Annual Report Questions Nike URGENT

10 -K 1 a2015123110 -k.htm 10 -K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10 -K  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2015 OR  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001 -02217 (Exact name of Registrant as specified in its charter) DELAWARE (State or other jurisdiction of incorporation or organization) 58 -0628465 (IRS Employer Identification No.) One Coca -Cola Plaza Atlanta, Georgia (Address of principal executive offices) 30313 (Zip Code) Registrant's telephone number, including area code: (404) 676 -2121 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, $0.25 Par Value New York Stock Exchange Floating Rate Notes Due 2017 New York Stock Exchange Floating Rate Notes Due 2019 New York Stock Exchange 1.125% Notes Due 2022 New York Stock Exchange 0.75% Notes Due 2023 New York Stock Exchange 1.875% Notes Due 2026 New York Stock Exchange 1.125% Notes Due 2027 New York Stock Exchange 1.625% Notes Due 2035 New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None ___________________________________________________ Indicate by check mark if the Registrant is a well -known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  No  Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Ex change Act. Yes  No  Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requ irements for the past 90 days. Yes  No  Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, ever y Interactive Data File required to be submitted and posted pursuant to Rule 405 of Re gulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes  No  Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statem ents incorporated by reference in Part III of this Form 10-K or any amendmen t to this Form 10-K.  Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non -accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "sma ller reporting company" in Rule 12b -2 of the Exchange Act. (Check one): Large accelerated filer  Accelerated filer  Non -accelerated filer  Smaller reporting company  (Do not check if a smaller reporting company) Indicate by check mark if the Registrant is a shell company (as defined in Rule 12b -2 of the Exchange Act). Yes  No  The aggregate market value of the common equity held by non -affiliates of the Registrant (assuming for these purposes, but without con ceding, that all executive officers and Directors are "affiliates" of the Registrant) as of July 3, 2015, the last business day of the Registrant's most recently completed second fiscal quarter, was $170,318,198,405 (based on the closing sale price of the Registrant's Common Stock on that date as reported on the New York Stock Exchange). The number of shares outstanding of the Registrant's Common Stock as of February 22, 2016, was 4,329,497,778. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Company's Proxy Statement for the Annual Meeting of Shareowners to be held on April 27, 2016, are incorporated by reference in Part III. Table of Contents Page Forward -Looking Statements 1 Part I Item 1. Business 1 Item 1A. Risk Factors 11 Item 1B. Unresolved Staff Comments 21 Item 2. Properties 22 Item 3. Legal Proceedings 22 Item 4. Mine Safety Disclosures 24 Item X. Executive Officers of the Company 24 Part II Item 5.

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 28 Item 6. Selected Financial Data 31 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 31 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 72 Item 8. Financial Statements and Supplementary Data 74 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 148 Item 9A. Controls and Procedures 148 Item 9B. Other Information 148 Part III Item 10. Directors, Executive Officers and Corporate Governance 148 Item 11. Executive Compensation 148 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 148 Item 13. Certain Relationships and Related Transactions, and Director Independence 149 Item 14. Principal Accountant Fees and Services 149 Part IV Item 15. Exhibits and Financial Statemen t Schedules 149 Signatures 158 Exhibit Index 160 FORWARD -LOOKING STATEMENTS This report contains information that may constitute "forward -looking statements." Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will" and simila r expressions identify forward -looking statements, which generally are not historical in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward -looking. All statements that address operating perform ance, events or developments that we expect or anticipate will occur in the future — including statements relating to volume growth, share of sales and earnings per share growth, and statements expressing general views about future operating results — are forward -looking statements. Management believes that these forward -looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward - looking statements because such statements speak only as of the date when made. Our Company undertakes no obligation to publicly update or revise any forward -looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward -looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our Company's historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in Part I, "Item 1A. Risk Factors" and elsewhere in this report and those described from time to time in our future reports filed with the Securities and Exchange Commission. PART I ITEM 1. BUSINESS In this report, the terms "The Coca -Cola Com pany," "Company," "we," "us" and "our" mean The Coca -Cola Company and all entities included in our consolidated financial statements. General The Coca -Cola Company is the world's largest beverage company. We own or license and market more than 500 nonalcoh olic beverage brands, primarily sparkling beverages but also a variety of still beverages such as waters, enhanced waters, juices and juice drinks, ready -to-drink teas and coffees, and energy and sports drinks. We own and market four of the world's top fiv e nonalcoholic sparkling beverage brands: Coca -Cola, Diet Coke, Fanta and Sprite. Finished beverage products bearing our trademarks, sold in the United States since 1886, are now sold in more than 200 countries. We make our branded beverage products availa ble to consumers throughout the world through our network of Company -owned or -controlled bottling and distribution operations as well as independent bottling partners, distributors, wholesalers and retailers — the world's largest beverage distribution sys tem. Beverages bearing trademarks owned by or licensed to us account for more than 1.9 billion of the approximately 58 billion servings of all beverages consumed worldwide every day. We believe our success depends on our ability to connect with consumers b y providing them with a wide variety of options to meet their desires, needs and lifestyles. Our success further depends on the ability of our people to execute effectively, every day. Our goal is to use our Company's assets — our brands, financial strengt h, unrivaled distribution system, global reach, and the talent and strong commitment of our management and associates — to become more competitive and to accelerate growth in a manner that creates value for our shareowners. We were incorporated in Septembe r 1919 under the laws of the State of Delaware and succeeded to the business of a Georgia corporation with the same name that had been organized in 1892. 1 Operating Segments The Company's operating structure is the basis for our internal financial reporting. As of December 31, 2015 , our operating structure included the following operating segments, the first six of whi ch are sometimes referred to as "operating groups" or "groups": • Eurasia and Africa • Europe • Latin America • North America • Asia Pacific • Bottling Investments • Corporate Except to the extent that differences among operating segments are material to an understanding of our business taken as a whole, the description of our business in this report is presented on a consolidated basis. Effective January 1, 2016, we transferred Coca -Cola Refreshments' ("CCR") bottling and associated supply chain operations in the United States and Canada from our North America segment to our Bottling Investments segment. For financial information about our operating segments and geographic areas, refer to Note 19 of Notes to Consolidated Financial Statements set forth in Part II, "Item 8. Financial Statements and Supplementary Data" of this report, incorporated herein by r eference. For certain risks attendant to our non -U.S. operations, refer to "Item 1A. Risk Factors" below. Products and Brands As used in this report: • "concentrates" means flavoring ingredients and, depending on the product, sweeteners used to prepare syrups or finished beverages and includes powders for purified water products such as Dasani; • "syrups" means beverage ingredients produced by combining concentrates and, depending on the product, sweeteners and added water; • "fountain syrups" means syrups that are sold to fountain retailers, such as restaurants and convenience stores, which use dispensing equipment to mix the syrups with sparkling or still water at the time of purchase to produce finished beverages that are served in cu ps or glasses for immediate consumption; • "sparkling beverages" means nonalcoholic ready -to-drink beverages with carbonation, including carbonated energy drinks and carbonated waters and flavored waters; • "still beverages" means nonalcoholic beverages without carbonation, including noncarbonated waters, flavored waters and enhanced waters, noncarbonated energy drinks, juices and juice drinks, ready -to-drink teas and coffees, and sports drinks; • "Company Trademark Beverages" means beverages bearing our trademarks and certain other beverage products bearing trademarks licensed to us by third parties for which we provide marketing support and from the sale of which we derive economic benefit; and • "Trademark Coca -Cola Beverages" or "Trademark Coca -Cola" means beverages bearing the trademark Coca - Cola or any trademark that includes Coca -Cola or Coke (that is, Coca -Cola, Coca -Cola Life, Diet Coke and Coca -Cola Zero and all their variations and any lin e extensions, including Coca -Cola Light, caffeine free Diet Coke, Cherry Coke, etc.). Likewise, when we use the capitalized word "Trademark" together with the name of one of our other beverage products (such as "Trademark Fanta," "Trademark Sprite" or "Tra demark Simply"), we mean beverages bearing the indicated trademark (that is, Fanta, Sprite or Simply, respectively) and all its variations and line extensions (such that "Trademark Fanta" includes Fanta Orange, Fanta Zero Orange, Fanta Apple, etc.; "Tradem ark Sprite" includes Sprite, Diet Sprite, Sprite Zero, Sprite Light, etc.; and "Trademark Simply" includes Simply Orange, Simply Apple, Simply Grapefruit, etc.). 2 Our Company markets, manufactures and sells: • beverage concentrates, sometimes referred to as "beverage bases," and syrups, including fountain syrups (we refer to this part of our business as our "concentrate business" or "concentrate operations"); and • finished sparkling and still beverages (we refer to this part of our business as our "finished product business" or "finished product operations"). Generally, finished product operations generate higher net operating revenues but lower gross profit margins than concentrate operationsK In our concentrate operations, we typically generate net operating revenues by selling concentrates and syrups to authorized bott ling and canning operations (to which we typically refer as our "bottlers" or our "bottling partners"). Our bottling partners either combine the concentrates with sweeteners (depending on the product), still water and/or sparkling water, or combine the syr ups with sparkling water to produce finished beverages. The finished beverages are packaged in authorized containers — such as cans and refillable and nonrefillable glass and plastic bottles — bearing our trademarks or trademarks licensed to us and are the n sold to retailers directly or, in some cases, through wholesalers or other bottlers. Outside the United States, we also sell concentrates for fountain beverages to our bottling partners who are typically authorized to manufacture fountain syrups, which t hey sell to fountain retailers such as restaurants and convenience stores which use the fountain syrups to produce beverages for immediate consumption, or to authorized fountain wholesalers who in turn sell and distribute the fountain syrups to fountain retailers. Our finished product operations consist primarily of our Company -owned or -controlled bottling, sales and distribution operations, including CCR. Our finished product operations generate net operating revenues by selling sparkling beverages and a variety of still beverages, such as juices and juice drinks, energy and sports drinks, ready - to-drink teas and coffees, and certain water products, to retailers or to distributors, wholesalers and bottling partners who distribute them to retailers. In addi tion, in the United States, we manufacture fountain syrups and sell them to fountain retailers, such as restaurants and convenience stores who use the fountain syrups to produce beverages for immediate consumption, or to authorized fountain wholesalers or bottling partners who resell the fountain syrups to fountain retailers. In the United States, we authorize wholesalers to resell our fountain syrups through nonexclusive appointments that neither restrict us in setting the prices at which we sell fountain syrups to the wholesalers nor restrict the territories in which the wholesalers may resell in the United States. For information about net operating revenues and unit case volume related to our concentrate operations and finished product operations, refer to the heading "Our Business — General" set forth in Part II, "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of this report, which is incorporated herein by reference. We own numerous valuable nonalcoholic b everage brands, including the following: Coca -Cola Minute Maid Aquarius Bonaqua/Bonaqa Diet Coke/Coca -Cola Light Georgia 1 Minute Maid Pulpy 4 Gold Peak 6 Coca -Cola Zero Powerade Dasani FUZE TEA 7 Fanta Del Valle 2 Simply 5 Glacéau Smartwater 8 Sprite Schweppes 3 Glacéau Vitaminwater Ice Dew 9 1 Georgia is primarily a coffee brand sold mainly in Japan. 2 We manufacture, market and sell juices and juice drinks under the Del Valle trademark primarily in Mexico and Brazil through joint ventures with our bottling partners. 3 Schweppes is owned by the Company in certain countries other than the United States. 4 Minute Maid Pulpy is a juice drink brand sold primarily in Asia Pacific. 5 Simply is a juice and juice drink brand sold in North America. 6 Gold Peak is primarily a tea brand sold in North America. 7 FUZE TEA is a brand sold outside of North America. 8 Glacéau Smartwater is a vapor -distilled water with added electrolytes which is sold mainly in North America and Great Britain. 9 Ice Dew is a water brand sold in China. 3 In addition to the beverage brands we own, we also provide marketing support and otherwise participate in the sales of other nonalcoholic beverage brands through licenses, joint ventures and strategic partnerships, i ncluding, but not limited to, the following: • We and certain of our bottlers distribute certain brands of Monster Beverage Corporation ("Monster"), primarily Monster Energy, in designated territories in the United States, Canada and other international territories pursuant to distribution coordination agreements between the Company and Monster and related distribution agreements between Monster and Company -owned or -controlled bottling operations, including CCR, and independent bottling and distribution partnersK • We produce and/or distribute certain other third -party brands, including brands owned by Dr Pepper Snapple Group, Inc. ("DPSG"), which we produce and distribute in designated territories in the United States and Canada pursuant to license agreements with DPSG. • We have a strategic partnership with Aujan Industries Company J.S.C. ("Aujan"), one of the largest independent beverage companies in the Middle East. We own 50 percent of the entity that holds the rights in certain territories to brands produced and distributed by Aujan, including Rani, a juice brand, and Barbican, a flavored malt beverage brandK • We have a joint venture with Nestl S.A. ("Nestl ") named Beverage Partners Worldwide ("BPW") which markets and distributes Nestea products in Europe and Canada under agreements with our bottlers. The Nestea trademark is owned by Soci t des Produits Nestl p.A. Consumer demand determines the optimal menu of Company product offerings. Consumer demand can vary from one locale to another and can change over time within a single locale. Employing our business strategy, and with special focus on core brands, our Company seeks to build its existing brands and, at the same time, to broaden its historical family of brands, products and services in order to create and satisfy consumer demand locale by localeK We measure the volume of Company beverage products sold in two ways: (1F unit cases of finished products and (2F concentrate sales. As used in this report, "unit case" means a unit of measurement equal to 192 U.S. fluid ounces of finished beverage (24 eight -ounce servings), and "u nit case volume" means the number of unit cases (or unit case equivalents) of Company beverage products directly or indirectly sold by the Company and its bottling partners ("Coca -Cola system") to customers. Unit case volume primarily consists of beverage products bearing Company trademarks. Also included in unit case volume are certain products licensed to, or distributed by, our Company, and brands owned by Coca -Cola system bottlers for which our Company provides marketing support and from the sale of whi ch we derive economic benefit. In addition, unit case volume includes sales by certain joint ventures in which the Company has an equity interest. We believe unit case volume is one of the measures of the underlying strength of the Coca -Cola system because it measures trends at the consumer level. The unit case volume numbers used in this report are derived based on estimates received by the Company from its bottling partners and distributors.

Concentrate sales volume represents the amount of concentrates a nd syrups (in all instances expressed in equivalent unit cases) sold by, or used in finished beverages sold by, the Company to its bottling partners or other customers.

Unit case volume and concentrate sales volume growth rates are not necessarily equal du ring any given period. Factors such as seasonality, bottlers' inventory practices, supply point changes, timing of price increases, new product introductions and changes in product mix can impact unit case volume and concentrate sales volume and can create differences between unit case volume and concentrate sales volume growth rates. In addition to the items mentioned above, the impact of unit case volume from certain joint ventures in which the Company has an equity interest but to which the Company does not sell concentrates or syrups may give rise to differences between unit case volume and concentrate sales volume growth rates. Distribution System and Bottler's Agreements We make our branded beverage products available to consumers in more than 200 coun tries through our network of Company -owned or -controlled bottling and distribution operations, independent bottling partners, distributors, wholesalers and retailers — the world's largest beverage distribution system. Consumers enjoy finished beverage pro ducts bearing trademarks owned by or licensed to us at a rate of more than 1.9 billion servings each day. We continue to expand our marketing presence in an effort to increase our unit case volume and net operating revenues in developed, developing and eme rging markets. Our strong and stable system helps us to capture growth by manufacturing, distributing and marketing existing, enhanced and new innovative products to our consumers throughout the world. 4 The Coca -Cola system sold 29.2 billion, 28.6 billion and 28.2 billion unit cases of our products in 2015, 2014 and 2013, respectively. The unit case volume for 2015 and 2014 reflects the impact of the transfer of distribution rights with respect to non -Com pany -owned brands that were previously licensed to us in North American refranchised territories and the discontinuance of certain brands owned by our Russian juice company in connection with the transition in 2014 of our Russian juice operations to an exi sting joint venture with an unconsolidated bottling partner (for information about these structural changes, refer to the heading "Operations Review — Structural Changes, Acquired Brands and Newly Licensed Brands" set forth in Part II, "Item 7. Management' s Discussion and Analysis of Financial Condition and Results of Operations" of this report). The Company eliminated the unit case volume related to these structural changes from the base year, as applicable, when calculating 2015 versus 2014 and 2014 versu s 2013 unit case volume growth rates. Sparkling beverages represented 73 percent, 73 percent and 74 percent of our worldwide unit case volume for 2015, 2014 and 2013, respectively. Trademark Coca -Cola Beverages accounted for 46 percent, 46 percent and 47 p ercent of our worldwide unit case volume for 2015, 2014 and 2013, respectively. In 2015, unit case volume in the United States ("U.S. unit case volume") represented 19 percent of the Company's worldwide unit case volume. Of the U.S. unit case volume for 20 15, 67 percent was attributable to sparkling beverages and 33 percent to still beverages. Trademark Coca -Cola Beverages accounted for 44 percent of U.S. unit case volume for 2015. Unit case volume outside the United States represented 81 percent of the Com pany's worldwide unit case volume for 2015. The countries outside the United States in which our unit case volumes were the largest in 2015 were Mexico, China, Brazil and Japan, which together accounted for 31 percent of our worldwide unit case volume. Of the non - U.S. unit case volume for 2015, 74 percent was attributable to sparkling beverages and 26 percent to still beverages.

Trademark Coca -Cola Beverages accounted for 46 percent of non -U.S. unit case volume for 2015. Our five largest independent bottlin g partners based on unit case volume in 2015 were: • Coca -Cola FEMSAI S.A.B. de C.V. ("Coca -Cola FEMSA"), which has bottling and distribution operations in a substantial portion of central Mexico, including Mexico City, and the southeast and northeast o f Mexico, including the Gulf region; Guatemala City and the surrounding areas in Guatemala; Nicaragua (nationwide); Costa Rica (nationwide); Panama (nationwide); most of Colombia; Venezuela (nationwide); a major part of the states of S o Paulo and Minas Ge rais, the states of Paran and Mato Grosso do Sul and part of the states of Rio de Janeiro and Goiás in Brazil; Buenos Aires and surrounding areas in Argentina; and the Philippines (nationwide); • Coca -Cola HBC AG ("Coca -Cola Hellenic"), which has bottling and distribution operations in Armenia, Austria, Belarus, Bosnia -Herzegovina, Bulgaria, Croatia, Cyprus, the Czech Republic, Estonia, the Former Yugoslav Republic of Macedonia, Greece, Hungary, Italy, Latvi a, Lithuania, Moldova, Montenegro, Nigeria, Northern Ireland, Poland, Republic of Ireland, Romania, Russia, Serbia, Slovakia, Slovenia, Switzerland and Ukraine; • Arca Continental, S.A.B. de C.V., which has bottling and distribution operations in northern and western Mexico, northern Argentina, Ecuador and Peru; • Coca -Cola Enterprises, Inc. ("CCE"), which has bottling and distribution operations in Belgium, continental France, Great Britain, Luxembourg, Monaco, the Netherlands, Norway and Sweden; and • Coca -Cola İçecek A.Ş., which has bottling and distribution operations in Turkey, Pakistan, Kazakhstan, Azerbaijan, Kyrgyzstan, Turkmenistan, Jordan, Iraq and Tajikistan and distribution operations in Syria. In 2015, these five bottling partners combined represented 34 percent of our total unit case volume. Being a bottler does not create a legal partnership or joint venture between us and our bottlers. O ur bottlers are independent contractors and are not our agents. Bottler's Agreements We have separate contracts ("Bottler's Agreements") with each of our bottling partners regarding the manufacture and sale of Company products. Subject to specified terms a nd conditions and certain variations, the Bottler’s Agreements generally authorize the bottlers to prepare specified Company Trademark Beverages, to package the same in authorized containers, and to distribute and sell the same in (but, subject to applicab le local law, generally only in) an identified territory. The bottler is obligated to purchase its entire requirement of concentrates or syrups for the designated Company Trademark Beverages from the Company or Company -authorized suppliers. We typically ag ree to refrain from selling or distributing, or from authorizing third parties to sell or distribute, the designated Company Trademark Beverages throughout the identified territory in the particular authorized containers; however, we typically reserve for ourselves or our designee the right (1) to prepare and package such Company Trademark Beverages in such containers in the territory for sale outside the territory, (2) to prepare, package, distribute and sell such Company Trademark Beverages in the territo ry in any other manner or form (territorial 5 restrictions on bottlers vary in some cases in accordance with local law), and (3) to handle certain key accounts (accounts that cover multiple territories). While under most of our Bottler's Agreements we generally have complete flexibility to determine the price and other terms of sale of the concentrates and syrups we sell to our bottlers, as a practical matter, our Company's ability to exercise its contractual fl exibility to determine the price and other terms of sale of its syrups, concentrates and finished beverages is subject, both outside and within the United States, to competitive market conditions. In addition, in some instances we have agreed or may in the future agree with a bottler with respect to concentrate pricing on a prospective basis for specified time periods. Also, in some markets, in an effort to allow our Company and our bottling partners to grow together through shared value, aligned incentives and the flexibility necessary to meet consumers' always changing needs and tastes, we worked with our bottling partners to develop and implement an incidence -based pricing model for sparkling and still beverages. Under this model, the concentrate price we charge is impacted by a number of factors, including, but not limited to, bottler pricing, the channels in which the finished products are sold and package mix. Under our Bottler's Agreements, in most cases, we have no obligation to provide marketing sup port to the bottlers. Nevertheless, we may, at our discretion, contribute toward bottler expenditures for advertising and marketing. We may also elect to undertake independent or cooperative advertising and marketing activities. As further discussed below, our Bottler's Agreements for territories outside of the United States differ in some respects from our Bottler's Agreements for territories within the United States. Bottler's Agreements Outside the United States The Bottler's Agreements between us and o ur authorized bottlers outside the United States generally are of stated duration, subject in some cases to possible extensions or renewals of the term of the contract. Generally, these contracts are subject to termination by the Company following the occu rrence of certain designated events. These events include defined events of default and certain changes in ownership or control of the bottler. Most of the Bottler's Agreements in force between us and bottlers outside the United States authorize the bottle rs to manufacture and distribute fountain syrups, usually on a nonexclusive basis. In certain parts of the world outside the United States, we have not granted comprehensive beverage production rights to the bottlers. In such instances, we or our authorize d suppliers sell Company Trademark Beverages to the bottlers for sale and distribution throughout the designated territory, often on a nonexclusive basis. Bottler's Agreements Within the United States During the year ended December 31, 2015, our Company -ow ned operations manufactured, sold and distributed 82 percent of our U.S. unit case volume. The discussion below relates to Bottler's Agreements and other contracts for territories in the United States that are not covered by Company -owned operations. In th e United States, certain Bottler's Agreements for Trademark Coca -Cola Beverages and other cola -flavored beverages have no stated expiration date. Our standard contracts for other sparkling beverage flavors and for still beverages are of stated duration, su bject to bottler renewal rights. The Bottler's Agreements in the United States are subject to termination by the Company for nonperformance or upon the occurrence of certain defined events of default that may vary from contract to contract. Under the terms of the Bottler's Agreements, bottlers in the United States generally are not authorized to manufacture fountain syrups. Rather, in the United States, our Company manufactures and sells fountain syrups to authorized fountain wholesalers (including certain authorized bottlers) and some fountain retailers. These wholesalers in turn sell the syrups or deliver them on our behalf to restaurants and other retailers. Certain Bottler's Agreements, entered into prior to 1987, provide for concentrates or syrups for c ertain Trademark Coca -Cola Beverages and other cola -flavored Company Trademark Beverages to be priced pursuant to a stated formula. Bottlers that accounted for 6.9 percent of U.S. unit case volume in 2015 have contracts for certain Trademark Coca -Cola Beve rages and other cola -flavored Company Trademark Beverages with pricing formulas that generally provide for a baseline price. This baseline price may be adjusted periodically by the Company, up to a maximum indexed ceiling price, and is adjusted quarterly b ased upon changes in certain sugar or sweetener prices, as applicable. Bottlers that accounted for 0.3 percent of U.S. unit case volume in 2015 operate under our oldest form of contract, which provides for a fixed price for Coca -Cola syrup used in bottles and cans. This price is subject to quarterly adjustments to reflect changes in the quoted price of sugar. 6 In conjunction with implementing a new beverage partnership model in North America, the Company has entere d into comprehensive beverage agreements ("CBAs") with certain bottling partners pursuant to which we granted to these bottlers certain exclusive territory rights for the distribution, promotion, marketing and sale of Company - owned and licensed beverage pr oducts as defined by the CBA. In some cases, the Company has entered into, or agreed to enter into, manufacturing agreements that authorize certain bottlers that have executed CBAs to manufacture certain beverage products. If a bottler has not entered into a specific manufacturing agreement, then under the CBA for the applicable territories, CCR retains the rights to produce these beverage products and the bottlers will purchase from CCR (or other Company -authorized manufacturing bottlers) substantially all of the related finished products needed in order to service the customers in these territories. Each CBA generally has a term of 10 years and is renewable, in most cases by the bottler and in some cases by the Company, indefinitely for successive addition al terms of 10 years each. Under the CBA, each bottler will make ongoing quarterly payments to CCR based on its gross profit in the refranchised territories throughout the term of the CBA, including renewals, in exchange for the grant of the exclusive terr itory rights. For more information about the North America refranchising transactions, refer to Note 2 of Notes to Consolidated Financial Statements set forth in Part II, "Item 8. Financial Statements and Supplementary Data" of this report. Promotions and Marketing Programs In addition to conducting our own independent advertising and marketing activities, we may provide promotional and marketing services and/or funds to our bottlers. In most cases, we do this on a discretionary basis under the terms of com mitment letters or agreements, even though we are not obligated to do so under the terms of the bottling or distribution agreements between our Company and the bottlers. Also, on a discretionary basis in most cases, our Company may develop and introduce ne w products, packages and equipment to assist the bottlers. Likewise, in many instances, we provide promotional and marketing services and/or funds and/or dispensing equipment and repair services to fountain and bottle/can retailers, typically pursuant to m arketing agreements. The aggregate amount of funds provided by our Company to bottlers, resellers or other customers of our Company's products, principally for participation in promotional and marketing programs, was $6.8 billion in 2015. Investments in Bo ttling Operations Most of our branded beverage products are manufactured, sold and distributed by independent bottling partners.

