: The increases were primarily driven by higher average investment balances and higher returns on our Corporate and certain international investments.
+Added: During the three months ended March 29, 2024, interest income was $246 million, compared to $168 million during the three months ended March 31, 2023, an increase of $78 million, or 46%.
+Added: The increase was primarily driven by higher average investment balances and higher returns on our Corporate and certain international investments.
Interest Expense
−Removed: During the three months ended September 29, 2023, interest expense was $368 million, compared to $198 million during the three months ended September 30, 2022, an increase of $170 million, or 87%.
−Removed: During the nine months ended September 29, 2023, interest expense was $1,114 million, compared to $578 million during the nine months ended September 30, 2022, an increase of $536 million, or 93%.
−Removed: The increases were primarily due to the impact of higher interest rates on short-term borrowings and derivative instruments compared to the prior year.
+Added: During the three months ended March 29, 2024, interest expense was $382 million, compared to $372 million during the three months ended March 31, 2023, an increase of $10 million, or 3%.
+Added: The increase was primarily due to the impact of higher interest rates on short-term borrowings and derivative instruments compared to the prior year.
Equity Income (Loss) — Net
−Removed: Three Months Ended September 29, 2023 versus Three Months Ended September 30, 2022
−Removed: During the three months ended September 29, 2023, equity income was $517 million, compared to equity income of $479 million during the three months ended September 30, 2022, an increase of $38 million, or 8%.
−Removed: The increase reflects, among other items, the impact of more favorable operating results reported by some of our equity method investees in the current year, and a favorable foreign currency exchange rate impact.
−Removed: These favorable impacts were partially offset by a $34 million increase in net charges resulting from the Company’s proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees.
−Removed: Nine Months Ended September 29, 2023 versus Nine Months Ended September 30, 2022
−Removed: During the nine months ended September 29, 2023, equity income was $1,330 million, compared to equity income of $1,133 million during the nine months ended September 30, 2022, an increase of $197 million, or 17%.
−Removed: The increase reflects, among other items, the impact of more favorable operating results reported by some of our equity method investees in the current year, and a favorable foreign currency exchange rate impact.
−Removed: These favorable impacts were partially offset by an $88 million increase in net charges resulting from the Company’s proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees.
+Added: During the three months ended March 29, 2024, equity income was $354 million, compared to equity income of $275 million during the three months ended March 31, 2023, an increase of $79 million, or 29%.
+Added: The increase reflects, among other items, the impact of more favorable operating results reported by some of our equity method investees in the current year, a favorable foreign currency exchange rate impact, and a $57 million decrease in net charges resulting from the Company’s proportionate share of significant operating and nonoperating items recorded by certain of our equity method investees.
Other Income (Loss) — Net
−Removed: Three Months Ended September 29, 2023 versus Three Months Ended September 30, 2022
−Removed: During the three months ended September 29, 2023, other income (loss) — net was a loss of $130 million.
−Removed: The Company recognized a net loss of $119 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities and recognized net foreign currency exchange losses of $52 million.
−Removed: Additionally, other income (loss) — net included dividend income of $44 million and income of $13 million related to the non-service cost components of net periodic benefit cost.
−Removed: During the three months ended September 30, 2022, other income (loss) — net was a loss of $53 million.
−Removed: The Company recognized a net loss of $78 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities and recognized net foreign currency exchange losses of $36 million.
−Removed: Additionally, other income (loss) — net included income of $41 million related to the non-service cost components of net periodic benefit income and dividend income of $25 million.
−Removed: Refer to Note 4 of Notes to Consolidated Financial Statements for additional information on equity and debt securities.
−Removed: Refer to Note 14 of Notes to Consolidated Financial Statements for additional information on net periodic benefit cost or income.
−Removed: Refer to Note 17 of Notes to Consolidated Financial Statements for the impact that certain of these items had on our operating segments and Corporate.
−Removed: Nine Months Ended September 29, 2023 versus Nine Months Ended September 30, 2022
−Removed: During the nine months ended September 29, 2023, other income (loss) — net was income of $576 million.
