What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-01 compared with 2024-10-24 · 146 added, 330 removed, 272 unchanged (64% of the section changed)

11 unchanged sentences

The variability of these factors depends on a number of conditions, and thus our accounting estimates may change from period to period.

These factors are even more difficult to estimate when global financial markets are highly volatile.

These factors are even more difficult to estimate given the highly volatile global financial markets.

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.

In November 2021, the Company acquired the remaining 85% ownership interest in, and now owns 100% of, BodyArmor, which offers a line of sports performance and hydration beverages.

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.

4 unchanged sentences

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.

As of March 28, 2025, the fair value of this trademark approximates its carrying value.

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.

3 unchanged sentences

The volume of sales in the beverage business may be affected by weather conditions.

While our operations are primarily local, we remain subject to global trade dynamics, which may impact certain components of our cost structure as well as the cost structures of our bottlers and our customers and may affect consumer sentiment across our markets.

The Global Ventures operating segment was established primarily to oversee the Company’s ownership of Costa, innocent and doğadan, as well as the fees earned pursuant to distribution coordination agreements between the Company and Monster.

In November 2024, we announced plans to sunset our Global Ventures operating segment to streamline and simplify our operating structure.

Effective January 1, 2025, the results of our Costa (excluding the ready-to-drink business), innocent and doğadan businesses are reported within the Company’s Europe, Middle East and Africa operating segment.

Costa’s ready-to-drink business and the fees related to Monster are reported in the respective geographic operating segments.

Our historical operating segment information disclosed below has been recast to reflect our current organizational structure.

Structural Changes, Acquired Brands and Newly Licensed Brands

22 unchanged sentences

We generally refer to acquisitions and divestitures of bottling operations as “structural changes,” which are a component of acquisitions and divestitures.

Typically, structural changes do not impact the Company’s unit case volume or concentrate sales volume on a consolidated basis or at the geographic operating segment level.

We report unit case volume for all sales of Company beverage products, regardless of our ownership interest in the bottling partner, if any.

Typically, structural changes do not impact the Company’s unit case volume on a consolidated basis or at the geographic operating segment level.

We recognize unit case volume for all sales of Company beverage products, regardless of our ownership interest in the bottling partner, if any.

However, the unit case volume reported by our Bottling Investments operating segment is generally impacted by structural changes because it only includes the unit case volume of our consolidated bottling operations.

Refer to Note 2 of Notes to Consolidated Financial Statements for additional information on the Company’s divestitures.

Refer to Note 2 of Notes to Consolidated Financial Statements for additional information on the Company’s acquisitions and divestitures.

“Acquired brands” refers to brands acquired during the past 12 months.

6 unchanged sentences

We generally do not consider the licensing of a brand to be a structural change.

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 for the nine months ended September 27, 2024.

Additionally, in January 2023, the Company refranchised our bottling operations in Vietnam.

The impact of this refranchising 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 nine months ended September 27, 2024.

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.

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 and nine months ended September 27, 2024.

In January, February and December 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.

Beverage Volume

9 unchanged sentences

The unit case volume numbers used in this report are derived based on estimates received by the Company from its bottling partners and distributors.

Concentrate sales volume represents the amount of concentrates, syrups,

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.

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.

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.

5 unchanged sentences

Three Months Ended

September 27, 2024 Nine Months Ended

September 27, 2024

Unit Cases 1,2,3

Concentrate Sales 4

March 28, 2025

Unit Cases 1,2,3

5 unchanged sentences

Asia Pacific 6 2 6

Global Ventures 1 1 2 2

Bottling Investments (17) 5

1 Bottling Investments operating segment data reflects unit case volume growth for consolidated bottlers only.

2 Geographic and Global Ventures operating segment data reflects unit case volume growth for all bottlers, both consolidated and unconsolidated, and distributors in the applicable geographic areas.

Global Ventures operating segment data also reflects unit case volume growth for Costa retail stores.

2 Geographic operating segment data reflects unit case volume growth for all bottlers, both consolidated and unconsolidated, and distributors in the applicable geographic areas.

Unit case volume growth for Costa retail stores is reflected in the Europe, Middle East and Africa operating segment data.

3 Unit case volume percent change is based on average daily sales.

4 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.

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.

5 After considering the impact of structural changes, unit case volume for Bottling Investments for the three and nine months ended September 27, 2024 declined 1% and grew 5%, respectively.

6 After considering the impact of structural changes, worldwide concentrate sales volume for the three and nine months ended September 27, 2024 declined 2% and grew 1%, respectively.

7 After considering the impact of structural changes, concentrate sales volume for Asia Pacific for the three and nine months ended September 27, 2024 declined 4% and grew 1%, respectively.

As a result, the first quarter of 2025 had two fewer days when compared to the first quarter of 2024, and the fourth quarter of 2025 will have one additional day when compared to the fourth quarter of 2024.

5 After considering the impact of structural changes, unit case volume for Bottling Investments for the three months ended March 28, 2025 grew 1%.

6 After considering the impact of structural changes, concentrate sales volume for Asia Pacific for the three months ended March 28, 2025 grew 8%.

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.

Three Months Ended September 27, 2024 versus Three Months Ended September 29, 2023

Unit case volume in Europe, Middle East and Africa decreased 2%, which included a 3% decline in Trademark Coca-Cola, a 2% decline in sparkling flavors and a 5% decline in juice, value-added dairy and plant-based beverages, partially offset by 1% growth in water, sports, coffee and tea.

The operating segment’s volume performance included a 7% decline in the Eurasia and Middle East operating unit as well as a 3% decline in the Africa operating unit, partially offset by growth of 1% in the Europe operating unit.

Unit case volume in Latin America was even, which included 2% growth in Trademark Coca-Cola, offset by a 3% decline in water, sports, coffee and tea, a 4% decline in sparkling flavors, and a 3% decline in juice, value-added dairy and plant-based

The operating segment’s volume performance included 7% growth in Brazil, offset by a decline of 3% in Mexico and a decline of 8% in Argentina.

Unit case volume in North America was even, which included 2% growth in Trademark Coca-Cola and 1% growth in both juice, value-added dairy and plant-based beverages as well as sparkling flavors, offset by a 6% decline in water, sports, coffee and tea.

Unit case volume in Asia Pacific decreased 2%, which included a 5% decline in both water, sports, coffee and tea as well as juice, value-added dairy and plant-based beverages, partially offset by 1% growth in Trademark Coca-Cola.

Unit case volume in sparkling flavors was even.

The operating segment’s volume performance included a decline in unit case volume of 5% in the Greater China and Mongolia operating unit and a decline of 1% in the ASEAN and South Pacific operating unit, partially offset by growth of 4% in the Japan and South Korea operating unit.

Unit case volume performance in the India and Southwest Asia operating unit was even.

Unit case volume for Global Ventures increased 1%, driven by growth in energy drinks and 3% growth in juice, value-added dairy and plant-based beverages, partially offset by an 8% decline in water, sports, coffee and tea.

Unit case volume for Bottling Investments decreased 31%, driven by the impact of refranchising our bottling operations in the Philippines, Bangladesh and certain territories in India.

Nine Months Ended September 27, 2024 versus Nine Months Ended September 29, 2023

Unit case volume in Europe, Middle East and Africa was even, which included 4% growth in water, sports, coffee and tea, offset by a 1% decline in Trademark Coca-Cola and a 2% decline in juice, value-added dairy and plant-based beverages.