However, from time to time we acquire or take control of bottling operations, often in underperforming markets where we believe we can use our resources and expertise to improve performance. Owning such a controlling interest enables us to compensate for limited local resources; help focus the bottler's sales and marketing programs; assist in the development of the bottler's busin ess and information systems; and establish an appropriate capital structure for the bottler. In line with our long -term bottling strategy, we may periodically consider options for divesting or reducing our ownership interest in a Company -owned or -controll ed bottler, typically by selling our interest in a particular bottling operation to an independent bottler to improve Coca -Cola system efficiency. When we sell our interest in a bottling operation to one of our other bottling partners in which we have an e quity method investment, our Company continues to participate in the bottler's results of operations through our share of the equity method investee's earnings or losses. In addition, from time to time we make equity investments representing noncontrolling interests in selected bottling operations with the intention of maximizing the strength and efficiency of the Coca -Cola system's production, marketing, sales and distribution capabilities around the world by providing expertise and resources to strengthen those businesses. These investments are intended to result in increases in unit case volume, net revenues and profits at the bottler level, which in turn generate increased concentrate sales for our Company's concentrate and syrup business. When this occu rs, both we and our bottling partners benefit from long -term growth in volume and improved cash flows. When our equity investment provides us with the ability to exercise significant influence over the investee bottler's operating and financial policies, w e account for the investment under the equity method, and we sometimes refer to such a bottler as an "equity method investee bottler" or "equity method investee." Our equity method investee bottlers include Coca -Cola FEMSA, in which as of December 31, 2015 , we had an equity ownership interest of 28 percent, Coca -Cola Hellenic, in which as of December 31, 2015, we had an equity ownership interest of 24 percent, and Coca -Cola İçecek A.Ş., in which as of December 31, 2015, we had an equity ownership interest o f 20 percent. 7 Seasonality Sales of our nonalcoholic ready -to-drink beverages are somewhat seasonal, with the second and third calendar quarters accounting for the highest sales volumes. The volume of sales in the beverage business may be affected by weather conditions. Competition The nonalcoholic beverage segment of the commercial beverage industry is highly competitive, consisting of numerous companies ranging from small or emerging to very large and well established. These include companies that, like our Company, compete in multiple geographic areas, as well as businesses that are primarily regional or local in operation. Competitive products include numerous nonalcoholi c sparkling beverages; various water products, including packaged, flavored and enhanced waters; juices and nectars; fruit drinks and dilutables (including syrups and powdered drinks); coffees and teas; energy and sports and other performance -enhancing dri nks; filtered milk and other dairy -based drinks; functional beverages, including vitamin -based products and relaxation beverages; and various other nonalcoholic beverages. These competitive beverages are sold to consumers in both ready -to-drink and other t han ready -to-drink form. In many of the countries in which we do business, including the United States, PepsiCo, Inc. ("PepsiCo"), is one of our primary competitors. Other significant competitors include, but are not limited to, Nestlé, DPSG, Groupe Danone , Mondelēz International, Inc. ("Mondelēz"), Kraft Foods Group, Inc. ("Kraft"), Suntory Beverage & Food Limited ("Suntory") and Unilever. In certain markets, our competition also includes beer companies. We also compete against numerous regional and local companies and, in some markets, against retailers that have developed their own store or private label beverage brands. Competitive factors impacting our business include, but are not limited to, pricing, advertising, sales promotion programs, product inno vation, increased efficiency in production techniques, the introduction of new packaging, new vending and dispensing equipment, and brand and trademark development and protection. Our competitive strengths include leading brands with high levels of consume r acceptance; a worldwide network of bottlers and distributors of Company products; sophisticated marketing capabilities; and a talented group of dedicated associates. Our competitive challenges include strong competition in all geographic regions and, in many countries, a concentrated retail sector with powerful buyers able to freely choose among Company products, products of competitive beverage suppliers and individual retailers' own store or private label beverage brands. Raw Materials Water is a main i ngredient in substantially all of our products. While historically we have not experienced significant water supply difficulties, water is a limited natural resource in many parts of the world, and our Company recognizes water availability, quality and sus tainability, for both our operations and also the communities where we operate, as one of the key challenges facing our business. In addition to water, the principal raw materials used in our business are nutritive and non -nutritive sweeteners. In the United States, the principal nutritive sweetener is high fructose corn syrup ("HFCS"), which is nutritionally equivalent to sugar. HFCS is available from numerous domestic sources and has historically been sub ject to fluctuations in its market price. The principal nutritive sweetener used by our business outside the United States is sucrose, i.e., table sugar, which is also available from numerous sources and has historically been subject to fluctuations in its market price. Our Company generally has not experienced any difficulties in obtaining its requirements for nutritive sweeteners. In the United States, we purchase HFCS to meet our and our bottlers' requirements with the assistance of Coca -Cola Bottlers' S ales & Services Company LLC ("CCBSS"). CCBSS is a limited liability company that is owned by authorized Coca -Cola bottlers doing business in the United States. Among other things, CCBSS provides procurement services to our Company for the purchase of vario us goods and services in the United States, including HFCS. The principal non -nutritive sweeteners we use in our business are aspartame, acesulfame potassium, saccharin, cyclamate, sucralose and a sweetener derived from the stevia plant. Generally, these r aw materials are readily available from numerous sources. However, our Company purchases aspartame, an important non -nutritive sweetener that is used alone or in combination with other important non -nutritive sweeteners such as saccharin or acesulfame pota ssium in our low - and no -calorie sparkling beverage products, primarily from Ajinomoto Co., Inc. and SinoSweet Co., Ltd., which we consider to be our primary sources for the supply of this product. Our Company generally has not experienced difficulties in obtaining its requirements for non -nutritive sweeteners and we do not anticipate such difficulties in the future. We work closely with Tate & Lyle PLC, our primary sucralose supplier, to maintain continuity of supply. 8 Juice and juice concentrate from various fruits, particularly orange juice and orange juice concentrate, are the principal raw materials for our juice and juice drink products. We source our orange juice and orange juice concentrate primarily from Fl orida and the Southern Hemisphere (particularly Brazil). We work closely with Cutrale Citrus Juices U.S.A., Inc., our primary supplier of orange juice from Florida and Brazil, to ensure an adequate supply of orange juice and orange juice concentrate that m eets our Company's standards. However, the citrus industry is impacted by greening disease and the variability of weather conditions. In particular, freezing weather or hurricanes in central Florida may result in shortages and higher prices for orange juic e and orange juice concentrate throughout the industry. In addition, greening disease is reducing the number of trees and increasing grower costs and prices. Our Company -owned or consolidated bottling and canning operations and our finished product busine ss also purchase various other raw materials including, but not limited to, polyethylene terephthalate ("PET") resin, preforms and bottles; glass and aluminum bottles; aluminum and steel cans; plastic closures; aseptic fiber packaging; labels; cartons; cas es; postmix packaging; and carbon dioxide. We generally purchase these raw materials from multiple suppliers and historically have not experienced significant shortages. Patents, Copyrights, Trade Secrets and Trademarks Our Company owns numerous patents, c opyrights and trade secrets, as well as substantial know -how and technology, which we collectively refer to in this report as "technology." This technology generally relates to our Company's products and the processes for their production; the packages use d for our products; the design and operation of various processes and equipment used in our business; and certain quality assurance software. Some of the technology is licensed to suppliers and other parties. Our sparkling beverage and other beverage formu lae are among the important trade secrets of our Company. We own numerous trademarks that are very important to our business. Depending upon the jurisdiction, trademarks are valid as long as they are in use and/or their registrations are properly maintaine d. Pursuant to our Bottler's Agreements, we authorize our bottlers to use applicable Company trademarks in connection with their manufacture, sale and distribution of Company products. In addition, we grant licenses to third parties from time to time to us e certain of our trademarks in conjunction with certain merchandise and food products. Governmental Regulation Our Company is required to comply, and it is our policy to comply, with all applicable laws in the numerous countries throughout the world in whi ch we do business. In many jurisdictions, compliance with competition laws is of special importance to us, and our operations may come under special scrutiny by competition law authorities due to our competitive position in those jurisdictions. In the Unit ed States, the safety, production, transportation, distribution, advertising, labeling and sale of many of our Company's products and their ingredients are subject to the Federal Food, Drug, and Cosmetic Act; the Federal Trade Commission Act; the Lanham Ac t; state consumer protection laws; competition laws; federal, state and local workplace health and safety laws; various federal, state and local environmental protection laws; and various other federal, state and local statutes and regulations. Outside the United States, our business is subject to numerous similar statutes and regulations, as well as other legal and regulatory requirements. Under a California law known as Proposition 65, if the state has determined that a substance causes cancer or harms human reproduction, a warning must appear on any product sold in the state that exposes consumers to that substance. The state maintains lists of these substances and periodically adds other substances to them. Proposition 65 exposes all food and beverage pr oducers to the possibility of having to provide warnings on their products in California because it does not provide for any generally applicable quantitative threshold below which the presence of a listed substance is exempt from the warning requirement. Consequently, the detection of even a trace amount of a listed substance can subject an affected product to the requirement of a warning label. However, Proposition 65 does not require a warning if the manufacturer of a product can demonstrate that the use of that product exposes consumers to a daily quantity of a listed substance that is: • below a "safe harbor" threshold that may be established; • naturally occurring; • the result of necessary cooking; or • subject to another applicable exemption. 9 One or more substances that are currently on the Proposition 65 lists, or that may be added in the future, can be detected in certain Company products at low levels that are safe. With respect to substances that have not yet been listed under Proposition 65, the Company takes the position that listing is not scientifically justified. With respect to substances that are already listed, the Company takes the position that the presence of each such substance in Company p roducts is subject to an applicable exemption from the warning requirement. The state of California and other parties, however, have in the past taken a contrary position and may do so in the future. Bottlers of our beverage products presently offer and u se nonrefillable recyclable containers in the United States and various other markets around the world. Some of these bottlers also offer and use refillable containers, which are also recyclable. Legal requirements apply in various jurisdictions in the Uni ted States and overseas requiring that deposits or certain ecotaxes or fees be charged in connection with the sale, marketing and use of certain beverage containers. The precise requirements imposed by these measures vary. Other types of statutes and regul ations relating to beverage container deposits, recycling, ecotaxes and/or product stewardship also apply in various jurisdictions in the United States and overseas. We anticipate that additional such legal requirements may be proposed or enacted in the fu ture at local, state and federal levels, both in the United States and elsewhere. All of our Company's facilities and other operations in the United States and elsewhere around the world are subject to various environmental protection statutes and regulati ons, including those relating to the use of water resources and the discharge of wastewater. Our policy is to comply with all such legal requirements. Compliance with these provisions has not had, and we do not expect such compliance to have, any material adverse effect on our Company's capital expenditures, net income or competitive position. Employees As of December 31, 2015 and 2014 , our Company had approximately 123,200 and 129,200 employees, respectively, of which approximately 3,300 and 3,800, respect ively, were employed by consolidated variable interest entities ("VIEs"). The decrease in the total number of employees in 2015 was primarily due to the refranchising of certain territories that were previously managed by CCR to certain of the Company's un consolidated bottling partners. For more information about the North America refranchising transactions, refer to Note 2 of Notes to Consolidated Financial Statements set forth in Part II, "Item 8. Financial Statements and Supplementary Data" of this repor t. As of December 31, 2015 and 2014 , our Company had approximately 60,900 and 65,300 employees, respectively, located in the United States, of which approximately 500 were employed by consolidated VIEs in both years. Our Company, through its divisions and subsidiaries, is a party to numerous collective bargaining agreements. As of December 31, 2015 , approximately 17,500 employees, excluding seasonal hires, in North America were covered by collective bargaining agreemen ts. These agreements typically have terms of three years to five years . We currently expect that we will be able to renegotiate such agreements on satisfactory terms when they expire. The Company believes that its relations with its employees are generall y satisfactory. Securities Exchange Act Reports The Company maintains a website at the following address: www.coca -colacompany.com. The information on the Company's website is not incorporated by reference in this Annual Report on Form 10 -K. We make availa ble on or through our website certain reports and amendments to those reports that we file with or furnish to the Securities and Exchange Commission ("SEC") in accordance with the Securities Exchange Act of 1934, as amended ("Exchange Act"). These include our Annual Reports on Form 10 -K, our Quarterly Reports on Form 10 -Q and our Current Reports on Form 8-K. We make this information available on our website free of charge as soon as reasonably practicable after we electronically file the information with, o r furnish it to, the SEC. 10 ITEM 1A. RISK FACTORS In addition to the other information set forth in this report, you should carefully consider the following factors, which could materially affect our business, financial condition or results of operations in future periods. The risks described below are not the only risks facing our Company. Additional risks not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations in future periods. Obesity concerns may reduce demand for some of our products. There is growing concern among consumers, public health professionals and government agencies about the health problems associated with obesity. In ad dition, some researchers, health advocates and dietary guidelines are suggesting that consumption of sugar -sweetened beverages, including those sweetened with HFCS or other nutritive sweeteners, is a primary cause of increased obesity rates and are encoura ging consumers to reduce or eliminate consumption of such products. Increasing public concern about obesity; possible new or increased taxes on sugar - sweetened beverages by government entities to reduce consumption or to raise revenue; additional governmen tal regulations concerning the marketing, labeling, packaging or sale of our sugar -sweetened beverages; and negative publicity resulting from actual or threatened legal actions against us or other companies in our industry relating to the marketing, labeli ng or sale of sugar -sweetened beverages may reduce demand for or increase the cost of our sugar -sweetened beverages, which could adversely affect our profitability. Water scarcity and poor quality could negatively impact the Coca -Cola system's costs and c apacity. Water is a main ingredient in substantially all of our products, is vital to the production of the agricultural ingredients on which our business relies and is needed in our manufacturing process. It also is critical to the prosperity of the commu nities we serve. Water is a limited resource in many parts of the world, facing unprecedented challenges from overexploitation, increasing demand for food and other consumer and industrial products whose manufacturing processes require water, increasing po llution, poor management and the effects of climate change. As the demand for water continues to increase around the world, and as water becomes scarcer and the quality of available water deteriorates, the Coca -Cola system may incur higher costs or face ca pacity constraints that could adversely affect our profitability or net operating revenues in the long run. If we do not anticipate and address evolving consumer preferences, our business could suffer. Consumer preferences are evolving rapidly as a result of, among other things, health and nutrition considerations, especially the perceived undesirability of artificial ingredients and obesity concerns; shifting consumer demographics, including aging populations; changes in consumer tastes and needs; changes in consumer lifestyles; and competitive product and pricing pressures. If we do not successfully anticipate these changing consumer preferences or fail to address them by timely developing new products or product extensions through innovation, our share of sales, volume growth and overall financial results could be negatively affected. Increased competition and capabilities in the marketplace could hurt our business. The nonalcoholic beverage segment of the commercial beverage industry is highly competitiv e. We compete with major international beverage companies that, like our Company, operate in multiple geographic areas, as well as numerous companies that are primarily regional or local in operation. In many countries in which we do business, including th e United States, PepsiCo is a primary competitor. Other significant competitors include, but are not limited to, Nestlé, DPSG, Groupe Danone, Mondelēz, Kraft, Suntory and Unilever. In certain markets, our competition also includes major beer companies. Our beverage products also compete against private label brands developed by retailers, some of which are Coca -Cola system customers. Our ability to gain or maintain share of sales in the global market or in various local markets may be limited as a result of actions by competitors. If we do not continue to strengthen our capabilities in marketing and innovation to maintain our brand loyalty and market share while we selectively expand into other product categories in the nonalcoholic beverage segment of the commercial beverage industry, our business could be negatively affected. Product safety and quality concerns could negatively affect our business. Our success depends in large part on our ability to maintain consumer confidence in the safety and quality of all of our products. We have rigorous product safety and quality standards which we expect our operations as well as our bottling partners to meet. However, we cannot assure you that despite our strong commitment to product safety and quality we or all of our bottling partners will always meet these standards, particularly as we expand our product offerings through innovation or acquisitions of products, such as value -added dairy products, that are beyond our traditional range of beverage products. If we or our bottling partners fail to comply with applicable product safety and quality standards and beverage products taken to the market are or become contaminated or adulterated, we may be required to conduct costly product recalls and may become subject to p roduct liability claims and negative publicity, which could cause our business to suffer. 11 Public debate and concern about perceived negative health consequences of certain ingredients, such as non - nutritive swe eteners and biotechnology -derived substances, and of other substances present in our beverage products or packaging materials, may reduce demand for our beverage products. Public debate and concern about perceived negative health consequences of certain in gredients in our beverage products, such as non -nutritive sweeteners and biotechnology -derived substances; substances that are present in our beverage products naturally or that occur as a result of the manufacturing process, such as 4 -methylimidazole, or 4- MEI (a chemical compound that is formed during the manufacturing of certain types of caramel coloring used in cola -type beverages); or substances used in packaging materials, such as bisphenol A, or BPA (an odorless, tasteless food -grade chemical commonl y used in the food and beverage industries as a component in the coating of the interior of cans), may affect consumers' preferences and cause them to shift away from some of our beverage products. In addition, increasing public concern about actual or per ceived health consequences of the presence of such ingredients or substances in our beverage products or in packaging materials, whether or not justified, could result in additional governmental regulations concerning the marketing and labeling of our beve rages, negative publicity, or actual or threatened legal actions against us or other companies in our industry, all of which could damage the reputation of, and may reduce demand for, our beverage products. If we are not successful in our innovation activi ties, our results may be negatively affected. Achieving our business growth objectives depends in part on our ability to successfully develop, introduce and market new beverage products. The success of our innovation activities in turn depends on our abili ty to correctly anticipate customer and consumer acceptance and trends, obtain, maintain and enforce necessary intellectual property protections and avoid infringing on the intellectual property rights of others. If we are not successful in our innovation activities, we may not be able to achieve our growth objectives, which may have a negative impact on our financial results. Increased demand for food products and decreased agricultural productivity may negatively affect our business. We and our bottling partners use a number of key ingredients that are derived from agricultural commodities such as sugarcane, corn, sugar beets, citrus, coffee and tea in the manufacture and packaging of our beverage products.

Increased demand for food products and decreased agricultural productivity in certain regions of the world as a result of changing weather patterns may limit the availability or increase the cost of such agricultural commodities and could impact the food security of communities around the world. If we a re unable to implement programs focused on economic opportunity and environmental sustainability to address these agricultural challenges and fail to make a strategic impact on food security through joint efforts with bottlers, farmers, communities, suppli ers and key partners, as well as through our increased and continued investment in sustainable agriculture, the affordability of our products and ultimately our business and results of operations could be negatively impacted. Changes in the retail landscape or the loss of key retail or foodservice customers could adversely affect our financial performance. Our industry is being affected by the trend toward consolidation in the retail channel, particularly in Europe and the United State s. Larger retailers may seek lower prices from us and our bottling partners, may demand increased marketing or promotional expenditures, and may be more likely to use their distribution networks to introduce and develop private label brands, any of which c ould negatively affect the Coca -Cola system's profitability. In addition, in developed markets, discounters and value stores, as well as the volume of transactions through e -commerce, are growing at a rapid pace. The nonalcoholic beverage retail landscape is also very dynamic and constantly evolving in emerging and developing markets, where modern trade is growing at a faster pace than traditional trade outlets. If we are unable to successfully adapt to the rapidly changing environment and retail landscape, our share of sales, volume growth and overall financial results could be negatively affected. In addition, our success depends in part on our ability to maintain good relationships with key retail and foodservice customers. The loss of one or more of our key retail or foodservice customers could have an adverse effect on our financial performance. If we are unable to expand our operations in emerging and developing markets, our growth rate could be negatively affected. Our success depends in part on our ability to grow our business in emerging and developing markets, which in turn depends on economic and political conditions in those markets and on our ability to acquire bottling operations in those markets or to form strate gic business alliances with local bottlers and to make necessary infrastructure enhancements to production facilities, distribution networks, sales equipment and technology. Moreover, the supply of our products in emerging and developing markets must match consumers’ demand for those products. Due to product price, limited purchasing power and cultural differences, there can be no assurance that our products will be accepted in any particular emerging or developing market. 12 Fluctuations in foreign currency exchange rates could have a material adverse effect on our financial results. We earn revenues, pay expenses, own assets and incur liabilities in countries using currencies other than the U.S.

dollar, including the euro, the Japanese yen, the Brazilian real and the Mexican peso. In 2015, we used 71 functional currencies in addition to the U.S. dollar and derived $23.9 billion of net operating revenues from operations outside the United States. Because our consoli dated financial statements are presented in U.S. dollars, we must translate revenues, income and expenses, as well as assets and liabilities, into U.S. dollars at exchange rates in effect during or at the end of each reporting period. Therefore, increases or decreases in the value of the U.S. dollar against other currencies affect our net operating revenues, operating income and the value of balance sheet items denominated in foreign currencies. Because of the geographic diversity of our operations, weaknes ses in some currencies might be offset by strengths in others over time. We also use derivative financial instruments to further reduce our net exposure to foreign currency exchange rate fluctuations. However, we cannot assure you that fluctuations in fore ign currency exchange rates, particularly the strengthening of the U.S. dollar against major currencies or the currencies of large developing countries, would not materially affect our financial results. If interest rates increase, our net income could be negatively affected. We maintain levels of debt that we consider prudent based on our cash flows, interest coverage ratio and percentage of debt to capital. We use debt financing to lower our cost of capital, which increases our return on shareowners' equi ty. This exposes us to adverse changes in interest rates. When and to the extent appropriate, we use derivative financial instruments to reduce our exposure to interest rate risks. We cannot assure you, however, that our financial risk management program w ill be successful in reducing the risks inherent in exposures to interest rate fluctuations. Our interest expense may also be affected by our credit ratings. In assessing our credit strength, credit rating agencies consider our capital structure and financ ial policies as well as the consolidated balance sheet and other financial information of the Company. In addition, some credit rating agencies also consider financial information of certain of our major bottlers. It is our expectation that the credit rati ng agencies will continue using this methodology. If our credit ratings were to be downgraded as a result of changes in our capital structure; our major bottlers' financial performance; changes in the credit rating agencies' methodology in assessing our cr edit strength; the credit agencies' perception of the impact of credit market conditions on our or our major bottlers' current or future financial performance and financial condition; or for any other reason, our cost of borrowing could increase.

Additiona lly, if the credit ratings of certain bottlers in which we have equity method investments were to be downgraded, such bottlers' interest expense could increase, which would reduce our equity income. We rely on our bottling partners for a significant portio n of our business. If we are unable to maintain good relationships with our bottling partners, our business could suffer. We generate a significant portion of our net operating revenues by selling concentrates and syrups to independent bottling partners. A s independent companies, our bottling partners, some of which are publicly traded companies, make their own business decisions that may not always align with our interests. In addition, many of our bottling partners have the right to manufacture or distrib ute their own products or certain products of other beverage companies. If we are unable to provide an appropriate mix of incentives to our bottling partners through a combination of pricing and marketing and advertising support, or if our bottling partner s are not satisfied with our brand innovation and development efforts, they may take actions that, while maximizing their own short -term profits, may be detrimental to our Company or our brands, or they may devote more of their energy and resources to busi ness opportunities or products other than those of the Company. Such actions could, in the long run, have an adverse effect on our profitability. If our bottling partners' financial condition deteriorates, our business and financial results could be affect ed. We derive a significant portion of our net operating revenues from sales of concentrates and syrups to independent bottling partners and, therefore, the success of our business depends on our bottling partners' financial strength and profitability. Whi le under our agreements with our bottling partners we generally have the right to unilaterally change the prices we charge for our concentrates and syrups, our ability to do so may be materially limited by our bottling partners' financial condition and the ir ability to pass price increases along to their customers. In addition, we have investments in certain of our bottling partners, which we account for under the equity method, and our operating results include our proportionate share of such bottling part ners' income or loss. Our bottling partners' financial condition is affected in large part by conditions and events that are beyond our and their control, including competitive and general market conditions in the territories in which they operate; the ava ilability of capital and other financing resources on reasonable terms; loss of major customers; or disruptions of bottling operations that may be caused by strikes, work stoppages, labor unrest or natural disasters. A deterioration of the financial condit ion or results of operations of one or more of our major bottling partners could adversely affect our net operating revenues from sales of concentrates and syrups; could result in a decrease in our equity income; and could negatively affect the carrying va lues of our investments in bottling partners, resulting in asset write -offs. 13 Increases in income tax rates, changes in income tax laws or unfavorable resolution of tax matters could have a material adverse impac t on our financial results. We are subject to income tax in the United States and in numerous other jurisdictions in which we generate net operating revenues. Increases in income tax rates could reduce our after -tax income from affected jurisdictions. We earn a substantial portion of our income in foreign countries. If our capital or financing needs in the United States require us to repatriate earnings from foreign jurisdictions above our current levels, our effective tax rates for the affected periods cou ld be negatively impacted. In addition, there have been proposals to reform U.S. tax laws that could significantly impact how U.S. multinational corporations are taxed on foreign earnings. Although we cannot predict whether or in what form these proposals will pass, several of the proposals being considered, if enacted into law, could have a material adverse impact on our income tax expense and cash flows. Our annual tax rate is based on our income and the tax laws in the various jurisdictions in which we o perate. Significant judgment is required in determining our annual income tax expense and in evaluating our tax positions.