+Added: During the three months ended March 29, 2024, other income (loss) — net was income of $1,513 million.
+Added: 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.
+Added: 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.
+Added: 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, recognized net foreign currency exchange losses of $68 million, and recorded $22 million of costs related to our trade accounts receivable factoring program.
+Added: Other income (loss) — net also included income of $15 million related to the non-service cost components of net periodic benefit cost, dividend income of $25 million and a loss of $7 million related to post-closing adjustments for the refranchising of our bottling operations in Vietnam in 2023.
+Added: During the three months ended March 31, 2023, other income (loss) — net was income of $615 million.
The Company recognized a net gain of $439 million related to the refranchising of our bottling operations in Vietnam.
−Removed: The Company recognized a net gain of $121 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities and recognized net foreign currency exchange losses of $172 million.
−Removed: Additionally, other income (loss) — net included dividend income of $172 million and income of $38 million related to the non-service cost components of net periodic benefit cost.
−Removed: During the nine months ended September 30, 2022, other income (loss) — net was a loss of $509 million.
−Removed: The Company recognized a net loss of $449 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities and recognized net foreign currency exchange losses of $190 million.
−Removed: The Company also recorded an other-than-temporary impairment charge of $96 million related to an equity method investee in Russia and a net loss of $24 million as a result of one of our equity method investees issuing additional shares of its stock.
−Removed: Additionally, other income (loss) — net included income of $178 million related to the non-service cost components of net periodic benefit income and dividend income of $73 million.
−Removed: Refer to Note 2 of Notes to Consolidated Financial Statements for additional information on the refranchising of our bottling operations in Vietnam.
+Added: 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, recognized net foreign currency exchange losses of $24 million, and recorded $11 million of costs related to our trade accounts receivable factoring program.
+Added: Additionally, other income (loss) — net included income of $13 million related to the non-service cost components of net periodic benefit cost and dividend income of $66 million.
+Added: Refer to Note 2 of Notes to Consolidated Financial Statements 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 of Notes to Consolidated Financial Statements for additional information on equity and debt securities.
Refer to Note 14 of Notes to Consolidated Financial Statements for additional information on net periodic benefit cost or income.
−Removed: Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the impairment charge and one of our equity method investees issuing additional shares of its stock.
Refer to Note 17 of Notes to Consolidated Financial Statements for the impact that certain of these items had on our operating segments and Corporate.
−Removed: The Company recorded income taxes of $454 million (12.8% effective tax rate) and $622 million (18.1% effective tax rate) during the three months ended September 29, 2023 and September 30, 2022, respectively.
−Removed: The Company recorded income taxes of $1,753 million (16.7% effective tax rate) and $1,671 million (18.2% effective tax rate) during the nine months ended September 29, 2023 and September 30, 2022, respectively.
−Removed: The Company’s effective tax rates for the three and nine months ended September 29, 2023 and September 30, 2022 vary from the statutory U.S.
+Added: 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.
+Added: 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 of Notes to Consolidated Financial Statements, 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.
−Removed: The Company’s effective tax rates for the three and nine months ended September 29, 2023 included $186 million and $311 million, respectively, of net tax benefits related to various discrete tax items, including return to provision adjustments and the net tax impact of agreed-upon audit issues.
−Removed: The Company’s effective tax rate for the nine months ended September 29, 2023 also included a tax benefit of $90 million related to a change in tax law in a certain foreign jurisdiction.
On November 18, 2020, the U.S.
−Removed: Tax Court (“Tax Court”) issued an opinion (“Opinion”) regarding the Company’s 2015 litigation with the U.S.
−Removed: Internal Revenue Service (“IRS”) involving transfer pricing tax adjustments in which the Tax Court predominantly sided with the IRS.
−Removed: The Company strongly disagrees with the Opinion and intends to vigorously defend its position.
+Added: Tax Court (“Tax Court”) issued an opinion (“Opinion”) regarding the Company’s 2015 litigation with the United States Internal Revenue Service (“IRS”) involving transfer pricing tax adjustments in which it predominantly sided with the IRS.