Unit case volume in sparkling flavors was even.

The operating segment reported an increase in unit case volume of 4% in the Africa operating unit, offset by a decline of 4% in the Eurasia and Middle East operating unit.

Unit case volume performance in the Europe operating unit was even.

Unit case volume in Latin America increased 3%, which included 5% growth in Trademark Coca-Cola and 2% growth in water, sports, coffee and tea, partially offset by a 1% decline in both sparkling flavors and juice, value-added dairy and plant-based beverages.

The operating segment’s volume performance included 9% growth in Brazil and 2% growth in Mexico, partially offset by a 17% decline in Argentina.

Unit case volume in North America decreased 1%, which included a 5% decline in water, sports, coffee and tea, partially offset by 3% growth in juice, value-added dairy and plant-based beverages.

Unit case volume in both Trademark Coca-Cola and sparkling flavors was even.

Unit case volume in Asia Pacific was even, which included 3% growth in sparkling flavors and 2% growth in Trademark Coca-Cola, offset by a 6% decline in water, sports, coffee and tea.

Unit case volume in Europe, Middle East and Africa increased 3%, which included 3% growth in both Trademark Coca-Cola and sparkling flavors, 2% growth in water, sports, coffee and tea, as well as growth in energy drinks, partially offset by a 5% decline in juice, value-added dairy and plant-based beverages.

The operating segment’s volume performance included an increase in unit case volume of 11% in the Eurasia and Middle East operating unit, 1% in the Africa operating unit and growth in energy drinks, partially offset by a decline of 1% in the Europe operating unit.

Unit case volume in Latin America was even, which included 1% growth in both Trademark Coca-Cola and water, sports, coffee and tea, as well as growth in energy drinks, offset by a 4% decline in sparkling flavors.

Unit case volume in juice, value-added dairy and plant-based beverages was even.

The operating segment’s volume performance included 7% growth in the India and Southwest Asia operating unit, 3% growth in the ASEAN and South Pacific operating unit and 4% growth in the Japan and South Korea operating unit, offset by a decline in unit case volume of 7% in the Greater China and Mongolia operating unit.

Unit case volume for Global Ventures increased 2%, driven by growth in energy drinks and 1% growth in juice, value-added dairy and plant-based beverages, partially offset by a 7% decline in water, sports, coffee and tea.

The operating segment’s volume performance included 4% growth in Brazil and 17% growth in Argentina, offset by a decline of 3% in Mexico.

Unit case volume in North America decreased 3%, which included a 3% decline in Trademark Coca-Cola, a 6% decline in water, sports, coffee and tea, and a 1% decline in sparkling flavors, partially offset by growth in energy drinks.

Unit case volume in juice, value-added dairy and plant-based beverages was even.

Unit case volume in Asia Pacific increased 6%, which included 6% growth in sparkling flavors, 7% growth in water, sports, coffee and tea, 3% growth in Trademark Coca-Cola, 4% growth in juice, value-added dairy and plant-based beverages and growth in energy drinks.

The operating segment’s volume performance included 16% growth in the India and Southwest Asia operating unit, 6% growth in the Greater China and Mongolia operating unit, 1% growth in the Japan and South Korea operating unit and growth in energy drinks, partially offset by a decline of 2% in the ASEAN and South Pacific operating unit.

Unit case volume for Bottling Investments decreased 17%, driven by the impact of refranchising our bottling operations in the Philippines, Bangladesh and certain territories in India.

Concentrate Sales Volume

During the three months ended September 27, 2024, worldwide concentrate sales volume and unit case volume both decreased 1% compared to the three months ended September 29, 2023.

During the nine months ended September 27, 2024, worldwide concentrate sales volume was even and unit case volume increased 1% compared to the nine months ended September 29, 2023.

During the three months ended March 28, 2025, worldwide concentrate sales volume increased 1% and unit case volume increased 2% compared to the three months ended March 29, 2024.

Concentrate sales volume growth is calculated based on the amount sold during the reporting periods, which is impacted by the number of days.

Conversely, unit case volume growth is calculated based on average daily sales, which is not impacted by the number of days in the reporting periods.

The differences between concentrate sales volume and unit case volume growth rates for the operating segments were primarily due to the timing of concentrate shipments.

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 during the nine months ended September 27, 2024.

The first quarter of 2025 had two fewer days when compared to the first quarter of 2024, which contributed to the differences between concentrate sales volume and unit case volume growth rates on a consolidated basis and for the individual operating segments.

Additionally, the differences between concentrate sales volume and unit case volume growth rates for the operating segments were impacted by the timing of concentrate shipments.

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

Three Months Ended September 27, 2024 versus Three Months Ended September 29, 2023

During the three months ended September 27, 2024, net operating revenues were $11,854 million, compared to $11,953 million during the three months ended September 29, 2023, a decrease of $99 million, or 1%.

During the three months ended March 28, 2025, net operating revenues were $11,129 million, compared to $11,300 million during the three months ended March 29, 2024, a decrease of $171 million, or 2%.

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:

6 unchanged sentences

Asia Pacific 8 (1) (6) (5) (4)

Global Ventures 1 (3) 2 — —

Bottling Investments (1) 3 (3) (18) (20)

Certain rows may not add due to rounding.

1 Represents the percent change in net operating revenues attributable to the increase (decrease) in concentrate sales volume for our geographic operating segments and our Global Ventures operating segment (expressed in unit case equivalents) after considering the impact of acquisitions and divestitures, if any.

1 Represents the percent change in net operating revenues attributable to the increase (decrease) in concentrate sales volume for our geographic operating segments after considering the impact of acquisitions and divestitures, if any.

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.

12 unchanged sentences

Price, product and geographic mix was impacted by a variety of factors and events including, but not limited to, the following:

• Europe, Middle East and Africa — favorable pricing initiatives, including inflationary pricing primarily in Nigeria, Türkiye and Zimbabwe, and favorable geographic mix, partially offset by unfavorable category mix;

• Latin America — favorable pricing initiatives, including inflationary pricing in Argentina;

• North America — favorable pricing initiatives and favorable category mix, partially offset by unfavorable channel mix;

• Asia Pacific — favorable geographic mix and favorable pricing initiatives;

• Global Ventures — unfavorable product mix, partially offset by favorable pricing initiatives;

• Bottling Investments — favorable pricing initiatives across most markets and favorable geographic mix.

• Europe, Middle East and Africa — favorable pricing initiatives, including inflationary pricing, partially offset by unfavorable mix;

• Latin America — favorable pricing initiatives, including inflationary pricing in Argentina, and favorable mix;

• North America — favorable pricing initiatives and favorable mix;

• Asia Pacific — unfavorable mix, partially offset by favorable pricing initiatives;

• Bottling Investments — favorable pricing initiatives, partially offset by unfavorable mix.

Fluctuations in foreign currency exchange rates unfavorably impacted our consolidated net operating revenues by 5%.

This unfavorable impact was primarily due to a stronger U.S.

dollar compared to certain foreign currencies, including the Argentine peso, Mexican peso, Brazilian real, Nigerian naira and Zimbabwean dollar, which had an unfavorable impact on our Latin America;

Europe, Middle East and Africa;

and Bottling Investments operating segments.