Although we believe our tax estimates are reasonable, the final determination of tax audits and any related disputes could be materia lly different from our historical income tax provisions and accruals. The results of audits or related disputes could have a material effect on our financial statements for the period or periods for which the applicable final determinations are made and fo r periods for which the statute of limitations is open. For instance, the United States Internal Revenue Service ("IRS") is seeking to increase our U.S. taxable income for tax years 2007 through 2009 by an amount that creates a potential additional U.S. fe deral income tax liability of approximately $3.3 billion for the period, plus interest. The IRS may add a claim for penalties at a later time. The disputed amounts largely relate to a transfer pricing matter involving the appropriate amount of taxable inco me the Company should report in the United States in connection with its licensing of intangible property to certain related foreign licensees regarding the manufacturing, distribution, sale, marketing and promotion of products in overseas markets. We are currently contesting the IRS' claims in the U.S. Tax Court. If the IRS were to prevail on its assertions, it would likely also seek transfer pricing adjustments of a similar nature for subsequent tax years. Consequently, if this dispute were to be ultimate ly determined adversely to us, the additional tax, interest and any potential penalties could have a material adverse impact on the Company's financial position, results of operations or cash flows. Increased or new indirect taxes in the United States or i n one or more of our other major markets could negatively affect our business. Our business operations are subject to numerous duties or taxes that are not based on income, sometimes referred to as "indirect taxes," including import duties, excise taxes, s ales or value -added taxes, taxes on sugar -sweetened beverages, property taxes and payroll taxes, in many of the jurisdictions in which we operate, including indirect taxes imposed by state and local governments. In addition, in the past, the United States Congress considered imposing a federal excise tax on beverages sweetened with sugar, HFCS or other nutritive sweeteners and may consider similar proposals in the future. As federal, state and local governments experience significant budget deficits, some l awmakers have proposed singling out beverages among a plethora of revenue -raising items. Increases in or the imposition of new indirect taxes on our business operations or products would increase the cost of products or, to the extent levied directly on co nsumers, make our products less affordable, which may negatively impact our net operating revenues and profitability. Increase in the cost, disruption of supply or shortage of energy or fuels could affect our profitability. CCR and our other Company -owned or -controlled bottlers operate a large fleet of trucks and other motor vehicles to distribute and deliver beverage products to customers. In addition, we use a significant amount of electricity, natural gas and other energy sou rces to operate our concentrate, syrup and juice production plants and the bottling plants and distribution facilities operated by CCR and our other Company -owned or -controlled bottlers. An increase in the price, disruption of supply or shortage of fuel a nd other energy sources in North America, in other countries in which we have concentrate plants, or in any of the major markets in which CCR and our other Company -owned or - controlled bottlers operate that may be caused by increasing demand or by events s uch as natural disasters, power outages, or the like could increase our operating costs and negatively impact our profitability. Our independent bottling partners also operate large fleets of trucks and other motor vehicles to distribute and deliver bevera ge products to their own customers and use a significant amount of electricity, natural gas and other energy sources to operate their own bottling plants and distribution facilities. Increases in the price, disruption of supply or shortage of fuel and othe r energy sources in any of the major markets in which our independent bottling partners operate would increase the affected independent bottling partners' operating costs and could indirectly negatively impact our results of operations. 14 Increase in the cost, disruption of supply or shortage of ingredients, other raw materials or packaging materials could harm our business. We and our bottling partners use various ingredients in our business, including HFCS, sucro se, aspartame, saccharin, acesulfame potassium, cyclamate, sucralose, a non -nutritive sweetener derived from the stevia plant, ascorbic acid, citric acid, phosphoric acid, caffeine and caramel color; other raw materials such as orange and other fruit juice and juice concentrates; and packaging materials such as PET for bottles and aluminum for cans. The prices for these ingredients, other raw materials and packaging materials fluctuate depending on market conditions.

Substantial increases in the prices of o ur or our bottling partners' ingredients, other raw materials and packaging materials, to the extent they cannot be recouped through increases in the prices of finished beverage products, would increase our and the Coca -Cola system's operating costs and co uld reduce our profitability. Increases in the prices of our finished products resulting from a higher cost of ingredients, other raw materials and packaging materials could affect affordability in some markets and reduce Coca -Cola system sales. In additio n, some of our ingredients, such as aspartame, acesulfame potassium, sucralose, saccharin and ascorbic acid, as well as some of the packaging containers, such as aluminum cans, are available from a limited number of suppliers, some of which are located in countries experiencing political or other risks. We cannot assure you that we and our bottling partners will be able to maintain favorable arrangements and relationships with these suppliers . The citrus industry is subject to disease and the variability of weather conditions, which affect the supply of orange juice and orange juice concentrate, which are important raw materials for our business. In particular, freezing weather or hurricanes in central Florida may result in shortages and higher prices for or ange juice and orange juice concentrate throughout the industry. In addition, greening disease is reducing the number of trees and increasing grower costs and prices. Adverse weather conditions may affect the supply of other agricultural commodities from which key ingredients for our products are derived. For example, drought conditions in certain parts of the United States may negatively affect the supply of corn, which in turn may result in shortages of and higher prices for HFCS . An increase in the cost, a sustained interruption in the supply, or a shortage of some of these ingredients, other raw materials, packaging materials or cans and other containers that may be caused by a deterioration of our or our bottling partners' relationships with suppliers; by supplier quality and reliability issues; or by events such as natural disasters, power outages, labor strikes, political uncertainties or governmental instability, or the like could negatively impact our net operating revenues and profits. Changes in la ws and regulations relating to beverage containers and packaging could increase our costs and reduce demand for our products. We and our bottlers currently offer nonrefillable recyclable containers in the United States and in various other markets around t he world. Legal requirements have been enacted in various jurisdictions in the United States and overseas requiring that deposits or certain ecotaxes or fees be charged in connection with the sale, marketing and use of certain beverage containers. Other pr oposals relating to beverage container deposits, recycling, ecotax and/or product stewardship have been introduced in various jurisdictions in the United States and overseas, and we anticipate that similar legislation or regulations may be proposed in the future at local, state and federal levels, both in the United States and elsewhere. Consumers' increased concerns and changing attitudes about solid waste streams and environmental responsibility and the related publicity could result in the adoption of su ch legislation or regulations. If these types of requirements are adopted and implemented on a large scale in any of the major markets in which we operate, they could affect our costs or require changes in our distribution model, which could reduce our net operating revenues and profitability. Significant additional labeling or warning requirements or limitations on the marketing or sale of our products may inhibit sales of affected products. Various jurisdictions may seek to adopt significant additional pr oduct labeling or warning requirements or limitations on the marketing or sale of our products as a result of what they contain or allegations that they cause adverse health effects. If these types of requirements become applicable to one or more of our ma jor products under current or future environmental or health laws or regulations, they may inhibit sales of such products. Under one such law in California, known as Proposition 65, if the state has determined that a substance causes cancer or harms human reproduction, a warning must appear on any product sold in the state that exposes consumers to that substance. The state maintains lists of these substances and periodically adds other substances to them. Proposition 65 exposes all food and beverage producers to the possibility of having to provide warnings on their products in California because it does not provide for any generally applicable quantitative threshold below which the presence of a list ed substance is exempt from the warning requirement. Consequently, the detection of even a trace amount of a listed substance can subject an affected product to the requirement of a warning label. However, Proposition 65 does not require a warning if the m anufacturer of a product can demonstrate that the use of the product in question exposes consumers to a daily quantity of a listed substance that is below a 15 "safe harbor" threshold that may be established, is naturally occurring, is the result of necessary cooking or is subject to another applicable exception. One or more substances that are currently on the Proposition 65 lists, or that may be added to the lists in the future, can be detected in certain Compan y products at low levels that are safe. With respect to substances that have not yet been listed under Proposition 65, the Company takes the position that listing is not scientifically justified. With respect to substances that are already listed, the Comp any takes the position that the presence of each such substance in Company products is subject to an applicable exemption from the warning requirement. The state of California and other parties, however, have in the past taken a contrary position and may do so in the future. If we were required to add Proposition 65 warnings on the labels of one or more of our beverage products produced for sale in California, the resulting consumer reaction to the warnings and possible adverse publicity could negatively af fect our sales both in California and in other markets. If we are unable to protect our information systems against service interruption, misappropriation of data or breaches of security, our operations could be disrupted and our reputation may be damaged. We rely on networks and information systems and other technology ("information systems"), including the Internet and third -party hosted services, to support a variety of business processes and activities, including procurement and supply chain, manufactur ing, distribution, invoicing and collection of payments, mergers and acquisitions and research and development. We use information systems to process financial information and results of operations for internal reporting purposes and to comply with regulat ory financial reporting and legal and tax requirements. In addition, we depend on information systems for digital marketing activities and electronic communications among our locations around the world and between Company personnel and our bottlers and oth er customers, suppliers and consumers. Because information systems are critical to many of the Company's operating activities, our business may be impacted by system shutdowns, service disruptions or security breaches. These incidents may be caused by fail ures during routine operations such as system upgrades or user errors, as well as network or hardware failures, malicious or disruptive software, unintentional or malicious actions of employees or contractors, cyberattacks by common hackers, criminal group s or nation -state organizations or social -activist (hacktivist) organizations, geopolitical events, natural disasters, failures or impairments of telecommunications networks, or other catastrophic events. In addition, such incidents could result in unautho rized disclosure of material confidential information. If our information systems suffer severe damage, disruption or shutdown and our business continuity plans do not effectively resolve the issues in a timely manner, we could experience delays in reporti ng our financial results, and we may lose revenue and profits as a result of our inability to timely manufacture, distribute, invoice and collect payments for concentrate or finished products. Misuse, leakage or falsification of information could result in violations of data privacy laws and regulations, damage to the reputation and credibility of the Company, loss of opportunities to acquire or divest of businesses or brands and loss of ability to commercialize products developed through research and devel opment efforts and, therefore, could have a negative impact on net operating revenues. In addition, we may suffer financial and reputational damage because of lost or misappropriated confidential information belonging to us, our current or former employees , or to our bottling partners, other customers, suppliers or consumers, and may become subject to legal action and increased regulatory oversight. The Company could also be required to spend significant financial and other resources to remedy the damage ca used by a security breach or to repair or replace networks and information systems . Like most major corporations, the Company's information systems are a target of attacks. Although the incidents that we have experienced to date have not had a material eff ect on our business, financial condition or results of operations, there can be no assurance that such incidents will not have a material adverse effect on us in the future.

In order to address risks to our information systems, we continue to make investme nts in personnel, technologies, cyber insurance and training of Company personnel. The Company maintains an information risk management program which is supervised by information technology management and reviewed by a cross -functional committee. As part o f this program, reports that include analysis of emerging risks as well as the Company's plans and strategies to address them are regularly prepared and presented to senior management and the Audit Committee of the Board of Directors. Unfavorable general e conomic conditions in the United States could negatively impact our financial performance. In 2015, our net operating revenues in the United States were $20.4 billion, or 46 percent, of our total net operating revenues. Unfavorable general economic conditi ons, such as a recession or economic slowdown, in the United States could negatively affect the affordability of, and consumer demand for, our beverages in our flagship market.

Under difficult economic conditions, consumers may seek to reduce discretionary spending by forgoing purchases of our products or by shifting away from our beverages to lower -priced products offered by other companies, including private label brands. Softer consumer demand for our beverages in the United States could reduce our profi tability and could negatively affect our overall financial performance. 16 Unfavorable economic and political conditions in international markets could hurt our business. We derive a significant portion of our net operating revenues from sales of our products in international markets. In 20 15, our operations outside the United States accounted for $23.9 billion, or 54 percent, of our total net operating revenues. Unfavorable economic conditions and financial uncertainties in our major international markets and unstable political conditions, including civil unrest and governmental changes, in certain of our other international markets could undermine global consumer confidence and reduce consumers' purchasing power, thereby reducing demand for our products. Product boycotts resulting from poli tical activism could reduce demand for our products, while restrictions on our ability to transfer earnings or capital across borders, price controls, limitation on profits, import authorization requirements and other restrictions on business activities wh ich have been or may be imposed or expanded as a result of political and economic instability or otherwise could impact our profitability. In addition, U.S. trade sanctions against countries designated by the U.S. government as state sponsors of terrorism and/or financial institutions accepting transactions for commerce within such countries could increase significantly, which could make it impossible for us to continue to make sales to bottlers in such countries, while the imposition of sanctions against U .S. multinational corporations by countries in which our products are manufactured, distributed or sold could negatively affect our business in such markets. Litigation or legal proceedings could expose us to significant liabilities and damage our reputat ion. We are party to various litigation claims and legal proceedings. We evaluate these litigation claims and legal proceedings to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses. Based on these as sessments and estimates, we establish reserves and/or disclose the relevant litigation claims or legal proceedings, as appropriate. These assessments and estimates are based on the information available to management at the time and involve a significant a mount of management judgment. We caution you that actual outcomes or losses may differ materially from those envisioned by our current assessments and estimates. In addition, we have bottling and other business operations in markets with high -risk legal co mpliance environments. Our policies and procedures require strict compliance by our associates and agents with all United States and local laws and regulations and consent orders applicable to our business operations, including those prohibiting improper payments to government officials. Nonetheless, we cannot assure you that our policies, procedures and related training programs will always ensure full compliance by our associates and agents with all applicable legal requirements. Improper conduct by our a ssociates or agents could damage our reputation in the United States and internationally or lead to litigation or legal proceedings that could result in civil or criminal penalties, including substantial monetary fines as well as disgorgement of profits. Failure to adequately protect, or disputes relating to, trademarks, formulae and other intellectual property rights could harm our business. Our trademarks, formulae and other intellectual property rights (refer to the heading "Patents, Copyrights, Trade Secrets and Trademarks" in "Item 1. Business" above) are essential to the success of our business. We cannot be certain that the legal steps we are taking around the world are sufficient to protect our intellectual property rights or that, notwithstanding le gal protection, others do not or will not infringe or misappropriate our intellectual property rights. If we fail to adequately protect our intellectual property rights, or if changes in laws diminish or remove the current legal protections available to th em, the competitiveness of our products may be eroded and our business could suffer. In addition, we could come into conflict with third parties over intellectual property rights, which could result in disruptive and expensive litigation. Any of the forego ing could harm our business. Adverse weather conditions could reduce the demand for our products. The sales of our products are influenced to some extent by weather conditions in the markets in which we operate.

Unusually cold or rainy weather during the s ummer months may have a temporary effect on the demand for our products and contribute to lower sales, which could have an adverse effect on our results of operations for such periods. Climate change may have a long -term adverse impact on our business and results of operations. There is increasing concern that a gradual increase in global average temperatures due to increased concentration of carbon dioxide and other greenhouse gases in the atmosphere will cause significant changes in weather patterns aroun d the globe and an increase in the frequency and severity of natural disasters. Decreased agricultural productivity in certain regions of the world as a result of changing weather patterns may limit the availability or increase the cost of key agricultural commodities, such as sugarcane, corn, sugar beets, citrus, coffee and tea, which are important sources of ingredients for our products, and could impact the food security of communities around the world. Climate change may also exacerbate water scarcity a nd cause a further deterioration of water quality in affected regions, which could limit water availability for the Coca -Cola system's bottling operations. Increased frequency or duration of extreme weather conditions could also impair production capabilit ies, disrupt our supply chain or impact demand for our products. As a result, the effects of climate change could have a long -term adverse impact on our business and results of operations. 17 If negative publicity, even if unwarranted, related to product safety or quality, human and workplace rights, obesity or other issues damages our brand image and corporate reputation, our business may suffer. Our success depends in large part on our ability to maintain the bran d image of our existing products, build up brand image for new products and brand extensions and maintain our corporate reputation. We cannot assure you, however, that our continuing investment in advertising and marketing and our strong commitment to prod uct safety and quality and human rights will have the desired impact on our products' brand image and on consumer preferences. Product safety or quality issues, actual or perceived, or allegations of product contamination, even when false or unfounded, cou ld tarnish the image of the affected brands and may cause consumers to choose other products. In some emerging markets, the production and sale of counterfeit or "spurious" products, which we and our bottling partners may not be able to fully combat, may d amage the image and reputation of our products. In addition, from time to time, we and our executives engage in public policy endeavors that are either directly related to our products and packaging or to our business operations and the general economic cl imate affecting the Company. These engagements in public policy debates can occasionally be the subject of backlash from advocacy groups that have a differing point of view and could result in adverse media and consumer reaction, including product boycotts . Similarly, our sponsorship relationships could subject us to negative publicity as a result of actual or alleged misconduct by individuals or entities associated with organizations we sponsor or support financially or through in -kind contributions. Likew ise, campaigns by activists connecting us, or our bottling system or supply chain, with human and workplace rights issues could adversely impact our corporate image and reputation.

Furthermore, in June 2011, the United Nations Human Rights Council endorsed the Guiding Principles on Business and Human Rights, which outlines how businesses should implement the corporate responsibility to respect human rights principles included in the United Nations "Protect, Respect and Remedy" framework on human rights.

Thr ough our Human Rights Policy, Code of Business Conduct and Supplier Guiding Principles, and our participation in the United Nations Global Compact, as well as our active participation in the Global Business Initiative on Human Rights and the Global Busines s Coalition Against Human Trafficking, we made a number of commitments to respect all human rights. Allegations, even if untrue, that we are not respecting one or more of the 30 human rights found in the United Nations Universal Declaration of Human Rights ; actual or perceived failure by our suppliers or other business partners to comply with applicable labor and workplace rights laws, including child labor laws, or their actual or perceived abuse or misuse of migrant workers; and adverse publicity surround ing obesity and health concerns related to our products, water usage, environmental impact, labor relations or the like could negatively affect our Company's overall reputation and brand image, which in turn could have a negative impact on our products’ ac ceptance by consumers. Changes in, or failure to comply with, the laws and regulations applicable to our products or our business operations could increase our costs or reduce our net operating revenues. Our Company's business is subject to various laws an d regulations in the numerous countries throughout the world in which we do business, including laws and regulations relating to competition, product safety, advertising and labeling, container deposits, recycling and product stewardship, the protection of the environment, and employment and labor practices. In the United States, the production, distribution, marketing and sale of many of our products are subject to, among others, the Federal Food, Drug, and Cosmetic Act, the Federal Trade Commission Act, t he Lanham Act, state consumer protection laws, the Occupational Safety and Health Act, and various environmental statutes, as well as various state and local statutes and regulations. Outside the United States, the production, distribution and sale of many of our products are also subject to various laws and regulations. Changes in applicable laws or regulations or evolving interpretations thereof, including increased government regulations to limit carbon dioxide and other greenhouse gas emissions as a res ult of concern over climate change, or regulations to limit or eliminate the use of bisphenol A, or BPA (an odorless, tasteless food -grade chemical commonly used in the food and beverage industries as a component in can liners and other packaging materials ), or regulations to limit or impose additional costs on commercial water use due to local water scarcity concerns, may result in increased compliance costs, capital expenditures and other financial obligations for us and our bottling partners, which could affect our profitability, or may impede the production, distribution, marketing and sale of our products, which could affect our net operating revenues. In addition, failure to comply with environmental, health or safety requirements, U.S. trade sanctions , the U.S. Foreign Corrupt Practices Act and other applicable laws or regulations could result in the assessment of damages, the imposition of penalties, suspension of production or distribution, costly changes to equipment or processes due to required cor rective action, or a cessation or interruption of operations at our or our bottling partners' facilities, as well as damage to our and the Coca -Cola system's image and reputation, all of which could harm our and the Coca -Cola system's profitability. 18 Changes in accounting standards could affect our reported financial results. New accounting standards or pronouncements that may become applicable to our Company from time to time, or changes in the interpretation of existing standards and pronouncements, could have a significant effect on our reported financial results for the affected periods. If we are not able to achieve our overall long -term growth objectives, the value of an investment in our Company could be ne gatively affected. We have established and publicly announced certain long -term growth objectives. These objectives were based on, among other things, our evaluation of our growth prospects, which are generally driven by the sales potential of many product types, some of which are more profitable than others, and on an assessment of the potential price and product mix. There can be no assurance that we will realize the sales potential and the price and product mix necessary to achieve our long -term growth o bjectives. If global credit market conditions deteriorate, our financial performance could be adversely affected. The cost and availability of credit vary by market and are subject to changes in the global or regional economic environment. If conditions in major credit markets deteriorate, our and our bottling partners' ability to obtain debt financing on favorable terms may be negatively affected, which could affect our and the Coca -Cola system's profitability as well as our share of the income of bottling partners in which we have equity method investments. A decrease in availability of consumer credit resulting from unfavorable credit market conditions, as well as general unfavorable economic conditions, may also cause consumers to reduce their discretion ary spending, which could reduce the demand for our beverages and negatively affect our net operating revenues and the Coca -Cola system's profitability. Default by or failure of one or more of our counterparty financial institutions could cause us to incur significant losses. As part of our hedging activities, we enter into transactions involving derivative financial instruments, including forward contracts, commodity futures contracts, option contracts, collars and swaps, with various financial institution s. In addition, we have significant amounts of cash, cash equivalents and other investments on deposit or in accounts with banks or other financial institutions in the United States and abroad. As a result, we are exposed to the risk of default by or failu re of counterparty financial institutions. The risk of counterparty default or failure may be heightened during economic downturns and periods of uncertainty in the financial markets. If one of our counterparties were to become insolvent or file for bankru ptcy, our ability to recover losses incurred as a result of default or to retrieve our assets that are deposited or held in accounts with such counterparty may be limited by the counterparty's liquidity or the applicable laws governing the insolvency or ba nkruptcy proceedings. In the event of default by or failure of one or more of our counterparties, we could incur significant losses, which could negatively impact our results of operations and financial condition. If we are unable to timely implement our p reviously announced actions to reinvigorate growth, or we do not realize the economic benefits we anticipate from these actions, our results of operations for future periods could be negatively affected. In October 2014, we announced that we were taking ac tions to reinvigorate growth, including streamlining and simplifying our operating model to speed decision making and enhance local market focus; expanding our productivity and reinvestment program by targeting additional productivity; refocusing on our co re business model; strategically targeting brand and growth investments that leverage our global strengths; and driving revenue and profit growth with clear portfolio roles across our markets while providing local operations with a clear line of sight and aligned compensation targets. We have begun implementing these actions and have incurred, and we expect will continue to incur, significant costs and expenses with the associated programs, initiatives and activities. If we are unable to implement some or a ll of these actions fully or in the envisioned timeframe, or otherwise we do not timely capture the efficiencies, cost savings and revenue growth opportunities we anticipate from these actions, our results of operations for future periods could be negative ly affected. If we fail to realize a significant portion of the anticipated benefits of our strategic relationship with Monster, our financial performance could be adversely affected. In August 2014, we entered into definitive agreements with Monster for a long -term strategic relationship in the global energy drink category, and upon the closing of the transactions contemplated by the agreements in June 2015 we purchased newly issued shares representing approximately 17 percent of Monster’s issued and outst anding shares of common stock (after giving effect to the issuance). (For more information regarding our agreements with Monster and related transactions, refer to Note 2 of Notes to Consolidated Financial Statements set forth in Part II, "Item 8. Financia l Statements and Supplementary Data" of this report.) If we are unable to successfully manage our complex relationship with Monster, or if for any other reason we fail to realize all or a significant part of the benefits we expect from this strategic relat ionship and the related investment, our financial performance could be adversely affected. 19 If we are unable to renew collective bargaining agreements on satisfactory terms, or we or our bottling partners exper ience strikes, work stoppages or labor unrest, our business could suffer. Many of our associates at our key manufacturing locations and bottling plants are covered by collective bargaining agreements. While we generally have been able to renegotiate collec tive bargaining agreements on satisfactory terms when they expire and regard our relations with associates and their representatives as generally satisfactory, negotiations in the current environment remain challenging, as the Company must have competitive cost structures in each market while meeting the compensation and benefits needs of our associates. If we are unable to renew collective bargaining agreements on satisfactory terms, our labor costs could increase, which could affect our profit margins. In addition, many of our bottling partners' employees are represented by labor unions. Strikes, work stoppages or other forms of labor unrest at any of our major manufacturing facilities or at our bottling operations' or our major bottlers' plants could impa ir our ability to supply concentrates and syrups to our bottling partners or our bottlers' ability to supply finished beverages to customers, which could reduce our net operating revenues and could expose us to customer claims. Furthermore, from time to ti me we and our bottling partners restructure manufacturing and other operations to improve productivity. Restructuring activities and the announcement of plans for future restructuring activities may result in a general increase in insecurity among some Com pany associates and some employees in other parts of the Coca -Cola system, which may have negative implications on employee morale, work performance, escalation of grievances and successful negotiation of collective bargaining agreements.

If these labor re lations are not effectively managed at the local level, they could escalate in the form of corporate campaigns supported by the labor organizations and could negatively affect our Company's overall reputation and brand image, which in turn could have a neg ative impact on our products' acceptance by consumers. We may be required to recognize impairment charges that could materially affect our financial results. We assess our goodwill, trademarks and other intangible assets as well as our other long -lived ass ets as and when required by accounting principles generally accepted in the United States to determine whether they are impaired and, if they are, we record appropriate impairment charges. Our equity method investees also perform impairment tests, and we r ecord our proportionate share of impairment charges recorded by them adjusted, as appropriate, for the impact of items such as basis differences, deferred taxes and deferred gains. It is possible that we may be required to record significant impairment cha rges or our proportionate share of significant impairment charges recorded by equity method investees in the future and, if we do so, our operating or equity income could be materially adversely affected. We may incur multi -employer plan withdrawal liabili ties in the future, which could negatively impact our financial performance. We participate in certain multi -employer pension plans in the United States. Our U.S. multi -employer pension plan expense totaled $40 million in 2015. The U.S. multi -employer pens ion plans in which we currently participate have contractual arrangements that extend into 2020. If, in the future, we choose to withdraw from any of the multi - employer pension plans in which we currently participate, we would need to record the appropriat e withdrawal liabilities at that time, which could negatively impact our financial performance in the applicable periods. If we do not successfully integrate and manage our Company -owned or -controlled bottling operations or other acquired businesses or br ands, our results could suffer. From time to time we acquire or take control of bottling operations, often in underperforming markets where we believe we can use our resources and expertise to improve performance. In addition, we routinely evaluate opportu nities to acquire other businesses or brands to expand our beverage portfolio and capabilities. We may incur unforeseen liabilities and obligations in connection with acquiring, taking control of or managing acquired bottling operations, other businesses o r brands and may encounter unexpected difficulties and costs in restructuring and integrating them into our Company's operating and internal control structures. We may also experience delays in extending our Company's internal control over financial report ing to newly acquired or controlled bottling operations or other businesses, which may increase the risk of failure to prevent misstatements in their financial records and in our consolidated financial statements. Our financial performance depends in large part on how well we can manage and improve the performance of Company -owned or -controlled bottling operations and other acquired businesses or brands. We cannot assure you, however, that we will be able to achieve our strategic and financial objectives f or such bottling operations or other acquisitions. If we are unable to achieve such objectives, our consolidated results could be negatively affected. 20 If we do not successfully manage our refranchising activities, our business and results of operations could be adversely affected. As part of our strategic initiative to refocus on our core business of building brands and leading our system of bottling partne rs, we are accelerating our refranchising activities in North America and have expanded our refranchising efforts to Company -owned or -controlled bottling operations in Europe, Africa and China. Our refranchising activities require significant attention an d effort on the part of, and therefore may become a distraction for, senior management. In addition, in connection with refranchising transactions in North America, we recorded, and we expect will continue to record, noncash losses related to the derecogni tion of intangible assets transferred or that will be transferred to bottling partners. There is no assurance that we will be able to complete refranchising transactions on our expected timetable and on terms and conditions favorable to us; that our refran chising bottling or joint venture partners will be efficient and aligned with our long -term vision for the Coca -Cola system; or that we will be able to maintain good relationships with the refranchised bottling operations. If we are unable to complete cont emplated refranchising transactions timely, on favorable terms and with partners who share our long -term vision for the Coca -Cola system, our business and results of operations could be adversely affected. If we are unable to successfully manage the possib le negative consequences of our productivity initiatives, our business operations could be adversely affected. We believe that improved productivity is essential to achieving our long -term growth objectives and, therefore, a leading priority of our Company is to design and implement the most effective and efficient business model possible. For information regarding our productivity initiatives, refer to the heading "Operations Review — Other Operating Charges — Productivity and Reinvestment Program" set for th in Part II, "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of this report. Some of the actions we are taking in furtherance of our productivity initiatives may become a distraction for our managers and em ployees and may disrupt our ongoing business operations; cause deterioration in employee morale which may make it more difficult for us to retain or attract qualified managers and employees; disrupt or weaken the internal control structures of the affected business operations; and give rise to negative publicity which could affect our corporate reputation. If we are unable to successfully manage the possible negative consequences of these actions, our business operations could be adversely affected. If we a re unable to attract or retain a highly skilled workforce, our business could be negatively affected. The success of our business depends on our ability to attract, train, develop and retain a highly skilled workforce.