+Added: 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.
+Added: Commissioner (February 9, 2023) controlled as to the validity of those regulations.
+Added: The Company strongly disagrees with the Opinions and intends to vigorously defend its position.
Refer to Note 9 of Notes to Consolidated Financial Statements for additional information on the tax litigation.
4 unchanged sentences
Many jurisdictions have enacted legislation and adopted policies resulting from the Organization for Economic Co-operation and Development’s (“OECD”) Anti-Base Erosion and Profit Shifting project.
−Removed: The OECD is currently coordinating a project on behalf of the G20 and other participating countries which would grant additional taxing rights over profits earned by multinational enterprises to the countries in which their products are sold and services rendered.
−Removed: Model rules adopted pursuant to this project would establish a global per-country minimum tax of 15%, and the European Union has approved a directive requiring member states to incorporate similar provisions into their respective domestic laws.
+Added: The OECD is currently coordinating a two-pillared project on behalf of the G20 and other participating countries which would grant additional taxing rights over profits earned by multinational enterprises to the countries in which their products are sold and services rendered.
+Added: Pillar One would allow countries to reallocate a portion of profits earned by multinational businesses with an annual global revenue exceeding €20 billion and a profit margin of over 10% to applicable market jurisdictions.
+Added: While the OECD issued draft language for the international implementation of Pillar One in October 2023, both the substantive rules and implementation process remain under discussion at the OECD so the timetable for any implementation remains uncertain.
+Added: In December 2021, the OECD issued Pillar Two model rules which would establish a global per-country minimum tax of 15%, and the European Union has approved a directive requiring member states to incorporate similar provisions into their respective domestic laws.
The directive requires the rules to initially become effective for fiscal years starting on or after December 31, 2023.
−Removed: Other countries have taken similar actions.
−Removed: Significant details around the provisions are still under formulation and the timing around enactment remains uncertain.
−Removed: Our income tax expense could be unfavorably impacted as the legislation becomes effective in countries in which we do business.
−Removed: We will continue to monitor the pending legislation and implementation by individual countries.
+Added: While it is uncertain whether the United States will enact legislation to adopt Pillar Two, numerous countries have enacted legislation, or have indicated their intent to adopt legislation, to implement certain aspects of Pillar Two effective January 1, 2024, with general implementation of the remaining global minimum tax rules by January 1, 2025.
+Added: The OECD and implementing countries are expected to continue to make further revisions to their legislation and release additional guidance.
+Added: The Company will continue to monitor developments to determine any potential impact in the countries in which we operate.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION
8 unchanged sentences
The Company regularly reviews its optimal mix of short-term and long-term debt.
−Removed: The Company’s cash, cash equivalents, short-term investments and marketable securities totaled $15.4 billion as of September 29, 2023.
−Removed: In addition to these funds, our commercial paper program, and our ability to issue long-term debt, we had $4.2 billion in unused backup lines of credit for general corporate purposes as of September 29, 2023.
+Added: The Company’s cash, cash equivalents, short-term investments and marketable securities totaled $16.9 billion as of March 29, 2024.
+Added: In addition to these funds, our commercial paper program, and our ability to issue long-term debt, we had $4.6 billion in unused backup lines of credit for general corporate purposes as of March 29, 2024.
These backup lines of credit expire at various times through 2028.
3 unchanged sentences
Refer to Note 7 of Notes to Consolidated Financial Statements for additional information.
+Added: The Company has a trade accounts receivable factoring program in certain countries.
+Added: Under this program, we can elect to sell trade accounts receivables to unaffiliated financial institutions at a discount.
+Added: In these factoring arrangements, for ease of administration, the Company collects customer payments related to the factored receivables and remits those payments to the financial institutions.
+Added: The Company sold $4,508 million and $2,709 million of trade accounts receivables under this program during the three months ended March 29, 2024 and March 31, 2023, respectively.