The unfavorable impact of a stronger U.S.

dollar compared to the currencies listed above was partially offset by the impact of a weaker U.S.

dollar compared to certain other foreign currencies, including the British pound, Kenyan shilling and South African rand, which had a favorable impact on our Global Ventures;

dollar compared to certain foreign currencies, including the Mexican peso, Brazilian real, Argentine peso, Ethiopian birr, euro, Zimbabwe gold, and Nigerian naira, which had an unfavorable impact on our Latin America;

Europe, Middle East and Africa;

6 unchanged sentences

Refer to the heading “Structural Changes, Acquired Brands and Newly Licensed Brands” above for additional information related to acquisitions and divestitures.

Nine Months Ended September 27, 2024 versus Nine Months Ended September 29, 2023

During the nine months ended September 27, 2024, net operating revenues were $35,517 million, compared to $34,905 million during the nine months ended September 29, 2023, an increase of $612 million, or 2%.

Percent Change 2024 versus 2023

Price, Product & Geographic Mix Foreign Currency Fluctuations Acquisitions & Divestitures 2

Consolidated 1 % 11 % (6) % (4) % 2 %

Europe, Middle East & Africa (3) 19 (17) — (1)

Latin America 4 21 (14) — 11

North America — 10 — — 10

Asia Pacific 1 4 (5) — —

Global Ventures 2 (2) 1 — 1

Bottling Investments 5 6 (2) (28) (20)

Certain rows may not add due to rounding.

Our Bottling Investments operating segment data reflects unit case volume growth for consolidated bottlers only after considering the impact of structural changes, if any.

Refer to the heading “Beverage Volume” above.

2 Includes structural changes, if any.

Refer to the heading “Structural Changes, Acquired Brands and Newly Licensed Brands” above.

Refer to the heading “Beverage Volume” above for additional information related to changes in our unit case and concentrate sales volumes.

Price, product and geographic mix had an 11% favorable impact on our consolidated net operating revenues.

Price, product and geographic mix was impacted by a variety of factors and events including, but not limited to, the following:

• Europe, Middle East and Africa — favorable pricing initiatives, including inflationary pricing primarily in Nigeria, Türkiye and Zimbabwe, and favorable geographic mix;

• Latin America — favorable pricing initiatives, including inflationary pricing in Argentina;

• North America — favorable pricing initiatives and favorable category mix, partially offset by unfavorable channel mix;

• Asia Pacific — favorable pricing initiatives and favorable geographic and package mix;

• Global Ventures — unfavorable product mix, partially offset by favorable pricing initiatives;

• Bottling Investments — favorable pricing initiatives across most markets and favorable package mix.

Fluctuations in foreign currency exchange rates unfavorably impacted our consolidated net operating revenues by 6%.

This unfavorable impact was primarily due to a stronger U.S.

dollar compared to certain foreign currencies, including the Argentine peso, Nigerian naira, Zimbabwean dollar, Turkish lira and Japanese yen, which had an unfavorable impact on our Latin America;

Europe, Middle East and Africa;

Asia Pacific;

and Bottling Investments operating segments.

The unfavorable impact of a stronger U.S.

dollar compared to the currencies listed above was partially offset by the impact of a weaker U.S.

dollar compared to certain other foreign currencies, including the British pound and Mexican peso, which had a favorable impact on our Global Ventures;

Europe, Middle East and Africa;

and Latin America operating segments.

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.

Our gross profit margin decreased to 60.7% for the three months ended September 27, 2024, compared to 61.0% for the three months ended September 29, 2023.

The decrease was primarily due to the unfavorable impact of foreign currency exchange rate fluctuations and higher commodity costs, partially offset by the impact of favorable pricing initiatives and the refranchising of our bottling operations in the Philippines, Bangladesh and certain territories in India.

Our gross profit margin increased to 61.4% for the nine months ended September 27, 2024, compared to 60.2% for the nine months ended September 29, 2023.

Our gross profit margin increased to 62.6% for the three months ended March 28, 2025, compared to 62.5% for the three months ended March 29, 2024.

The increase was primarily due to the impact of favorable pricing initiatives and the refranchising of our bottling operations in the Philippines, Bangladesh and certain territories in India, 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):

Three Months Ended Nine Months Ended

September 27,

2024 September 29,

2023 September 27,

2024 September 29,

Selling and distribution expenses $ 603 $ 694 $ 1,833 $ 2,030

Advertising expenses 1,376 1,526 3,937 3,810

Stock-based compensation expense 67 57 207 177

Other operating expenses 1,590 1,390 4,559 4,156

Selling, general and administrative expenses $ 3,636 $ 3,667 $ 10,536 $ 10,173

During the three months ended September 27, 2024, selling, general and administrative expenses decreased $31 million, or 1%, versus the prior year.

Foreign currency exchange rate fluctuations decreased selling, general and administrative expenses by 2%.

Additionally, the lower advertising expenses were due to the timing of advertising spending and the lower selling and distribution expenses were due to the refranchising of our bottling operations in the Philippines, Bangladesh and certain territories in India.

These decreases were partially offset by an increase in other operating expenses.

During the nine months ended September 27, 2024, selling, general and administrative expenses increased $363 million, or 4%, versus the prior year.

The increase was primarily due to higher advertising expenses and higher other operating expenses, partially offset by a decrease in selling and distribution expenses.

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.

During the nine months ended September 27, 2024, foreign currency exchange rate fluctuations decreased selling, general and administrative expenses by 4%.

As of September 27, 2024, we had $298 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 1.7 years as stock-based compensation expense.

During the three months ended March 28, 2025, selling, general and administrative expenses was $3,234 million, compared to $3,351 million during the three months ended March 29, 2024, a decrease of $117 million, or 4%.

The decrease was primarily due to the refranchising of our bottling operations in the Philippines, Bangladesh and certain territories in India as well as an unfavorable foreign currency exchange rate impact of 3%.

Advertising expenses for the three months ended March 28, 2025 and March 29, 2024 were $1,089 million and $1,161 million, respectively.

As of March 28, 2025, we had $391 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 2.0 years as stock-based compensation expense.

This expected cost does not include the impact of any future stock-based compensation awards.

Other Operating Charges

Other operating charges incurred by operating segment and Corporate were as follows (in millions):

Three Months Ended Nine Months Ended

September 27,

2024 September 29,

2023 September 27,

2024 September 29,

Other operating charges incurred by our operating segments and Corporate were as follows (in millions):

Three Months Ended

2025 March 29,

Europe, Middle East & Africa $ — $ —

2 unchanged sentences

Asia Pacific — —

Global Ventures — — — —

Bottling Investments — —

1 unchanged sentence

Total $ 73 $ 1,573

During the three months ended September 27, 2024, the Company recorded other operating charges of $1,044 million.

These charges consisted of $919 million related to the remeasurement of our contingent consideration liability to fair value in conjunction with our acquisition of fairlife, LLC (“fairlife”) in 2020, $87 million related to the impairment of a trademark in Latin America and $34 million related to the Company’s productivity and reinvestment program.

In addition, other operating charges included $4 million for the amortization of noncompete agreements related to the BodyArmor acquisition and $2 million of transaction costs related to the sale of a portion of our interest in Coca-Cola Consolidated, Inc.

(“Coke Consolidated”).