We may not be able to successfully co mpete for and attract the high -quality and diverse employee talent we want and our future business needs may require. In addition, unexpected loss of experienced and highly skilled associates due to insecurity resulting from our ongoing productivity initia tives, refranchising transactions and organizational changes could deplete our institutional knowledge base and erode our competitiveness. Any of the foregoing could have a negative impact on our business. Global or regional catastrophic events could impa ct our operations and financial results. Because of our global presence and worldwide operations, our business can be affected by large -scale terrorist acts, especially those directed against the United States or other major industrialized countries; the o utbreak or escalation of armed hostilities; major natural disasters; or widespread outbreaks of infectious diseases. Such events could impair our ability to manage our business around the world, could disrupt our supply of raw materials and ingredients, an d could impact production, transportation and delivery of concentrates, syrups and finished products. In addition, such events could cause disruption of regional or global economic activity, which can affect consumers' purchasing power in the affected area s and, therefore, reduce demand for our products. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable. 21 ITEM 2. PROPERTIES Our worldwide headquarters is located on a 35 -acre office complex in Atlanta, Georgia. The complex includes our 621,000 square foot headquarters building and an 870,000 square foot building in which our North America group’s main offices are located. The complex also includes several other buildings, including our 264,000 s quare foot Coca -Cola Plaza building, technical and engineering facilities and a reception center. We also own an office and retail building at 711 Fifth Avenue in New York, New York. These properties, except for the North America group’s main offices, are included in the Corporate operating segment. We own or lease additional facilities, real estate and office space throughout the world which we use for administrative, manufacturing, processing, packaging, storage, warehousing, distribution and retail opera tions. These properties are generally included in the geographic operating segment in which they are located. In the North America operating segment's geographic area, as of December 31, 2015, we owned 63 beverage production facilities, 10 principal bevera ge concentrate and/or syrup manufacturing plants, one facility that manufactures juice concentrates for foodservice use, two bottled water facilities, and one container manufacturing facility; we leased one beverage production facility, one bottled water f acility and four container manufacturing facilities; and we operated 224 principal beverage distribution warehouses, of which 80 were leased and the rest were owned. Also included in the North America operating segment is a portion of the Atlanta office co mplex consisting of the North America group’s main offices. Outside of the North America operating segment's geographic area, as of December 31, 2015, our Company owned and operated 18 principal beverage concentrate manufacturing plants, of which three are included in the Eurasia and Africa operating segment, three are included in the Europe operating segment, five are included in the Latin America operating segment, and seven are included in the Asia Pacific operating segment. We own or hold a majority int erest in or otherwise consolidate under applicable accounting rules bottling operations that, as of December 31, 2015, owned 76 principal beverage bottling and canning plants located throughout the world. These plants are included in the Bottling Investmen ts operating segment. Management believes that our Company's facilities for the production of our products are suitable and adequate, that they are being appropriately utilized in line with past experience, and that they have sufficient production capacity for their present intended purposes. The extent of utilization of such facilities varies based upon seasonal demand for our products. However, management believes that additional production can be obtained at the existing facilities by adding personnel an d capital equipment and, at some facilities, by adding shifts of personnel or expanding the facilities. We continuously review our anticipated requirements for facilities and, on the basis of that review, may from time to time acquire additional facilities and/or dispose of existing facilities. ITEM 3. LEGAL PROCEEDINGS The Company is involved in various legal proceedings, including the proceedings specifically discussed below.

Management believes that the total liabilities to the Company that may arise as a result of currently pending legal proceedings will not have a material adverse effect on the Company taken as a whole. Aqua -Chem Litigation On December 20, 2002, the Company filed a lawsuit ( The Coca -Cola Company v. Aqua -Chem, Inc., Civil Action No. 200 2CV631 -50) in the Superior Court of Fulton County, Georgia ("Georgia Case"), seeking a declaratory judgment that the Company has no obligation to its former subsidiary, Aqua -Chem, Inc., now known as Cleaver - Brooks, Inc. ("Aqua -Chem"), for any past, present or future liabilities or expenses in connection with any claims or lawsuits against Aqua -Chem. Subsequent to the Company's filing but on the same day, Aqua -Chem filed a lawsuit (Aqua -Chem, Inc. v. The Coca -Cola Company, Civil Action No. 02CV012179 ) in the Circuit Court, Civil Division of Milwaukee County, Wisconsin ("Wisconsin Case"). In the Wisconsin Case, Aqua -Chem sought a declaratory judgment that the Company is responsible for all liabilities and expenses not covered by insurance in connection with ce rtain of Aqua -Chem's general and product liability claims arising from occurrences prior to the Company's sale of Aqua -Chem in 1981, and a judgment for breach of contract in an amount exceeding $9 million for costs incurred by Aqua -Chem to date in connecti on with such claims. The Wisconsin Case initially was stayed, pending final resolution of the Georgia Case, and later was voluntarily dismissed without prejudice by Aqua -Chem. 22 The Company owned Aqua -Chem from 1970 to 1981. During that time, the Company purchased over $400 million of insurance coverage, which also insures Aqua -Chem for some of its prior and future costs for certain product liability and other claims. The Company sold Aqua -Chem to Lyonnaise American Holding, Inc., in 1981 under the terms of a stock sale agreement. The 1981 agreement, and a subsequent 1983 settlement agreement, outlined the parties' rights and obligations concer ning past and future claims and lawsuits involving Aqua -Chem. Cleaver - Brooks, a division of Aqua -Chem, manufactured boilers, some of which contained asbestos gaskets. Aqua -Chem was first named as a defendant in asbestos lawsuits in or around 1985 and curre ntly has approximately 40,000 active claims pending against it. The parties agreed in 2004 to stay the Georgia Case pending the outcome of insurance coverage litigation filed by certain Aqua -Chem insurers on March 26, 2004. In the coverage action, five pla intiff insurance companies filed suit (Century Indemnity Company, et al. v. Aqua -Chem, Inc., The Coca -Cola Company, et al., Case No. 04CV002852 ) in the Circuit Court, Civil Division of Milwaukee County, Wisconsin, against the Company, Aqua -Chem and 16 insu rance companies. Several of the policies that were the subject of the coverage action had been issued to the Company during the period (1970 to 1981) when the Company owned Aqua -Chem. The complaint sought a determination of the respective rights and obliga tions under the insurance policies issued with regard to asbestos - related claims against Aqua -Chem. The action also sought a monetary judgment reimbursing any amounts paid by the plaintiffs in excess of their obligations. Two of the insurers, one with a $1 5 million policy limit and one with a $25 million policy limit, asserted cross -claims against the Company, alleging that the Company and/or its insurers are responsible for Aqua -Chem's asbestos liabilities before any obligation is triggered on the part of the cross - claimant insurers to pay for such costs under their policies. Aqua -Chem and the Company filed and obtained a partial summary judgment determination in the coverage action that the insurers for Aqua -Chem and the Company were jointly and severally liable for coverage amounts, but reserving judgment on other defenses that might apply. During the course of the Wisconsin insurance coverage litigation, Aqua -Chem and the Company reached settlements with several of the insurers, including plaintiffs, who have paid or will pay funds into an escrow account for payment of costs arising from the asbestos claims against Aqua -Chem. On July 24, 2007, the Wisconsin trial court entered a final declaratory judgment regarding the rights and obligations of the parties under the insurance policies issued by the remaining defendant insurers, which judgment was not appealed. The judgment directs, among other things, that each insurer whose policy is triggered is jointly and severally liable for 100 percent of Aqua -Chem's losses up to policy limits. The court's judgment concluded the Wisconsin insurance coverage litigation. The Company and Aqua -Chem continued to pursue and obtain coverage agreements for the asbestos -related claims against Aqua -Chem with those insurance com panies that did not settle in the Wisconsin insurance coverage litigation. The Company anticipated that a final settlement with three of those insurers ("Chartis insurers") would be finalized in May 2011, but the Chartis insurers repudiated their settlemen t commitments and, as a result, Aqua - Chem and the Company filed suit against them in Wisconsin state court to enforce the coverage -in-place settlement or, in the alternative, to obtain a declaratory judgment validating Aqua -Chem and the Company's interpret ation of the court's judgment in the Wisconsin insurance coverage litigation. In February 2012, the parties filed and argued a number of cross -motions for summary judgment related to the issues of the enforceability of the settlement agreement and the exh austion of policies underlying those of the Chartis insurers. The court granted defendants' motions for summary judgment that the 2011 Settlement Agreement and 2010 Term Sheet were not binding contracts, but denied their similar motions related to plaintif fs' claims for promissory and/or equitable estoppel. On or about May 15, 2012, the parties entered into a mutually agreeable settlement/stipulation resolving two major issues: exhaustion of underlying coverage and control of defense. On or about January 10 , 2013, the parties reached a settlement of the estoppel claims and all of the remaining coverage issues, with the exception of one disputed issue relating to the scope of the Chartis insurers' defense obligations in two policy years. The trial court grant ed summary judgment in favor of the Company and Aqua -Chem on that one open issue and entered a final appealable judgment to that effect following the parties' settlement. On January 23, 2013, the Chartis insurers filed a notice of appeal of the trial court 's summary judgment ruling. On October 29, 2013, the Wisconsin Court of Appeals affirmed the grant of summary judgment in favor of the Company and Aqua - Chem. On November 27, 2013, the Chartis insurers filed a petition for review in the Supreme Court of Wis consin, and on December 11, 2013, the Company filed its opposition to that petition. On April 16, 2014, the Supreme Court of Wisconsin denied the Chartis insurers' petition for review. The Georgia Case remains subject to the stay agreed to in 2004. 23 U.S. Federal Income Tax Dispute On September 17, 2015, the Company received a Statutory Notice of Deficiency ("Notice") from the IRS for the tax years 2007 through 2009, after a five -year audit. In the Notice, the IRS claims that the Company's United States taxable income should be increased by an amount that creates a potential additional federal income tax liability of approximately $3.3 billion for the period, plus interest. No penalties were asserted in the Notice; however, the IRS has since taken the position that it is not precluded from asserting penalties and notified the Company that it may do so. The disputed amounts largely relate to a transfer pricing matter involving the appropriate amount of taxable income the Company should report in the United States in connection with its licensing of intangible property to certain related foreign licensees for use in connection with the manufacturing, distribution, sale, marketing and promotion of products in overseas ma rkets. The Company has followed the same transfer pricing methodology for these licenses since the methodology was agreed with the IRS in a 1996 closing agreement that applied back to 1987. The closing agreement provides prospective penalty protection as l ong as the Company follows the prescribed methodology and material facts and circumstances and relevant Federal tax law have not changed. On February 11, 2016, the IRS notified the Company, without further explanation, that the IRS has determined that mate rial facts and circumstances and relevant Federal tax law have changed and that it may assert penalties. The Company does not agree with this determination. The Company's compliance with the closing agreement was audited and confirmed by the IRS in five su ccessive audit cycles covering the subsequent 11 years through 2006, with the last audit concluding as recently as 2009. The Notice represents a repudiation of the methodology previously adopted in the 1996 closing agreement. The IRS designated the matter for litigation on October 15, 2015. Therefore, the Company will be prevented from pursuing any administrative settlement at IRS Appeals or under the IRS Advance Pricing and Mutual Agreement Program. The Company firmly believes that the IRS' claims are with out merit and plans to pursue all available administrative and judicial remedies necessary to resolve this matter. To that end, the Company filed a petition in the U.S. Tax Court on December 14, 2015. The Company intends to vigorously defend its position a nd is confident in its ability to prevail on the merits. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ITEM X. EXECUTIVE OFFICERS OF THE COMPANY The following are the executive officers of our Company as of February 25, 2016: Alexander B. Cummings, Jr. , 59, is Executive Vice President and Chief Administrative Officer of the Company. Mr. Cummings joined the Company in 1997 as Deputy Region Manager, Nigeria. In 1998, Mr. Cummings was named Managing Director/Region Manager, Nigeria, and in 2000, he became President of the North West Africa Division based in Morocco. In 2001, Mr. Cummings became President of the Africa Group and served in this capacity until June 2008. Mr. Cummings was appointed Chief Administrative Officer of the Company effective July 1, 2 008, and was elected Executive Vice President of the Company effective October 15, 2008. Mr. Cummings will be retiring from the Company on March 31, 2016. Marcos de Quinto, 57, is Executive Vice President and Chief Marketing Officer of the Company. Mr. De Quinto first joined the Company in 1982 in the marketing department of Coca -Cola Spain, where he held positions including District Manager and Merchandising Manager. In 1988, he left the Company to be Regional Manager for Southern Publicity Agencies ALAS B ATES/BSB Advertising before rejoining Coca -Cola Spain in 1990 as Marketing Services Manager. From September 1992 to September 1994, Mr. De Quinto served as Senior Vice President, Marketing Operations Manager, Coca -Cola Southeast and West Asia, and from Sep tember 1994 to February 1995, he served as Regional Manager for Singapore and Malaysia. From February 1995 to October 1996, Mr. De Quinto served as Marketing Manager, Central Europe Division, and from October 1996 to January 2000, he served as Regional Man ager, Coca -Cola Spain. In January 2000, he was appointed President of the Iberia Business Unit and served in that role until his appointment to the position of Chief Marketing Officer effective January 1, 2015. He also served as Vice President, Europe Grou p from May 2007 to December 2012. Mr. De Quinto was elected Executive Vice President of the Company effective February 19, 2015. 24 J. Alexander M. Douglas, Jr., 54, is Executive Vice President and President of Coca -Cola North America. Mr. Douglas joined the Company in January 1988 as a District Sales Manager for the Foodservice Division of Coca - Cola USA. In May 1994, he was named Vice President of Coca -Cola USA, initially assuming leadership of the CCE Sales and Marketing Group and eventually assuming leadership of the entire North American Field Sales and Marketing Groups. In 2000, Mr. Douglas was appointed President of the North American Retail Division within the North America Group. He served as Senior Vice President and Chief Customer Officer of the Company from 2003 until 2006 and continued serving as Senior Vice President until April 2007. Mr. Douglas was President of the North America Group from August 2006 through December 2012. He served as Global Chief Customer Officer of the Company from January 2013 through March 2015 and as Senior Vic e President of the Company from February 2013 until his election as Executive Vice President of the Company effective April 30, 2015. Mr. Douglas was appointed President of Coca -Cola North America effective January 1, 2014. Ceree Eberly, 53, is Senior Vice President and Chief People Officer of the Company, with responsibility for leading the Company's global People Function. Ms. Eberly joined the Company in 1990, serving in staffing, compensation and other roles supporting the Company's divisions around the world. From 1998 until 2003, she served as Human Resources Director for the Latin Center Division. From 2003 until 2007, Ms. Eberly served as Vice President of the McDonald's Division. She was appointed Group Human Resources Director for Europe in July 20 07 and served in that capacity until she was appointed Chief People Officer effective December 1, 2009. Ms. Eberly was elected Senior Vice President of the Company effective April 1, 2010. Irial Finan, 58, is Executive Vice President and President, Bottlin g Investments and Supply Chain. Mr. Finan joined the Company and was named President, Bottling Investments in 2004. Mr. Finan joined the Coca -Cola system in 1981 with Coca -Cola Bottlers Ireland, Ltd., where for several years he held a variety of accounting positions. From 1987 until 1990, Mr. Finan served as Finance Director of Coca -Cola Bottlers Ireland, Ltd. From 1991 to 1993, he served as Managing Director of Coca -Cola Bottlers Ulster, Ltd. He was Managing Director of Coca -Cola bottlers in Romania and Bu lgaria until late 1994. From 1995 to 1999, he served as Managing Director of Molino Beverages, with responsibility for expanding markets, including the Republic of Ireland, Northern Ireland, Romania, Moldova, Russia and Nigeria. Mr. Finan served from 2001 until 2003 as Chief Executive Officer of Coca -Cola Hellenic. He was elected Executive Vice President of the Company in October 2004. Bernhard Goepelt, 53, is Senior Vice President, General Counsel and Chief Legal Counsel of the Company. Mr. Goepelt joined the Company in 1992 as Legal Counsel for the German Division. In 1997, he was appointed Legal Counsel for the Middle and Far East Group and in 1999 was appointed Division Counsel, Southeast and West Asia Division, based in Thailand. In 2003, Mr. Goepelt wa s appointed Group Counsel for the Central Europe, Eurasia and Middle East Group. In 2005, he assumed the position of General Counsel for Japan and China, and in 2007, Mr.

Goepelt was appointed General Counsel, Pacific Group. In April 2010, he moved to Atla nta, Georgia, to become Associate General Counsel, Global Marketing, Commercial Leadership & Strategy. In September 2010, Mr. Goepelt took on the additional responsibility of General Counsel for the Pacific Group. In addition to his functional responsibili ties, he also managed the administration of the Legal Division. Mr. Goepelt was elected Senior Vice President, General Counsel and Chief Legal Counsel of the Company in December 2011. Julie Hamilton, 50, is Senior Vice President and Chief Customer and Comm ercial Leadership Officer of the Company. Ms. Hamilton joined the Company in 1996 as Brand Development Manager of Still Beverages with Coca -Cola USA. From January 1998 to April 1999, she served as Franchise Manager of Independent Bottlers with Coca -Cola US A, and from April 1999 to October 2000, she served as Group Manager for the Worldwide Marketing Partnership with Blockbuster. From October 2000 to January 2003, Ms. Hamilton served as Director of Franchise Sales & Marketing -Northwest U.S. Region. From Janu ary 2003 to October 2005, she served as Group Director for Global On -Premise Customers, and from October 2005 to June 2007, she served as Vice President, Global Customer Development. She served as Group Vice President, North America Wal -Mart Team from June 2007 to January 2009, and as President of the Global Wal -Mart Group from January 2009 to March 2011. She was appointed Executive Assistant to Muhtar Kent, the Chairman and Chief Executive Officer of the Company, in March 2011 and served in that capacity u ntil she was appointed Chief Customer and Commercial Leadership Officer effective April 1, 2015. Ms. Hamilton was elected Vice President of the Company in April 2015 and Senior Vice President effective February 18, 2016. Brent Hastie, 42, is Senior Vice Pr esident, Strategy and Planning for the Company. Mr. Hastie first joined the Company in 2006 as Vice President, Strategy and Planning for Coca -Cola North America. From March 2009 to July 2009, he served as Vice President, Commercial Leadership, Still Bevera ges. From August 2009 to December 2010, he served as President and General Manager, Active Lifestyles Brands. From January 2011 to April 2012, he served as Chief Strategy Officer for CCR. In April 2012, he left the Company to join Bain Capital, a global pr ivate investment firm, where he was Executive Vice President in the Private Equity group until July 2013, when he returned to the Company as Vice President, Strategy and Planning. Mr. Hastie was elected Senior Vice President of the Company effective Februa ry 18, 2016. 25 Ed Hays , PhD, 57, is Senior Vice President and Chief Technical Officer of the Company. Dr. Hays joined the Company in 1985 as a scientist in Corporate Research and Development. He served as Direct or of Product Development in Corporate Research and Development from 1992 to 1995 and as Director, Research and Development for the Middle East and Far East Group from August 1995 to January 1998. He served as Director of Corporate Research and Development from July 1998 to December 1999. He was named Vice President, Global Science, Regulatory and Formula Governance in December 2000 and served in that role until his appointment as Chief Technical Officer of the Company effective March 1, 2015. He continued to serve as Vice President until his election as Senior Vice President of the Company effective April 30, 2015. Nathan Kalumbu, 51, is President of the Eurasia and Africa Group. Mr. Kalumbu joined the Company in 1990 as the Central Africa region's Externa l Affairs Manager and served in numerous roles in marketing operations and country management in Zimbabwe, Zambia and Malawi from 1992 to 1996. He held the role of Executive Assistant to the South Africa Division President from 1997 to 1998 and Region Mana ger for Central Africa from 1998 to 2000 and for Nigeria from 2000 to 2004. In 2004, Mr. Kalumbu was appointed Business Planning Director and Executive Assistant to the Retail Division President, North America. He returned to the Africa Group as Director o f Business Strategy and Planning for the East and Central Africa Division in 2006. In 2007, he was named President of the Central, East and West Africa (CEWA) business unit and served in that role until his appointment to his current position effective Jan uary 1, 2013. Muhtar Kent, 63, is Chairman of the Board of Directors and Chief Executive Officer of the Company. Mr. Kent joined the Company in 1978 and held a variety of marketing and operations roles throughout his career with the Company. In 1985, he wa s appointed General Manager of Coca -Cola Turkey and Central Asia. From 1989 to 1995, Mr. Kent served as President of the East Central Europe Division and Senior Vice President of Coca -Cola International. Between 1995 and 1998, he served as Managing Directo r of Coca -Cola Amatil -Europe, covering bottling operations in 12 countries, and from 1999 until 2005, he served as President and Chief Executive Officer of Efes Beverage Group, a diversified beverage company with Coca -Cola and beer operations across Southe ast Europe, Turkey and Central Asia. Mr. Kent rejoined the Company in May 2005 as President and Chief Operating Officer, North Asia, Eurasia and Middle East Group, an organization serving a broad and diverse region that included China, Japan and Russia. He was appointed President, Coca -Cola International in January 2006 and was elected Executive Vice President of the Company in February 2006. He was elected President and Chief Operating Officer of the Company in December 2006 and was elected to the Board of Directors in April 2008. Mr. Kent was elected Chief Executive Officer of the Company effective July 1, 2008, and was elected Chairman of the Board of Directors of the Company in April 2009. He served as President of the Company until August 2015. James Qu incey, 51, is President and Chief Operating Officer of the Company. Mr. Quincey joined the Company in 1996 as Director, Learning Strategy for the Latin America Group. He moved to Mexico as Deputy to the Division President in 1999, became Region Manager for Argentina and Uruguay in 2000, and then served as General Manager of the South Cone region (Argentina, Chile, Uruguay and Paraguay) in 2003. Mr. Quincey was appointed President of the South Latin Division in December 2003 and President of the Mexico Divis ion in December 2005. In October 2008, he was named President of the Northwest Europe and Nordics business unit and served in that role until he was appointed President of the Europe Group in January 2013. He was elected to his current positions in August 2015. Atul Singh, 56, is President of the Asia Pacific Group. Mr. Singh joined the Company in 1998 as Vice President, Operations of the India Division. In 2001, he moved to the China Division and served as Region Manager of East China from 2001 to 2002, Vi ce President of Operations from 2002 to 2003, Deputy Division President of the China Division from 2003 to 2004 and President of the East, Central and South China Division from January to August 2005. From September 2005 to June 2013, he served as Presiden t of the India and South West Asia business unit. Mr. Singh served as Deputy President, Pacific Group, from July 2013 to December 2013 and served as Group President, Asia, which is part of the Asia Pacific Group, from January 2014 to August 2014. Mr. Singh was appointed to his current position in September 2014. Brian Smith, 60, is President of the Latin America Group. Mr. Smith joined the Company in 1997 as Latin America Group Manager for Mergers and Acquisitions, a role he held until July 2001. From 2001 to 2002, he worked as Executive Assistant to Brian Dyson, then Chief Operating Officer and Vice Chairman of the Company. Mr. Smith served as President of the Brazil Division from 2002 to 2008 and President of the Mexico business unit from 2008 through Dece mber 2012. Mr. Smith was appointed to his current position effective January 1, 2013. 26 Ed Steinike, 58, is Senior Vice President and Chief Information Officer of the Company. He joined the Company in 2002 as Chi ef Technology Officer. From May 2004 to November 2007, Mr. Steinike served as Chief Development Officer and Chief Information Officer for Coca -Cola North America. From February 2007 to November 2007, he served as Vice President of the Company. From Novembe r 2007 to April 2010, he served as Executive Vice President and Chief Information Officer at ING Insurance, part of ING Groep N.V. He rejoined the Company in April 2010 as Chief Information Officer and was elected Vice President in July 2010. He was electe d Senior Vice President in December 2013. Clyde C. Tuggle, 53, is Senior Vice President and Chief Public Affairs and Communications Officer of the Company. Mr. Tuggle joined the Company in 1989 in the Corporate Issues Communications Department. In 1992, he was named Executive Assistant to Roberto C. Goizueta, then Chairman and Chief Executive Officer of the Company, where he managed external affairs and communications for the Office of the Chairman. In 1998, Mr.