+Added: The costs of factoring such receivables were $22 million and $11 million for the three months ended March 29, 2024 and March 31, 2023, respectively.
+Added: The cash received from the financial institutions is reflected within the operating activities section of our consolidated statement of cash flows.
Our current capital allocation priorities are as follows:
2 unchanged sentences
During 2024, we expect to repurchase shares to offset dilution resulting from employee stock-based compensation.
−Removed: We may also use a portion of the proceeds we expect to receive from nonoperating activities to repurchase additional shares.
We are currently in litigation with the IRS for tax years 2007 through 2009.
On November 18, 2020, the Tax Court issued the Opinion in which it predominantly sided with the IRS.
−Removed: however, a decision is still pending and the timing of such decision is not currently known.
−Removed: The Company strongly disagrees with the IRS’ positions and the portions of the Opinion affirming such positions and intends to vigorously defend our positions utilizing every available avenue of appeal.
+Added: 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.
+Added: Commissioner (February 9, 2023) controlled as to the validity of those regulations.
+Added: The Company strongly disagrees with the IRS’ positions and the portions of the Opinions affirming such positions and intends to vigorously defend our positions utilizing every available avenue of appeal.
While the Company believes that it is more likely than not that we will ultimately prevail in this litigation upon appeal, it is possible that all, or some portion of, the adjustments proposed by the IRS and sustained by the Tax Court could ultimately be upheld.
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Additional income tax and interest would continue to accrue until the time any such potential liability, or portion thereof, were to be paid.
−Removed: The Company estimates the impact of the continued application of the Tax Court Methodology for the nine months ended September 29, 2023 would increase the potential aggregate incremental tax and interest liability by approximately $1.2 billion.
−Removed: Once the Tax Court renders a decision, the Company will have 90 days to file a notice of appeal and pay the portion of the potential aggregate incremental tax and interest liability related to the 2007 through 2009 tax years, which we currently estimate to be approximately $5.6 billion (including interest accrued through September 29, 2023), plus any additional interest accrued through the time of payment.
+Added: 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.
+Added: The Company and the IRS are now in the process of agreeing on the tax impacts of the Opinions.
+Added: Subsequent to the completion of this process, the Tax Court will render a decision in the case.
+Added: The Company will have 90 days thereafter to file a notice of appeal to the U.S.
+Added: Court of Appeals for the Eleventh Circuit.
+Added: The IRS can 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).
+Added: 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.
+Added: Some or all of this amount, plus accrued interest, would be refunded if the Company were to prevail on appeal.
Refer to Note 9 of Notes to Consolidated Financial Statements for additional information on the tax litigation.
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Cash Flows from Operating Activities
−Removed: The Company has a trade accounts receivable factoring program in certain countries.
−Removed: Under this program, we can elect to sell trade accounts receivables to unaffiliated financial institutions at a discount.
−Removed: In these factoring arrangements, for ease of administration, the Company collects customer payments related to the factored receivables and remits those payments to the financial institutions.
−Removed: The Company sold $12,793 million and $7,097 million of trade accounts receivables under this program during the nine months ended September 29, 2023 and September 30, 2022, respectively.
−Removed: The costs of factoring such receivables were $58 million and $14 million for the nine months ended September 29, 2023 and September 30, 2022, respectively.
−Removed: The cash received from the financial institutions is reflected within the operating activities section of our consolidated statement of cash flows.
−Removed: Net cash provided by operating activities during the nine months ended September 29, 2023 and September 30, 2022 was $8,929 million and $8,068 million, respectively, an increase of $861 million, or 11%.
−Removed: This increase was primarily driven by increased operating income, the timing of working capital initiatives and lower marketing payments resulting from year-end accruals.
−Removed: These items were partially offset by an unfavorable impact due to foreign currency exchange rate fluctuations, higher tax payments, payments resulting from the buildup of inventory in the prior year to manage potential supply chain disruptions and $167 million of the $275 million milestone payment for fairlife.