These charges were partially offset by a net benefit of $2 million related to a revision of management’s estimates for tax litigation expense.

During the nine months ended September 27, 2024, the Company recorded other operating charges of $3,987 million.

These charges consisted of $3,021 million related to the remeasurement of our contingent consideration liability to fair value in conjunction with our acquisition of fairlife, $760 million related to the impairment of our BodyArmor trademark, $102 million related to the Company’s productivity and reinvestment program and $87 million related to the impairment of a trademark in Latin America.

In addition, other operating charges included $11 million for the amortization of noncompete agreements related to the BodyArmor acquisition, $7 million of transaction costs related to the refranchising of our bottling operations in certain territories in India and $2 million of transaction costs related to the sale of a portion of our interest in Coke Consolidated.

These charges were partially offset by a net benefit of $3 million related to a revision of management’s estimates for tax litigation expense.

During the three months ended September 29, 2023, the Company recorded other operating charges of $359 million.

These charges consisted of $296 million related to the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition, $58 million related to the Company’s productivity and reinvestment program, $4 million for the amortization of noncompete agreements related to the BodyArmor acquisition and $1 million related to tax litigation expense.

During the nine months ended September 29, 2023, the Company recorded other operating charges of $1,808 million.

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.

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.

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 and the sale of a portion of our interest in Coke Consolidated.

During the three months ended March 28, 2025, the Company recorded other operating charges of $73 million.

These charges consisted of $47 million related to the remeasurement of our contingent consideration liability to fair value in conjunction with our acquisition of fairlife in 2020, which brought the total liability to $6,173 million and was paid in March 2025.

Additionally, other operating charges included $11 million related to the Company’s productivity and reinvestment program, $9 million related to an indemnification agreement entered into as a part of the refranchising of certain of our bottling operations, $3 million for the amortization of noncompete agreements related to the BodyArmor acquisition and $3 million related to tax litigation expense.

During the three months ended March 29, 2024, the Company recorded other operating charges of $1,573 million.

These charges consisted of $765 million related to the remeasurement of our contingent consideration liability to fair value in conjunction with our acquisition of fairlife, $760 million related to the impairment of our BodyArmor trademark and $36 million related to the Company’s productivity and reinvestment program.

In addition, other operating charges included $7 million for transaction costs related to the refranchising of our bottling operations in certain territories in India, $4 million for the amortization of noncompete agreements related to the BodyArmor acquisition and $1 million related to tax litigation expense.

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.

Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the fairlife acquisition and the impairments.

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:

Three Months Ended Nine Months Ended

September 27,

2024 September 29,

2023 September 27,

2024 September 29,

Three Months Ended

2025 March 29,

Europe, Middle East & Africa 29.1 % 50.5 %

2 unchanged sentences

Asia Pacific 17.1 30.7

Global Ventures 3.1 2.5 3.1 2.3

Bottling Investments 3.2 7.3

5 unchanged sentences

Information about our operating margin on a consolidated basis and for each of our operating segments and Corporate is as follows:

Three Months Ended Nine Months Ended

September 27,

2024 September 29,

2023 September 27,

2024 September 29,

Three Months Ended

2025 March 29,

Consolidated 32.9 % 18.9 %

3 unchanged sentences

Asia Pacific 47.1 51.9

Global Ventures 9.9 10.4 9.8 9.3

Bottling Investments 8.1 8.6

1 unchanged sentence

* Calculation is not meaningful.

Three Months Ended September 27, 2024 versus Three Months Ended September 29, 2023

During the three months ended September 27, 2024, operating income was $2,510 million, compared to $3,270 million during the three months ended September 29, 2023, a decrease of $760 million, or 23%.

The decrease was driven by the impact of refranchising our bottling operations in the Philippines, Bangladesh and certain territories in India;

a decrease in concentrate sales volume of 2%;

higher commodity costs;

higher other operating charges;

and an unfavorable foreign currency exchange rate impact of 15%.

These items were partially offset by favorable pricing initiatives and lower selling, general and administrative expenses.

Fluctuations in foreign currency exchange rates unfavorably impacted consolidated operating income by 15% due to a stronger U.S.

dollar compared to certain foreign currencies, including the Argentine peso and Mexican peso, which had an unfavorable impact on our Latin America operating segment.

Refer to the heading “Liquidity, Capital Resources and Financial Position — Foreign Exchange” below.

The Europe, Middle East and Africa operating segment reported operating income of $977 million and $1,136 million for the three months ended September 27, 2024 and September 29, 2023, respectively.

The decrease in operating income was primarily driven by a decline in concentrate sales volume of 7%, higher commodity costs, higher operating expenses and an unfavorable foreign currency exchange rate impact of 12%, partially offset by favorable pricing initiatives and the timing of marketing spending.

Latin America reported operating income of $933 million and $985 million for the three months ended September 27, 2024 and September 29, 2023, respectively.

The decrease in operating income was primarily due to increased marketing spending, higher

operating expenses, higher other operating charges and an unfavorable foreign currency exchange rate impact of 28%, partially offset by an increase in concentrate sales volume of 2% and favorable pricing initiatives.

Operating income for North America for the three months ended September 27, 2024 and September 29, 2023 was $1,405 million and $1,276 million, respectively.

The increase in operating income was primarily driven by an increase in concentrate sales volume of 1% 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 1%.

Asia Pacific’s operating income for the three months ended September 27, 2024 and September 29, 2023 was $459 million and $491 million, respectively.

The decrease in operating income was primarily driven by a decrease in concentrate sales volume of 4%, higher commodity costs and an unfavorable foreign currency exchange rate impact of 18%, partially offset by favorable pricing initiatives and the timing of marketing spending.

Global Ventures’ operating income for the three months ended September 27, 2024 and September 29, 2023 was $77 million and $81 million, respectively.

The decrease in operating income was primarily driven by higher operating expenses, partially offset by concentrate sales volume growth of 1% and lower commodity costs.

Bottling Investments’ operating income for the three months ended September 27, 2024 and September 29, 2023 was $43 million and $132 million, respectively.

The decrease in operating income was primarily driven by the impact of refranchising our bottling operations in the Philippines, Bangladesh and certain territories in India;

a decline in unit case volume of 1%;

higher commodity costs;

higher operating expenses;

and an unfavorable foreign currency exchange rate impact of 4%, partially offset by favorable pricing initiatives.

Corporate’s operating loss for the three months ended September 27, 2024 and September 29, 2023 was $1,384 million and $831 million, respectively.

Operating loss in 2024 increased as a result of higher other operating charges, primarily due to the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition, partially offset by a favorable foreign currency exchange rate impact of 1%.

Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the fairlife acquisition.

Nine Months Ended September 27, 2024 versus Nine Months Ended September 29, 2023

During the nine months ended September 27, 2024, operating income was $7,283 million, compared to $9,038 million during the nine months ended September 29, 2023, a decrease of $1,755 million, or 19%.

The decrease was driven by the impact of refranchising our bottling operations in the Philippines, Bangladesh and certain territories in India;

During the three months ended March 28, 2025, operating income was $3,659 million, compared to $2,141 million during the three months ended March 29, 2024, an increase of $1,518 million, or 71%.