Tuggle transferred to the Company's Central European Division Office in Vienna, where he held a variety of positions, including Director of Operations Development, Deputy to the Division President and Region Manager for Austria. In 2000, Mr. Tuggle returned to Atlanta, Georgia, as Executive Assista nt to then Chairman and Chief Executive Officer Douglas N. Daft and was elected Vice President of the Company. In February 2003, he was elected Senior Vice President of the Company and appointed Director of Worldwide Public Affairs and Communications. From 2005 until September 2008, Mr. Tuggle served as President of the Russia, Ukraine and Belarus Division. In September 2008, he returned to Atlanta, Georgia, to lead the Company's productivity efforts and oversee the Company's Public Affairs and Communicatio ns and Strategic Security and Aviation functions. Mr. Tuggle was elected Senior Vice President in October 2008 and in May 2009 was named to his current position. Kathy N. Waller, 57, is Executive Vice President and Chief Financial Officer of the Company. Ms. Waller joined the Company in 1987 as a senior accountant in the Accounting Research Department and has served in a number of accounting and finance roles of increasing responsibility. From July 2004 to August 2009, Ms. Waller served as Chief of Interna l Audit. In December 2005, she was elected Vice President of the Company, and in August 2009, she was elected Controller. In August 2013, she became Vice President, Finance and Controller, assuming additional responsibilities for corporate treasury, corpor ate tax and finance capabilities, and served in that position until April 23, 2014, when she was appointed Chief Financial Officer and elected Executive Vice President. All executive officers serve at the pleasure of the Board of Directors. There is no fam ily relationship between any of the Directors or executive officers of the Company. 27 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The principal United States market in which the Company's common stock is listed and trade d is the New York Stock Exchange. The following table sets forth, for the quarterly reporting periods indicated, the high and low market prices per share for the Company's common stock, as reported on the New York Stock Exchange composite tape, and dividen d per share information: Common Stock Market Prices High Low Dividends Declared 2015 Fourth quarter $ 43.91 $ 40.43 $ 0.330 Third quarter 42.25 36.56 0.330 Second quarter 41.69 39.12 0.330 First quarter 43.83 39.61 0.330 2014 Fourth quarter $ 45.00 $ 39.80 $ 0.305 Third quarter 42.57 39.06 0.305 Second quarter 42.29 38.04 0.305 First quarter 41.23 36.89 0.305 While we have historically paid dividends to holders of our common stock on a quarterly basis, the declaration and payment of future dividends will depend on many factors, including, but not limited to, our earnings, financial condition, business development needs and regulatory considerations, and are at the discretion of our Board of Directors. As of February 22, 2016, there were 224,780 shareowner accounts of record. This figure does not include a substantially greater number of "street name" holders or beneficial holders of our common stock, whose shares are held of record by banks, brokers and other financial institutions. The information under th e heading "EQUITY COMPENSATION PLAN INFORMATION" in the Company's definitive Proxy Statement for the Annual Meeting of Shareowners to be held on April 27, 2016 , to be filed with the Securities and Exchange Commission ("Company's 2016 Proxy Statement"), is incorporated herein by reference. During the fiscal year ended December 31, 2015 , no equity securities of the Company were sold by the Company that were not registered under the Securities Act of 1933, as amended. 28 The following table presents information with respect to purchases of common stock of the Company made during the three months ended December 31, 2015 , by the Company or any "affiliated purchaser" of the Company as defined in Rule 10b -18(a)(3) under th e Exchange Act. Period Total Number of Shares Purchased 1 Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plan 2 Maximum Number of Shares That May Yet Be Purchased Under the Publicly Announced Plan October 3, 2015 through October 30, 2015 6,247,561 $ 42.50 6,024,200 268,168,951 October 31, 2015 through November 27, 2015 22,030,953 42.28 22,027,278 246,141,673 November 28, 2015 through December 31, 2015 8,210,439 42.95 8,209,731 237,931,942 Total 36,488,953 $ 42.47 36,261,209 1 The total number of shares purchased includes: (i) shares purchased pursuant to the 2012 Plan described in footnote 2 below, and (ii) 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 t he vesting of restricted stock issued to employees, totaling 223,361 shares, 3,675 shares and 708 shares for the fiscal months of October, November and December 2015, respectively. 2 On October 18, 2012, the Company publicly announced that our Board of Directors had authorized a plan ("2012 Plan") for the Company to purchase up to 500 million shares of our Company's common stock. This column discloses the number of shares purchased pursua nt to the 2012 Plan during the indicated time periods (including shares purchased pursuant to the terms of preset trading plans meeting the requirements of Rule 10b5 -1 under the Exchange Act). 29 Performance Graph Comparison of Five -Year Cumulative Total Return Among The Coca -Cola Company, the Peer Group Index and the S&P 500 Index Total Return Stock Price Plus Reinvested Dividends December 31, 2010 2011 2012 2013 2014 2015 The Coca -Cola Company $ 100 $ 109 $ 117 $ 137 $ 144 $ 151 Peer Group Index 100 119 131 166 191 218 S&P 500 Index 100 102 118 157 178 181 The total return assumes that dividends were reinvested daily and is based on a $100 investment on December 31, 2010. The Peer Group Index is a self -constructed peer group of companies that are included in the Dow Jones Food and Beverage Group and the Dow Jones Tobacco Group of companies, from which the Company has been excluded. The Peer Group Index consists of the following companies: Altria Group, Inc., Archer Daniels Midland Company, B& G Foods, Inc., Brown -Forman Corporation, Bunge Limited, Campbell Soup Company, Coca -Cola Enterprises, Inc., ConAgra Foods, Inc., Constellation Brands, Inc., Darling Ingredients Inc., Dean Foods Company, Dr Pepper Snapple Group, Inc., Flowers Foods, Inc., G eneral Mills, Inc., The Hain Celestial Group, Inc., Herbalife Ltd., The Hershey Company, Hormel Foods Corporation, Ingredion Incorporated, The J.M. Smucker Company, Kellogg Company, Keurig Green Mountain, Inc., The Kraft Heinz Company, Lancaster Colony Cor poration, Leucadia National Corporation, McCormick & Company, Inc., Mead Johnson Nutrition Company, Molson Coors Brewing Company, Mondelēz International, Inc., Monster Beverage Corporation, PepsiCo, Inc., Philip Morris International Inc., Pinnacle Foods In c., Post Holdings, Inc., Reynolds American Inc., TreeHouse Foods, Inc., Tyson Foods, Inc., and The WhiteWave Foods Company. Companies included in the Dow Jones Food and Beverage Group and the Dow Jones Tobacco Group change periodically. This year, the grou ps include Pinnacle Foods Inc., which was not included in the groups last year. Additionally, the groups do not include Lorillard, Inc., which was included in the groups last year. 30 ITEM 6. SELECTED FINANCIAL DATA The following selected financial data should be read in conjunction with "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and consolidat ed financial statements and notes thereto contained in "Item 8. Financial Statements and Supplementary Data" of this report. Year Ended December 31, 2015 2014 2013 2012 2011 (In millions except per share data) SUMMARY OF OPERATIONS Net operating revenues $ 44,294 $ 45,998 $ 46,854 $ 48,017 $ 46,542 Net income attributable to shareowners of The Coca -Cola Company 7,351 7,098 8,584 9,019 8,584 PER SHARE DATA Basic net income $ 1.69 $ 1.62 $ 1.94 $ 2.00 $ 1.88 Diluted net income 1.67 1.60 1.90 1.97 1.85 Cash dividends 1.32 1.22 1.12 1.02 0.94 BALANCE SHEET DATA Total assets $ 90,093 $ 92,023 $ 90,055 $ 86,174 $ 79,974 Long -term debt 28,407 19,063 19,154 14,736 13,656 The Company's results are impacted by acquisitions and divestitures. Refer to "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" for additional information. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help the reader understand T he Coca -Cola Company, our operations and our present business environment. MD&A is provided as a supplement to — and should be read in conjunction with — our consolidated financial statements and the accompanying notes thereto contained in "Item 8. Financi al Statements and Supplementary Data" of this report. This overview summarizes the MD&A, which includes the following sections: • Our Business — a general description of our business and the nonalcoholic beverage segment of the commercial beverage industry; our objective; our strategic priorities; our core capabilities; and challenges and risks of our business. • Critical Accounting Policies and Estimates — a discussion of accounting policies that require critical judgments and estimates. • Operations Review — an analysis of our Company's consolidated results of operations for the three years presented in our consolidated financial statements. Except to the extent that differences among our operating segments are material to an understanding of our business as a whole, we present the discussion on a consolidated basisK • Liquidity, Capital Resources and Financial Position — an analysis of cash flows; off -balance sheet arrangements and aggregate contractual obligations; foreign exchange; the impact of inflation and changing prices; and an overview of financial position. 31 Our Business General The Coca -Cola Company is the world's largest beverage company. We own or license and market more than 500 nonalcoholic beverage brands, primarily sparkling beverages but also a variety of still b everages such as waters, enhanced waters, juices and juice drinks, ready -to-drink teas and coffees, and energy and sports drinks. We own and market four of the world's top five nonalcoholic sparkling beverage brands: Coca -Cola, Diet Coke, Fanta and Sprite. Finished beverage products bearing our trademarks, sold in the United States since 1886, are now sold in more than 200 countries. We make our branded beverage products available to consumers throughout the world through our network of Company -owned or -controlled bottling and distribution operations, bottling partners, distributors, wholesalers and retailers — the world's largest beverage distribution system. Beverages bearing trademarks owned by or licensed to us account for more than 1.9 billion of the a pproximately 58 billion servings of all beverages consumed worldwide every day. We believe our success depends on our ability to connect with consumers by providing them with a wide variety of choices to meet their desires, needs and lifestyle choices. Our success further depends on the ability of our people to execute effectively, every day. Our goal is to use our Company's assets — our brands, financial strength, unrivaled distribution system, global reach, and the talent and strong commitment of our mana gement and associates — to become more competitive and to accelerate growth in a manner that creates value for our shareowners. Our Company markets, manufactures and sells: • beverage concentrates, sometimes referred to as "beverage bases," and syrups, including fountain syrups (we refer to this part of our business as our "concentrate business" or "concentrate operations"); and • finished sparkling and still beverages (we refer to this part of our business as our "finished product business" or "finished product operations"). Generally, finished product operations generate higher net operating revenues but lower gross profit margins than concentrate operationsK In our concentrate operations, we typically generate net operating revenues by selling concentrates and syrups to authorized bottling and canning operations (to which we typically refer as our "bottlers" or our "bottling partners").

Our bottling partners eith er combine the concentrates with sweeteners (depending on the product), still water and/or sparkling water, or combine the syrups with sparkling water to produce finished beverages. The finished beverages are packaged in authorized containers — such as can s and refillable and nonrefillable glass and plastic bottles — bearing our trademarks or trademarks licensed to us and are then sold to retailers directly or, in some cases, through wholesalers or other bottlers. Outside the United States, we also sell con centrates for fountain beverages to our bottling partners who are typically authorized to manufacture fountain syrups, which they sell to fountain retailers such as restaurants and convenience stores which use the fountain syrups to produce beverages for i mmediate consumption, or to authorized fountain wholesalers who in turn sell and distribute the fountain syrups to fountain retailers. Our finished product operations consist primarily of Company -owned or -controlled bottling, sales and distribution operat ions, including CCR. Until December 31, 2015, our Company -owned or -controlled bottling, sales and distribution operations, other than CCR, were included in our Bottling Investments operating segment; and CCR was included in our North America operating seg ment. Effective January 1, 2016, we transferred CCR's bottling and associated supply chain operations in the United States and Canada from our North America segment to our Bottling Investments segment. Our finished product operations generate net operating revenues by selling sparkling beverages and a variety of still beverages, such as juices and juice drinks, energy and sports drinks, ready -to-drink teas and coffees, and certain water products, to retailers or to distributors, wholesalers and bottling par tners who distribute them to retailers. In addition, in the United States, we manufacture fountain syrups and sell them to fountain retailers such as restaurants and convenience stores who use the fountain syrups to produce beverages for immediate consumpt ion or to authorized fountain wholesalers or bottling partners who resell the fountain syrups to fountain retailers. In the United States, we authorize wholesalers to resell our fountain syrups through nonexclusive appointments that neither restrict us in setting the prices at which we sell fountain syrups to the wholesalers nor restrict the territories in which the wholesalers may resell in the United States. 32 The following table sets forth the percentage of total net operating revenues related to concentrate operations and finished product operations: Year Ended December 31, 2015 2014 2013 Concentrate operations 1 37 % 38 % 38 % Finished product operations 2 63 62 62 Total 100 % 100 % 100 % 1 Includes concentrates sold by the Company to authorized bottling partners for the manufacture of fountain syrups. The bottlers then typically sell the fountain syrups to wholesalers or directly to fountain retailers. 2 Includes fountain syrups manufactured by the Company, including consolidated bottling operations, and sold to fountain retailers or to authorized fountain wholesalers or bottling partners who resell the fountain syrups to fountain retailers. The following table sets forth the percentage of total worldwide unit case volume related to concentrate operations and finished product operations: Year Ended December 31, 2015 2014 2013 Concentrate operations 1 73 % 73 % 72 % Finished product operations 2 27 27 28 Total 100 % 100 % 100 % 1 Includes unit case volume related to concentrates sold by the Company to authorized bottling partners for the manufacture of fountain syrups.

The bottlers then typically sell the fountain syrups to wholesalers or directly to fountain retailers. 2 Includes unit case volume related to fountain syrups manufactured by the Company, including consolidated bottling operations, and sold to fountain retailers or to authorized fountain wholesalers or bottling partners who resell the fountain syrups to fountain retailers. The Nonalcoholic Beverage Segment of the Commercial Beve rage Industry We operate in the highly competitive nonalcoholic beverage segment of the commercial beverage industry. We face strong competition from numerous other general and specialty beverage companies. We, along with other beverage companies, are affe cted by a number of factors, including, but not limited to, cost to manufacture and distribute products, consumer spending, economic conditions, availability and quality of water, consumer preferences, inflation, political climate, local and national laws and regulations, foreign currency fluctuations, fuel prices and weather patterns. Our Objective Our objective is to use our formidable assets — our brands, financial strength, unrivaled distribution system, global reach, and the talent and strong commitment of our management and associates — to achieve long -term sustainable growth. Our vision for sustainable growth includes the following: • People: Being a great place to work where people are inspired to be the best they can beK • Portfolio: Bringing to the world a portfolio of beverage brands that anticipates and satisfies people's desires and needs. • Partners: Nurturing a winning network of partners and building mutual loyalty. • Planet: Being a responsible global citizen that makes a differenceK • Profit: Maximizing return to shareowners while being mindful of our overall responsibilitiesK • Productivity: Managing our people, time and money for greatest effectivenessK To enable us to achieve our objective, we must further enhance our core capabilities of consumer marketing; commercial leadership; franchise leadership; and bottling and distr ibution operationsK 33 Core Capabilities Consumer Marketing Marketing investments are designed to enhance consumer awareness of, and increase consumer preference for, our brands. Successful marketing investments produce long -term growth in unit case volume, per capita consumption and our share of worldwide nonalcoholic beverage sales. Through our relationships with our bottling partners and those who sell our products in the marketplace, we create and implement integrated marketing programs , both globally and locally, that are designed to heighten consumer awareness of and product appeal for our brands. In developing a strategy for a Company brand, we conduct product and packaging research, establish brand positioning, develop precise consum er communications and solicit consumer feedback. Our integrated marketing activities include, but are not limited to, advertising, point -of-sale merchandising and sales promotions. We are focusing on marketing strategies to drive volume growth in emerging markets, increasing our brand value in developing markets and growing profit in our developed markets. In emerging markets, we are investing in infrastructure programs that drive volume through increased access to consumers. In developing markets, where consumer access has largely been established, our focus is on differentiating our brands. In our developed markets, we continue to invest in brands and infrastructure programs but generally at a slower rate than gross profit growth. Commercial Leadership The Coca -Cola system has millions of customers around the world who sell or serve our products directly to consumers. We focus on enhancing value for our customers and providing solutions to grow their beverage businesses. Our approach includes understanding each customer's business and needs — whether that customer is a sophisticated retailer in a developed market or a kiosk owner in an emerging market. We focus on ensuring that our customers have the right product and package offerings and the right promotio nal tools to deliver enhanced value to themselves and the Company. We are constantly looking to build new beverage consumption occasions in our customers' outlets through unique and innovative consumer experiences, product availability and delivery systems , and beverage merchandising and displays. We participate in joint brand -building initiatives with our customers in order to drive consumer preference for our brands. Through our commercial leadership initiatives, we embed ourselves further into our retail customers' businesses while developing strategies for better execution at the point of sale. Franchise Leadership We must continue to improve our franchise leadership capabilities to give our Company and our bottling partners the ability to grow together through shared values, aligned incentives and a sense of urgency and flexibility that supports consumers' always changing needs and tastes. The financial health and success of our bottling partners are critical components of the Company's success. We work with our bottling partners to identify processes that enable us to quickly achieve scale and efficiencies, and we share best practices throughout the bottling system. With our bottling partners, we work to produce differentiated beverages and packages that are appropriate for the right channels and consumers. We also design business models for sparkling and still beverages in specific markets to ensure that we appropriately share the value created by these beverages with our bottling partners. We will conti nue to build a supply chain network that leverages the size and scale of the Coca -Cola system to gain a competitive advantage. Bottling and Distribution Operations Most of our Company beverage products are manufactured, sold and distributed by independent bottling partners. However, from time to time we acquire or take control of bottling operations, often in underperforming markets where we believe we can use our resources and expertise to improve performance. Owning such a controlling interest enables us to compensate for limited local resources; help focus the bottler's sales and marketing programs; assist in the development of the bottler's business and information systems; and establish an appropriate capital structure for the bottler. Our Company has a long history of providing world -class customer service, demonstrating leadership in the marketplace and leveraging the talent of our global workforce. In addition, we have an experienced bottler management team. All of these factors are critical to build upon as we manage our bottling and distribution operations. The Company has a deep commitment to continuously improving our business. This includes our efforts to develop innovative packaging and merchandising solutions which help drive demand for our beve rages and meet the evolving preferences of our consumers. As we further transform the way we go to market, the Company continues to seek out ways to be more efficient. 34 Challenges and Risks Being global provides unique opportunities for our Company. Challenges and risks accompany those opportunities. Our management has identified certain challenges and risks that demand the attention of the nonalcoholic beverage segment of the commercial beverage industry and our Company. Of these, six key challenges and risks are discussed below. Obesity The rates of obesity affecting communities, cultures and countries worldwide continue to be too high. There is growing concern among consumers, public health professionals and go vernment agencies about the health problems associated with obesity, which results from poor diets that are too high in calories combined with inactive lifestyles. This concern represents a significant challenge to our industry. We understand and recognize that obesity is a complex public health challenge and are committed to being a part of the solution. We recognize the uniqueness of consumers' lifestyles and dietary choices. We are working to pair commercial actions with community engagement to bring tog ether business, government and civil society to help pursue solutions that address obesity. Commercially, we continue to: • offer reduced -, low - or nç -calorie beverage options; • provide transparent nutrition information, featuring calories on the front of all of our packages; • provide our beverages in a range of packaging sizes; and • market responsibly, including no advertising to children under 12. The heritage of our Company is to lead, and innovation is critical for leadership. As such, we are resolute in continuing to innovate and are committed to partnering to find winning solutions in the area of noncaloric sweeteners. This includes working to reduc e caloric sweeteners, and therefore the calories, in our beverages. We want to be a more helpful and credible partner in the fight against obesity. Across the Coca -Cola system, we are mobilizing our assets in marketing and in community outreach to increase awareness and spur action. Water Quality and Quantity Water quality and quantity is an issue that increasingly requires our Company's attention and collaboration with other companies, suppliers, governments, nongovernmental organizations and communities w here we operate. Water is a main ingredient in substantially all of our products, is vital to the production of the agricultural ingredients on which our business relies and is needed in our manufacturing process. It also is critical to the prosperity of t he communities we serve. Water is a limited natural resource facing unprecedented challenges from overexploitation, flourishing food demand, increasing pollution, poor management and the effects of climate change. Our Company has a robust water stewardship and management program and continues to work to improve water use efficiency, treat wastewater prior to discharge and achieve our goal of replenishing the water that we and our bottling partners source and use in our finished products. We regularly assess the specific water -related risks that we and many of our bottling partners face and have implemented a formal water risk management program. We are actively collaborating with other companies, governments, nongovernmental organizations and communities to advocate for needed water policy reforms and action to protect water availability and quality around the world. We are working with our global partners to develop and implement sustainability -related water projects that address local needs. We are encourag ing improved water efficiency and conservation efforts throughout our system. Through these integrated programs, we believe that our Company is in an excellent position to leverage the water - related knowledge we have developed in the communities we serve — through source water availability assessments and planning, water resource management, water treatment, wastewater treatment systems and models for working with communities and partners in addressing water and sanitation needs. As demand for water continu es to increase around the world, we expect commitment and continued action on our part will be crucial to the successful long - term stewardship of this critical natural resource. Evolving Consumer Preferences We are impacted by shifting consumer demographic s and needs, on -the -go lifestyles, aging populations and consumers who are empowered with more information than ever. As a consequence of these changes, consumers want more choices. We are committed to meeting their needs and to generating new growth throu gh our portfolio of more than 500 brands and more than 3,800 beverage products, including more than 1,100 low - and no -calorie products, new product offerings, innovative packaging and ingredient education efforts. We are also committed to continuing to exp and the variety of choices we provide to consumers to meet their ever -changing needs, desires and lifestyles. 35 Increased Competition and Capabilities in the Marketplace Our Company is facing strong competition f rom some well -established global companies and many local participants. We must continue to strengthen our capabilities in marketing and innovation in order to maintain our brand loyalty and market share while we strategically expand into other profitable categories of the nonalcoholic beverage segment of the commercial beverage industry. Product Safety and Quality As the world's largest beverage company, we strive to meet the highest of standards in both product safety and product quality. We are aware tha t some consumers have concerns and negative viewpoints regarding certain ingredients used in our products. Our system works every day to share safe and refreshing beverages with the world.