+Added: Net cash provided by operating activities during the three months ended March 29, 2024 and March 31, 2023 was $528 million and $160 million, respectively, an increase of $368 million, or 230%.
+Added: This increase was primarily driven by strong cash operating results, a benefit from the trade accounts receivable factoring program in the current year and a dividend payment from an equity method investee in Thailand.
+Added: The increase was also impacted by $167 million of the $275 million milestone payment for fairlife in the prior year.
+Added: These items were partially offset by an unfavorable impact due to foreign currency exchange rate fluctuations, higher tax payments and additional annual incentive payments in the current year due to improved business performance in the prior year.
Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the milestone payment for fairlife.
Cash Flows from Investing Activities
−Removed: Net cash used in investing activities during the nine months ended September 29, 2023 and September 30, 2022 was $2,423 million and $2,189 million, respectively.
+Added: Net cash provided by investing activities during the three months ended March 29, 2024 and March 31, 2023 was $330 million and $117 million, respectively.
Purchases of Investments and Proceeds from Disposals of Investments
−Removed: During the nine months ended September 29, 2023, purchases of investments were $4,588 million and proceeds from disposals of investments were $2,892 million, resulting in a net cash outflow of $1,696 million.
−Removed: During the nine months ended September 30, 2022, purchases of investments were $3,169 million and proceeds from disposals of investments were $3,049 million, resulting in a net cash outflow of $120 million.
+Added: During the three months ended March 29, 2024, purchases of investments were $2,552 million and proceeds from disposals of investments were $444 million, resulting in a net cash outflow of $2,108 million.
+Added: During the three months ended March 31, 2023, purchases of investments were $739 million and proceeds from disposals of investments were $815 million, resulting in a net cash inflow of $76 million.
This activity primarily represents the purchases of, and proceeds from the disposals of, investments in marketable securities and short-term investments that were made as part of the Company’s overall cash management strategy.
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Proceeds from Disposals of Businesses, Equity Method Investments and Nonmarketable Securities
−Removed: During the nine months ended September 29, 2023 and September 30, 2022, proceeds from disposals of businesses, equity method investments and nonmarketable securities were $327 million and $229 million, respectively, which primarily related to sales of our ownership interests in certain equity method investees.
+Added: During the three months ended March 29, 2024 and March 31, 2023, proceeds from disposals of businesses, equity method investments and nonmarketable securities were $2,893 million and $319 million, respectively.
+Added: The activity during the three months ended March 29, 2024 primarily related to sales of our ownership interests in certain equity method investees and the refranchising of certain of our bottling operations.
+Added: The activity during the three months ended March 31, 2023 primarily related to sales of our ownership interests in certain equity method investees.
+Added: Refer to Note 2 of Notes to Consolidated Financial Statements.
Purchases of Property, Plant and Equipment
−Removed: Purchases of property, plant and equipment during the nine months ended September 29, 2023 and September 30, 2022 were $1,001 million and $776 million, respectively.
+Added: Purchases of property, plant and equipment during the three months ended March 29, 2024 and March 31, 2023 were $370 million and $276 million, respectively.
Collateral (Paid) Received Associated with Hedging Activities — Net
−Removed: Collateral paid associated with our hedging activities during the nine months ended September 29, 2023 was $124 million, and collateral paid associated with our hedging activities during the nine months ended September 30, 2022 was $1,449 million.
+Added: Collateral paid associated with our hedging activities during the three months ended March 29, 2024 was $105 million, and collateral received associated with our hedging activities during the three months ended March 31, 2023 was $18 million.
Refer to Note 6 of Notes to Consolidated Financial Statements for additional information on our hedging activities.
Cash Flows from Financing Activities
−Removed: Net cash used in financing activities during the nine months ended September 29, 2023 and September 30, 2022 was $4,085 million and $5,078 million, respectively.
−Removed: Debt Financing
−Removed: Issuances and payments of debt included both short-term and long-term financing activities.
−Removed: During the nine months ended September 29, 2023, the Company had issuances of debt of $6,013 million, which included $5,979 million of issuances of commercial paper and short-term debt with maturities greater than 90 days and long-term debt issuances of $34 million, net of related discounts and issuance costs.