The increase was driven by an increase in concentrate sales volume of 1%, favorable pricing initiatives and lower other operating charges, partially offset by the impact of refranchising our bottling operations in the Philippines, Bangladesh and certain territories in India;

higher commodity costs;

higher selling, general and administrative expenses;

higher other operating charges;

and an unfavorable foreign currency exchange rate impact of 18%.

These items were partially offset by an increase in concentrate sales volume of 1% and favorable pricing initiatives.

Fluctuations in foreign currency exchange rates unfavorably impacted consolidated operating income by 18% due to a stronger U.S.

dollar compared to certain foreign currencies, including the Argentine peso, Zimbabwean dollar and Turkish lira, which had an unfavorable impact on our Latin America;

Europe, Middle East and Africa;

and Bottling Investments operating segments.

The unfavorable impact of a stronger U.S.

dollar compared to the currencies listed above was partially offset by the impact of a weaker U.S.

dollar compared to certain other foreign currencies, including the Mexican peso and British pound, which had a favorable impact on our Latin America, Global Ventures and Europe, Middle East and Africa operating segments.

dollar compared to certain foreign currencies, including the Mexican peso, Brazilian real, Argentine peso, euro, and Zimbabwe gold, which had an unfavorable 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.

The Europe, Middle East and Africa operating segment reported operating income of $3,309 million and $3,404 million for the nine months ended September 27, 2024 and September 29, 2023, respectively.

The decrease in operating income was primarily driven by a decrease in concentrate sales volume of 3%, higher commodity costs, increased marketing spending, higher operating expenses and an unfavorable foreign currency exchange rate impact of 16%, partially offset by favorable pricing initiatives.

Latin America reported operating income of $2,795 million and $2,635 million for the nine months ended September 27, 2024 and September 29, 2023, respectively.

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, higher other operating charges and an unfavorable foreign currency exchange rate impact of 16%.

Operating income for North America for the nine months ended September 27, 2024 and September 29, 2023 was $3,162 million and $3,525 million, respectively.

The decrease in operating income was primarily driven by higher commodity costs, increased marketing spending, higher operating expenses and higher other operating charges due to the impairment of our BodyArmor trademark, partially offset by favorable pricing initiatives.

The Europe, Middle East and Africa operating segment reported operating income of $1,065 million and $1,080 million for the three months ended March 28, 2025 and March 29, 2024, respectively.

The decrease in operating income was primarily driven by higher commodity costs, increased marketing spending, higher operating expenses and an unfavorable foreign currency exchange rate impact of 9%, partially offset by an increase in concentrate sales volume of 1% and favorable pricing initiatives.

Latin America reported operating income of $904 million and $945 million for the three months ended March 28, 2025 and March 29, 2024, respectively.

The decrease in operating income was primarily driven by a decrease in concentrate sales volume of 3%, higher commodity costs and an unfavorable foreign currency exchange rate impact of 22%, partially offset by favorable pricing initiatives and lower operating expenses.

Operating income for North America for the three months ended March 28, 2025 and March 29, 2024 was $1,341 million and $497 million, respectively.

The increase in operating income was primarily driven by favorable pricing initiatives and lower other operating charges due to the impairment of our BodyArmor trademark in the prior year, partially offset by a decrease in concentrate sales volume of 4%, higher commodity costs, increased marketing spending, higher operating expenses 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 impairment of our BodyArmor trademark.

Asia Pacific’s operating income for the nine months ended September 27, 2024 and September 29, 2023 was $1,760 million and $1,727 million, respectively.

The increase in operating income was primarily driven by concentrate sales volume growth of

1%, favorable pricing initiatives, lower other operating charges and the impact of acquired brands and structural changes, partially offset by higher commodity costs and an unfavorable foreign currency exchange rate impact of 8%.

Global Ventures’ operating income for the nine months ended September 27, 2024 and September 29, 2023 was $224 million and $210 million, respectively.

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 1%, partially offset by higher operating expenses.

Bottling Investments’ operating income for the nine months ended September 27, 2024 and September 29, 2023 was $297 million and $393 million, respectively.

The decrease in operating income was primarily driven by the impact of refranchising our bottling operations in the Philippines, Bangladesh and certain territories in India, higher commodity costs, increased marketing spending, higher operating expenses and an unfavorable foreign currency exchange rate impact of 3%, partially offset by unit case volume growth of 5% and favorable pricing initiatives.

Corporate’s operating loss for the nine months ended September 27, 2024 and September 29, 2023 was $4,264 million and $2,856 million, respectively.

Operating loss in 2024 increased as a result of higher operating expenses and higher other operating charges, primarily due to the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition.

Asia Pacific’s operating income for the three months ended March 28, 2025 and March 29, 2024 was $624 million and $657 million, respectively.

The decrease in operating income was primarily driven by the impact of structural changes, higher operating expenses and an unfavorable foreign currency exchange rate impact of 11%, partially offset by concentrate sales volume growth of 8%, lower commodity costs and lower marketing spending due to timing.

Bottling Investments’ operating income for the three months ended March 28, 2025 and March 29, 2024 was $119 million and $156 million, respectively.

The decrease in operating income was primarily driven by the impact of refranchising our bottling operations in the Philippines, Bangladesh and certain territories in India, higher commodity costs, higher operating expenses and an unfavorable foreign currency exchange rate impact of 4%, partially offset by favorable pricing initiatives.

Corporate’s operating loss for the three months ended March 28, 2025 and March 29, 2024 was $394 million and $1,194 million, respectively.

Operating loss in 2025 decreased primarily as a result of lower operating expenses and lower other operating charges, primarily due to the remeasurement of our contingent consideration liability to fair value in conjunction with the fairlife acquisition.

Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the fairlife acquisition.

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Interest Income

During the three months ended September 27, 2024, interest income was $263 million, compared to $248 million during the three months ended September 29, 2023, an increase of $15 million, or 6%.

During the nine months ended September 27, 2024, interest income was $784 million, compared to $640 million during the nine months ended September 29, 2023, an increase of $144 million, or 23%.

The increases were primarily driven by higher average investment balances on our Corporate and certain international investments.

During the three months ended March 28, 2025, interest income was $180 million, compared to $246 million during the three months ended March 29, 2024, a decrease of $66 million, or 27%.

The decrease was primarily driven by lower average investment balances on our Corporate and certain international investments.

Interest Expense

During the three months ended September 27, 2024, interest expense was $425 million, compared to $368 million during the three months ended September 29, 2023, an increase of $57 million, or 15%.

During the nine months ended September 27, 2024, interest expense was $1,225 million, compared to $1,114 million during the nine months ended September 29, 2023, an increase of $111 million, or 10%.

The increases were primarily due to the impact of higher debt balances and higher interest rates on derivative instruments compared to the prior year.

During the three months ended March 28, 2025, interest expense was $387 million, compared to $382 million during the three months ended March 29, 2024, an increase of $5 million, or 1%.

The increase was primarily due to the impact of higher debt balances, partially offset by lower rates on derivative instruments compared to the prior year.

Equity Income (Loss) — Net

Three Months Ended September 27, 2024 versus Three Months Ended September 29, 2023

During the three months ended September 27, 2024, equity income was $541 million, compared to equity income of $517 million during the three months ended September 29, 2023, an increase of $24 million, or 5%.

The increase reflects, among other items, the impact of more favorable operating results reported by certain of our equity method investees in the current year and a $52 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.