We have rigorous product and ingredient safety and quality standard s designed to ensure safety and quality in each of our products, and we drive innovation that provides new beverage options to meet consumers' evolving needs and preferences. Across the Coca -Cola system, we take great care in an effort to ensure that every one of our beverages meets the highest standards for safety and quality. We work to ensure consistent safety and quality through strong governance and compliance with applicable regulations and standards. We stay current with new regulations, industry bes t practices and marketplace conditions and engage with standard -setting and industry organizations. Additionally, we manufacture and distribute our products according to strict policies, requirements and specifications set forth in an integrated quality ma nagement program that continually measures all operations within the Coca -Cola system against the same stringent standards. Our quality management system also identifies and mitigates risks and drives improvement. In our quality laboratories, we stringentl y measure the quality attributes of ingredients as well as samples of finished products collected from the marketplace. We perform due diligence to ensure that product and ingredient safety and quality standards are maintained in the more than 200 countri es where our products are sold. We consistently reassess the relevance of our requirements and standards and continually work to improve and refine them across our entire supply chain. Food Security Increased demand for commodities and decreased agricultur al productivity in certain regions of the world as a result of changing weather patterns may limit the availability or increase the cost of key agricultural commodities, such as sugarcane, corn, sugar beets, citrus, coffee and tea, which are important sour ces of ingredients for our products and could impact the food security of communities around the world. We are dedicated to implementing our sustainable sourcing commitment, which is founded on principles that protect the environment, uphold workplace righ ts and help build more sustainable communities. To support this commitment, our programs focus on economic opportunity, with an emphasis on female farmers, and environmental sustainability designed to help address these agricultural challenges. Through joi nt efforts with farmers, communities, bottlers, suppliers and key partners, as well as our increased and continued investment in sustainable agriculture, we can together help make a positive strategic impact on food security. All of these challenges and ri sks — obesity; water quality and quantity; evolving consumer preferences; increased competition and capabilities in the marketplace; product safety and quality; and food security — have the potential to have a material adverse effect on the nonalcoholic be verage segment of the commercial beverage industry and on our Company; however, we believe our Company is well positioned to appropriately address these challenges and risks. See also ''Item 1A. Risk Factors'' in Part I of this report for additional inform ation about risks and uncertainties facing our Company. Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require management to make estimates, judgments and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. We believe our most critical accounting policies and estimates relate to the following: • mrinciples of Consolidation • Recoverability of Current and Noncurrent Assets • Pension Plan Valuations • Revenue Recognition • Income Taxes 36 Management has discussed the development, selection and disclosure of critical accounting policies and estimates with the Audit Committee of the Company's Board of Directors. While our estimates and assumptions are based on our knowledge of current events and actions we may undertake in the future, actual results may ultimately differ from these estimates and assumptions. For a discussion of the Company's significant accounting policies, refer to Note 1 of Notes to C onsolidated Financial Statements. Principles of Consolidation Our Company consolidates all entities that we control by ownership of a majority voting interest as well as variable interest entities for which our Company is the primary beneficiary. Generally , we consolidate only business enterprises that we control by ownership of a majority voting interest. However, there are situations in which consolidation is required even though the usual condition of consolidation (ownership of a majority voting interes t) does not apply. Generally, this occurs when an entity holds an interest in another business enterprise that was achieved through arrangements that do not involve voting interests, which results in a disproportionate relationship between such entity's vo ting interests in, and its exposure to the economic risks and potential rewards of, the other business enterprise. This disproportionate relationship results in what is known as a variable interest, and the entity in which we have the variable interest is referred to as a "VIE." An enterprise must consolidate a VIE if it is determined to be the primary beneficiary of the VIE. The primary beneficiary has both (1) the power to direct the activities of the VIE that most significantly impact the entity's econom ic performance, and (2) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. Our Company holds interests in certain VIEs, primarily bottling and container manufacturing operations, for which we were not determined to be the primary beneficiary. Our variable interests in these VIEs primarily relate to profit guarantees or subordinated financial support. Refer to Note 11 of Notes to Consolidated Fina ncial Statements. Although these financial arrangements resulted in our holding variable interests in these entities, they did not empower us to direct the activities of the VIEs that most significantly impact the VIEs' economic performance. Our Company's investments, plus any loans and guarantees, related to these VIEs totaled $ 2,687 million and $ 2,274 million as of December 31, 2015 and 2014 , respectively, representing our maximum exposures to loss. The Company's investments, plus any loans and guarantees , related to these VIEs were not significant to the Company's consolidated financial statements. In addition, our Company holds interests in certain VIEs, primarily bottling and container manufacturing operations, for which we were determined to be the pri mary beneficiary. As a result, we have consolidated these entities. Our Company's investments, plus any loans and guarantees, related to these VIEs totaled $ 221 million and $ 266 million as of December 31, 2015 and 2014 , respectively, representing our maxim um exposures to loss. The assets and liabilities of VIEs for which we are the primary beneficiary were not significant to the Company's consolidated financial statements. Creditors of our VIEs do not have recourse against the general credit of the Company, regardless of whether they are accounted for as consolidated entities. Recoverability of Current and Noncurrent Assets Our Company faces many uncertainties and risks related to various economic, political and regulatory environments in the countries in wh ich we operate, particularly in developing or emerging markets. Refer to the heading "Our Business — Challenges and Risks" above and "Item 1A. Risk Factors" in Part I of this report. As a result, management must make numerous assumptions which involve a si gnificant amount of judgment when completing recoverability and impairment tests of current and noncurrent assets in various regions around the world. We perform recoverability and impairment tests of current and noncurrent assets in accordance with accoun ting principles generally accepted in the United States. For certain assets, recoverability and/or impairment tests are required only when conditions exist that indicate the carrying value may not be recoverable. For other assets, impairment tests are requ ired at least annually, or more frequently, if events or circumstances indicate that an asset may be impaired. Our equity method investees also perform such recoverability and/or impairment tests. If an impairment charge is recorded by one of our equity me thod investees, the Company records its proportionate share of such charge as a reduction of equity income (loss) — net in our consolidated statements of income. However, the actual amount we record with respect to our proportionate share of such charges m ay be impacted by items such as basis differences, deferred taxes and deferred gains. 37 Management's assessments of the recoverability and impairment tests of noncurrent assets involve critical accounting estimat es. These estimates require significant management judgment, include inherent uncertainties and are often interdependent; therefore, they do not change in isolation. Factors that management must estimate include, among others, the economic life of the asse t, sales volume, pricing, cost of raw materials, delivery costs, inflation, cost of capital, marketing spending, foreign currency exchange rates, tax rates, capital spending and proceeds from the sale of assets. These factors are even more difficult to pre dict when global financial markets are highly volatile. The estimates we use when assessing the recoverability of current and noncurrent assets are consistent with those we use in our internal planning. When performing impairment tests, we estimate the fai r values of the assets using management's best assumptions, which we believe would be consistent with what a hypothetical marketplace participant would use. Estimates and assumptions used in these tests are evaluated and updated as appropriate. The variabi lity of these factors depends on a number of conditions, including uncertainty about future events, and thus our accounting estimates may change from period to period. If other assumptions and estimates had been used when these tests were performed, impair ment charges could have resulted. As mentioned above, these factors do not change in isolation and, therefore, we do not believe it is practicable or meaningful to present the impact of changing a single factor. Furthermore, if management uses different as sumptions or if different conditions occur in future periods, future impairment charges could result. Refer to the heading "Operations Review" below for additional information related to our present business environment. Certain factors discussed above are impacted by our current business environment and are discussed throughout this report, as appropriate. Investments in Equity and Debt Securities The carrying values of our investments in equity securities are determined using the equity method, the cost m ethod or the fair value method. We account for investments in companies that we do not control or account for under the equity method either at fair value or under the cost method, as applicable. Investments in equity securities, other than investments acc ounted for under the equity method, are carried at fair value if the fair value of the security is readily determinable. Equity investments carried at fair value are classified as either trading or available -for -sale securities. Realized and unrealized gai ns and losses on trading securities and realized gains and losses on available - for -sale securities are included in net income. Unrealized gains and losses, net of deferred taxes, on available -for - sale securities are included in our consolidated balance she ets as a component of accumulated other comprehensive income (loss) ("AOCI"), except for the change in fair value attributable to the currency risk being hedged, if applicable, which is included in net income. Trading securities are reported as either mark etable securities or other assets in our consolidated balance sheets. Securities classified as available -for -sale are reported as either marketable securities or other investments in our consolidated balance sheets, depending on the length of time we inten d to hold the investment. Investments in equity securities that do not qualify for fair value accounting or equity method accounting are accounted for under the cost method. In accordance with the cost method, our initial investment is recorded at cost and we record dividend income when applicable dividends are declared. Cost method investments are reported as other investments in our consolidated balance sheets. Our investments in debt securities are carried at either amortized cost or fair value. Investme nts in debt securities that the Company has the positive intent and ability to hold to maturity are carried at amortized cost and classified as held -to-maturity. Investments in debt securities that are not classified as held -to-maturity are carried at fair value and classified as either trading or available -for -sale. The following table presents the carrying values of our investments in equity and debt securities (in millions): December 31, 2015 Carrying Value Percentage of Total Assets Equity method investments $ 12,318 14 % Securities classified as available -for -sale 8,606 10 Securities classified as trading 322 * Cost method investments 190 * Total $ 21,436 24 % * Accounts for less than 1 percent of the Company's total assets. 38 Investments classified as trading securities are not assessed for impairment, since they are carried at fair value with the change in fair value included in net income. We review our investments in equity and debt securities that are accounted for using the equity method or cost method or that are classified as available -for -sale or held -to-maturity each reporting period to determine whether a significant e vent or change in circumstances has occurred that may have an adverse effect on the fair value of each investment. When such events or changes occur, we evaluate the fair value compared to our cost basis in the investment. We also perform this evaluation e very reporting period for each investment for which our cost basis has exceeded the fair value. The fair values of most of our Company's investments in publicly traded companies are often readily available based on quoted market prices. For investments in nonpublicly traded companies, management's assessment of fair value is based on valuation methodologies including discounted cash flows, estimates of sales proceeds and appraisals, as appropriate. We consider the assumptions that we believe hypothetical ma rketplace participants would use in evaluating estimated future cash flows when employing the discounted cash flow or estimates of sales proceeds valuation methodologies. The ability to accurately predict future cash flows, especially in emerging and devel oping markets, may impact the determination of fair value. In the event the fair value of an investment declines below our cost basis, management is required to determine if the decline in fair value is other than temporary. If management determines the de cline is other than temporary, an impairment charge is recorded. Management's assessment as to the nature of a decline in fair value is based on, among other things, the length of time and the extent to which the market value has been less than our cost ba sis, the financial condition and near -term prospects of the issuer, and our intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in market value. In 2013, four of the Company's Japanese bottling partners merged as Coca -Cola East Japan Bottling Company, Ltd., now known as Coca -Cola East Japan Co., Ltd. ("CCEJ"), a publicly traded entity, through a share exchange. The terms of the agreement included the issuance of new shares of one of the publicly traded bottlers in exchange for 100 percent of the outstanding shares of the remaining three bottlers according to an agreed -upon share exchange ratio. As a result, the Company recorded a net charge of $114 million for those investments in which the Compan y's carrying value was greater than the fair value of the shares received. These charges were recorded in the line item other income (loss) — net in our consolidated statement of income and impacted the Corporate operating segment. Refer to the heading "Op erations Review — Other Income (Loss) — Net" below as well as Note 17 of Notes to Consolidated Financial Statements. The following table presents the difference between calculated fair values, based on quoted closing prices of publicly traded shares, and o ur Company's cost basis in investments in publicly traded companies accounted for under the equity method (in millions): December 31, 2015 Fair Value Carrying Value Difference Monster Beverage Corporation $ 5,071 $ 3,118 $ 1,953 Coca -Cola FEMSA, S.A.B. de C.V. 4,360 1,853 2,507 Coca -Cola HBC AG 1,851 1,105 746 Coca -Cola Amatil Limited 1,496 685 811 Coca -Cola İçecek A.Ş. 65P 202 451 Coca -Cola East Japan Co., Ltd. 627 448 179 Coca -Cola Bottling Co. Consolidated 453 104 349 Embotelladora Andina S.A. 396 275 121 Corporación Lindley S.A. 191 83 108 Total $ 15,098 $ 7,873 $ 7,225 39 Other Assets Our Company invests in infrastructure programs with our bottlers that are directed at strengthening our bottling system and increasing unit case volume. Additionally, our Company advances payments to cer tain customers for distribution rights as well as to fund future marketing activities intended to generate profitable volume and expenses such payments over the periods benefited. Payments under these programs are generally capitalized and reported in the line items prepaid expenses and other assets or other assets, as appropriate, in our consolidated balance sheets. When facts and circumstances indicate that the carrying value of these assets (or asset groups) may not be recoverable, management assesses th e recoverability of the carrying value by preparing estimates of sales volume and the resulting gross profit and cash flows. These estimated future cash flows are consistent with those we use in our internal planning. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount, we recognize an impairment loss. The impairment loss recognized is the amount by which the carrying amount exceeds the fair value. Property, Plant and Equipment As of December 31, 2015 , the carrying value of our property, plant and equipment, net of depreciation, was $ 12,571 million , or 14 percent of our total assets. Certain events or changes in circumstances may indicate that the recoverability of the carrying amount or remaining useful life of property, plant and equipment should be assessed, including, among others, the manner or length of time in which the Company intends to use the asset, a significant decrease in market value, a significant change in the business climate in a particular market, or a current period operating or cash flow loss combined with historical losses or projected future losses. When such events or changes in circumstances are present and an impairment review is performed, we estimate the futu re cash flows expected to result from the use of the asset (or asset group) and its eventual disposition. These estimated future cash flows are consistent with those we use in our internal planning. If the sum of the expected future cash flows (undiscounte d and without interest charges) is less than the carrying amount, we recognize an impairment loss. The impairment loss recognized is the amount by which the carrying amount exceeds the fair value. We use a variety of methodologies to determine the fair val ue of property, plant and equipment, including appraisals and discounted cash flow models, which are consistent with the assumptions we believe hypothetical marketplace participants would use. Goodwill, Trademarks and Other Intangible Assets Intangible ass ets are classified into one of three categories: (1) intangible assets with definite lives subject to amortization, (2) intangible assets with indefinite lives not subject to amortization and (3) goodwill. For intangible assets with definite lives, tests f or impairment must be performed if conditions exist that indicate the carrying value may not be recoverable. For intangible assets with indefinite lives and goodwill, tests for impairment must be performed at least annually or more frequently if events or circumstances indicate that assets might be impaired. The following table presents the carrying values of intangible assets included in our consolidated balance sheet (in millions): December 31, 2015 Carrying Value Percentage of Total Assets 1 Goodwill $ 11,289 13 % Bottlers' franchise rights with indefinite lives 6,000 7 Trademarks with indefinite lives 5,989 7 Definite -lived intangible assets, net 690 1 Other intangible assets not subject to amortization 164 * Total $ 24,132 27 % * Accounts for less than 1 percent of the Company's total assets. 1 The total percentage does not add due to rounding. When facts and circumstances indicate that the carrying value of definite -lived intangible assets may not be recoverable, management assesses the recoverability of the carrying value by preparing estimates of sales volume and the resulting gross profit and cash flows. These estimated future cash flows are consistent wit h those we use in our internal planning. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset (or asset group), we recognize an impairment loss. The impairment loss recognize d is the amount by which the carrying amount exceeds the fair value. We use a variety of methodologies to determine the fair value of these assets, including discounted cash flow models, which are consistent with the assumptions we believe hypothetical mar ketplace participants would use. 40 We test intangible assets determined to have indefinite useful lives, including trademarks, franchise rights and goodwill, for impairment annually, or more frequently if events o r circumstances indicate that assets might be impaired. Our Company performs these annual impairment reviews as of the first day of our third fiscal quarter. We use a variety of methodologies in conducting impairment assessments of indefinite -lived intangi ble assets, including, but not limited to, discounted cash flow models, which are based on the assumptions we believe hypothetical marketplace participants would use. For indefinite -lived intangible assets, other than goodwill, if the carrying amount excee ds the fair value, an impairment charge is recognized in an amount equal to that excess. The Company has the option to perform a qualitative assessment of indefinite -lived intangible assets, other than goodwill, prior to completing the impairment test desc ribed above. The Company must assess whether it is more likely than not that the fair value of the intangible asset is less than its carrying amount. If the Company concludes that this is the case, it must perform the testing described above. Otherwise, th e Company does not need to perform any further assessment. During 2015 , the Company performed qualitative assessments on 25 percent of the carrying value of our indefinite -lived intangible assets other than goodwill. We perform impairment tests of goodwill at our reporting unit level, which is one level below our operating segments. Our operating segments are primarily based on geographic responsibility, which is consistent with the way management runs our business. Our operating segments are subdivided int o smaller geographic regions or territories that we sometimes refer to as "business units." These business units are also our reporting units. The Bottling Investments operating segment includes all Company -owned or consolidated bottling operations, regard less of geographic location, except for bottling operations managed by CCR, which are included in our North America operating segment. Generally, each Company -owned or consolidated bottling operation within our Bottling Investments operating segment is its own reporting unit. Goodwill is assigned to the reporting unit or units that benefit from the synergies arising from each business combination. The goodwill impairment test consists of a two -step process, if necessary. The first step is to compare the fai r value of a reporting unit to its carrying value, including goodwill. We typically use discounted cash flow models to determine the fair value of a reporting unit. The assumptions used in these models are consistent with those we believe hypothetical mark etplace participants would use. If the fair value of the reporting unit is less than its carrying value, the second step of the impairment test must be performed in order to determine the amount of impairment loss, if any. The second step compares the impl ied fair value of the reporting unit's goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds its implied fair value, an impairment charge is recognized in an amount equal to that excess. The los s recognized cannot exceed the carrying amount of goodwill. The Company has the option to perform a qualitative assessment of goodwill prior to completing the two -step process described above to determine whether it is more likely than not that the fair va lue of a reporting unit is less than its carrying amount, including goodwill and other intangible assets. If the Company concludes that this is the case, it must perform the two -step process. Otherwise, the Company will forego the two -step process and does not need to perform any further testing. During 2015 , the Company performed qualitative assessments on 10 percent of our consolidated goodwill balance. As of December 31, 2015, we did not have any reporting unit with a material amount of goodwill for which it is reasonably likely that it will fail step one of a goodwill impairment test in the near term. Intangible assets acquired in recent transactions are naturally more susceptible to impairment, primarily due to the fact that they are recorded a t fair value based on recent operating plans and macroeconomic conditions present at the time of acquisition. Consequently, if operating results and/or macroeconomic conditions deteriorate shortly after an acquisition, it could result in the impairment of the acquired assets. A deterioration of macroeconomic conditions may not only negatively impact the estimated operating cash flows used in our cash flow models but may also negatively impact other assumptions used in our analyses, including, but not limite d to, the estimated cost of capital and/or discount rates. Additionally, as discussed above, in accordance with accounting principles generally accepted in the United States, we are required to ensure that assumptions used to determine fair value in our an alyses are consistent with the assumptions a hypothetical marketplace participant would use. As a result, the cost of capital and/or discount rates used in our analyses may increase or decrease based on market conditions and trends, regardless of whether o ur Company's actual cost of capital has changed. Therefore, if the cost of capital and/or discount rates change, our Company may recognize an impairment of an intangible asset in spite of realizing actual cash flows that are approximately equal to, or grea ter than, our previously forecasted amounts. On June 12, 2015, the Company closed a transaction with Monster. Under the terms of the transaction, the Company was required to discontinue selling energy products under one of the trademarks included in the gl acéau portfolio. During the year ended December 31, 2015, the Company recognized impairment charges of $418 million, primarily as a result of discontinuing these products. The total combined fair value of the various trademarks in the glacéau portfolio sig nificantly exceeds the remaining combined carrying value of $2.9 billion as of December 31, 2015. However, the fair value of the individual trademark that was the subject of the impairment charges currently equals its carrying value. If the future operatin g results of 41 this trademark do not support the current near -term financial projections, or if macroeconomic conditions change causing the cost of capital and/or discount rate to increase without an offsetting increase in the oper ating results, it is likely that we would be required to recognize an additional impairment charge related to this trademark. During 2015, the Company also recorded a charge of $55 million related to the impairment of a Venezuelan trademark. The Venezuelan trademark impairment was due to the Company's revised expectations regarding the convertibility of the local currency. These charges were recorded in our Corporate operating segment in the line item other operating charges in our consolidated statement of income and were determined by comparing the fair value of the trademarks, derived using discounted cash flow analyses, to the respective carrying value. Management will continue to monitor the fair value of our intangible assets in future periods. The Com pany did not record any significant impairment charges related to intangible assets during the year ended December 31, 2014. During 2013, the Company recorded charges of $195 million related to certain intangible assets. These charges included $113 million related to the impairment of trademarks recorded in our Bottling Investments and Asia Pacific operating segments. These impairments were primarily due to a strategic decision to phase out certain local -market brands, which resulted in a change in the expe cted useful life of the intangible assets, and were determined by comparing the fair value of the trademarks, derived using discounted cash flow analyses, to the current carrying value. Additionally, the remaining charge of $82 million related to goodwill recorded in our Bottling Investments operating segment. This charge was primarily the result of management's revised outlook on market conditions and volume performance. The total impairment charges of $195 million were recorded in our Corporate operating segment in the line item other operating charges in our consolidated statements of income. Pension Plan Valuations Our Company sponsors and/or contributes to pension and postretirement health care and life insurance benefit plans covering substantially all U.S. employees. We also sponsor nonqualified, unfunded defined benefit pension plans for certain associates and participate in multi -employer pension plans in the United States. In addition, our Company and its subsidiaries have various pension plans and other forms of postretirement arrangements outside the United States. Management is required to make certain critical estimates related to actuarial assumptions used to determine our pension expense and obligations. We believe the most critical assumptions are related to (1) the discount rate used to determine the present value of the liabilities and (2) the expected long -term rate of return on plan assets. All of our actuarial assumptions are reviewed annually. Changes in these assumptions could have a mat erial impact on the measurement of our pension expense and obligations. At each measurement date, we determine the discount rate primarily by reference to rates of high -quality, long -term corporate bonds that mature in a pattern similar to the future payme nts we anticipate making under the plans. As of December 31, 2015 and 2014, the weighted -average discount rate used to compute our pension obligations was 4.25 percent and 3.75 percent, respectively. During the years ended December 31, 2015, 2014, and 2013 , for plans using the yield curve approach, the Company measured the related service and interest components of net periodic benefit cost for pension and other postretirement benefit plans utilizing the single weighted -average discount rate derived from th e yield curve. Effective January 1, 2016, the Company changed the method used to calculate the service and interest components and will measure these costs by applying the specific spot rates along the yield curve to the plans' projected cash flows. The Co mpany believes the new approach provides a more precise measurement of service and interest costs by improving the correlation between projected cash flows and the corresponding spot yield curve rates. The change does not affect the measurement of the Comp any's pension and other postretirement benefit obligations for those plans and is accounted for as a change in accounting estimate, which is applied prospectively. In 2016, we expect the change in estimate to reduce pension and other postretirement net per iodic benefit plan costs by $73 million. The expected long -term rate of return on plan assets is based upon the long -term outlook of our investment strategy as well as our historical returns and volatilities for each asset class. We also review current lev els of interest rates and inflation to assess the reasonableness of our long -term rates. Our pension plan investment objective is to ensure all of our plans have sufficient funds to meet their benefit obligations when they become due. As a result, the Comp any periodically revises asset allocations, where appropriate, to improve returns and manage risk. The weighted -average expected long -term rate of return used to calculate our pension expense was 8.25 percent in 2015 and 2014. 42 In 2015, the Company's total pension expense related to defined benefit plans was $305 million. In 2016, we expect our total pension expense to be $105 million. The anticipated decrease is primarily due to settlement and special termination costs incurred in 2015 of $169 million, the new method to calculate service and interest costs described above, an increase in the weighted -average discount rate used to calculate the Company's benefit obligations and the impact of $471 million of contrib utions the Company made in early 2016 to U.S. pension plans. The impact of these items will be partially offset by unfavorable asset performance compared to our expected return during 2015 and a decrease in the expected return on assets for U.S. plans. The estimated impact of a 50 basis -point decrease in the discount rate on our 2016 pension expense would be an increase to our pension expense of $34 million. Additionally, the estimated impact of a 50 basis -point decrease in the expected long -term rate of re turn on plan assets on our 2016 pension expense would be an increase to our pension expense of $29 million. The sensitivity information provided above is based only on changes to the actuarial assumptions used for our U.S.

pension plans. As of December 31, 2015, the Company's primary U.S. plan represented 59 percent and 62 percent of the Company's consolidated projected pension benefit obligation and pension assets, respectively. Refer to Note 13 of Notes to Consolidated Financial Statements for additional information about our pension plans and related actuarial assumptions. Effective December 31, 2014, the Company revised our mortality assumptions used to determine the projected benefit obligation of the U.S. defined benefit pension plans. The revised assu mptions were derived from the mortality tables and the mortality improvement scales published by the Society of Actuaries in October 2014. The change in mortality assumptions for the U.S. plans resulted in an increase in the projected benefit obligation at December 31, 2014 of $210 million. Revenue Recognition We recognize revenue when persuasive evidence of an arrangement exists, delivery of products has occurred, the sales price is fixed or determinable and collectibility is reasonably assured. For our Co mpany, this generally means that we recognize revenue when title to our products is transferred to our bottling partners, resellers or other customers. Title usually transfers upon shipment to or receipt at our customers' locations, as determined by the specific sales terms of each transaction. Our sales terms do not allow for a right of return except for matters related to any manufacturing defects on our part. Our customers can earn certain incentives which are included in deductions from revenue, a compo nent of net operating revenues in our consolidated statements of income. These incentives include, but are not limited to, cash discounts, funds for promotional and marketing activities, volume -based incentive programs and support for infrastructure progra ms. Refer to Note 1 of Notes to Consolidated Financial Statements. The aggregate deductions from revenue recorded by the Company in relation to these programs, including amortization expense on infrastructure programs, were $ 6.8 billion , $ 7.0 billion and $ 6.9 billion in 2015 , 2014 and 2013 , respectively. In preparing the financial statements, management must make estimates related to the contractual terms, customer performance and sales volume to determine the total amounts recorded as deductions from reven ue. Management also considers past results in making such estimates. The actual amounts ultimately paid may be different from our estimates. Such differences are recorded once they have been determined and have historically not been significant. Income Tax es Our annual tax rate is based on our income, statutory tax rates and tax planning opportunities available to us in the various jurisdictions in which we operate. Significant judgment is required in determining our annual tax expense and in evaluating our tax positions. We establish reserves to remove some or all of the tax benefit of any of our tax positions at the time we determine that the positions become uncertain based upon one of the following: (1) the tax position is not "more likely than not" to b e sustained, (2) the tax position is "more likely than not" to be sustained, but for a lesser amount, or (3) the tax position is "more likely than not" to be sustained, but not in the financial period in which the tax position was originally taken. For pur poses of evaluating whether or not a tax position is uncertain, (1) we presume the tax position will be examined by the relevant taxing authority that has full knowledge of all relevant information, (2) the technical merits of a tax position are derived fr om authorities such as legislation and statutes, legislative intent, regulations, rulings and case law and their applicability to the facts and circumstances of the tax position, and (3) each tax position is evaluated without considerations of the possibil ity of offset or aggregation with other tax positions taken. We adjust these reserves, including any impact on the related interest and penalties, in light of changing facts and circumstances, such as the progress of a tax audit. Refer to the heading "Oper ations Review — Income Taxes" below and Note 14 of Notes to Consolidated Financial Statements. On September 17, 2015, the Company received a Notice from the IRS for the tax years 2007 through 2009, after a five -year audit. In the Notice, the IRS claims tha t the Company's United States taxable income should be increased by an amount that creates a potential additional federal income tax liability of approximately $3.3 billion for the period, plus interest. No penalties were asserted in the Notice; however, t he IRS has since taken the position that it is not precluded from asserting penalties and notified the Company that it may do so. The disputed amounts largely relate to a transfer pricing matter involving the 43 appropriate amount of taxable income the Company should report in the United States in connection with its licensing of intangible property to certain related foreign licensees regarding the manufacturing, distributi on, sale, marketing and promotion of products in overseas markets. The IRS designated the matter for litigation on October 15, 2015. The Company firmly believes that the IRS' claims are without merit and plans to pursue all available administrative and jud icial remedies necessary to resolve this matter. To that end, the Company filed a petition in U.S. Tax Court on December 14, 2015. The Company believes that the final adjudication of this matter will not have a material impact on its consolidated financial position, results of operations or cash flows and that it has adequate tax reserves for all tax matters. However, if this dispute were to be ultimately determined adversely to us, the additional tax, interest and any potential penalties could have a mater ial adverse impact on the Company's financial position, results of operations or cash flows. Refer to Note 11 of Notes to Consolidated Financial Statements for additional information. A number of years may elapse before a particular matter for which we hav e established a reserve is audited and finally resolved. The number of years with open tax audits varies depending on the tax jurisdiction. The tax benefit that has been previously reserved because of a failure to meet the "more likely than not" recognitio n threshold would be recognized in our income tax expense in the first interim period when the uncertainty disappears under any one of the following conditions: (1) the tax position is "more likely than not" to be sustained, (2) the tax position, amount, and/or timing is ultimately settled through negotiation or litigation, or (3) the statute of limitations for the tax position has expired. Settlement of any particular issue would usually require the use of cash. Tax law requires items to be included in the tax return at different times than when these items are reflected in the consolidated financial statements. As a result, the annual tax rate reflected in our consolidated financial statements is different from that reported in our tax return (our cash tax rate). Some of these differences are permanent, such as expenses that are not deductible in our tax return, and some differences reverse over time, such as depreciation expense. These timing differences create deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax bases of assets and liabilities.

