Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements (Tables)

v3.3.0.814
Fair Value Measurements (Tables)
 9 Months Ended
Oct. 02, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Assets and liabilities measured at fair value on a recurring basis
The following table summarizes those assets and liabilities measured at fair value on a recurring basis as of October 2, 2015 (in millions):
 
Level 1

Level 2

Level 3

 
Netting
Adjustment1

 
Fair Value
Measurements

 
Assets:
 
 
 
 
 
 
 
 
Trading securities2
$
180

$
136

$
3

 
$
—

 
$
319

 
Available-for-sale securities2
2,859

3,610

117

3 
—

 
6,586

 
Derivatives4
7

1,500

—

 
(606
)
5 
901

6 
Total assets
$
3,046

$
5,246

$
120

 
$
(606
)
 
$
7,806

 
Liabilities:
 
 
 
 
 
 
 
 
Derivatives4
$
16

$
590

$
—

 
$
(434
)
 
$
172

6 
Total liabilities
$
16

$
590

$
—

 
$
(434
)
 
$
172

 
1 Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle positive and negative positions and also cash collateral held or placed with the same counterparties. There are no amounts subject to legally enforceable master netting agreements that management has chosen not to offset or that do not meet the offsetting requirements. Refer to Note 5.
2 
Refer to Note 3 for additional information related to the composition of our trading securities and available-for-sale securities.
3 Primarily related to long-term debt securities that mature in 2018.
4 Refer to Note 5 for additional information related to the composition of our derivative portfolio.
5 The Company is obligated to return $183 million in cash collateral it has netted against its net asset derivative position.
6 
The Company's derivative financial instruments are recorded at fair value in our condensed consolidated balance sheet as follows: $130 million in the line item prepaid expenses and other assets; $771 million in the line item other assets; $11 million in the line item accounts payable and accrued expenses; and $161 million in the line item other liabilities. Refer to Note 5 for additional information related to the composition of our derivative portfolio.
The following table summarizes those assets and liabilities measured at fair value on a recurring basis as of December 31, 2014 (in millions):
 
Level 1

Level 2

Level 3

 
Netting
Adjustment1

Fair Value
Measurements

 
Assets:
 
 
 
 
 
 
 
Trading securities2
$
228

$
177

$
4

 
$
—

$
409

 
Available-for-sale securities2
4,116

3,627

136

3 
—

7,879

 
Derivatives4
9

1,721

—

 
(437
)
1,293

5 
Total assets
$
4,353

$
5,525

$
140

 
$
(437
)
$
9,581

 
Liabilities:
 
 
 
 
 
 
 
Derivatives4
$
2

$
558

$
—

 
$
(437
)
$
123

5 
Total liabilities
$
2

$
558

$
—

 
$
(437
)
$
123

 
1 Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle positive and negative positions and also cash collateral held or placed with the same counterparties. There are no amounts subject to legally enforceable master netting agreements that management has chosen not to offset or that do not meet the offsetting requirements. Refer to Note 5.
2 
Refer to Note 3 for additional information related to the composition of our trading securities and available-for-sale securities.
3 Primarily related to long-term debt securities that mature in 2018.
4 Refer to Note 5 for additional information related to the composition of our derivative portfolio.
5 The Company's derivative financial instruments are recorded at fair value in our condensed consolidated balance sheet as follows: $567 million in the line item prepaid expenses and other assets; $726 million in the line item other assets; $14 million in the line item accounts payable and accrued expenses; and $109 million in the line item other liabilities. Refer to Note 5 for additional information related to the composition of our derivative portfolio.
Assets and liabilities measured at fair value on a Nonrecurring basis
The gains or losses on assets measured at fair value on a nonrecurring basis are summarized in the table below (in millions):
 
Gains (Losses)  
 
 
Three Months Ended
 
Nine Months Ended
 
 
October 2,
2015

 
September 26,
2014

 
October 2,
2015

 
September 26,
2014

 
Assets held for sale1
$
(799
)
 
$
(236
)
 
$
(822
)
 
$
(236
)
 
Intangible assets
(41
)
2 
—

 
(473
)
2 
—

 
Investment in formerly unconsolidated subsidiary
—

 
—

 
(19
)
3 
—

 
Valuation of shares in equity method investee
—

 
—

 
(6
)
4 
—

 
Total
$
(840
)
 
$
(236
)
 
$
(1,320
)
 
$
(236
)
 
1 
The Company is required to record assets and liabilities that are held for sale at the lower of carrying value or fair value less any costs to sell based on the agreed-upon sale price. These charges primarily related to refranchising activities in North America. The charges were calculated based on Level 3 inputs. Refer to Note 2.
2 
During the three and nine months ended October 2, 2015, the Company recognized losses of $41 million and $473 million, respectively. The charges incurred during the three months ended included a $38 million impairment charge on one of the trademarks in the glacéau portfolio and a $3 million impairment charge on a Venezuelan trademark. The charges incurred during the nine months ended October 2, 2015 included $418 million of impairment charges primarily due to the discontinuation of the energy products in the glacéau portfolio as a result of the Monster Transaction and a $55 million impairment charge on a Venezuelan trademark. The charges were determined by comparing the fair value of the assets to the current carrying value. The fair value of the assets was derived using discounted cash flow analyses based on Level 3 inputs. Refer to Note 1, Note 2 and Note 10.
3 
The Company recognized a loss of $19 million on our previously held investment in a South African bottler, which had been accounted for under the equity method of accounting prior to our acquisition of the bottler in February 2015. U.S. GAAP requires the acquirer to remeasure its previously held noncontrolling equity interest in the acquired entity to fair value as of the acquisition date and recognize any gains or losses in earnings. The Company remeasured our equity interest in the South African bottler based on Level 3 inputs. Refer to Note 2 and Note 10.
4 
The Company recognized a loss of $6 million as a result of the owners of the majority interest in a Brazilian bottling entity exercising their option to acquire from us a 10 percent interest in the entity's outstanding shares. The exercise price was lower than our carrying value. This loss was determined using Level 3 inputs. Refer to Note 2 and Note 10.