These favorable impacts were partially offset by the impact of the sale of our ownership interests in certain of our equity method investees and an unfavorable foreign currency exchange rate impact.

Nine Months Ended September 27, 2024 versus Nine Months Ended September 29, 2023

During the nine months ended September 27, 2024, equity income was $1,432 million, compared to equity income of $1,330 million during the nine months ended September 29, 2023, an increase of $102 million, or 8%.

The increase reflects, among other items, the impact of more favorable operating results reported by certain of our equity method investees in the current year and an $87 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.

These favorable impacts were partially offset by the impact of the sale of our ownership interests in certain of our equity method investees and an unfavorable foreign currency exchange rate impact.

During the three months ended March 28, 2025, equity income was $351 million, compared to equity income of $354 million during the three months ended March 29, 2024, a decrease of $3 million, or 1%.

Other Income (Loss) — Net

Three Months Ended September 27, 2024 versus Three Months Ended September 29, 2023

During the three months ended September 27, 2024, other income (loss) — net was income of $491 million.

The Company recognized a net gain of $338 million related to the sale of a portion of our interest in Coke Consolidated, a net gain of $103 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, dividend income of $74 million and income of $34 million related to the non-service cost components of net periodic benefit income.

Other income (loss) — net also included $34 million of costs related to our trade accounts receivable factoring program, a charge of $10 million related to post-closing adjustments for the sale of our ownership interest in an equity method investee in Thailand, net foreign currency exchange losses of $7 million and a charge of $4 million related to post-closing adjustments for the refranchising of our bottling operations in the Philippines.

During the three months ended September 29, 2023, other income (loss) — net was a loss of $130 million.

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, recognized net foreign currency exchange losses of $52 million and recorded $27 million of costs related to our trade accounts receivable factoring program.

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.

Refer to Note 2 of Notes to Consolidated Financial Statements for additional information on the sale of a portion of our interest in Coke Consolidated.

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.

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.

Nine Months Ended September 27, 2024 versus Nine Months Ended September 29, 2023

During the nine months ended September 27, 2024, other income (loss) — net was income of $2,006 million.

The Company recognized a net gain of $595 million related to the refranchising of our bottling operations in the Philippines, including the impact of post-closing adjustments, and recognized a net gain of $506 million related to the sale of our ownership interest in an equity method investee in Thailand, including the impact of post-closing adjustments.

The Company also recognized a net gain of $338 million related to the sale of a portion of our interest in Coke Consolidated, a net gain of $331 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities, and a net gain of $290 million related to the refranchising of our bottling operations in certain territories in India, including the impact of post-closing adjustments.

Additionally, the Company recognized dividend income of $147 million and income of $62 million related to the non-service cost components of net periodic benefit cost.

Other income (loss) — net also included net foreign currency exchange losses of $139 million, $85 million of costs related to our trade accounts receivable factoring program, an other-than-temporary impairment charge of $34 million related to an equity method investee in Latin America and a loss of $7 million related to post-closing adjustments for the refranchising of our bottling operations in Vietnam in 2023.

During the nine months ended September 29, 2023, other income (loss) — net was income of $576 million.

The Company recognized a net gain of $439 million related to the refranchising of our bottling operations in Vietnam.

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, recognized net foreign currency exchange losses of $172 million and recorded $58 million of costs related to our trade accounts receivable factoring program.

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.

Refer to Note 2 of Notes to Consolidated Financial Statements for additional information on the refranchising of our bottling operations, the sale of our ownership interest in an equity method investee in Thailand and the sale of a portion of our interest in Coke Consolidated.

During the three months ended March 28, 2025, other income (loss) — net was income of $254 million.

The Company recognized a net gain of $331 million related to the sale of a portion of our ownership interest in CCEP, an impairment charge of $25 million related to an equity method investee in Latin America and a net loss of $19 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities.

Additionally, the Company recognized net foreign currency exchange losses of $16 million, $24 million of costs related to our trade accounts receivable factoring program and dividend income of $55 million.

Other income (loss) — net also included expense of $33 million related to the non-service cost components of net periodic benefit cost, which included

charges of $25 million and $11 million for special termination benefits and a curtailment loss, respectively, related to non-U.S.

pension activity.

During the three months ended March 29, 2024, other income (loss) — net was income of $1,513 million.

The Company recognized net gains of $599 million and $293 million related to the refranchising of our bottling operations in the Philippines and certain territories in India, respectively.

The Company also recognized a net gain of $516 million related to the sale of our ownership interest in an equity method investee in Thailand.

Additionally, the Company recognized a net gain of $178 million related to realized and unrealized gains and losses on equity securities and trading debt securities as well as realized gains and losses on available-for-sale debt securities, recognized net foreign currency exchange losses of $68 million and recorded $22 million of costs related to our trade accounts receivable factoring program.

Other income (loss) — net also included income of $15 million related to the non-service cost components of net periodic benefit cost and dividend income of $25 million.

Refer to Note 2 of Notes to Consolidated Financial Statements for additional information on the sale of our ownership interest in CCEP, the sale of our ownership interest in an equity method investee in Thailand and the refranchising of our bottling operations.

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.

Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the other-than-temporary impairment charge.

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.

The Company recorded income taxes of $530 million (15.7% effective tax rate) and $454 million (12.8% effective tax rate) during the three months ended September 27, 2024 and September 29, 2023, respectively.

The Company recorded income taxes

of $1,844 million (17.9% effective tax rate) and $1,753 million (16.7% effective tax rate) during the nine months ended September 27, 2024 and September 29, 2023, respectively.

The Company’s effective tax rates for the three and nine months ended September 27, 2024 and September 29, 2023 vary from the statutory U.S.

Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the impairment charge.

The Company recorded income taxes of $722 million (17.8% effective tax rate) and $687 million (17.7% effective tax rate) during the three months ended March 28, 2025 and March 29, 2024, respectively.

The Company’s effective tax rates for the three months ended March 28, 2025 and March 29, 2024 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.

The Company’s effective tax rates for the three and nine months ended September 27, 2024 included $45 million of net tax benefits and $15 million of net tax expense, respectively, related to various discrete tax items, including the resolution of certain foreign tax matters, return to provision adjustments and the net tax impact of agreed-upon audit issues.

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.

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.

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.

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.

The Company’s effective tax rate for the three months ended March 28, 2025 included $143 million of net tax benefits related to various discrete tax items, including net interest income of $53 million related to the IRS Tax Litigation Deposit recorded in the line item income taxes in our consolidated statement of income, in accordance with our accounting policy, and a tax benefit of $85 million related to a change in the Company’s indefinite reinvestment assertion for certain foreign entities.

On November 18, 2020, the Tax Court issued the Opinion regarding the Company’s 2015 litigation with the IRS involving transfer pricing tax adjustments in which it predominantly sided with the IRS.

On November 8, 2023, the Tax Court issued a supplemental opinion, siding with the IRS in concluding both that the blocked-income regulations apply to the Company’s operations and that the Tax Court opinion in 3M Co.

Commissioner (February 9, 2023) controlled as to the validity of those regulations.

The Company strongly disagrees with the Opinions and intends to vigorously defend its position.

The Company strongly disagrees with the Opinions and intends to vigorously defend its positions.

Refer to Note 9 of Notes to Consolidated Financial Statements for additional information on the tax litigation.