The tax rates used to determine deferred tax assets or liabilities are the enacted tax rates in effect for th e year and manner in which the differences are expected to reverse. Based on the evaluation of all available information, the Company recognizes future tax benefits, such as net operating loss carryforwards, to the extent that realizing these benefits is c onsidered more likely than not. We evaluate our ability to realize the tax benefits associated with deferred tax assets by analyzing our forecasted taxable income using both historical and projected future operating results; the reversal of existing taxabl e temporary differences; taxable income in prior carryback years (if permitted); and the availability of tax planning strategies. A valuation allowance is required to be established unless management determines that it is more likely than not that the Comp any will ultimately realize the tax benefit associated with a deferred tax asset. As of December 31, 2015 , the Company's valuation allowances on deferred tax assets were $ 477 million and primarily related to uncertainties regarding the future realization o f recorded tax benefits on tax loss carryforwards generated in various jurisdictions. Current evidence does not suggest we will realize sufficient taxable income of the appropriate character within the carryforward period to allow us to realize these defer red tax benefits. If we were to identify and implement tax planning strategies to recover these deferred tax assets or generate sufficient income of the appropriate character in these jurisdictions in the future, it could lead to the reversal of these valu ation allowances and a reduction of income tax expense. The Company believes it will generate sufficient future taxable income to realize the tax benefits related to the remaining net deferred tax assets in our consolidated balance sheets. The Company does not record a U.S. deferred tax liability for the excess of the book basis over the tax basis of its investments in foreign corporations to the extent that the basis difference results from earnings that meet the indefinite reversal criteria. These criteri a are met if the foreign subsidiary has invested, or will invest, the undistributed earnings indefinitely. The decision as to the amount of undistributed earnings that the Company intends to maintain in non -U.S. subsidiaries takes into account items includ ing, but not limited to, forecasts and budgets of financial needs of cash for working capital, liquidity plans, capital improvement programs, merger and acquisition plans, and planned loans to other non -U.S. subsidiaries. The Company also evaluates its exp ected cash requirements in the United States. Other factors that can influence that determination are local restrictions on remittances (for example, in some countries a central bank application and approval are required in order for the Company's local co untry subsidiary to pay a dividend), economic stability and asset risk. As of December 31, 2015, undistributed earnings of the Company's foreign subsidiaries that met the indefinite reversal criteria amounted to $31.9 billion. Refer to Note 14 of Notes to Consolidated Financial Statements. The Company's effective tax rate is expected to be 22.5 percent in 2016. This estimated tax rate does not reflect the impact of any unusual or special items that may affect our tax rate in 2016. 44 Operations Review Our organizational structure as of December 31, 2015 , consisted of the following operating segments, the first six of which are sometimes referred to as "operating groups" or "groups": Eurasia and Africa; Europe; Latin America; North America; Asia Pacific; Bottling Investments; and Corporate. For further information regarding our operating segments, refer to Note 19 of Notes to Consolidated Financial Statements. Structural Changes, Acquired Brands and Newly Licensed Bra nds In order to continually improve upon the Company's operating performance, from time to time, we engage in buying and selling ownership interests in bottling partners and other manufacturing operations. In addition, we also acquire brands or enter into license agreements for certain brands to supplement our beverage offerings. These items impact our operating results and certain key metrics used by management in assessing the Company's performance. Unit case volume growth is a metric used by management t o evaluate the Company's performance because it measures demand for our products at the consumer level. The Company's unit case volume represents the number of unit cases (or unit case equivalents) of Company beverage products directly or indirectly sold b y the Company and its bottling partners to customers and, therefore, reflects unit case volume for consolidated and unconsolidated bottlers. Refer to the heading "Beverage Volume" below. Concentrate sales volume represents the amount of concentrates and sy rups (in all cases expressed in equivalent unit cases) sold by, or used in finished products sold by, the Company to its bottling partners or other customers. Refer to the heading "Beverage Volume" below. Our Bottling Investments operating segment and our other finished product operations, including the finished product operations in our North America operating segment, typically generate net operating revenues by selling sparkling beverages and a variety of still beverages, such as juices and juice drinks, energy and sports drinks, ready - to-drink teas and coffees, and certain water products, to retailers or to distributors, wholesalers and bottling partners who distribute them to retailers. In addition, in the United States, we manufacture fountain syrups a nd sell them to fountain retailers such as restaurants and convenience stores who use the fountain syrups to produce beverages for immediate consumption, or to authorized fountain wholesalers or bottling partners who resell the fountain syrups to fountain retailers. For these consolidated finished product operations, we recognize the associated concentrate sales volume at the time the unit case or unit case equivalent is sold to the customer. Our concentrate operations typically generate net operating reven ues by selling concentrates and syrups to authorized bottling and canning operations. For these concentrate operations, we recognize concentrate revenue and concentrate sales volume when we sell concentrate to the authorized unconsolidated bottling and can ning operations, and we typically report unit case volume when finished products manufactured from the concentrates and syrups are sold to the customer. When we analyze our net operating revenues we generally consider the following four factors: (1) volume growth (unit case volume or concentrate sales volume, as appropriate), (2) acquisitions and divestitures (including structural changes defined below), as applicable, (3) changes in price, product and geographic mix and (4) foreign currency fluctuations. R efer to the heading "Net Operating Revenues" below. We generally refer to acquisition and divestitures of bottling, distribution or canning operations and consolidation or deconsolidation of bottling and distribution entities for accounting purposes as str uctural changes ("structural changes"). 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 product s 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 co nsolidated bottling operations. "Acquired brands" refers to brands acquired during the past 12 months. Typically, the Company has not reported unit case volume or recognized concentrate sales volume related to acquired brands in periods prior to the closin g of a transaction. Therefore, the unit case volume and concentrate sales volume from the sale of these brands is incremental to prior year volume. We do not generally consider acquired brands to be structural changes. "Licensed brands" refers to brands no t owned by the Company, but for which we hold certain rights, generally including, but not limited to, distribution rights, and from which we derive an economic benefit when these brands are ultimately sold. Typically, the Company has not reported unit cas e volume or recognized concentrate sales volume related to these brands in periods prior to the beginning of the term of a license agreement. Therefore, in the year that the licenses are entered into, the unit case volume and concentrate sales volume from the sale of these brands is incremental to prior year volume. We do not generally consider newly licensed brands to be structural changes. 45 In 2015, the Company closed a transaction with Monster ("Monster Transaction"), which has been included as a structural change (a component of acquisitions and divestitures) in our analysis of net operating revenues on a consolidated basis as well as for the Eurasia and Africa, Europe, Latin America, North America, Asia Pacific and Corporate operating segments. This transaction consisted of multiple elements including, but not limited to, the acquisition of Monster's non -energy brands and the expansion of our distribution of Monster products into additional U.S. territor ies. These elements of the transaction impacted the Company's unit case volume and concentrate sales volume and therefore, in addition to being included as a structural change (a component of acquisitions and divestitures), they are also considered acquire d brands. See further discussion of this transaction in Note 2 of Notes to Consolidated Financial Statements. Also during 2015, the Company acquired a South African bottler, which has been included as a structural change (a component of acquisitions and di vestitures) in our analysis of net operating revenues on a consolidated basis as well as for the Bottling Investments operating segment. Refer to "Net Operating Revenues" below. In 2014, the Company began refranchising territories in North America that wer e previously managed by CCR to certain of our unconsolidated bottling partners. The impact of these refranchising activities has been included as a structural change (a component of acquisitions and divestitures) in our analysis of net operating revenues o n a consolidated basis as well as for our North America operating segment. In addition, for non -Company -owned and licensed beverage products sold in the refranchised territories, we have eliminated the unit case volume and associated concentrate sales from the base year when calculating volume growth rates on a consolidated basis as well as for the North America operating segment. Refer to the headings "Beverage Volume" and "Net Operating Revenues" below. In 2014, the Company made a decision to change our process of buying and selling recyclable materials in North America. Also during 2014, the Company transitioned our Russian juice operations to an existing joint venture with an unconsolidated bottling partner and acquired a majority interest in bottling o perations in Sri Lanka and Nepal. The impact of these changes is included as a structural change (a component of acquisitions and divestitures) in our analysis of net operating revenues on a consolidated basis as well as for our North America and Bottling Investments operating segments. Refer to the heading "Net Operating Revenues" below. In January 2014, the Venezuelan government enacted a new law ("Fair Price Law") that imposes limits on profit margins earned in the country, which limited the amount of re venue the Company was able to recognize in 2014 as compared to 2013. The impact of the Fair Price Law has been included as a structural change in our analysis of operating results for our Latin America segment for the year ended December 31, 2014. Refer to the heading "Net Operating Revenues" below. In 2013, the Company acquired a majority interest in bottling operations in Myanmar, sold a majority interest in our previously consolidated bottling operations in the Philippines and deconsolidated our bottling operations in Brazil as a result of their combination with an independent bottling partner. Accordingly, the impact to net operating revenues related to these transactions is included as a structural change (a component of acquisitions and divestitures) i n our analysis of net operating revenues for our Bottling Investments segment. Refer to the heading "Net Operating Revenues" below. The Company sells concentrates and syrups to both consolidated and unconsolidated bottling partners. The ownership structure of our bottling partners impacts the timing of recognizing concentrate revenue and concentrate sales volume. When we sell concentrates or syrups to our consolidated bottling partners, we are not able to recognize the concentrate revenue or concentrate sal es volume until the bottling partner has sold finished products manufactured from the concentrates or syrups to a third party or independent customer. When we sell concentrates or syrups to our unconsolidated bottling partners, we recognize the concentrate revenue and concentrate sales volume when the concentrates or syrups are sold to the bottling partner. The subsequent sale of the finished products manufactured from the concentrates or syrups to a customer does not impact the timing of recognizing the concentrate revenue or concentrate sales volume. When we account for an unconsolidated bottling partner as an equity method investment, we eliminate the intercompany profit related to these transactions until the equity method investee has sold finished prod ucts manufactured from the concentrates or syrups to a third party or independent customer. The Company is currently pursuing certain transactions that, if completed, will be included as structural changes for the applicable periods. In November 2014, the Company and two of our existing bottling partners entered into an agreement to combine each of the parties' bottling operations in Southern and East Africa. In August 2015, the Company entered into an agreement to merge our German bottli ng operations with the bottling operations of two of our existing bottling partners. Subject to receiving any required regulatory and shareholder approvals, we expect each of these transactions to close during the second quarter of 2016. Additionally, in 2 016 we announced our intent to refranchise 100 percent of Company -owned North America bottling territories by the end of 2017. The Company also announced that we have entered into a non -binding letter of intent to refranchise Company -owned bottling operati ons in China to two of our existing bottling partners. 46 Beverage Volume We measure the volume of Company beverage products sold in two ways: (1) unit cases of finished products and (2) concentrate sales. As use d in this report, "unit case" means a unit of measurement equal to 192 U.S. fluid ounces of finished beverage (24 eight -ounce servings); and "unit case volume" means the number of unit cases (or unit case equivalents) of Company beverage products directly or indirectly sold by the Company and its bottling partners to customers. Unit case volume primarily consists of beverage products bearing Company trademarks. Also included in unit case volume are certain products licensed to, or distributed by, our Compan y, and brands owned by Coca -Cola system bottlers for which our Company provides marketing support and from the sale of which we derive economic benefit. In addition, unit case volume includes sales by certain joint ventures in which the Company has an equi ty interest. We believe unit case volume is one of the measures of the underlying strength of the Coca -Cola system because it measures trends at the consumer level. The unit case volume numbers used in this report are derived based on estimates received by the Company from its bottling partners and distributors. Concentrate sales volume represents the amount of concentrates and syrups (in all instances expressed in equivalent unit cases) sold by, or used in finished beverages sold by, the Company to its bot tling partners or other customers. Unit case volume and concentrate sales volume growth rates are not necessarily equal during any given period. Factors such as seasonality, bottlers' inventory practices, supply point changes, timing of price increases, ne w product introductions and changes in product mix can impact unit case volume and concentrate sales volume and can create differences between unit case volume and concentrate sales volume growth rates. In addition to the items mentioned above, the impact of unit case volume from certain joint ventures in which the Company has an equity interest but to which the Company does not sell concentrates or syrups may give rise to differences between unit case volume and concentrate sales volume growth rates. Infor mation about our volume growth by operating segment is as follows: Percent Change 2015 vs. 2014 2014 vs. 2013 Year Ended December 31, Unit Cases 1,2 Concentrate Sales Unit Cases 1,2 Concentrate Sales Worldwide 2 % 2 % 3 2 % 2 % 4 Eurasia & Africa 3 % 2 % 4 % 3 % Europe 2 2 (2 ) (2 ) Latin America 1 1 1 — North America 1 2 3 — (1 F Asia Pacific 4 2 5 5 Bottling Investments 8 N/A (2 ) N/A 1 Bottling Investments operating segment data reflects unit case volume growth for consolidated bottlers only. 2 Geographic segment data reflects unit case volume growth for all bottlers, both consolidated and unconsolidated, and distributors in the applicable geographic areas. 3 After considering the impact of structural changes, concentrate sales volume both worldwide and for North America for the year ended December 31, 2015 grew 1 percent. 4 After considering the impact of structural changes, worldwide concentrate sales volume for the year ended December 31, 2014 grew 1 percent. Unit Case Volume The Coca -Cola system sold 29.2 billion, 28.6 billion and 28.2 billion unit cases of our products in 2015, 2014 and 2013, respectively. The number of unit cases sold in 2015 and 2014 does not include certain licensed beverage brands sold in the North American refranchised territories and certain brands owned by o ur Russian juice company. Refer to the heading "Structural Changes, Acquired Brands and Newly Licensed Brands" above. The Company eliminated the unit case volume related to these structural changes from the base year, where applicable, when calculating the volume growth rates. 47 Year Ended December 31, 2015 versus Year Ended December 31, 2014 Unit case volume in Eurasia and Africa increased 3 percent, which consisted of 2 percent growth in sparkling beverages and 6 percent growth in still beverages. The group's sparkling beverage growth included 3 percent growth in Trademark Coca -Cola, and the growth in still beverages was led by packaged water and juices and juice drinks. Eurasia and Africa benefited from unit ca se volume growth of 8 percent, 6 percent and 2 percent in the Central, East & West Africa, Southern Africa, and Middle East & North Africa business units, respectively, partially offset by a decline of 4 percent in the Russia, Ukraine & Belarus business un it. In Europe, unit case volume grew 2 percent, reflecting 7 percent growth in still beverages and 1 percent growth in sparkling beverages. The growth in still beverages was driven by the group's performance in packaged water, teas, sports drinks and the e xpansion of the innocent brand. The group's sparkling beverage growth included 9 percent growth in Coca -Cola Zero and 4 percent growth in Trademark Fanta. Unit case volume in Latin America grew 1 percent as a result of growth in still beverages of 4 perce nt and even sparkling beverage volume. The growth in still beverages was led by growth in packaged water, juices and juice drinks and sports drinks. The Latin Center and South Latin business units reported unit case volume growth of 4 percent and 3 percent , respectively. The Mexico business unit reported unit case volume growth of 3 percent, reflecting growth in Trademark Coca -Cola of 3 percent. The growth in the Latin Center, South Latin and Mexico business units was partially offset by a unit case volume decline of 4 percent in the Brazil business unit. In North America, unit case volume grew 1 percent. This increase reflects 5 percent growth in still beverage volume and even sparkling beverage volume. The still beverage growth in the group was led by 8 pe rcent growth in packaged water and 6 percent growth in teas. After considering the impact of the acquired volume resulting from the Monster Transaction, North America unit case volume growth remained 1 percent. Unit case volume in Asia Pacific increased 4 percent, which consisted of 4 percent growth in both sparkling and still beverage volume. The sparkling beverage volume growth was led by a 5 percent increase in Trademark Coca -Cola, a 4 percent increase in Trademark Sprite and a 6 percent increase in Trad emark Fanta. Still beverage volume growth was led by increases in packaged water and teas of 12 percent and 6 percent, respectively. China's unit case volume grew 5 percent during the year, led by 12 percent growth in Trademark Coca -Cola and 3 percent grow th in Trademark Sprite. India reported unit case volume growth of 4 percent and Japan reported even volume during the year. Unit case volume for Bottling Investments increased 8 percent. This increase primarily reflects the growth in China and India. In ad dition, unit case volume in Germany grew 2 percent. The Company's consolidated bottling operations accounted for 34 percent, 69 percent, and 100 percent of the unit case volume in China, India and Germany, respectively. Year Ended December 31, 2014 versus Year Ended December 31, 2013 Unit case volume in Eurasia and Africa increased 4 percent, which consisted of 3 percent growth in sparkling beverages and 8 percent growth in still beverages. The group's sparkling beverage growth included 2 percent growth in Trademark Coca -Cola, 3 percent growth in Trademark Sprite, and 2 percent growth in Trademark Fanta. Growth in the group's still beverages was led by packaged water, juices and juice drinks and teas. The group's growth reflects a continued focus on improve d marketplace execution and providing greater consumer choice in package and price options. Eurasia and Africa benefited from unit case volume growth of 7 percent and 6 percent in the Middle East & North Africa and Central, East & West Africa business unit s, respectively. This growth was partially offset by a decline in unit case volume of 1 percent in the Russia, Ukraine & Belarus business unit. In Europe, unit case volume declined 2 percent as a result of a decline in sparkling beverages of 3 percent, par tially offset by growth in still beverages of 1 percent. The decline in sparkling beverages reflects the softness in the macroeconomic environment and continuing competitive pressures in the market. The growth in still beverages was led by growth in juices and juice drinks. Unit case volume in Latin America increased 1 percent reflecting growth in still beverages of 6 percent and even sparkling beverage volume. The growth in still beverages was led by packaged water, value -added dairy and sports drinks. Lat in America benefited from unit case volume growth of 6 percent and 2 percent in the Latin Center and Brazil business units, respectively, partially offset by a volume decline of 1 percent in the Mexico business unit. The decline in Mexico was primarily due to the impact of a new excise tax that went into effect on January 1, 2014. In North America, unit case volume was even, reflecting 1 percent growth in still beverages offset by a decline of 1 percent in sparkling beverages. The still beverage growth was led by 8 percent growth in packaged water and 4 percent growth in teas. 48 Unit case volume in Asia Pacific increased 5 percent, which consisted of 5 percent growth in sparkling beverages and 4 percent growth in still beverages. The growth in sparkling beverages was led by a 5 percent incre ase in Trademark Sprite, a 4 percent increase in Trademark Fanta and a 3 percent increase in brand Coca -Cola. Still beverage volume growth was led by packaged water and growth in teas and value -added dairy of 6 percent and 10 percent, respectively. China's unit case volume grew 4 percent, led by 5 percent growth in brand Coca -Cola and 6 percent growth in Trademark Fanta. India reported double -digit volume growth, and Japan reported a volume decline of 1 percent, reflecting 1 percent growth in sparkling beve rages offset by a 1 percent decline in still beverages. Unit case volume for Bottling Investments decreased 2 percent. This decrease primarily reflects the deconsolidation of our bottling operations in Brazil during July 2013 as a result of their combinati on with an independent bottling partner. The unfavorable impact of these transactions on the group's unit case volume results was partially offset by growth in other key markets, including China and India, where we own or otherwise consolidate bottling ope rations. The Company's consolidated bottling operations accounted for 35 percent and 65 percent of the unit case volume in China and India, respectively. Concentrate Sales Volume In 2015, worldwide concentrate sales volume and unit case volume both grew 2 percent compared to 2014. After considering the impact of structural changes, concentrate sales volume grew 1 percent during the year ended December 31, 2015. In 2014, worldwide concentrate sales volume and unit case volume both grew 2 percent compared to 2013. After considering the impact of structural changes, concentrate sales volume grew 1 percent during the year ended December 31, 2014. The differences between concentrate sales volume and unit case volume growth rates worldwide and for individual opera ting segments in 2015 and 2014 were primarily due to the timing of concentrate shipments and the impact of unit case volume from certain joint ventures in which the Company has an equity interest, but to which the Company does not sell concentrates, syrups , beverage bases or powders. Analysis of Consolidated Statements of Income Percent Change Year Ended December 31, 2015 2014 2013 2015 vs. 2014 2014 vs. 2013 (In millions except percentages and per share data) NET OPERATING REVENUES $ 44,294 $ 45,998 $ 46,854 (4 )% (2 )% Cost of goods sold 17,482 17,889 18,421 (2 ) (3 ) GROSS PROFIT 26,812 28,109 28,433 (5 ) (1 ) GROSS PROFIT MARGIN 60.5 % 61.1 % 60.7 % Selling, general and administrative expenses 16,427 17,218 17,310 (5 ) (1 ) Other operating charges 1,657 1,183 895 40 32 OPERATING INCOME 8,728 9,708 10,228 (10 ) (5 ) OPERATING MARGIN 19.7 % 21.1 % 21.8 % Interest income 613 594 534 3 11 Interest expense 856 483 463 77 4 Equity income (loss) — net 489 769 602 (36 ) 28 Other income (loss) — net 631 (1,263 ) 576 * * INCOME BEFORE INCOME TAXES 9,605 9,325 11,477 3 (19 ) Income taxes 2,239 2,201 2,851 2 (23 ) Effective tax rate 23.3 % 23.6 % 24.8 % CONSOLIDATED NET INCOME 7,366 7,124 8,626 3 (17 ) Less: Net income attributable to noncontrolling interests 15 26 42 (40 ) (38 ) NET INCOME ATTRIBUTABLE TO SHAREOWNERS OF THE COCA -COLA COMPANY $ 7,351 $ 7,098 $ 8,584 4 % (17 )% BASIC NET INCOME PER SHARE 1 $ 1.69 $ 1.62 $ 1.94 4 % (16 )% DILUTED NET INCOME PER SHARE 1 $ 1.67 $ 1.60 $ 1.90 5 % (16 )% * Calculation is not meaningful. 1 Calculated based on net income attributable to shareowners of The Coca -Cola Company. 49 Net Operating Revenues Year Ended December 31, 2015 versus Year Ended December 31, 2014 The Company's net operating revenues decreased $1,704 million, or 4 percent. The following table illustrates, on a percentage basis, the estimated impact of key factors resulting in the increase (decrease) in net operating revenues for each of our operating segments: Percent Change 2015 vs. 2014 Volume 1 Acquisitions & Divestitures Price, Product & Geographic Mix Currency Fluctuations Total Consolidated 1 % — B 2 B (7 )% (4 )% Eurasia & Africa 2 % (1 )% 3 % (14 )% (10 )% Europe 2 (1 ) 1 (9 ) (7 ) Latin America 1 — 9 (2P F (13 ) North America 1 (1 ) 3 (1 ) 2 Asia Pacific 2 — (3 F (8 F (9 ) Bottling Investments 6 3 (3 ) (10 ) (4 ) Corporate * * * * * * Calculation is not meaningful. 1 Represents the percent change in net operating revenues attributable to the increase (decrease) in concentrate sales volume f or our geographic operating segments (expressed in equivalent unit cases) after considering the impact of structural changes. For our Bottling Investments operating segment, this represents the percent change in net operating revenues attributable to the increase (decrease) in unit case volume after considering the impact of structural changes. Our Bottling Investments operating segment data reflects unit case volume growth for consolidated bottlers only. Refer to the heading "Beverage Volume" above. Refer to the heading "Beverage Volume" above for additional information related to changes in our unit case and concentrate sales volumes. "Acquisitions and Divestitures" refers to acquisitions and divestitures of brands or businesses, some of which the Company considers to be structural changes. Refer to the heading "Structural Changes, Acquired Brands and Newly Licensed Brands" above for additional information related to the structural changes. The acquisitions and divestitures percent change for 2015 versus 2014 in the table above consisted entirely of structural changes. Price, product and geographic mix had a fa vorable 2 percent 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: • Eurasia and Africa — favorable price mix in most of the segment's business units, partially offset by unfavorable geographic mix; • Latin America — favorable price mix in all four of the segment's business units and the impact of inflationary environments in certain markets; • North America — favorably impacted as a result of price increases and package mix; • Asia Pacific — unfavorable product and channel mix as well as unfavorable geographic mix; and • Bottling Investments — unfavorable price mix attributable to channel, product and package mixK The unfavorable impact of foreign currency fluctuations decreased our consolidated net operating revenues by T percent. This unfavorable impact was primarily due to a stronger U.S. dollar compared to certain foreign currencies, including the South African rand , euro, U.K. pound sterling, Brazilian real, Mexican peso, Australian dollar and Japanese yen, which had an unfavorable impact on our Eurasia and Africa, Europe, Latin America, Asia Pacific and Bottling Investments 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; acquisitions and divestitures; price, product and geographic mix; and foreign currency fluctuations. The size a nd timing of acquisitions and divestitures are not consistent from period to period. The Company currently expects acquisitions and divestitures to have a mid single - digit unfavorable impact on full year 2016 net operating revenues. Based on current spot r ates and our hedging coverage in place, we expect currencies will continue to have an unfavorable impact on our full year 2016 net operating revenues. 50 Year Ended December 31, 2014 versus Year Ended December 31, 2013 The Company's net operating revenues decreased $856 million, or 2 percent. The following table illustrates, on a percentage basis, the estimated impact of key factors resulting in the increase (decrease) in net operating revenues for each of our oper ating segments: Percent Change 2014 vs. 2013 Volume 1 Acquisitions & Divestitures Price, Product & Geographic Mix Currency Fluctuations Total Consolidated 1 % (2 )% 1 % (2 )% (2 )% Eurasia & Africa 3 % — % 4 % (8 )% (1 )% Europe (2 ) — 4 2 4 Latin America — (4 ) 8 (10 ) (6 ) North America (1 ) (1 ) 1 — (1 ) Asia Pacific 5 1 (2 ) (6 ) (2 ) Bottling Investments 5 (9 ) (2 ) (2 ) (8 ) Corporate * * * * * * Calculation is not meaningful. 1 Represents the percent change in net operating revenues attributable to the increase (decrease) in concentrate sales volume f or our geographic operating segments (expressed in equivalent unit cases) after considering the impact of structural changes. For our Bottling Investments operating segment, this represents the percent change in net operating revenues attributable to the increase (decrease) in unit case volume after considering the impact of structura l changes. Our Bottling Investments operating segment data reflects unit case volume growth for consolidated bottlers only. Refer to the heading "Beverage Volume" above. Refer to the heading "Beverage Volume" above for additional information related to changes in our unit case and concentrate sales volumes. "Acquisitions and Divestitures" refers to acquisitions and divestitures of brands or businesses, some of which the Company considers to be structural changes. Refer to the heading "Structural Changes, Acquired Brands and Newly Licensed Brands" above for additional information related to the structural changes. The acquisitions and divestitures percent change for 2014 versus 2013 in the table above consisted entirely of structural changes. The impact of the Venezuelan Fair Price Law reduced our Latin America segment revenues by 5 percent in 2014. Price, product and geographic mix had a fa vorable 1 percent 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: • Eurasia and Africa — favorable price mix in all of the segment's business units; • Europe — favorable impact as a result of consolidating the juice and smoothie business of Fresh Trading Ltd. ("innocent") in May 2013 and favorable price mix in all of the segment's business units; • Latin America — favorable price mix in all four of the segment's business units and the impact of inflationary environments in certain markets; and • Asia Pacific — unfavorable geographic mixK The unfavorable impact of foreign currency fluctuations decreased our consolidated net operating revenues by 2 percent. The unfavorable currency impact was primarily due to a stronger U.S. dollar compared to certain other foreign currencies, including the South African rand, Mexican peso, Brazilian real, Australian dollar an d Japanese yen, which had an unfavorable impact on our Eurasia and Africa, Latin America, Asia Pacific and Bottling Investments operating segments. The unfavorable impact of a stronger U.S. dollar compared to the currencies listed above was partially offse t by the impact of a weaker U.S. dollar compared to certain other foreign currencies, including the euro and British pound, which had a favorable impact on our Europe and Bottling Investments operating segments. Refer to the heading "Liquidity, Capital Res ources and Financial Position — Foreign Exchange" below. 51 Net Operating Revenues by Operating Segment Information about our net operating revenues by operating segment as a percentage of Company net operating rev enues is as follows: Year Ended December 31, 2015 2014 2013 Eurasia & Africa 5.5 % 5.9 % 5.9 % Europe 10.3 10.5 9.9 Latin America 9.0 10.0 10.1 North America 49.2 46.7 46.1 Asia Pacific 10.6 11.4 11.5 Bottling Investments 15.1 15.2 16.2 Corporate 0.3 0.3 0.3 Total 100.0 % 100.0 % 100.0 % The percentage contribution of each operating segment fluctuates over time due to net operating revenues in certain operating segments growing at a faster rate compared to other operating segments. Net operating revenue growth rates are impacted by sales volume; acquisitions and divestitures; price, product and geographic mix; an d foreign currency fluctuations. For additional information about the impact of foreign currency fluctuations, refer to the heading "Liquidity, Capital Resources and Financial Position — Foreign Exchange" below. Gross Profit Margin As a result of our finis hed goods operations, which are primarily included in our North America and Bottling Investments operating segments, the following inputs represent a substantial portion of the Company's total cost of goods sold: (1) sweeteners, (2) metals, (3) juices and (4) PET. The Company enters into hedging activities related to certain commodities in order to mitigate a portion of the price risk associated with forecasted purchases. Many of the derivative financial instruments used by the Company to mitigate the risk associated with these commodity exposures, including any related foreign currency exposure, do not qualify for hedge accounting. As a result, the changes in fair value of these derivative instruments have been, and will continue to be, included as a compon ent of net income in each reporting period. The Company recorded losses related to these derivatives of $206 million, $8 million and $120 million during the years ended December 31, 2015, 2014 and 2013 , respectively, in the line item cost of goods sold in our consolidated statements of income. Refer to Note 5 of Notes to Consolidated Financial Statements. We do not currently expect changes in commodity costs to have a significant impact on our 2016 gross profit margin as compared to 2015. Year Ended December 31, 2015 versus Year Ended December 31, 2014 Our gross profit margin decreased to 60.5 percent in 2015 from 61.1 percent in 2014. The decrease was primarily due to the impact of acquisitions and divestitures and the unfavorable impact of foreign c urrency exchange rate fluctuations, partially offset by positive price mix and slightly lower commodity costs. Refer to Note 2 of Notes to Consolidated Financial Statements for additional information related to acquisitions and divestitures. Year Ended Dec ember 31, 2014 versus Year Ended December 31, 2013 Our gross profit margin increased to 61.1 percent in 2014 from 60.7 percent in 2013. The increase was partially due to the deconsolidation of our Brazilian bottling operations in July 2013 as well as lower commodity costs, primarily in our North America finished goods business, and favorable geographic mix. Refer to Note 2 of Notes to Consolidated Financial Statements for additional information regarding the impact of the deconsolidation of our Brazilian bo ttling operations. The favorable geographic mix was primarily due to growth in emerging markets. Although this shift in geographic mix has a negative impact on net operating revenues, it generally has a favorable impact on our gross profit margin due to th e correlated impact it has on our product mix. The product mix in the majority of our emerging and developing markets is more heavily skewed toward our sparkling beverage products, which generally yield a higher gross profit margin compared to our still be verages and finished products. 52 Selling, General and Administrative Expenses The following table sets forth the significant components of selling, general and administrative expenses (in millions): Year Ended December 31, 2015 2014 2013 Stock -based compensation expense $ 236 $ 209 $ 227 Advertising expenses 3,976 3,499 3,266 Selling and distribution expenses 6,025 6,412 6,419 Other operating expenses 6,190 7,098 7,398 Selling, general and administrative expenses $ 16,427 $ 17,218 $ 17,310 Year Ended December 31, 2015 versus Year Ended December 31, 2014 Selling, general and administrative expenses decreased $791 million, or 5 percent. During the year ended December 31, 2015, fluctuations in foreign currency decreased selling, general and administrative expenses by 6 percent. The increase in stock -based compensatio n was primarily due to reversals in 2014 of previously recognized expenses related to the Company's long -term incentive programs as performance criteria were not achieved. The increase in advertising expenses reflects the Company's increased investments to strengthen our brands, partially offset by a foreign currency exchange impact of 13 percent. The decrease in selling and distribution expenses reflects the impact of acquisitions and divestitures. The decrease in other operating expenses reflects the shif t of the Company's marketing spending to more consumer -facing advertising expenses as well as savings from our productivity and reinvestment initiatives. Foreign currency exchange rate fluctuations have a more significant impact on both advertising and oth er operating expenses as compared to our selling and distribution expenses since they are generally transacted in local currency. Our selling and distribution expenses are primarily related to our Company - owned bottling operations, of which the majority of expenses are attributable to CCR and are primarily denominated in U.S. dollars. Refer to Note 2 of Notes to Consolidated Financial Statements for additional information related to acquisitions and divestitures. In 2016, our pension expense is expected to decrease by $200 million compared to 2015. The anticipated decrease is primarily due to settlement and special termination costs incurred in 2015 of $169 million, the new method to calculate service and interest costs, an increase in the weighted -average d iscount rate used to calculate the Company's benefit obligations and the impact of $471 million of contributions the Company made in early 2016 to U.S. pension plans. The impact of these items will be partially offset by unfavorable asset performance compa red to our expected return during 2015 and a decrease in the expected return on assets for U.S. plans. Refer to the heading "Liquidity, Capital Resources and Financial Position" below for information related to these contributions. Refer to the heading "Cr itical Accounting Policies and Estimates — Pension Plan Valuations" above and Note 13 of Notes to Consolidated Financial Statements for additional information related to the pension plan assumptions used by the Company. As of December 31, 2015, we had $319 million of total unrecognized compensation cost related to nonvested share - based compensation arrangements granted under our plans. This cost is expected to be recognized over a weighted - average period of 1.8 years as stock -based compensation expense. Thi s expected cost does not include the impact of any future stock -based compensation awards. Refer to Note 12 of Notes to Consolidated Financial Statements. Year Ended December 31, 2014 versus Year Ended December 31, 2013 Selling, general and administrative expenses decreased $92 million, or 1 percent. Foreign currency fluctuations decreased selling, general and administrative expenses by 2 percent. The decrease in stock -based compensation was primarily due to reversals in 2014 of p reviously recognized expenses related to the Company's long -term incentive compensation programs. The increase in advertising expenses reflects the company's increased investment to strengthen our brands. This increase was partially offset by a foreign cur rency exchange impact of 4 percent. The decrease in selling and distribution expenses is a result of the refranchising of certain territories in North America in 2014 and the deconsolidation of our Brazilian bottling operations as a result of their combina tion with an independent bottling partner in July 2013. 53 Other Operating Charges Other operating charges incurred by operating segment were as follows (in millions): Year Ended December 31, 2015 2014 2013 Eurasia & Africa $ 16 $ 26 $ 2 Europe (25 ) 111 57 Latin America 40 295 — North America 384 281 277 Asia Pacific 3 38 47 Bottling Investments 357 247 194 Corporate 882 185 318 Total $ 1,657 $ 1,183 $ 895 In 2015, the Company incurred other operating charges of $1,657 million. These charges included $691 million due to the Company's productivity and reinvestment program and $292 million due to the integration of our German bottling operations. In addition, the Company recorded impairment charges of $418 million primarily due to the discontinuation of the energy pr oducts in the glacéau portfolio as a result of the Monster Transaction and incurred a charge of $100 million due to a cash contribution we made to The Coca -Cola Foundation. The Company also incurred a charge of $111 million due to the write -down we recorde d related to receivables from our bottling partner in Venezuela and an impairment of a Venezuelan trademark primarily due to changes in exchange rates as a result of the establishment of the new open market exchange system. Refer to Note 18 of Notes to Con solidated Financial Statements for additional information on the Company's productivity, integration and restructuring initiatives. Refer to Note 2 of Notes to Consolidated Financial Statements for additional information on the Monster Transaction.