−Removed: The Company made payments of debt of $4,794 million during the nine months ended September 29, 2023, which included $630 million of net payments of commercial paper and short-term debt with maturities of 90 days or less, payments of $3,893 million related to commercial paper and short-term debt with maturities greater than 90 days and payments of long-term debt of $271 million.
+Added: Net cash provided by financing activities during the three months ended March 29, 2024 and March 31, 2023 was $406 million and $2,065 million, respectively.
+Added: Loans, Notes Payable and Long-Term Debt
+Added: During the three months ended March 29, 2024, the Company had issuances of debt of $2,285 million, which included $2,221 million of issuances of commercial paper and short-term debt with maturities greater than 90 days and long-term debt issuances of $64 million, net of related discounts and issuance costs.
+Added: The Company made payments of debt of $1,366 million during the three months ended March 29, 2024, which included $369 million of net payments of commercial paper and short-term debt with maturities of 90 days or less, payments of
+Added: $408 million related to commercial paper and short-term debt with maturities greater than 90 days and payments of long-term debt of $589 million.
Refer to Note 8 of Notes to Consolidated Financial Statements for additional information.
−Removed: During the nine months ended September 30, 2022, the Company had issuances of debt of $4,351 million, which included $2,163 million of net issuances of commercial paper and short-term debt with maturities of 90 days or less, $1,402 million of issuances of commercial paper and short-term debt with maturities greater than 90 days, and long-term debt issuances of $786 million, net of related discounts and issuance costs.
−Removed: The Company made payments of debt of $3,761 million during the nine months ended September 30, 2022, which included payments of $3,022 million related to commercial paper and short-term debt with maturities greater than 90 days and payments of long-term debt of $739 million.
+Added: During the three months ended March 31, 2023, the Company had issuances of debt of $4,074 million, which included $2,725 million of net issuances of commercial paper and short-term debt with maturities of 90 days or less, $1,346 million of issuances of commercial paper and short-term debt with maturities greater than 90 days, and long-term debt issuances of $3 million, net of related discounts and issuance costs.
+Added: The Company made payments of debt of $1,174 million during the three months ended March 31, 2023, which included payments of $1,011 million related to commercial paper and short-term debt with maturities greater than 90 days and payments of long-term debt of $163 million.
On December 31, 2021, the United Kingdom’s Financial Conduct Authority, the governing body responsible for regulating the London Interbank Offered Rate (“LIBOR”), ceased to publish certain LIBOR reference rates.
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dollar overnight, 1-month, 3-month, 6-month and 12-month maturities, continued to be published through June 2023.
−Removed: In preparation for the discontinuation of LIBOR, we have amended our LIBOR-referencing agreements to either reference the Secured Overnight Financing Rate or include mechanics for selecting an alternative rate.
+Added: As a result of the discontinuation of LIBOR, we have amended our LIBOR-referencing agreements to either reference the Secured Overnight Financing Rate or include mechanics for selecting an alternative rate.
Refer to Note 6 of Notes to Consolidated Financial Statements for additional information on our hedging activities.
Issuances of Stock
−Removed: The issuances of stock during the nine months ended September 29, 2023 and September 30, 2022 were related to the exercise of stock options by employees.
−Removed: Share Repurchases
−Removed: During the nine months ended September 29, 2023, the total cash outflow for treasury stock purchases was $1,193 million.
+Added: The issuances of stock during the three months ended March 29, 2024 and March 31, 2023 were related to the exercise of stock options by employees.
+Added: Purchases of Stock for Treasury
+Added: During the three months ended March 29, 2024, the total cash outflow for treasury stock purchases was $702 million.
The Company repurchased 10.4 million shares of common stock under the share repurchase plan authorized by our Board of Directors.
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In addition to shares repurchased under the share repurchase plan, the Company’s treasury stock activity included shares surrendered to the Company to pay the exercise price and/or to satisfy tax withholding obligations in connection with so-called stock swap exercises of employee stock options and/or the vesting of restricted stock issued to employees.