1 unchanged sentence

This estimate reflects, among other items, our best estimate of operating results and foreign currency exchange rates.

Based on enacted tax laws, as well as our current interpretation of recently issued regulations, the Company’s effective tax rate in 2024 is expected to be 18.8% before considering the potential impact of any significant operating and nonoperating items that may affect our effective tax rate.

Based on current tax laws, including the impact of several countries enacting global minimum tax regulations, the Company’s effective tax rate in 2025 is expected to be approximately 20.8% before considering the potential impact of any significant operating and nonoperating items that may affect our effective tax rate.

This rate does not include the impact of the ongoing tax litigation with the IRS, if the Company were not to prevail.

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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.

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.

The directive requires, with certain limited exceptions, the rules to initially become effective for fiscal years starting on or after December 31, 2023.

Numerous countries have enacted legislation that implemented certain aspects of Pillar Two effective January 1, 2024, while many others have indicated their intent to adopt, or have adopted, legislation effective in

The OECD and implementing countries are expected to continue to make further revisions to their legislation and release additional guidance.

10 unchanged sentences

The Company regularly reviews its optimal mix of short-term and long-term debt.

The Company’s cash, cash equivalents, short-term investments and marketable securities totaled $18.2 billion as of September 27, 2024.

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 September 27, 2024.

The Company’s cash, cash equivalents, short-term investments and marketable securities totaled $13.8 billion as of March 28, 2025.

These backup lines of credit expire at various times through 2030.

Our current payment terms with the majority of our suppliers are 120 days.

Two global financial institutions offer a voluntary supply chain finance program which enables our suppliers, at their sole discretion, to sell their receivables from the Company to these financial institutions on a non-recourse basis at a rate that leverages our credit rating and thus may be more beneficial to them.

Certain financial institutions offer a voluntary supply chain finance program which enables our suppliers, at their sole discretion, to sell their receivables from the Company to these financial institutions on a non-recourse basis at a rate that leverages our credit rating and thus may be more beneficial to them.

We do not believe there is a risk that our payment terms will be shortened in the near future.

3 unchanged sentences

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.

The Company sold $16,015 million and $12,793 million of trade accounts receivables under this program during the nine months ended September 27, 2024 and September 29, 2023, respectively.

The costs of factoring such receivables were $85 million and $58 million for the nine months ended September 27, 2024 and September 29, 2023, respectively.

The Company sold $5,034 million and $4,508 million of trade accounts receivables under this program during the three months ended March 28, 2025 and March 29, 2024, respectively.

The costs of factoring such receivables were $24 million and $22 million for the three months ended March 28, 2025 and March 29, 2024, respectively.

The cash received from the financial institutions is reflected within the operating activities section of our consolidated statement of cash flows.

3 unchanged sentences

During 2025, we expect to repurchase shares to offset dilution resulting from employee stock-based compensation.

During 2025, we expect to pay the remaining milestone payment related to the acquisition of fairlife.

Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the milestone payment for fairlife.

We are currently in litigation with the IRS for tax years 2007 through 2009.

5 unchanged sentences

With applicable interest, the total liability for the 2007 through 2009 tax years resulting from the Tax Court’s decision is $6.0 billion, for which the IRS issued the Company invoices on September 3, 2024.

The Company paid those invoices on September 10, 2024, which stopped interest from accruing on the additional tax due for the 2007 through 2009 tax years.

The Company paid the IRS Tax Litigation Deposit on September 10, 2024, which stopped interest from accruing on the additional tax due for the 2007 through 2009 tax years.

That amount, plus interest earned, would be refunded in full or in part if the Company’s tax positions are ultimately sustained on appeal.

For the three and nine months ended September 27, 2024, the Company recorded net interest income of $14 million related to this tax payment in the line item income taxes in our consolidated statements of income, in accordance with our accounting policy.

The payment of the IRS invoices and the related accrued interest were recorded in the line item other noncurrent assets in our consolidated balance sheet as of September 27, 2024.

For the three months ended March 28, 2025, the Company recorded net interest income of $53 million related to this tax payment in the line item income taxes in our consolidated statement of income, in accordance with our accounting policy.

The payment of the IRS invoices and the related accrued interest were recorded in the line item other noncurrent assets in our consolidated balance sheets as of March 28, 2025 and December 31, 2024.

On October 22, 2024, the Company appealed the Tax Court’s decision to the U.S.

Court of Appeals for the Eleventh Circuit.

The Company filed its principal appellate brief with the U.S.

Court of Appeals for the Eleventh Circuit on March 12, 2025.

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.

In that event, the Company would not receive a refund of the applicable portion or all of the $6.0 billion it paid in response to the IRS invoices issued in September 2024 and the related accrued interest receivable of $14 million as of September 27, 2024.

Additionally, the Company would likely be subject to significant additional liabilities for subsequent years, which could have a material adverse impact on the Company’s financial position, results of operations and cash flows.

Additionally, the Company would likely be subject to significant additional liabilities for subsequent years, which could have a material adverse

impact on the Company’s financial position, results of operations and cash flows.

The Company estimates that the potential aggregate remaining incremental tax and interest liability for the tax years 2010 through 2024 could be approximately $12 billion as of December 31, 2024.

Additional income tax and interest on any unpaid potential liabilities for the 2010 through 2024 tax years would continue to accrue until the time any such potential liability, or portion thereof, were to be paid.

The Company estimates the impact of the continued application of the methodology asserted by the IRS and affirmed in the Opinions for the three and nine months ended September 27, 2024 would increase the potential aggregate incremental tax and interest liability by approximately $400 million and $1.1 billion, respectively.

The Company estimates the impact of the continued application of the methodology asserted by the IRS and affirmed in the Opinions for the three months ended March 28, 2025 would increase the potential aggregate incremental tax and interest liability by approximately $400 million.

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

Net cash provided by operating activities during the nine months ended September 27, 2024 and September 29, 2023 was $2,854 million and $8,929 million, respectively, a decrease of $6,075 million, or 68%.

This decrease was primarily driven by a $6.0 billion tax litigation deposit paid to the IRS, an unfavorable impact due to foreign currency exchange rate fluctuations, higher other tax payments and additional annual incentive payments in the current year due to improved business performance in the prior year.

In addition, the decrease was impacted by the timing of concentrate sales and marketing payments, and the prior year impact of working capital initiatives.

These items were partially offset by strong cash operating results, a dividend payment from an equity method investee in Thailand, payments in the prior year resulting from the buildup of inventory to manage potential supply chain disruptions, and $167 million of the $275 million milestone payment for fairlife in the prior year.

Refer to Note 9 of Notes to Consolidated Financial Statements for additional information on the tax payment to the IRS.

Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the milestone payment for fairlife.

Net cash used in operating activities during the three months ended March 28, 2025 was $5,202 million, and net cash provided by operating activities during the three months ended March 29, 2024 was $528 million, a decrease of $5,730 million.

The decrease was primarily driven by $6,069 million of the $6,173 million final milestone payment for fairlife that was made during the three months ended March 28, 2025, the prior year benefits of both the trade accounts receivable factoring program and the dividend payment from an equity method investee in Thailand, as well as the unfavorable impact due to foreign currency exchange rate fluctuations.

These items were partially offset by strong cash operating results and the timing of changes in working capital.