Refer t o Note 1 of Notes to Consolidated Financial Statements for additional information on the Venezuelan currency change. Refer to Note 19 of Notes to Consolidated Financial Statements for the impact these charges had on our operating segments. In 2014, the Com pany incurred other operating charges of $1,183 million. These charges primarily consisted of $601 million due to the Company's productivity and reinvestment program and $208 million due to the integration of our German bottling operations. In addition, th e Company incurred a charge of $314 million due to a write -down we recorded related to receivables from our bottling partner in Venezuela and an impairment of a Venezuelan trademark primarily due to higher exchange rates. The write -down was recorded as a r esult of our revised assessment of the U.S. dollar value we expect to realize upon the conversion of the Venezuelan bolivar into U.S.

dollars by our bottling partner to pay our concentrate sales receivables. The Company also recorded a loss of $36 million as a result of the restructuring and transition of the Company's Russian juice operations to an existing joint venture with an unconsolidated bottling partner. Refer to Note 18 of Notes to Consolidated Financial Statements and see below for additional info rmation on our productivity and reinvestment program as well as the Company's other productivity, integration and restructuring initiatives. Refer to Note 1 of Notes to Consolidated Financial Statements for additional information on the Venezuelan currency rate change. Refer to Note 19 of Notes to Consolidated Financial Statements for the impact these charges had on our operating segments. In 2013, the Company incurred other operating charges of $895 million, which primarily consisted of $494 million assoc iated with the Company's productivity and reinvestment program; $195 million due to the impairment of certain intangible assets; $188 million due to the Company's other productivity, integration and restructuring initiatives; and $22 million due to charges associated with certain of the Company's fixed assets. Refer to Note 17 of Notes to Consolidated Financial Statements for further information on the impairment charges. Refer to Note 18 of Notes to Consolidated Financial Statements and see below for furth er information on the Company's productivity and reinvestment program, as well as the Company's other productivity, integration and restructuring initiatives.

Refer to Note 19 of Notes to Consolidated Financial Statements for the impact these charges had o n our operating segments. Productivity and Reinvestment Program In February 2012, the Company announced a four -year productivity and reinvestment program designed to further enable our efforts to strengthen our brands and reinvest our resources to drive lo ng-term profitable growth. This program is focused on the following initiatives: global supply chain optimization; global marketing and innovation effectiveness; operating expense leverage and operational excellence; data and information technology systems standardization; and the integration of Coca -Cola Enterprises Inc.'s ("Old CCE") former North America business. 54 In February 2014, the Company announced the expansion of our productivity and reinvestment program to drive an incremental $1 billion in productivity by 2016 that will primarily be redirected into increased media investments.

Our incremental productivity goal consists of two relatively equal components. First, we will expand savings through global supp ly chain optimization, data and information technology system standardization, and resource and cost reallocation. Second, we will increase the effectiveness of our marketing investments by transforming our marketing and commercial model to redeploy resour ces into more consumer -facing marketing investments to accelerate growth. In October 2014, the Company announced that we are further expanding our productivity and reinvestment program and extending it through 2019. The expansion of the productivity initiatives will focus on four key areas: restructuring the Company's global supply chain, including manufacturing in North America; implementing zero - based work, an evolution of zero -based budget principles, across the organi zation; streamlining and simplifying the Company's operating model; and further driving increased discipline and efficiency in direct marketing investments.

The Company expects that the expanded productivity initiatives will generate an incremental $2 bill ion in annualized productivity. This productivity will enable the Company to fund marketing initiatives and innovation required to deliver sustainable net revenue growth and will also support margin expansion and increased returns on invested capital over time. We expect to achieve total annualized productivity of approximately $3.6 billion by 2019 from the initiatives implemented under this program since it began in 2012. We have incurred total pretax expenses of $2,056 million since the initiative commenc ed in 2012. Refer to Note 18 of Notes to Consolidated Financial Statements for additional information. Integration of Our German Bottling Operations In 2008, the Company began the integration of our German bottling operations acquired in 2007. Since the integration commenced, the Company has incurred total pretax expenses of $1,127 million primarily related to involuntary terminations. We are currently reviewing additional restructuring opportunities within the German bottling operations, including integrat ion costs related to information technology and other initiatives. If implemented, these initiatives will result in additional charges in future periods. Our German bottling operations are now classified as held for sale. Refer to Note 18 of Notes to Conso lidated Financial Statements. Operating Income and Operating Margin Information about our operating income contribution by operating segment on a percentage basis is as follows: Year Ended December 31, 2015 2014 2013 Eurasia & Africa 11.3 % 11.2 % 10.6 % Europe 33.1 29.4 28.0 Latin America 24.9 23.8 28.4 North America 28.5 25.2 23.8 Asia Pacific 25.1 25.2 24.2 Bottling Investments — 0.1 1.1 Corporate (22.9 ) (14.9 ) (16.1 ) Total 100.0 % 100.0 % 100.0 % Information about our operating margin on a consolidated basis and by operating segment is as follows: Year Ended December 31, 2015 2014 2013 Consolidated 19.7 % 21.1 % 21.8 % Eurasia & Africa 40.7 % 39.7 % 39.3 % Europe 63.6 58.9 61.5 Latin America 54.3 50.4 61.3 North America 11.4 11.4 11.3 Asia Pacific 46.5 46.6 46.1 Bottling Investments — 0.1 1.5 Corporate * * * * Calculation is not meaningful. 55 Year Ended December 31, 2015 versus Year Ended December 31, 2014 In 2015, foreign currency exchange rate fluctuations unfavorably impacted consolidated operating income by 12 percent. This unfavorable impact was prim arily due to a stronger U.S. dollar compared to certain foreign currencies, including the South African rand, euro, U.K. pound sterling, Brazilian real, Mexican peso, Australian dollar and Japanese yen, which had an unfavorable impact on our Eurasia and Af rica, Europe, Latin America, Asia Pacific and Bottling Investments operating segments. Refer to the heading "Liquidity, Capital Resources and Financial Position — Foreign Exchange" below. During the year ended December 31, 2015, the Company's operating inc ome was unfavorably impacted by the refranchising of additional territories in North America and the sale of the Company's energy brands as part of the Monster Transaction. The refranchising activities unfavorably impacted our North America operating segme nt and the sale of the energy brands unfavorably impacted our Eurasia and Africa, Europe, Latin America, North America and Asia Pacific operating segments. Refer to Note 2 of Notes to Consolidated Financial Statements for additional information. Operating income for Eurasia and Africa for the years ended December 31, 2015 and 2014 was $987 million and $1,084 million, respectively. The segment was unfavorably impacted by fluctuations in foreign currency exchange rates of 16 percent, partially offset by favor able pricing across most of the segment's business units. Operating income for Europe for the years ended December 31, 2015 and 2014 was $2,888 million and $2,852 million, respectively. The Europe group was favorably impacted by a reduction in other operat ing charges primarily related to the Company's productivity and reinvestment program. The favorable impact of the reduction in other operating charges was partially offset by the unfavorable impact of foreign currency exchange rate fluctuations of 3 percen t. Operating income for the Latin America segment for the years ended December 31, 2015 and 2014 was $2,169 million and $2,316 million, respectively. Foreign currency exchange rate fluctuations unfavorably impacted operating income by 31 percent, partially offset by the reduction in other operating charges and favorable price mix in all of the segment's business units. North America's operating income for the years ended December 31, 2015 and 2014 was $2,490 million and $2,447 million, respectively. The segment was favorably impacted by price increases and product and package mix, partially offset by an increase in other operating charges. Operating income in Asia Pacific for the years ended December 31, 2015 and 2014 was $2,189 million and $2,448 million, respectively. Operating income for the segment reflects the unfavorable impact of foreign currency exchange rate fluctuations of 8 percent. Our Bottling Investments segment's operating income for the years e nded December 31, 2015 and 2014 was zero and $9 million, respectively. The Bottling Investments segment was unfavorably impacted by an increase in other operating charges partially offset by the favorable impact of acquisitions and divestitures. Refer to N ote 2 of Notes to Consolidated Financial Statements for additional information related to acquisitions and divestitures. The Corporate segment's operating loss for the years ended December 31, 2015 and 2014 was $1,995 million and $1,448 million, respective ly. Operating loss in 2015 was unfavorably impacted by an impairment charge of $418 million primarily related to the discontinuation of the energy products in the glacéau portfolio as a result of the Monster Transaction, a charge of $100 million due to a c ash contribution we made to The Coca -Cola Foundation and a $111 million charge due to an impairment of a Venezuelan trademark and a write -down the Company recorded on receivables from our bottling partner in Venezuela. 56 Year Ended December 31, 2014 versus Year Ended December 31, 2013 In 2014, foreign currency exchange rate fluctuations unfavorably impacted consolidated operating income by 6 percent. The unfavorable impact of changes in foreign currency exchange ra tes was primarily due to a stronger U.S. dollar compared to certain other foreign currencies, including the South African rand, Mexican peso, Brazilian real, Australian dollar and Japanese yen, which had an unfavorable impact on our Eurasia and Africa, Lat in America, 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 curr encies, including the euro and British pound, which had a favorable impact on our Europe and Bottling Investments operating segments. Refer to the heading "Liquidity, Capital Resources and Financial Position — Foreign Exchange" below. Operating income for Eurasia and Africa for the years ended December 31, 2014 and 2013 was $1,084 million and $1,087 million, respectively. The segment was unfavorably impacted by fluctuations in foreign currency exchange rates of 12 percent. The unfavorable impact of the fore ign currency exchange rates was offset by favorable pricing across many of the segment's markets. Europe’s operating income for the years ended December 31, 2014 and 2013 was $2,852 million and $2,859 million, respectively. The Europe group was favorably i mpacted by foreign currency exchange rate fluctuations of 2 percent. The favorable impact of the foreign currency exchange rate fluctuations was offset by lower concentrate sales volume and increased charges related to the Company’s productivity and reinve stment program. Operating income in Latin America for the years ended December 31, 2014 and 2013 was $2,316 million and $2,908 million, respectively. Foreign currency exchange rate fluctuations and the Venezuelan Fair Price Law unfavorably impacted operati ng income by 12 percent and 9 percent, respectively. Operating income was also unfavorably impacted by the write -down of receivables from our local bottling partner in Venezuela. Refer to Note 1 of Notes to Consolidated Financial Statements for additional information on the write -down of receivables. The impact of these items was partially offset by favorable price mix in all of the segment's business units. North America's operating income for the years ended December 31, 2014 and 2013 was $2,447 million a nd $2,432 million, respectively. The segment was favorably impacted by positive price mix and lower commodity costs, partially offset by increased marketing investments. Operating income in Asia Pacific for the years ended December 31, 2014 and 2013 was $2 ,448 million and $2,478 million, respectively. Operating income was favorably impacted by a 5 percent increase in concentrate sales and a reduction in operating expenses, offset by the unfavorable impact of foreign currency exchange rate fluctuations of 8 percent. Our Bottling Investments segment's operating income for the years ended December 31, 2014 and 2013 was $9 million and $115 million, respectively. The primary reason for the decrease in operating income was the deconsolidation of the Company's Braz ilian bottling operations in July 2013 and increased restructuring expenses incurred by our German bottling operations. In addition, fluctuations in foreign currency unfavorably impacted the segment's 2014 operating income by 4 percent. The Corporate segme nt's operating loss for the years ended December 31, 2014 and 2013 was $1,448 million and $1,651 million, respectively. Operating loss in 2013 was unfavorably impacted by a $195 million charge due to the impairment of certain intangible assets. 57 Interest Income Year Ended December 31, 2015 versus Year Ended December 31, 2014 Interest income was $ 613 million in 2015 , compared to $ 594 million in 2014 , an increase of $19 million, or 3 percent. The increase primarily reflects higher average cash and investment balances and higher average interest rates in certain of our international locations, partially offset by the unfavorable impact of fluctuations in foreign currency exchange rates due to a stronger U.S. dollar a gainst most major currencies. Year Ended December 31, 2014 versus Year Ended December 31, 2013 Interest income was $ 594 million in 2014 , compared to $ 534 million in 2013 , an increase of $60 million, or 11 percent. The increase primarily reflects higher cash balances and higher average interest rates in certain of our international locations, partially offset by the unfavorable impact of fluctuations in foreign currency exchange rates due to a stronger U.S. dollar against most major curren cies. Interest Expense Year Ended December 31, 2015 versus Year Ended December 31, 2014 Interest expense was $ 856 million in 2015 , compared to $ 483 million in 2014 , an increase of $373 million, or 77 percent. The increase is primarily due to charges of $32 0 million the Company recorded on the early extinguishment of certain long -term debt. These charges included the difference between the reacquisition price and the net carrying amount of the debt extinguished, including the impact of the related fair value hedging relationship. Interest expense also increased as a result of an overall increase in the total debt balances and a shift in the mix of our debt portfolio from short -term to long -term debt. During the year ended December 31, 2015, the Company issued SFr1,325 million, €8,500 million and $4,000 million of long -term debt. Refer to Note 5 of Notes to Consolidated Financial Statements for additional information related to the Company's hedging program. Refer to the heading "Liquidity, Capital Resources an d Financial Position — Cash Flows from Financing Activities — Debt Financing" below and Note 10 of Notes to Consolidated Financial Statements for additional information related to the Company's long -term debt. Year Ended December 31, 2014 versus Year Ended December 31, 2013 Interest expense was $ 483 million in 2014 , compared to $ 463 million in 2013 , an increase of $20 million, or 4 percent. The increase primarily reflects the impact of additional long -term debt the Company issued during late 2013 and 2014 as well as the unfavorable impact of interest rate swaps. In addition, interest expense in 2013 included charges related to the Company's early extinguishment of long -term debt. Refer to Note 5 of Notes to Consolidated Financial S tatements for additional information related to the Company's hedging program. Refer to the heading "Liquidity, Capital Resources and Financial Position — Cash Flows from Financing Activities — Debt Financing" below for additional information related to th e Company's long -term debt. Equity Income (Loss) — Net Year Ended December 31, 2015 versus Year Ended December 31, 2014 Equity income (loss) — net represents our Company's proportionate share of net income or loss from each of our equity method investees. In 2015, equity income was $489 million, compared to equity income of $769 million in 2014, a decrease of $280 million, or 36 percent. This decrease reflects, among other items, the unfavorable impact of the challenging economic conditions around the worl d where many of our equity method investees operate and fluctuations in foreign currency exchange rates due to a stronger U.S. dollar against most major currencies. The impact of these items was partially offset by the impact of acquisitions of equity inve stees. Refer to Note 2 of Notes to Consolidated Financial Statements for additional information. Year Ended December 31, 2014 versus Year Ended December 31, 2013 In 2014 , equity income was $ 769 million , compared to equity income of $ 602 million in 2013 , an increase of $167 million, or 28 percent. This increase was primarily due to more favorable operating results reported by several of our equity method investees, a decrease in the impact of unusual or infrequent charges recorded by certain of our equity method investees, and the deconsolidation of our Brazilian bottling operations during 2013, which is now an equity method investee. This increase was partially offset by the unfavorable impact of foreign currency fluctuations. 58 Other Income (Loss) — Net Other income (loss) — net includes, among other things, the impact of foreign currency exchange gains and losses; dividend income; rental income; gains and losses related to the disposal of property, plant and equi pment; gains and losses related to business combinations and disposals; realized and unrealized gains and losses on trading securities; realized gains and losses on available -for -sale securities; other -than -temporary impairments of available -for -sale secur ities; and the accretion of expense related to certain acquisitions. The foreign currency exchange gains and losses are primarily the result of the remeasurement of monetary assets and liabilities from certain currencies into functional currencies. The eff ects of the remeasurement of these assets and liabilities are partially offset by the impact of our economic hedging program for certain exposures on our consolidated balance sheets. Refer to Note 5 of Notes to Consolidated Financial Statements. In 2015, o ther income (loss) — net was income of $ 631 million . This income included a net gain of $1,403 million as a result the Monster Transaction, primarily due to the difference in the recorded carrying value of the assets transferred, including an allocated por tion of goodwill, compared to the value of the total assets and business acquired. Other income (loss) — net also included net foreign currency exchange gains of $149 million and dividend income of $83 million. This income was partially offset by noncash l osses of $1,006 million due to refranchising activities in North America. The net foreign currency exchange gains included a gain of $300 million associated with our foreign -denominated debt partially offset by a charge of $27 million due to the initial remeasurement of the net monetary assets of our Venezuelan subsidiary using the SIMADI exchange rate. The Company determined that based on its economic circumstances, the SIMADI rate best represented the applicable rate at which future transactions could be settled, including the payment of dividends. As such, the Company remeasured the net assets related to its operations in Venezuela using the current SIMADI rate. Refer to Note 2 of Notes to Consolidated Financial Statements for additional information on th e Monster Transaction and North America refranchising. Refer to the heading "Liquidity, Capital Resources and Financial Position — Foreign Exchange" below and Note 1 of Notes to Consolidated Financial Statements for additional information on the charge due to the change in Venezuelan exchange rates. In 2014, other income (loss) — net was a loss of $ 1,263 million , primarily due to noncash losses of $799 million related to the refranchising of certain territories in North America and foreign exchange losses o f $569 million, including a charge of $372 million due to the remeasurement of the net monetary assets of our Venezuelan subs