−Removed: The net impact of the Company’s issuances of stock and share repurchases during the nine months ended September 29, 2023 resulted in a net cash outflow of $769 million.
−Removed: During the nine months ended September 30, 2022, the total cash outflow for treasury stock purchases was $1,412 million.
+Added: The net impact of the Company’s issuances of stock and share repurchases during the three months ended March 29, 2024 resulted in a net cash outflow of $412 million.
+Added: During the three months ended March 31, 2023, the total cash outflow for treasury stock purchases was $848 million.
The Company repurchased 12.4 million shares of common stock under the share repurchase plan authorized by our Board of Directors.
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In addition to shares repurchased under the share repurchase plan, the Company’s treasury stock activity included shares surrendered to the Company to pay the exercise price and/or to satisfy tax withholding obligations in connection with so-called stock swap exercises of employee stock options and/or the vesting of restricted stock issued to employees.
−Removed: The net impact of the Company’s issuances of stock and share repurchases during the nine months ended September 30, 2022 resulted in a net cash outflow of $705 million.
−Removed: During the nine months ended September 29, 2023 and September 30, 2022, the Company paid dividends of $4,078 million and $3,910 million, respectively.
−Removed: As a result of the timing of our quarterly reporting periods as well as our dividend payment dates, the Company paid substantially all of the 2022 and 2023 third quarterly dividends in the fourth quarter of each year.
−Removed: Our Board of Directors approved the Company’s regular quarterly dividend of $0.46 per share at its October 2023 meeting.
−Removed: This dividend is payable on December 15, 2023 to shareowners of record as of the close of business on December 1, 2023.
+Added: The net impact of the Company’s issuances of stock and share repurchases during the three months ended March 31, 2023 resulted in a net cash outflow of $619 million.
+Added: During the three months ended March 29, 2024 and March 31, 2023, the Company paid dividends of $99 million and $101 million, respectively.
+Added: As a result of the timing of our quarterly reporting periods as well as our dividend payment dates, the Company paid substantially all of the 2023 and 2024 first quarterly dividends in the second quarter of each year.
+Added: Our Board of Directors approved the Company’s regular quarterly dividend of $0.485 per share at its May 2024 meeting.
+Added: This dividend is payable on July 1, 2024 to shareowners of record as of the close of business on June 14, 2024.
Other Financing Activities
−Removed: During the nine months ended September 29, 2023 and September 30, 2022, the total cash outflow for other financing activities was $457 million and $1,053 million, respectively.
−Removed: The cash outflow during the nine months ended September 29, 2023 included $108 million of the $275 million milestone payment for fairlife.
−Removed: The cash outflow during the nine months ended September 29, 2023 and September 30, 2022 included payments totaling $311 million and $616 million, respectively, of the purchase price of BodyArmor, which included amounts originally held back for indemnification obligations.
−Removed: Additionally, the cash outflow during the nine months ended September 30, 2022 included repayments of collateral related to our hedging programs.
+Added: During the three months ended March 29, 2024 and March 31, 2023, the total cash outflow for other financing activities was $2 million and $115 million, respectively.
+Added: The cash outflow during the three months ended March 31, 2023 included $108 million of the $275 million milestone payment for fairlife.
Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the milestone payment for fairlife.
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Our foreign currency management program is designed to mitigate, over time, a portion of the potentially unfavorable impact of exchange rate fluctuations on our net income.
−Removed: Taking into account the effects of our hedging activities, the impact of fluctuations in foreign currency exchange rates decreased our operating income for the three and nine months ended September 29, 2023 by 4% and 7%, respectively.
+Added: Taking into account the effects of our hedging activities, the impact of fluctuations in foreign currency exchange rates decreased our operating income for the three months ended March 29, 2024 by 7%.
Based on current spot rates and our hedging coverage in place, we expect foreign currency exchange rate fluctuations will have an unfavorable impact on operating income and cash flows from operating activities through the end of the year.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.