Cash Flows from Investing Activities

Net cash provided by investing activities during the nine months ended September 27, 2024 was $3,307 million, and net cash used in investing activities during the nine months ended September 29, 2023 was $2,423 million.

Net cash used in investing activities during the three months ended March 28, 2025 was $1,067 million, and net cash provided by investing activities during the three months ended March 29, 2024 was $330 million.

Purchases of Investments and Proceeds from Disposals of Investments

During the nine months ended September 27, 2024, purchases of investments were $4,398 million and proceeds from disposals of investments were $5,125 million, resulting in a net cash inflow of $727 million.

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.

During the three months ended March 28, 2025, purchases of investments were $2,507 million and proceeds from disposals of investments were $1,005 million, resulting in a net cash outflow of $1,502 million.

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.

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

During the nine months ended September 27, 2024 and September 29, 2023, proceeds from disposals of businesses, equity method investments and nonmarketable securities were $3,468 million and $327 million, respectively.

The activity during the nine months ended September 27, 2024 primarily related to sales of our ownership interests in certain equity method investees and the refranchising of certain of our bottling operations.

The activity during the nine months ended September 29, 2023 primarily related to sales of our ownership interests in certain equity method investees.

During the three months ended March 28, 2025 and March 29, 2024, proceeds from disposals of businesses, equity method investments and nonmarketable securities were $748 million and $2,893 million, respectively.

The activity during the three months ended March 28, 2025 primarily related to the sale of a portion of our ownership interest in CCEP.

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.

Refer to Note 2 of Notes to Consolidated Financial Statements.

Purchases of Property, Plant and Equipment

Purchases of property, plant and equipment during the nine months ended September 27, 2024 and September 29, 2023 were $1,261 million and $1,001 million, respectively.

Other Investing Activities

During the nine months ended September 27, 2024 and September 29, 2023, the total cash inflow was $194 million and $70 million, respectively.

The activity during the nine months ended September 27, 2024 included the receipt of a $100 million installment payment on the note receivable related to the sale of our ownership interest in an equity method investee in Pakistan in 2023 and the collection of $69 million of deferred proceeds related to the refranchising of our bottling operations in Vietnam.

Purchases of property, plant and equipment during the three months ended March 28, 2025 and March 29, 2024 were $309 million and $370 million, respectively.

Cash Flows from Financing Activities

Net cash used in financing activities during the nine months ended September 27, 2024 and September 29, 2023 was $1,426 million and $4,085 million, respectively.

Net cash provided by financing activities during the three months ended March 28, 2025 and March 29, 2024 was $3,432 million and $406 million, respectively.

Loans, Notes Payable and Long-Term Debt

During the nine months ended September 27, 2024, the Company had issuances of debt of $11,298 million, which consisted of $3,129 million of issuances of commercial paper and short-term debt with maturities greater than 90 days and long-term debt issuances of $8,169 million, net of related discounts and issuance costs.

During the three months ended March 28, 2025, the Company had issuances of debt of $5,436 million, which consisted of $3,917 million of net issuances of commercial paper and short-term debt with maturities of 90 days or less, $1,033 million of issuances of commercial paper and short-term debt with maturities greater than 90 days and long-term debt issuances of

$486 million, net of related discounts and issuance costs.

Refer to Note 8 of Notes to Consolidated Financial Statements for additional information.

The Company made payments of debt of $7,925 million during the nine months ended September 27, 2024, which consisted of $818 million of net payments of commercial paper and short-term debt with maturities of 90 days or less, payments of $4,829 million related to commercial paper and short-term debt with maturities greater than 90 days and payments of long-term debt of $2,278 million.

During the nine months ended September 29, 2023, the Company had issuances of debt of $6,013 million, which consisted of $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.

The Company made payments of debt of $4,794 million during the nine months ended September 29, 2023, which consisted of $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.

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.

However, other LIBOR reference rates, including U.S.

dollar overnight, 1-month, 3-month, 6-month and 12-month maturities, continued to be published through June 2023.

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.

The Company made payments of debt of $1,599 million during the three months ended March 28, 2025, which consisted of $1,047 million of payments related to commercial paper and short-term debt with maturities greater than 90 days and payments of long-term debt of $552 million.

During the three months ended March 29, 2024, the Company had issuances of debt of $2,285 million, which consisted of $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.

The Company made payments of debt of $1,366 million during the three months ended March 29, 2024, which consisted of $369 million of net payments of commercial paper and short-term debt with maturities of 90 days or less, payments of $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.

Issuances of Stock

The issuances of stock during the nine months ended September 27, 2024 and September 29, 2023 were related to the exercise of stock options by employees.

The issuances of stock during the three months ended March 28, 2025 and March 29, 2024 were related to the exercise of stock options by employees.

Purchases of Stock for Treasury

During the nine months ended September 27, 2024, the total cash outflow for treasury stock purchases was $1,228 million.

During the three months ended March 28, 2025, the total cash outflow for treasury stock purchases was $370 million.

The Company repurchased 4.3 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.

The net impact of the Company’s issuances of stock and share repurchases during the nine months ended September 27, 2024 resulted in a net cash outflow of $511 million.

During the nine months ended September 29, 2023, the total cash outflow for treasury stock purchases was $1,193 million.

The net impact of the Company’s issuances of stock and share repurchases during the three months ended March 28, 2025 resulted in a net cash outflow of $211 million.

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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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.

During the nine months ended September 27, 2024 and September 29, 2023, the Company paid dividends of $4,274 million and $4,078 million, respectively.

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 third quarterly dividends in the fourth quarter of each year.

Our Board of Directors approved the Company’s regular quarterly dividend of $0.485 per share at its October 2024 meeting.

This dividend is payable on December 16, 2024 to shareowners of record as of the close of business on November 29, 2024.

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.

During the three months ended March 28, 2025 and March 29, 2024, the Company paid dividends of $89 million and $99 million, respectively.

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 2024 and 2025 first quarterly dividends in the second quarter of each year.

Our Board of Directors approved the Company’s regular quarterly dividend of $0.51 per share at its May 2025 meeting.

This dividend is payable on July 1, 2025 to shareowners of record as of the close of business on June 13, 2025.

Other Financing Activities

During the nine months ended September 27, 2024 and September 29, 2023, the total cash outflow for other financing activities was $14 million and $457 million, respectively.

The cash outflow during the nine months ended September 29, 2023 included $108 million of the $275 million milestone payment for fairlife.

Additionally, the cash outflow during the nine months ended September 29, 2023 included payments totaling $311 million of the purchase price of BodyArmor, which included amounts originally held back for indemnification obligations.

Refer to Note 16 of Notes to Consolidated Financial Statements for additional information on the milestone payment for fairlife.

During the three months ended March 28, 2025 and March 29, 2024, the total cash outflow for other financing activities was $105 million and $2 million, respectively.

The cash outflow during the three months ended March 28, 2025 included $104 million of the $6,173 million final milestone payment for fairlife.

Foreign Exchange

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Due to the geographic diversity of our operations, weakness in some currencies may be offset by strength in other currencies over time.

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.

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 27, 2024 by 15% and 12%, respectively.

Our hedging activities are designed to mitigate, over time, a portion of the potentially unfavorable impact of exchange rate fluctuations on our net income.

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 28, 2025 by 18%.

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.

What changed 10-Q

Item 2. Management’s Discussion and Analysis